Office of City Auditor

Focus:  This report is the second in a series that our office will be producing at the request of Seattle City Councilmember Lisa Herbold regarding the City of Seattle's Navigation Team, which provides outreach to people living unsheltered in Seattle. This report assesses the Executive's Quarter 1 response to the Navigation Team reporting plan, a plan with 14 reporting checkpoints designed to help inform the City Council on the Navigation Team approach.

Results: We identified findings for each of the seven reporting checkpoints included in the Executive's Quarter 1 response. We developed a set of 30 recommendations that are listed in Appendix B of this report. This report was reviewed by the Executive and incorporates its input, but the Executive did not provide a formal written response.

Focus: Ordinance 125324, passed by the Seattle City Council in June 2017, required the City Auditor to contract with academic researchers to conduct a multi-year evaluation of the behavioral, health, and economic impacts of the sweetened beverage tax. The Office of City Auditor contracted with Public Health - Seattle and King County (Public Health) to lead the evaluation.  Public Health contracted with the University of Washington and Seattle Children's Health to help it conduct the evaluation.  This baseline report provides information on conditions before the implementation of the tax in Seattle. 

Focus: The Seattle Rental Housing Study focuses on the experiences of renters and landlords operating in the Seattle market as well as the distribution, condition, cost and change in rental housing in the Seattle area from August 2017 through April 2018. The project's goal was to better understand the practices and experiences of landlords and renters within the Seattle market and develop strategies to compile timely, accurate information about housing conditions and cost to supplement the City's current data-analysis efforts.

Focus: To report on the implementation status, as of December 2017, of 595 recommendations from audit reports issued by our office from January 2007 through December 2017.

Results: As of December 31, 2017, 71 percent (422 out of 595) were implemented, 18 percent (108 out of 595) were pending, and 11 percent (65 out of 595) were categorized as no further follow-up planned.

Focus: We performed this audit to help ensure that wholesale customers are paying for their water supply in accordance with formal agreements with Seattle Public Utilities (SPU) and at rates approved by the Seattle City Council. Our objectives for this audit were to (1) determine whether billings to wholesale customers and related payments were accurate, timely, and complete; and (2) determine whether internal controls over the wholesale billing and payment related processes are adequate. 

Results: We found that SPU's billing of wholesale customers was generally accurate and complete. However, we identified internal controls over the wholesale billing process that were either lacking or need to be strengthened. These controls relate to billing accuracy and completeness, the accuracy of meters and related equipment, and information systems security.  We made 19 recommendations to improve internal controls over SPU's wholesale water billing process, including (1) ensuring only authorized personnel approve billing adjustments; (2) requiring additional steps to ensure the accuracy of meter read inputs from field crews; (3) implementing controls over current cycle consumption adjustments; (4) requiring annual meter read verifications; and (5) requiring additional support from wholesale customers when reporting facilities charges.

Focus: Ordinance 124860, passed by the Seattle City Council in September 2015, revised the Seattle Municipal Code’s provisions covering permitted special events and directed our office to conduct this audit.  We reviewed the Seattle Police Department’s (SPD) processes for staffing permitted and non-permitted events, and we reviewed internal controls over permitting administration functions. We examined the City’s cost recovery rates for the different types of special events.  In 2016, SPD spent 150,748 hours and $10.3 million in wages staffing 724 special events. Our audit scope did not include evaluating the policing strategies or tactics SPD employs at special events.

Results: We identified three areas where the City could improve its controls over special events police services functions: 1) Police Fees and Cost Recovery, 2) SPD Event Planning and Staffing, and 3) Special Events Administration Functions.  We found that SPD’s costs for staffing special events are not fully recovered for any type of special event, including permitted and non-permitted events that are charged for police services.  We also found there are some permitted events that involve a significant amount of commercial activity but, based on how they are categorized, receive police services at no charge.  We concluded SPD generally follows federal best practice guidance for determining event staffing levels, but needs to improve its documentation and independent oversight of staffing decisions.  SPD uses sworn personnel to perform special events work that is primarily traffic-directing, amounting to about $3.2 million in wages in 2016; some of this work could possibly be performed by less expensive non-sworn personnel. SPD and the Special Events Office, which is located within the Office of Economic Development (OED), need to improve controls over some special events administrative functions. We offer nineteen recommendations to address these weaknesses. SPD was in general agreement with the report’s findings, and OED agreed with some recommendations but did not agree with others.

