The Board of Directors for the San Diego Association of Governments (SANDAG) will be convening on the morning of Friday, August 4 to hear results from an investigation by the law firm Hueston Hennigan into reports published in Voice of San Diego concerning misrepresentations about revenue forecasts used to promote ballot measures.
SANDAG is the forum for regional decision-making and the primary public planning, transportation, and research agency for all of the county. Last year the agency failed to pass a tax increase designed to fund projects for decades to come. Questions about its policies, leadership, and staff now stand in the way of progress for the region.
The report, commissioned by the SANDAG board as an independent inquiry, confirms allegations that employees of the agency knew there was a problem and attempted to communicate unsuccessfully with higher-ups selling the public on a proposed ballot measure.
Unfortunately, the scope of the inquiry did not include the agency’s failure to disclose cost increases on existing projects. I suspect there are additional skeletons in those closets.
What we didn’t know prior to this report was the extent to which management at SANDAG went to keep information from the press and the public.
Following a records request for emails concerning revenue projections from VOSD, the staff was told to delete documents. An unsearchable server –in terms of public records requests–was designated as the repository for documents created while researching the causes of the forecasting scandal.
Graphic from SANDAG in support of Measure A – Unfortunately, the agency couldn’t accurately project how those half-cents would add up once collected.
At the root of the erroneous financial projections made by the agency was a data-entry error made in 2004 and never corrected. This mistake means there will be (and is) a shortfall amounting to billions of dollars for transportation and infrastructure projects.
We now know a portion of SANDAG’s 2016’s Measure A projected sales tax revenue was to be used to backfill shortfalls arising in monies collected from 2004’s TransNet taxes. We know–as many suspected during last fall’s campaign–the reasoning behind the loosely worded promises made about projects to be undertaken.
While the coverup is dominating local media coverage of the investigation, a closer reading of the report reveals stunning deficiencies in how data was handled, going back more than a decade.
The computer based modeling program, known as DEFM, used by SANDAG dated from the 1970’s and was used until earlier this year.
Using more than 700 demographic and economic variables, such as population, housing, and labor force projections, along with forecasts of future rates of income and taxable retail sales, this program was the basis for the numbers used in updates of the legally mandated regional growth forecast for SANDAG’s Regional Transportation Plan.
From the report (emphasis mine):
Each time SANDAG updates DEFM for a new regional growth forecast, the update is referred to as a new “Series.” Series 13—the thirteenth DEFM update—was produced for the most recent RTP, which the Board adopted on October 9, 2015. SANDAG uses these Series to conduct a variety of forecasts, including the revenue forecasts for TransNet and Measure A. But although SANDAG updated the DEFM forecast roughly every four years, the actual DEFM computer program has only received a handful of updates since the 1970s, most recently in 2003. At this point, SANDAG no longer uses DEFM and is developing a forecasting model to replace it.
In terms of technological advances, that’s like saying you’re still using a desktop calculator to do your company payroll in 2016.
Image of 1970s computer operator via University of Windsor
To make matters worse, two senior SANDAG employees who retired in 2006 repeatedly warned management of the computer program’s ever increasing shortcomings. The company responsible for creating the software, Regional Economic Research, Inc, was sold and no longer updating the program.
Over the past decade, the forecasts produced using this program were managed by an ever-changing and undersized staff. Attempts at cross-checking data for quality control were diminished, allowing the original inputting errors to continue to generate inflated numbers.
By 2012, the employee managing the regional growth forecast was living in Florida while simultaneously teaching college. She quit in 2013, warning upper management during her exit interview of the staffing and quality control issues.
Management, according to the report, should have known there was a problem, as employees repeatedly brought matters to their attention. Executive Director Gary Gallegos didn’t remember being informed of various problems. Chief Economist Marney Cox said he didn’t agree and/or wasn’t informed until later.
Cox had a very long tenure at SANDAG, and witnesses frequently described him as possessing a great deal of influence over staff and other executives. In particular, a number of witnesses commented that Gallegos relied heavily on Cox’s opinion, and would often listen to him over others. In addition, a number of witnesses described Cox as having been closely involved with the early development of DEFM, and said he couldn’t accept criticism of the model. But while Cox had run DEFM through the 1980s, he had become increasingly less involved with it over the years.
The SANDAG report is 41 pages long with an additional 130+ pages of documentation. It provides a more-than-balanced narrative of what happened, i.e., he said/she said/they rebutted. Despite all the posturing to be ‘fair,’ it becomes clear the agency has a huge management problem.
Here’s the bottom line: heads must roll at SANDAG. The report, combined with Voice of San Diego’s reporting and the egregious behavior of the board responding to previous disclosures, leaves no doubt in my mind about what needs to be done.
