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SANDAG Executive To Face Review For Role In Forecasting Scandal

SANDAG Executive Director Gary Gallegos sits in a SANDAG board meeting, Aug. 4, 2017.
Nicholas McVicker
SANDAG Executive Director Gary Gallegos sits in a SANDAG board meeting, Aug. 4, 2017.
SANDAG Executive To Face Review For Role In Forecasting Scandal
SANDAG Executive To Face Review For Role In Forecasting Scandal GUEST:Andrew Bowen, metro reporter, KPBS News

The top story, investigations will continue into SANDAG and the failed measure A tax proposal. The Association of government Board of Directors on Friday heard the results of an independent inquiry which confirmed reports that the revenue projections for that tax measure were too high. The report found that the top officials attempted to keep information about the miscalculation in the public. The board says more investigations are needed, including a review of the employment contract for the executive director. Joining me is Metro reporter Andrew Bowen. Welcome. Thank you. We talked about this investigation before but this was the first time the board members were officially presented with the results. What was the reaction ? Everyone was complementary of the investigators for thoroughness. There was a split. Some saw this as something of a vindication of the staff and executives. We heard the statements, mistakes were made but the investigation did not find hard evidence of them intentionally inflating the numbers to win votes. We heard from Sam, the mayor saying let's put it behind us and move on. There was other board members who saw this as the beginning of a bigger investigation. There were questions about transparency and confidence and ignoring red flags that were raised over several years. Here is what the board member Diane Jacob had to say. Does anything occur rise to a level of criminal investigation ? I do not know that. I do not think any of us do. That is why we need a deeper dive to make sure we do a thorough house cleaning. What did the investigator find out about why revenue projections were billions of dollars to high? I think you just mentioned that he found that SANDAG did not intentionally mislead the public about how much sales tax could raise. The error state back to 2004 when somebody put in a wrong number on a spreadsheet and infected the demographic and economic forecasting model with bad numbers that were producing overly optimistic estimates on how much money they would raise. That does not appear to have been intentional. Whether or not the discovery of the error was ignored or pushed aside is another question. It depends on your definition of intention. Did they conclude that executives manipulated the numbers to win votes? No. Did it find the executive director and his deputy was presented with evidence that members were inflated by multiple staffers but they dismissed those reports? You know the whistleblowers, absolutely. They found that the chief brought on determined that the estimate was overstated and he did not say anything to the executives. He did not think anyone would listen to him. The accusation is less about lying intentionally and about willful ignorance and an office culture that shut down whistleblowers. When they uncovered the miscalculation, investigators say SANDAG officials directed employees to delete documents and create an unsearchable folder in an effort to keep the information from reporters. What did that investigators and the board have to say about that ? They said those actions were a huge mistake for Noah's of the recent then they created a bad look. It creates the appearance of a cover-up. There were characterizations in the written report that were toned down in the oral presentation. You could chalk that up to the investigators being in the same room and sitting in front of some of the people they were calling out. I want to say the board members were limited in their ability to call out staff members or executives in this open and public meeting. If a disciplinary action is going to take place, the staffers have a right to rebut accusations against them. Those reviews have to take place in closed session. It is not to take place where the entire public can look on and hear what they are saying about the staff members. Gary who is a central figure in this report, Werther calls for his resignation ? Yes. The first person to call for his resignation was Corey Schumacher. She is an alternate on the board. She was a board member during a meeting. She said he had to be held responsible for the failures because he is the executive and the buck stops here. Several members called for him to resort -- resigned. The board members were more restrained. There were defenders and they said he is a dedicated civil servant and he is been an effective advocate for San Diego and getting dollars for matching projects that they were constructing. What further investigations do they authorize? What they uncovered was the use of an searchable folder that you mentioned were staff members were supposed to keep draft documents related to this scandal. The staff said no documents were deleted in the folder but the investigators could not verify that. They commissioned a forensic investigation into that folder to see if they could verify whether or not no documents were deleted. They referred another aspect of the scandal that the investigation did not touch on to a subcommittee to look at further implications on what was also uncovered by the voice of San Diego which is short falling revenues of the existing measure that was approved in 2004. That has been gathering as much money as and Jack -- SANDAG rejected. The cost of the measure has increased and neither those were revealed properly to the public or the board. Considering there is legislation pending that would fundamentally change the way SANDAG is set up, what pressure is on the board to get the situation sorted out ? The board members is reporting to constituents. They are not accountable to the entire county. The board members are popular in the jurisdictions. The consequences at the ballot bot does not seem likely. They still have a need for more dollars and finding transportation projects and the system is underfunded and the roads are crumbling and the population will continue to grow and congestion will get worse. Now that SANDAG has a huge stain on the reputation, one aspect of the bill that you mentioned is it will authorize the transit operators in the county to levy sales taxes and fun their own transportation projects. They might have challenges in getting a measure approved by voters. At the least, they do not have baggage. I have been speaking with Andrew Bowen, thank you. My pleasure.