Focus: Seattle City Councilmember Lisa Herbold asked the Office of City Auditor to review the Theory of Change for the City's Navigation Team and to identify additional information that the City Council may want to gather. The Navigation Team is an approach developed by former Mayor Murray's administration for addressing the issue of people living unsheltered in Seattle. It is important for the City to ensure that the Navigation Team is an approach that is appropriate and humane as well as efficient and effective.

Results: This report includes a reporting plan with 14 requests for information (i.e., "reporting checkpoints") that can help inform the City Council's understanding of the Navigation Team approach.  The Executive has agreed to this reporting plan; their response is included in Appendix C of this report.

Focus: City Councilmember M. Lorena González requested that we assess the Seattle Municipal Court Resource Center (CRC). The CRC provides on-site social services and resources to Court clients who are in the different stages of the criminal justice system. During the period covered by our audit (January 2015-Febuary 2017), the CRC had approximately 10,000 visits. The CRC sees an average of 18 visitors daily, over 80 percent of whom have a current or past Court case and about a third of whom have housing instability issues.

Results: We found that limited funding and staffing hinders the Court’s ability to coordinate with CRC service providers and hold them accountable, and hampers its ability to assist the City in addressing the challenges that the CRC’s client population faces. We make six recommendations to address our findings related to improving CRC client data collection, ensuring adequate service provider coverage of the CRC, and assessing CRC’s staffing and budgetary needs to improve its operations and accountability.

Focus: Ordinance 125315, adopted on June 1, 2017, established a new police oversight structure for the City of Seattle. Seattle City Councilmember Tim Burgess asked our office to provide information to the City Council about the issues involved in evaluating the new police oversight system over time.

Results: Our research brief offers five recommendations for evaluating the functioning of Seattle's new police oversight system:
1. It is important to evaluate how the police oversight system functions to ensure that it is effective.
2. The evaluation must be an appropriate fit for the Seattle context and community.
3. Shared goals among the police oversight entities as well as protocols, expectations, and metrics should be developed in advance of a system evaluation.
4. To the extent possible, the system evaluation should use tools and frameworks for assessing system functioning that are grounded in research.
5. The timing of a periodic system evaluation should balance the need to ensure that the system is off to a good start without overly burdening the police oversight entities.

Focus: This report provides members of the public and public officials with information on the City of Seattle’s (City) financial condition. The report uses information from the City’s Comprehensive Annual Financial Reports (CAFR) and Adopted Budgets, among other sources, and compiles the information for a broad audience. The report also provides five years of data for several of the financial and economic indicators analyzed, allowing public officials to see historical trends and identify areas that may need attention.

Results: Overall, the City of Seattle financial and economic indicators we present in this report are positive. Revenues have exceeded expenses for the last five years. The City’s revenues are diversified, which affords some protection from economic downturns. The City is committed to maintaining reserves and has both an Emergency Subfund and a Rainy Day Fund to address unanticipated events or declines in revenues. However, major downturns in the national or local economy that significantly affect local business or construction activity would decrease the revenues available to the City. City leaders are also continually challenged to address complex social problems, such as homelessness and housing affordability, while still maintaining a balanced budget.

Focus: City Councilmember Lisa Herbold asked our office to audit the City of Seattle’s (City) handling of hate crimes. We are completing this audit in two phases, with this first report focusing on how the Seattle Police Department (SPD) uses hate crime data and the practices and processes the City follows to identify, respond to, and prevent hate crimes. The second phase report will address how the City can improve its use of hate crime data and will provide an analysis of the extent to which reported hate crimes have resulted in prosecution.

