SANDAG Audit Alleges Improper Severance Payments, Bonuses, Promotions
Thursday, September 3, 2020
Photo by Matthew Bowler
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A sweeping audit of the San Diego Association of Governments alleges big problems with hiring, promotions and compensation for upper management. The findings come as the agency is still trying to rebuild credibility after a major scandal that led to the ouster of its former chief executive.
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A sweeping audit of personnel and compensation practices at the San Diego Association of Governments released late Wednesday finds the agency made severance and bonus payments totaling hundreds of thousands of dollars without having adequate oversight and controls in place.
The audit creates more turmoil for an organization that in recent years lost an executive director and other top staffers amid a scandal involving a failed 2016 tax measure. It also comes as current Executive Director Hasan Ikhrata seeks to build support for a $177 billion plan to reduce greenhouse gas emissions through big changes to San Diego County's transportation infrastructure.
The audit by Independent Performance Auditor Mary Khoshmashrab was first reported on by the San Diego Union-Tribune and is due to be reviewed at a special meeting of the SANDAG Audit Committee on Sept. 11.
Among the audit’s findings are that SANDAG management:
- Promoted and gave raises to several employees, most of them in upper management, without sufficient justification supported by good performance reviews.
- Failed to inform board members of their responsibility to enact policies governing special compensation and was generally not transparent in presenting budget information.
- Failed to rely on comparable government agencies when completing its salary comparison surveys, instead relying on private and out-of-state agencies.
- Lacks fair, objective and competitive hiring practices and does not consistently score candidates or document the results of interviews.
Accompanying the audit is a written response from Ikhrata that fiercely disputes much of its findings, saying the alleged improper payments were well within the scope of authority delegated to the executive director by both the state legislature and SANDAG board of directors.
Portions of the documents included in the audit were redacted, ostensibly to limit the agency's legal exposure and protect employee privacy — though some of the redactions were easily readable by copying and pasting the redacted text.
One such redaction blacks out an allegation of "harassment and/or improper treatment of staff" as well as "a cross-allegation of wrongful harassment by management against (Office of the Independent Performance Auditor) staff members."
Following that redacted text, the management response from the audit reads: "Personnel matters are subject to heightened confidentiality at SANDAG." The response states SANDAG will hire an independent firm to investigate the harassment allegations. No further details were available.
The redacted sections of the documents were made on the recommendation of SANDAG General Council John Kirk because they "could be harmful to the agency and on balance, in management’s opinion, the public transparency gained does not appear likely to outweigh the increased risk to the agency or the privacy concerns of staff."
Allegations date back years
Some of the alleged missteps outlined in the audit go back as far as 2015, long before Ikhrata's start at the organization in December 2018. Others are described as actions taken by Ikhrata under the guidance of Kirk.
"The readers will find the results of the audit alarming," Koshmashrab wrote. "However, the findings should not be surprising given that SANDAG has gone unwatched from an internal perspective for this length of time."
In his letter responding to the audit, Ikhrata said auditors took a number of things out of context.
"(The audit) contains findings and conclusions that sometimes lack sufficient information and context and therefore might lead a reader to believe the discretion exercised by management was not reasonable," Ikhrata wrote.
At the same time, Ikhrata acknowledged some deficiencies at SANDAG, such as outdated record keeping practices and payroll software, and pledged to make changes based on the audit's recommendations.
"Management will develop an Action Plan, in consultation with the Board as necessary, to implement changes that will strengthen the overall operations and performance of the organization," Ikhrata's response said.
The document uploaded Wednesday night totals 401 pages and includes the audit, the management response, a legal memo from a private law firm hired by SANDAG and several other supporting documents.
Some of the improper payments date back to July 2019, when three executive-level staffers left the organization: Chief Deputy Director Kim Kawada, Communications Director David Hicks and Land Use and Transportation Planning Director Muggs Stoll.
Stoll's severance agreement included a payout of $48,781.20 while Hicks received $62,306.40. Kawada received a severance payment of $115,991.20, as well as a payout of 990.94 hours of accrued sick leave — well above the 25% of accrued hours that the agreement describes as standard at the agency. Kawada's paid out sick leave totaled an additional $110,519.54.
Koshmashrab found that because all three employees left voluntarily, they were not entitled to any severance payments. She also faulted SANDAG for not having a severance policy to determine the size of the payouts and for not going to the board of directors for approval.
According to the audit, the payouts were made under threat of litigation — yet SANDAG's management and legal counsel did not provide Koshmashrab with evidence that the employees had filed any claims against their former employer.
A challenging tenure
Ikhrata took the helm at SANDAG as the agency was recovering from a scandal related to its 2016 ballot measure to fund transportation projects with a half-cent sales tax increase. Reporting by Voice of San Diego found SANDAG officials had overestimated how much revenue the sales tax measure would bring in yet failed to inform board members or voters before the election.
A subsequent investigation found former Executive Director Gary Gallegos, former Director of Technical Services Kurt Kroninger and John Kirk, the general counsel, went to extraordinary lengths to shield documents relating to the forecasting error from public records requests. Gallegos announced his retirement from SANDAG a week after the investigation was made public.
Just weeks ago, Ikhrata presented board members with his vision for the next 30-year regional transportation plan, which includes an extensive network of new carpool and toll lanes, massive investments in new high-speed public transit lines and a futuristic "operating system" that adapts the network based on real time transportation patterns.
The plan is estimated to cost $177 billion over three decades and would require voters to approve a once-cent sales tax with no expiration date.
The SANDAG Office of the Independent Performance Auditor was created by a state law, AB 805, that passed in 2017 in the wake of the tax measure scandal. This audit is Koshmashrab's first comprehensive report since she was hired in February 2019.
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