SANDAG Executive To Face Review For Role In Forecasting Scandal
Gary Gallegos, the executive director of the San Diego Association of Governments, will face a performance review by the board of directors for his role in the agency's inflated tax revenue projections. The board voted for that review after an independent investigation into the scandal.

Gary Gallegos, executive director of the San Diego Association of Governments, will face a performance review by the agency's board of directors for his role in a revenue forecasting scandal that has rocked the agency and prompted an independent investigation.

The results of that investigation were presented to the board at its meeting Friday morning. Chief investigator John Hueston of the Orange County-based law firm Hueston Hennigan detailed how the agency came to rely on a faulty formula to estimate how much money it would collect through a sales tax measure last year.

That error, created in 2004 when a staff member copied the wrong numbers into the formula, was used for more than a decade in SANDAG's transportation spending plans. The inflated numbers allowed the agency to promise billions of dollars in improvements to highways, streets, bikeways and public transit systems that it likely would not be able to pay for.


RELATED: Investigation Details How SANDAG Pushed Boundaries Of Public Records Law

The investigators also dug into SANDAG's response to the scandal after it was uncovered by Voice of San Diego. SANDAG General Counsel John Kirk held a meeting telling staffers to delete documents before they turned 60 days old, when they would become easier to access by journalists or members of the public. Director of Technical Services Kurt Kroninger also set up a secret folder shielded from public records requests where staffers were told to store newer "draft" documents related to the scandal.

SANDAG Investigation
An independent investigation examines SANDAG's mistakes relating to tax measures and its mishandling of public records.
To view PDF files, download Acrobat Reader.

Hueston told SANDAG board members that the use of that unsearchable folder should never have been allowed.

"It raises way too many red flags," he said. "And ultimately it created this appearance of a cover-up when in fact at the very root of all the issues here, there was an inadvertent copy paste error that caused issues in forecasting models over time."

Board members and public speakers at the meeting largely praised the investigators for their efforts, but differed on whether the investigation was proof of failures serious enough to warrant a change in leadership. Some public speakers called on board members to fire Gallegos.


"There is quite clearly a dysfunctional, demoralizing internal culture here that is not conducive to good governance or transparency," said Cori Schumacher, a Carlsbad City Council member and an alternate board member. "The responsibility here falls squarely on the executive leadership team, and specifically Mr. Gallegos. I would ask this board to call for Mr. Gallegos to resign."

Board members sitting in the meeting were less eager to criticize Gallegos directly, but some did suggest the need for personnel changes.

"Does anything that occurred internally rise to a level of a criminal investigation?" asked County Supervisor Dianne Jacob. "I don't know that. I don't think any of us do. And that's why I think we need a deeper dive on this to really make sure we do a thorough house cleaning."

Gallegos was praised by some speakers during the meeting as a dedicated civil servant who has effectively advocated for San Diego's needs at the state and federal level. County Supervisor Ron Roberts, who chairs the SANDAG board, said after the meeting that he was "not even close" to asking for Gallegos's resignation.

"At this point I want to see more information," he said. "I'm in a position where I have to balance positives against negatives and the value to this organization of these people."

The board ultimately voted unanimously to review Gallegos's performance in a future closed session meeting. It also commissioned a forensic review of SANDAG servers to determine whether any documents were deleted improperly, and it directed a subcommittee made up of three board members to come up with a more detailed plan of action in response to the investigation.

That plan of action is expected to encompass other elements of the scandal uncovered by Voice of San Diego but not reviewed in the investigation, including a shortfall of some $17.5 billion in existing SANDAG transportation spending plans that were not promptly disclosed to the board or public.

SANDAG Board Says Agency Needs Improvements To Internal Procedures