Results: We identified five areas in which the City could improve its hate crime efforts.

1. Changes in SPD reporting procedures would help ensure hate crimes are more appropriately recorded and investigated.
2. SPD patrol officers would benefit from regular formal training and improved guidance on hate crimes.
3. More sophisticated use of data could inform hate crime prevention efforts.
4. Increased coordination among City departments would improve hate crime prevention and response efforts.
5. Regional coordination of hate crime response efforts will promote efficiency and improved response efforts.

The report offers nine specific recommendations to improve the City’s efforts to prevent, respond, and report hate crimes. The three departments involved in this audit – the Seattle Police Department (SPD), the Seattle Office for Civil Rights (SOCR), and Seattle Public Utilities (SPU) – agree with all the recommendations.

Focus: To report on the implementation status as of December 2016, of 526 recommendations contained in 51 audit reports issued from January 2007 through December 2016.  

Results: As of December 31, 2016, 69 percent (364 out of 526) were implemented, 19 percent (97 out of 526) were pending, and 12 percent (65 out of 526) were categorized as no further follow-up planned.

Focus: City Councilmember Mike O’Brien requested that we review development projects that participated in Seattle’s Incentive Zoning program to gain extra floor area in exchange for providing an affordable housing public benefit. Our objectives were to: 1) report the number and location of projects since 2006 that participated in incentive zoning for affordable housing, 2) whether the projects’ affordable housing contributions were accurately calculated, and 3) whether and when affordable housing contributions were secured.

Results: We identified two projects that had received extra floor area that had not made affordable housing contributions; these contributions had an estimated value of about $5 million. We found discrepancies between several projects’ source documents and information in the data system related to extra floor area gained and contribution amounts owed. We also found 10 projects that made late affordable housing payments by an average of 9 months. We make 22 recommendations to improve program management, accountability, oversight, internal controls, reporting and transparency, customer service, and to adjust program fees.

Focus: To inform our work on the Audit of New Customer Information System (NCIS) Implementation, with the assistance of the City's Chief Technology Officer, we selected Gartner, Inc. to write a best practices report, based on their experience working with public agencies, on ways to manage information technology projects effectively.

Results: Gartner's report provides a high-level overview of best practices for government portfolio and project management. The report's contents and recommendations are organized by stages of the project life cycle, including initiation, planning, execution, and monitoring and control. Please note that the report's content and recommendations are the opinions of Gartner and may need to be tailored to fit the needs of the City of Seattle.

Focus: At the request of City Councilmember Tim Burgess, we audited Seattle City Light's (SCL) and Seattle Public Utilities' (SPU) implementation of their new billing system, NCIS. The City Council had learned that the project was a year late and approximately $34 million over budget, and some members were concerned about whether the Council was receiving timely and accurate information about the project's status.

Results: We found that the NCIS project took longer and cost more than originally estimated because of an unrealistic initial schedule, additions to the scope, project staff who were challenged by the project's size and complexity, and project leaders' decisions to prioritize quality over timeliness. An extended project schedule resulted in increased labor costs for both City staff and the primary consultant on the project, PricewaterhouseCoopers. Communication with the City Council was hampered by the lack of an effective reporting mechanism, a high degree of uncertainty behind early cost estimates for large, complex information technology projects, and financial reporting that was not designed for project oversight purposes. We also found that although the project team complied with City rules for the use of QA experts, the Executive Steering Committee could have acted more quickly to resolve or lower the probability and impact of 6 high risks identified by the QA expert. We provide a timeline of key project decisions and formal communications about those decisions to the City Council.

Focus: The objectives for our audit of City Light service connections and related services were to: (1) Determine whether internal controls over the billing and revenue collection process were designed properly and operating effectively, including controls to help ensure the accuracy, completeness, and timeliness of billing, and to ensure that all funds collected were deposited into the City Treasury; (2) Identify control weaknesses in the billing and revenue collection process and make recommendations for strengthening controls; (3) Determine through sampling of billing transactions whether the customer was billed accurately, completely, and timely, and whether all revenues were collected timely and appropriately deposited.

