Kpmg County Transformation Project:

R1

“Summarize strategic planning workshop outputs…

R2

Assist COUNTY in developing business case and scenario analysis documents…

R3

Assist COUNTY in its efforts to provide training to COUNTY employees regarding enhanced use of workflow and workload analysis toolsets as well as statistical sampling and lean process analysis.” The Grand Jury requested that the EO provide: “Deliverables specified in KPMG contract Amendment #1: a- Board of Supervisors strategic planning workshop summary, b- Training materials, c- Business case scenario analysis”35 The EO responded with the following: “Answer: KPMG Contract Amendment No. 1 was presented to the Board of Supervisors on Tuesday, March 29, 2016. Including the Form 11, report and video of Board Workshop held on Tuesday, March 29, 2016.36 Related Attachments: (F) DVD with video of Board Workshop held on Tuesday, March 29, 2016 **to be delivered next week to the Grand Jury offices** (G) 2016-03-29 Board of Supervisors – Public Agenda (H) KPMG Amendment No 1 Form 11 & Report “ The Grand Jury is very puzzled by this answer. It essentially says that deliverables specified by Amendment 1 that was approved on March 29, 2016 were provided in the same meeting in which the Amendment was approved. Also, as noted above, the Scope of Work itself provided to the Grand Jury is dated eight months after the Amendment was approved. The Grand Jury reviewed Contract Amendment No. 1 including Form 11, as provided by the EO, the online video of the Board meeting (workshop) held on the afternoon of March 29, 2016, and the final report from the original contract from KPMG discussed in that workshop. The Grand Jury found no evidence of anything resembling the deliverables specified. Note also that KPMG contract amendments may be in conflict with Board of Supervisors Policy A-18, which states 34 Amendment 1, pp. 4-6 35 Email to the EO from the Grand Jury, Dec 4, 2019 36 Email response from the EO to the Grand Jury, Jan. 9, 2020 24 “The department head shall be responsible for the satisfactory performance of the contract requirements by the contractor. This includes contract monitoring… and contractor evaluation…The establishment of a quantifiable objective is an essential element of the contract development process to enable evaluation.”37 Although this policy is directed to department heads and departments, the Board itself contradicted that policy which governs County departments by not specifying quantifiable (and, therefore, measurable) objectives (deliverables) in the KPMG contract amendments. County Performance Unit (CPU) KPMG’s Scope of Work in Amendment 4 includes “County Performance Unit Implementation Support…to contain costs, enhance outcomes, and improve efficiency.”38 The Submittal to the Board of August 28, 2018 by the EO, referred to previously, states “A key tenet to achieving reductions in spend and ensuring that county departments continue with transformation initiatives recommended by the consultant is the new County Performance Unit (CPU). The CPU is a management tool within the Executive Office to help create a culture driven by performance, accountability, and data-driven decisions. Assistant CEOs will work with county departments to assess performance and identify further efficiencies across departments countywide. The ACEO’s, portfolios and departments develop strategic objectives and KPIs aligned with the county’s LiftUp RivCo and Vision 2030 outcomes. …The CPU tool offers greater support of the transformation efforts both in the Executive Office and departments.”39 The Submittal also states: “The CPU initiative monitors the various transformation initiatives to ensure accountability and performance are consistently measured. CPU reviews strategic, operational and financial performance of departments and uses a central data-driven analysis and tracking hub within the Executive Office.” 37https://www.rivcocob.org/boardpolicies/policy-a/POLICY-A18.pdf viewed 7/23/20 38 Amendment 4, Attachment A-4, p. 6 39 Submittal to the Board of Supervisors, “County Transformation Project Updates”, August 28, 2018, p. 9 25 In other words, this was a very important part of implementing monitoring, and measuring initiatives of the Project. When the Grand Jury inquired of the EO about the current status of the CPU, we received the following answer was provided. “The CPU initiative was transitioned from the consultant to the Executive Office team. The initiative resulted in over 300 KPIs which was as a result of working closely and collaboratively with all county departments. These KPIs are reflected in the County’s Recommended/Adopted budget … It was decided that instead of creating a separate unit called CPU, and hiring additional staffing, that the CPU function be embedded in the job duties of the Executive Office analysts. In addition to review of the data in the Recommended budget, the KPIs are also being reviewed and validated at yearend. This year again, we’ll go through the KPI validation process as part of our yearend process to ensure the key performance indicators are still providing the intended outcome and it’s aligned with the county, and portfolio objectives.” So, the CPU, this “key tenet to achieving reductions in spend and ensuring that county departments continue with transformation initiatives recommended by the consultant” has been disbanded, and instead of being driven by Assistant CEOs, it has now been reduced to monitoring of data by EO analysts as part of their other job duties. To repeat, the Grand Jury was advised by the EO that “updates [to the Board of Supervisors] were verbal, there are no documents available to provide.” Reporting the Results to the Board of Supervisors The EO reported to the Board in the afore-mentioned meeting of June 25, 2019 on progress to date on 2019 KPMG recommendations coming out of the entire Project. The Grand Jury asked the EO for evidence on eight of the recommendations reported as “Complete”. The Grand Jury found that the evidence of completion provided on two of the recommendations was satisfactory. However, the following six, as described by the EO, are of concern: (Information Technology) (IT3) RECOMMENDATION: “Conduct IT inventory and develop Total Cost of Ownership model” REPORTED TO BOARD: “Complete. On-going process to deal with IT procurement and software and hardware inventory.” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY: “Implemented ServiceNow and are implementing RivcoPro to better manage procurements and inventory” 26 CONCERN: The “Total Cost of Ownership model” was not provided. An “on-going process” does not indicate completion, nor does “implementing RivcoPro”. (IT4) RECOMMENDATION: “Define IT talent management plan (Hiring, Retention, and Succession Planning)” REPORTED TO BOARD: “Complete. Designed new hiring methodology” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY: “Implemented use of IT staffing firms to help find hard to recruit employees. They must transfer to County employment This has created flexibility and increased hiring speed.” CONCERN: Use of IT staffing firms is not a new hiring methodology and does not address retention and succession planning. (Planning) (PL3) RECOMMENDATION: “Document key process steps and decision making (sic) framework” REPORTED TO BOARD: “Complete. Implemented Case Planner Ownership framework and process…” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY (sent Jan. 9, 2020): “Working with the Transportation Department and will follow-up with an answer (PENDING)” CONCERN: Nothing from the Transportation Department or regarding Planning was provided to the Grand Jury. (PL7) RECOMMENDATION: “Improve planner workload management (i.e. electronic trackers, PLUS)” REPORTED TO BOARD: “Complete. …Implemented Case Planner Ownership framework and process…” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY (sent Jan. 9, 2020): “Working with the Transportation Department and will follow-up with an answer (PENDING)” CONCERN: Nothing from the Transportation Department or regarding Planning was provided to the Grand Jury. (PL14) RECOMMENDATION: “encourage more independent decision making that weighs risk and benefits: REPORTED TO BOARD: “Complete. Implemented Case Planner Ownership framework and process…” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY (sent Jan. 9, 2020): “Working with the Transportation Department and will follow-up with an answer (PENDING)” CONCERN: Nothing from the Transportation Department or regarding Planning was provided to the Grand Jury. (Note that all three Planning recommendations (PL3, PL7, and PL14) cited the same evidence of completion - “Case Planning Ownership and Process”, which was promised and never received. 27 (Animal Services) (AS6) RECOMMENDATION: “Continue to enhance mobile technology capabilities to facilitate activities and develop a supporting Chameleon training strategy to ensure consistent staff proficiency” REPORTED TO BOARD: “Complete. New technologies have been purchased and deployed…” RESPONSE AND EVIDENCE PROVIDED TO GRAND JURY: “The department has deployed I-pads with each Field Officer. Training has been delivered on proper use/input of information into WEB Chameleon. All Field staff should be inputting information for each activity into the WEB Chameleon System at this time. SOP’s have been developed and pushed out to end users in the training. Mobile credit card machines are being purchased from Elavon (Ingenico Link 2500). The initial purchase will be for eight (8) machines and delivery is expected by the end of January. These will be distributed to our primary users, with training on how to use them. SOP’s will be developed, and training provided once the machines arrive. A specific policy and procedure for monetary transactions by the licensing and animal control officers has been written and provided to these employees.” CONCERN: While the Grand Jury acknowledges the deployment of iPads, the implication regarding mobile credit card machines is that deployment was the result of the KPMG recommendation. KPMG, in its Countywide Strategic Review dated July 2017, made no mention of field payments or mobile credit card machines when it published Recommendations AS6. In fact, the 2018-2019 Riverside County Civil Grand Jury wrote a report entitled “Riverside County Department of Animal Services Improved Efficiency for County Animal Control Officers”.40 The Grand Jury found: • “Lack of Policy for Handling Payment of Fees in the Field”, and • Cumbersome and Unsafe Procedures for Processing Fee Payments”. The report recommended • The Riverside County Department of Animal Services should have a policy and procedure regarding the acceptance of payments in the field for services by animal control officers”, and • County animal control officers should be issued a tablet with a credit card reader to process payments made in the field. Supplying this tool would reduce the County’s legal and safety liability exposure of 40 https://countyofriverside.us/Portals/0/GrandJury/GrandJury2018- 2019/Riverside_County_Dept_of_Animal_Services.pdf?ver=2019-06-12-132609-057, viewed 5/26/20 28 its field staff. This will be an inexpensive solution that eliminates cash handling and improves the efficiency, convenience and safety of ACO’s.” The Grand Jury finds it misleading to credit the Project and KPMG recommendations for addressing this issue. Obstacles and Complicating Factors Appointed Versus Elected County Officials As a General Law County under the California Constitution, Riverside County has five elected officials in addition to the elected Board of Supervisors: • The Assessor-Clerk-Recorder • The Auditor-Controller • The District Attorney • The Sheriff, Coroner and Public Administrator • The Treasurer and Tax Collector Because these officials are elected by the voters, they are, essentially, answerable to the voters and not to the Board of Supervisors or the County Executive Officer. The exception is that the Board sets the discretionary budget for each of these officials’ departments, meaning the budget for funds controlled by the Board and not coming from outside agencies, such as the State or Federal Government. Note that the total discretionary budget for the County (dubbed NCC or Net County Cost), is about $700 million each year out of a total County budget of around $6 billion, most