How bad is it? Consider this snip from Andy Kopps VOSD op-ed, published on Monday:
Last Friday, the board was set to discuss a counter ballot proposal, a “self-reform” measure, as an attempt to undermine or stop AB 805, the SANDAG reform bill written by Assemblywoman Lorena Gonzalez Fletcher. The bill – which I support – is designed to remake the board’s voting structure more equal across the county’s populations, and instill stronger public accountability measures.
Many board members are against it. In the face of overwhelming reporting on these issues, La Mesa Councilwoman Kristine Alessio still said that she hasn’t seen enough evidence of wrongdoing to make any judgements. National City Mayor Ron Morrison questioned the notion of journalism itself, and alluded to VOSD’s reports as something akin to fake news. El Cajon Mayor Bill Wells told Gonzalez Fletcher directly that he was against AB 805 because he was determined to fight against communism.
Union members at Earth Fair in support of AB 805 via IBEW Twitter
Although Assemblywoman Lorena Gonzalez’ bill has broad public support, behind the scenes there is plenty of scheming aimed at preserving the status quo.
The building contractors who most benefitted from SANDAG’s largesse over the years are hoping to use their lobbying power to convince Gov. Brown to veto the legislation.
They see a baked-in pro-labor bias because of language specifying contracts over $1,000,000 “will use a skilled and trained workforce to perform all work on the project or a contract that falls within an apprenticeship occupation in the building and construction trades.”
Is it really so shocking that a bill from Assm. Gonzalez, the former Secretary of the San Diego and Imperial Counties Labor Council, gives a nod toward organized labor?
It must be so because other folks are saying the language was inserted as a trade for union support for husband Nathan Fletcher’s campaign for County Supervisor.
This is–pardon my language–horseshit. This is reminiscent of the “but what about Hillary’s emails?” deflection used by certain Bernie-Bots and Trump apologists alike.
The legislature returns to Sacramento in late August. Let’s make sure AB 805 gets done.
The slogan #SanDiegoCanWait may be okay for soccer city fans, but it’s way past time to fix SANDAG and the kind of institutional turgidity it represents.
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Doug Porter
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Mr Porter:
you note that “the root of the erroneous financial projections made by the agency was a data-entry error made in 2004 and never corrected.” and you again refer to “the original inputting errors … continue to generate inflated numbers.”
but what was the nature of the erroneous data?
“In 2004, SANDAG staff incorrectly inputted third-party data into DEFM, which caused it to forecast an inflated growth rate for regional income. This inflated regional income forecast led, in turn, to an inflated projection for taxable retail sales in the region.”
vague as vague could be. one wonders why the error wasn’t simply corrected when the data entry was checked. the data entry WAS reviewed, wasn’t it?
malfeasance on top of incompetence.
In San Diego any project to develop housing and roads built to service them is a closed-door operation. Civic San Diego was one of them, a non-governmental board of which 8 members were chosen by the mayor’s office and one by City Council, a reality about as democratic as Trump’s tweets. Now we’re hearing that county-wide SANDAG is using 13-year-old computer programs that produce income shortfalls and the best the Mayors of National City and El Cajon can say is that they’re against Lorena Gonzalez’ bill, AB805, because they’re fighting communism or don’t believe in journalism. Are they running for President after they get through bankrupting government here?
A few years ago Gallegos was saying SANDAG couldn’t release the algorithms and data underlying their projections because the public wouldn’t understand them. When people called this out as BS, Gallegos claimed the software was proprietary. Turns out that was BS too.
Heads indeed must roll at SANDAG, but more important is the need to make it more democratic by structuring its board to provide more equal representation of the larger cities. The dinky suburban “cities” are always going to be pro-concrete/anti-transit, just as Caltrans alumnus Gallegos has always favored the automobiles-first solutions to every problem.
So maybe this scandal will result in a good outcome. Here’s hoping!
I was at the SANDAG meeting. SANDAG has a structure that empowers peripheral small communities at the representational expense of the central popululation centers, resulting in their neglect. Each person in Del Mar has a voteequal to 65-70 in San Diego or Chula Vista. So, the root of the problems are NEVER addressed. The root is that developers and labor are always going to want to expand the periphery by scraping off hillsides and building single family homes, creating ever expanding feeder routes for overcrowded freeways. At the same time, no one in the urban center can get anywhere on public transit, let alone anyone else trying to get to work elsewhere. There is a need for a change of paradigm. SB 805 is a good start.
It isn’t that surprising that the development community seems to have the process wired in their favor and they massage numbers to get their way. They got caught. Now what happens? Here in San Diego? Probably nothing. These folks have had their way with us for decades and don’t appear to have had an awakening that will change things, in fact they appear to just say no and then hope the doubters will go away. At the end of the day, there is no accountability and even less accurate information provided for us to make decisions. Sounds like more than bad policy. Sounds illegal. Does someone need to do the “perp” walk?