Charter Committee Never Intended for Controller to Audit Elected Officials

– Los Angeles Daily Journal

By George David Kieffer

There is a disagreement between the Los Angeles city attorney and the city controller regarding the controller's authority to conduct performance audits of elected officials, in this case the workers' comp activities within the city attorney's office. The city attorney first rendered an opinion on the underlying issue in connection with a gang program to be run out of the mayor's office. The city attorney opined that the controller's authority to conduct performance audits extends only to departments and programs within them and not to the offices of elected officials. The controller argues that the City Charter authorizes performance audits of programs within elected offices and perhaps even of entire elected offices themselves. The disagreement involves a reading of the new Charter provisions expanding the duties of the city controller.

Whether the elected city controller should have the authority through a performance audit to make official public "findings" as to the performance of other elected officials, it is very clear that the Charter does not now provide such authority - and that's probably a good thing, at least without further parameters. To give the controller the official authority to say whether the mayor or city attorney is "performing" is an open invitation to take part in dirty politics and "hit and run" sound bite government. The position of controller is seen as a stepping-stone to becoming mayor or city attorney, and has in fact been used as such. One ought to be careful about authorizing the controller to rummage though an elected office and "officially" condemn an opponent under his or her own subjective criteria. But careful does not mean never.

My friend and charter reform colleague, Erwin Chemerinsky, differs on this point. Two
commissions were charged with rewriting a new Los Angeles Charter. I chaired the Appointed Charter Reform Commission and Chemerinsky chaired the Elected Charter Reform Commission. Ultimately, the two commissions came together and presented a "Unified Charter" that was approved by the voters. Chemerinsky recently has spoken out on why he believes the controller should and does have the authority under the new city Charter to conduct performance audits of other elected officials in the city.

Chemerinsky and I agree on most interpretations of the Charter. But on this legal and philosophical point, we've agreed to respectfully disagree. Nonetheless, we do agree that the media has wrongly presented this dispute as a personality clash between Controller Laura Chick and City Attorney Rocky Delgadillo. Rather, it is a very important issue going to the heart of the government, and the dispute requires much more thoughtful discussion regarding how we might achieve greater accountability in a city where there is no "loyal opposition."

A word about the difference between a "financial audit" and a "performance audit": A financial audit deals with budgets, revenues and expenditures. A performance audit is a management tool, generally performed against predetermined (and often mutually determined) goals and objectives. A performance audit is generally aimed at a government activity or program, not the conduct of an elected official. In fact, I do not know of anywhere where a performance audit measures an elected official's performance.

The first level of legal interpretation is the plain language of the Charter. Charter Section 261 sets forth the authority of the controller in Sections (a) through (k). The sections must be read in context with each other. Section (e) reads that the controller shall, "in compliance with generally accepted accounting standards, audit all departments and offices of the City ... where any City funds are either received or expended" (emphasis added). This is the controller's traditional authority to conduct financial audits, which was carried over from the previous Charter. There is no debate here about the controller's authority to conduct financial audits of elected officials as well as departments within the city government.

On the other hand, Section (k), which was added in the new Charter, reads: "The Controller shall conduct performance audits of all departments and may conduct audits of City programs." In contrast to Section (e), the word "offices" was deleted from this new provision and that deletion cannot be interpreted as an oversight or mistake. It must be read as intentional. In fact, the Appointed Commission had the language of the two sections - one old, one new – right before us and knew exactly what was accomplished by deleting the word "offices" from the new section. (While the language was first adopted by the Elected Commission in a close vote, we had the same language before us in the Appointed Commission.) The controller argues that the word "programs" means programs anywhere situated, whether within a department or within an elected office. But referring back to Section (e) regarding financial audits, it is very clear that programs ("programs and activities within every department") is simply a subcategory within "departments."

It is very unlikely that a court would find that the omission of the word "offices" in the new provision was some kind of oversight. The language alone is likely to be the basis of a finding that while the controller can do financial audits of elected officials and any programs within such office, he or she is authorized to conduct performance audits of only departments and programs that are within or cut across departments. Still, if the court finds that the language is not dispositive, it will go to the legislative history, and there the interpretation is equally clear. All of the legislative history - too much to cover here - indicates that there was never the slightest intention to authorize the controller to use this new power of "performance audit" to judge the performance of other elected officials. As one can see from the current brouhaha, this suggested power is very, very controversial. There were representatives of the City Council, the mayor and the city attorney at every Charter meeting, including during the discussion of this new performance audit authority. While there was plenty of testimony regarding the impact on departments, no one (neither the mayor, City Council nor the city attorney) ever commented on this provision with respect to their own offices. In fact, no one in their wildest imagination thought it was remotely applicable to elected officials. The official Voter Information Pamphlet summarizing the controller's new powers states "adds duty to audit the performance of departments" and makes no mention of what would be a very controversial and new authority to do performance audits of other elected officials.

In the absence of further consideration by the Council and placement on the ballot of a clarifying amendment, the question will have to be decided by a court. This is unfortunate only because it misses the opportunity to address the issue in a more nuanced way.

While the current Charter does not provide the controller the authority to conduct performance audits of other elected officials, might an amendment to the Charter provide for this in the future? This would mean making the controller something like a public inspector general, not only with respect to the use of funds by elected officials but with respect to a more subjective performance of his or her duties. If so, what kinds of protections might be built in to avoid politicization of the role? While it could raise constitutional issues, perhaps the controller should not be permitted to run for another city office once in the controller's office. At a minimum, the Charter could reference general guidelines. The U.S. General Accounting Office Auditing Standards states that performance auditors must be independent, both in fact and appearance, from personal, external and organizational impairments to independence. That is not the appearance today. And it does little good if the controller's performance audits - whether of departments or elected officials - are ignored (as they surely have been) or arbitrarily dismissed as political (whether they are or not).

One answer, at least with respect to the mayor's office, derives from the whole direction of the new Charter, which placed the management of the government within the authority of the mayor; the City Council was to be much more of a legislative body. Why should there ever be a "program" within a Council office or the Council as a whole? And probably any program in the mayor's office should be defined as a "departmental program" subject to a performance audit.

Finally, there is a deeper question here that proponents of more controller authority may be trying to get at. In a city with a "nonpartisan" government but essentially one-party rule, with no "loyal opposition," atrophied civic service and very limited media coverage, how do we learn about the performance of our elected officials? How do we change our government? How do we generate a radical, renewed commitment to a city that can really work? The city controller, frustrated by the failure of the elected officials to respond to numerous financial and performance audits of the departments, has begun to focus on judging "officially" the performance of elected officials themselves. Very understandable and perhaps a good way to bring about change. However, the charter does not now provide the controller that particular role or authority.

George Kieffer is a partner in the law firm of Manatt and served as chair of the Appointed Charter Commission.

This article appeared in the December 19, 2008 edition of the Los Angeles Daily Journal.

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