of which is designated for specific purposes by outside agencies. The result is that the Board, and thus the Executive Office, has only limited authority to tell agencies and departments run by elected officials what to do. So, in this Project, the Board and EO could ask these agencies and departments to cooperate with KPMG’s investigation and to follow their recommendations, but could only use their budget authority and not direct supervisory authority to make that happen. That, of course, limited their ability to effect Change Management in these agencies and departments, as opposed to the rest of County departments where there is ultimate authority over hiring and firing as well as budgets. High Turnover and a Highly Charged Political Atmosphere The period following KPMG’s initial recommendations for Criminal Justice in March 2016 and especially following their recommendations in July 2017 was one of significant political turmoil in Riverside County. The Fourth District Supervisor died unexpectedly in December 2016, and his replacement was appointed in May 2017 to fill the position. The County Executive Officer retired in August of 2017 and was replaced by the chief assistant. The First 29 and Second District Supervisors both announced they would not run for reelection and would retire in January of 2019. Both were primary driving forces behind the KPMG County Transformation Project. The Sheriff with whom the Project began was succeeded by a new Sheriff in 2019. The heads of key agencies and departments have left and been replaced since the Project began, including HR, DPSS, and the EDA. There has also been significant turnover of middle management and staff in key departments, such as HR. Thus, initiatives coming out of KPMG’s recommendations were to be led and managed by new people who may not have had the background or made commitments to these initiatives. They would not have gone through the process of development of the recommendations and initiatives, including the information gathering and discussion process and all the thought processes of their development. Also, certainly, leaders in new positions want to put their own stamp on their organizations. This would, naturally, have led to delays and, possibly, changes in direction in implementing recommendations and initiative from the Project. Conflicting Incentives In looking at projects like this one involving major change, there can be conflicting incentives for management and staff to accept and implement the recommendations of outside consultants. On the one hand if senior leadership is pressing for large budget reductions and greater efficiencies, then major changes to accomplish these must be considered and accepted to preserve one’s job. On the other hand, embracing major changes can imply that one was deficient in one’s job for not initiating these changes in the first place. The Grand Jury was informed that in some cases department heads agreed to publicly announce only some of the savings and efficiencies achieved from the Project. In addition, it is well known, particularly in government, that acknowledging savings can have the negative result of having one’s budget cut in succeeding budget cycles. This can result in losing funding for other initiatives that a department or agency might want or losing staff. For these reasons, there may be benefits and cost savings from the Project that County management and staff are unwilling to acknowledge or wish to take credit for themselves rather than attributing them to the KPMG County Transformation Project. Going Forward The Grand Jury makes a number of recommendations in this report for the future regarding 30 • How to assure competitive bidding on large contracts with outside service providers • Ensuring commitment to follow-through on major operational changes before incurring large financial obligations, such as for software projects • Specifying measurable deliverables from outside contractors • Publishing achievement levels in departments of KPIs • Establishing an independent agency to report on the achievement of objectives for major projects in the County • Re-constituting the County Performance Unit to continue with its original mission In the Board of Supervisors meeting of June 25th, 2019, during KPMG’s final presentation, participants were very outspoken in emphasizing the importance of following up on the Project after KPMG’s departure.41 One Supervisor said “…unless we follow recommendations then we won’t realize potential savings or efficiencies.” The County CEO said “It’s up to us… to make sure … departments are following up and implementing some of the better practices that we have identified.” The Board Chair, in wrapping up the presentation said “The next step is the follow-up… We cannot let the items [that you have found] die. It’s going to fall on the five of us and our CEO to make sure that those items stay front and center …and that all the money we have spent on your firm… we get even more out of it.” Five months after this Board meeting, the Grand Jury asked a high ranking official in the EO what reports or actions have been provided to the Board of Supervisors or requested to follow-up and track the progress of the Project. The reply was “none”. When the Grand Jury asked why, the response was “because the Board has not asked”. Most importantly, the County in its actions should not treat the KPMG County Transformation Project as if it were over and done. It is highly likely there are still benefits to be achieved and money to be saved from the Project in areas that the Grand Jury was unable to investigate. The current COVID-19 crisis will certainly delay many major initiatives until the situation stabilizes to a “new normal”. However, it would seem particularly urgent now to look for cost savings considering the budget pressures being caused by the COVID-19 crisis. By continuing to implement, monitor, and track the recommendations from the Project through a re-constituted CPU and with strong support from the Board and the EO, the County can still avoid the Project being permanently labeled as wasteful. BOS mtg, June 25, 2019, starting about 30 minutes into video 31

