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A $761,600 agreement has ballooned into a $41 million pact, and that has a prominent service employees union asking questions.
In October 2015, Riverside County hired a global accounting firm to help it analyze how the county was spending money on public safety.
At the time, its contract with KPMG LLC was worth $761,600.
The company, one of the largest and best-known of its kind in the world, was charged with sorting out how much cities and unincorporated communities pay Riverside County for police protection, and whether a more efficient system could be worked out.
In a 103-page report that focused on four departments – sheriff, probation, district attorney and public defender – KPMG came up with 51 ways the county could provide law enforcement services more economically.
So far, nothing unusual. Municipal governments routinely hire consulting firms to help them fine-tune policies, especially regarding spending, and $761,600 wasn’t excessive considering the breadth of the information KPMG was providing.
Riverside County spends about $850 million a year on law enforcement, or 18 percent of its annual $5.2 billion budget, according to KPMG.
But county officials weren’t finished with KPMG.
In the spring of 2016, the contract was expanded to $15.7 million so that those recommendations could be implemented. Then, another $2.7 million was added to the contract so that KPMG could find ways to save money in safety departments that did not involve members of the public.
Last July, the board of supervisors added another two years to KPMG’s contract, which is scheduled to expire in June 2019. That extension, worth $20.3 million, is part of major revamping of the county government so that services at all levels, not only public safety, are delivered more efficiently.
There’s no doubt that Riverside County, with its 22,500-plus public employees, must be more fiscally prudent. It’s dealing with multiple financial issues, starting with paying higher pension costs mandated by the California Public Employees Retirement System, a problem confronting many California cities.
The county’s contract with KPMG is now worth $41 million, a significant leap from the original $761,600 three years ago. What’s more, not one of those increases was the result of competitive bidding, but by amendments to the original agreement approved by the board of supervisors.
All of that has caused some to question how serious the county is about being fiscally responsible, and whether expanding the original contract beyond an assessment of county law enforcement was legal.
“If they had announced that the contract was going to get that big, every consulting firm in the country would have bid on it,” said Ryan Hudson, research and policy analyst with the Service Employees International Union Local 721 in Los Angeles, “But no one had any idea the contract was going to be amended like that because that information was never made public.”
Because it represents approximately 7,200 Riverside County employees, the service employees union has taken an interest in the KPMG contract.
That agreement is the equivalent of a 6.3 percent wage increase for union members, Hudson told a gathering of about 70 people at a news conference May 18 at the Cesar Chavez Community Center in Riverside.
He also noted that the county has reported no cost savings as a result of the KPMG contract, and that of the five bids originally submitted – the others ranged from $230,000 to $300,000 – KPMG’s was ranked fourth by a five-member evaluation team.
“Since when is the fourth-best offer the one you decide to go with?,” said Hudson, who undertook a detailed analysis of the KPMG contract and how it was adopted.
Riverside County and the service employees union have for years had a difficult relationship – one study called it “tumultuous” – so county officials hired attorney Ed Zappia to negotiate with the union.
In April, Zappia’s Huntington Beach firm put together a report regarding the latest contract dispute between the county and the service employees union – a disagreement that had nothing to do with KPMG – which noted that Riverside County pays SEIU employees about $517 million per year in salary compensation.
Counting benefits and other incentives, SEIU members who work for Riverside County receive an average yearly compensation of more than $106,000 a year, double the average yearly of Riverside County residents.
That’s nearly 20 percent more than SEIU employees are paid annually in San Bernardino, Orange, Los Angeles, San Diego and Ventura counties, the report stated.
During the collective bargaining agreement between the union and the county that was in place from 2012 to 2016, union members received “staggering” pay increases of 43 percent to 49 percent, according to the report.
Zappia could not be reached for further comment.
Several supervisors, including outgoing board member John Tavaglione, have defended the KPMG contract, saying it has saved the county money and that it’s a good deal in the long run.
In the meantime, the SEIU will continue to cite the agreement as a sign of the county’s poor fiscal management.
“There are a lot of places where that money could be put to better use,” Hudson said.