Results:  Through our testing of 100 time and materials service connection projects and our review of City Light's billing and revenue collection processes, we identified both control weaknesses and billing inaccuracies. In some cases we found evidence of either over or under billing for services. We also identified billing adjustments that were not supported with sufficient documentation. If billing for new and related services is not well controlled over time, unrecovered billable costs due to customer under billing may need to be recovered in the form of higher electric utility rates. We categorized our findings into five main areas: 1) completeness and accuracy of billing, 2) timeliness of billing and revenue collection, 3) cash handling, 4) monitoring and oversight of refunds, and 5) control environment. Although we did not identify specific instances of fraud, the control weaknesses we noted could create opportunities for fraud.

We made 18 recommendations to help improve the accuracy, completeness, and timeliness of City Light's billing and revenue collection processes. One of these recommendations is for City Light to follow-up on billing discrepancies identified during the audit of $10,000 or more, including two projects with adjustments totaling $253,000, to determine if additional customer billing or refunds are appropriate. City Light's formal response to our audit is in Appendix A of the report. City Light generally agreed with our recommendations.

The City of Seattle is considering implementing an acoustic gunshot locator system as a pilot project, and the City Council requested short summary of the current literature on acoustic gunshot locator systems and the essential factors for conducting an evaluation.  This Research Brief identifies ten things that the City should consider in advance of implementing the system  to enable a rigorous evaluation of the pilot project to ensure that the system is producing the desired outcomes for Seattle.

Focus: When the Seattle City Council approved the reauthorization of the Metropolitan Improvement District (MID) and its expansion into Belltown in May 2013, they included a performance audit requirement in the authorizing legislation, Ordinance 124175. As specified in this ordinance, the audit's primary purpose was to assess whether, three years after implementation, Belltown has received the general types and levels of services described in the MID Business Plan.

Results: We concluded that the Belltown is receiving the general types and levels of services described in the MID's April 18, 2013 Business Plan, including the services outlined in the Belltown Program Implementation Plan that is part of the MID Business Plan.

Focus:  To report on the implementation status as of December 2015 of 453 recommendations from audit reports issued by our office from January 2007 - December 2015.

Results:  As of December 31, 2015, 75 percent (337 out of 453) were implemented, 13 percent (60.5 out of 453) were pending, and 12 percent (55.5 out of 453) were categorized as no further follow up planned.

This research brief addresses one component of a comprehensive public health approach to addressing drug abuse -- the safe disposal of unused prescription drugs.  Safe disposal of unused prescription drugs, especially opioid pain relievers, reduces the risk of nonmedical use that might lead to drug abuse, including heroin addiction.

On April 4, 2016, the Seattle City Council unanimously passed Resolution 31654 expressing the City's support for an effective, countywide safe prescription drug disposal program, including controlled substances, and requesting local pharmacies and the Seattle Police Department to install drug disposal drop-boxes across the city: http://seattle.legistar.com/LegislationDetail.aspx?ID=2598093&GUID=9551D2DD-0DDA-46AF-A2CF-7617D347C467

Focus: Seattle Police Chief Kathleen O'Toole asked us to conduct an audit of the Seattle Police Department's (SPD) overtime controls. Specifically, we were asked to review whether there was adequate leadership, management oversight, and supervisory control to manage SPD's overtime spending. Over the past ten years SPD's overtime expenditures have almost doubled and have significantly exceeded SPD's overtime budget. In 2015, SPD spent $24.2 million on overtime. SPD's overtime expenditure trend has caused concerns for the City Council and the City Budget Office, as well as for SPD management.

Results: We identified significant gaps in SPD's overtime internal controls that led to overtime errors and inefficiencies, including duplicate payments of overtime. We found overtime control weaknesses in six major categories: policies and procedures, budgeting, operational controls, management controls, special events, and off-duty work. We offer thirty recommendations to address these weaknesses.  SPD agreed with all of our findings and recommendations.