R4

The Board of Supervisors establish an agency that is independent of any department to, among other possible duties, perform financial and operational audits verifying the completion, claimed benefits, and adherence to policy of projects undertaken in the County. Such an agency should choose which projects it will audit, and report its findings publicly to the Board of Supervisors. The agency could be part of the Auditor Controller’s Office, or akin to the Internal Audit department in many 33 California Counties or an Inspector General’s Office in many other governmental entities. This should be completed by 6/30/2021. (Findings 5 and 7)

R5

The Board of Supervisors and the Executive Office re-examine the initiatives recommended in the KPMG County Transformation project, track and report on those still offering benefits and cost savings to the County, and direct departments and agencies to continue efforts to achieve those benefits and cost savings. The list of departments which should continue implementing KPMG’s recommendations should be completed by 3/31/21, and department efforts should continue indefinitely. (Findings 7 and 8)

R8

Despite adamant agreement by of the Board of Supervisors in KPMG’s Project closeout presentation, to diligently following-up on the Project recommendations, no such follow-up appears to have happened since that meeting.

R9

While the Grand Jury found some limited evidence of cost savings and other benefits, no evidence was provided that the KPMG County Transformation project came close to paying for itself. There still may be considerable savings and other benefits to be derived if the County follows up on recommended initiatives from the Project. However, unless and until new savings and benefits are realized, there is more justification to label the Project wasteful rather than beneficial. RECOMMENDATIONS The Grand Jury recommends that: