September 2004 · Volume 86 · Number 8

How to Benchmark With Easily Available Resources: Ensure That You’re Comparing Apples to Apples
by Daniel Hobbs
Three years ago, the new mayor asked me, as city manager, to come in and help him turn our huge aircraft carrier, city hall, around and move Fresno, California, in the right direction. Management colleagues cautioned me that Fresno was a complicated, adversarial, and political community. Here are some of my initial observations:
•	There had been several years of political civil war between the previous mayor and city council. Decisions were based on ideology and, even worse, personalities. At one point, the council removed the redevelopment agency from the administration and set up its own RDA, with the executive director reporting only to the council. 
•	The city’s financial management was a mess. Major mistakes and hidden problems totaling millions of dollars from the previous administration cropped up in the preparation of the mayor’s first-year budget. 
•	The so-called personnel system reflected a routinized, clerically administrative system of pushing paper. There was no formal organizational training unit and no plan for attracting top talent or paying attention to diversity. This is not a criticism of the people involved. There simply was not enough staff, and there was no perspective on what was needed to deliver the personnel function for a modern city. 
•	The city’s executive corps was hunkered down and paralyzed. For them, living with the friction between the mayor and council was the equivalent of children caught between two warring parents. No initiatives were undertaken. The sense was “Just keep your head down, and don’t attract attention.” 
•	A report commissioned by the council and released during the first months after my arrival stated, among other things: “We further determined that after years of downsizing and curtailed investments in training among the departments included in our review, the city’s workforce is not appropriately constituted to meet current and emerging taxpayer needs.” 
After 90 days on the job, I came to the conclusion that Fresno was indeed complicated and asked myself, “What is going on here?”
First Steps
I designed a schematic to understand the various factors at play. I came up with a force-field analysis (see Figure 2). What has continued to amaze me nearly three years later is the accuracy of this initial analysis. What I especially liked about it was its nonpersonal nature.
It was clear that we had inherited a situation generated by a number of people, issues, and attitudes, both inside and outside the government, over a number of years. The best quotation to cover the situation is at the bottom of the diagram: “We have met the enemy…and he is us.”
Basically, I concluded that we were in a struggle for the soul of city hall—a struggle for reform, for change, for moving the city forward—versus those opposing forces who wished for things to remain the same. These status quo forces represented established political interests, vested special interests, and the same old political foolishness. This struggle, of course, created the tension that is represented by the vertical change line in the middle of the diagram.
At the time the schematic was prepared, the forces for the status quo were stronger than the forces for reform. Today, I believe that the forces for reform have pushed back and put the status quo on the defensive.
We have had some experiences that qualify as watershed events. Collectively, these events proclaim that we are turning this aircraft carrier around and that we also are moving the community in the right direction:
•	The city has adopted a 2025 General Plan that creates the future vision for Fresno through setting limits to urban sprawl and presents a model for “smart growth.” 
•	The mayor has reconnected Fresno with the federal and state governments. He has established personal relationships with President Bush and Governor Schwarzenegger. He also sits on the board of directors of the League of California Cities and the advisory board of the U.S. Conference of Mayors. 
•	The city secured the Federal Empowerment Zone designation at a time in 2002 when there were only seven new empowerment zones in the country. 
•	The city’s executive corps was overhauled. Seventeen of 22 top executives were replaced in 18 months. There has been no political litmus test for new hires. The world-renowned Pacific Institute has been retained to conduct high-performance training for the organization. 
•	Fresno executed a contract for private sector management of the city’s convention-center facilities for the purpose of reducing its $6 million annual subsidy. This is a recognition of a new day that requires managed competition. 
•	The city signed on as cocreator of Operation Clean Air, a voluntary San Joaquin Valley cooperative effort to clean the air without sacrificing jobs. 
•	The city championed the founding of the Regional Jobs Initiative, a joint venture representing 281 public and private sector executives committed to generating 30,000 new jobs in five years. 
•	Financial management is strong. The city has a 5 percent reserve for its general fund, and this year’s budget required departments to find efficiencies or make cuts of $13.6 million. 

Most managers will recognize the various factors noted in the force-field analysis. Two of the strongest tools we used in our reform are fact finding and fact-based decision making—the power of facts and logic, and the power of good business practices. This led us to a factual comparison of how our city does compared with other cities, so that we can understand more clearly exactly what we have on our hands and where we need to make additional change.
Anyone who has been involved with local government management knows that sooner or later you will have to respond to elected officials, the public, or the press with some sort of benchmark or comparison and explain why you aren’t doing as well, or why you are spending more than these other cities or counties.
You may find yourself trying to explain why this is not an “apples to apples” comparison, why the data are taken out of context, or some other clarification. You may have wanted to do your own benchmarking but couldn’t justify hiring a consultant to do the work, or simply wished you had some reliable data you could use to find out how your city or county stacked up compared with others.
In some communities like Fresno, which has grown phenomenally in recent years, there seems to be an imprinted image of a city that does not at all resemble the city you are now trying to manage. In Fresno, as recently as 2003, the divisiveness and distrust were such that arguments were frequently held over issues that in other cities would have been considered “facts.” Was Fresno a high-tax city, as was frequently asserted? Was the police department dramatically underfunded compared with other places, as was generally believed? Weren’t our fees already too high, and wasn’t our overhead excessive? Didn’t everyone know that?
Even this small step of limiting our peer city comparisons to California cities could have been controversial, except for the active involvement and leadership of the mayor’s council of economic advisors, who oversaw every step of the study and approved in advance the approach to be taken.
In such a divisive atmosphere, where distrust was rampant and “facts” were disputed, it became imperative that we find a way to objectively and inexpensively review where we were as a city and to do an honest, “let the chips fall where they may” comparison of the entire budget with the budgets of our peer cities. After a few months, using existing staff and a loaned executive from the private sector, we were able to produce a Peer City Benchmarking Report entitled Meeting the Challenge, which literally changed the dialogue in Fresno. Sounds simple, but a number of hurdles had to be jumped to get the desired result.
Peer City Selection
The first hurdle was to decide who our peer cities were. Because we also wanted to compare Fresno, the 37th-largest city in the United States, to some of the best-run cities, we naturally looked beyond the borders of California. And that was our first problem. It turns out that it is extremely difficult to compare cities from different states, or at least a California city with non-California cities, given the differing state constitutions and legal authority and financing mechanisms of those cities.
We decided to limit our peer city review to other California cities, picking 10 cities ranging in population from 243,000 to 1,223,000, with a median population of 399,000, which is close to Fresno’s 2000 population of 427,652. (Cities selected and key statistics are shown in Figure 1.)
Even this small step of limiting our peer city comparisons to California cities could have been controversial, except for the active involvement and leadership of the mayor’s council of economic advisors, who oversaw every step of the study and approved in advance the approach to be taken.
There was some interest in comparing Fresno with smaller cities nearby, but the largest was still under 80,000 in population, and it quickly became apparent that the comparisons would not be meaningful. This was one of the first breakthroughs in the effort: an agreement that our true “peers” were cities that were roughly our size (or that had been our size or that may grow to our size in the coming years). Peer selection is critical to the success of the benchmarking approach we recommend.
Key Data Sources
Another key early decision was to rely exclusively on published data that could be verified independently by anyone. This choice was critical for two reasons: 1) with the low levels of trust then in Fresno, it was important that the sources of the data be beyond suspicion; and 2) we didn’t have the time and staff to do intensive interviews with different cities, dig into their records, and then fact-check this research, even if these peer cities would have had the time to respond.
The main data used to decide peer cities came from the 2000 census. In some instances, we compared this data with later census data but found that the comparison did not materially change the report and instead relied on the 2000 data.
The other published data we routinely used were budgets published by the respective peer cities, the audited and published Comprehensive Audited Financial Reports (CAFRs), and state financial reports of the activities of all jurisdictions in California, available from the state controller’s office. We were pleased that in most instances the findings using one data source were consistent with those using another report, at least in terms of relative rankings of different cities, even though the numbers themselves did not always reconcile.

The Key to Ensuring Fair Comparisons
The other key decision made in the study design was to use per capita data to compare information gathered from these various data sources. When annual budget data were taken from cities with different populations, we simply divided by the population of each jurisdiction, allowing a true “apples to apples” comparison. We similarly compared full-time equivalents (FTEs) in different departments and in different cities and converted these to per capita comparison charts, too.
The findings. For many in Fresno, the findings were truly surprising. We saw, for the first time, that Fresno stood out as one of the leanest city governments in the state, spending less per capita than any of our peers on everything but police services, and that we had the lowest taxes collected per capita. In contrast to police services, we saw that we spent the least per capita on our fire services of any of our peers. We also found that our fees were below the median.
We were high in a few areas, such as the highest unemployment (in fact, the census data show our unemployment as the highest of any city over 100,000 population in the country). The mayor’s council of economic advisors, skeptical of the state of the city when the process began, became the messenger to the public about these issues and helped draft an action plan to deal with long-neglected problems.
Results to date. Since the Meeting the Challenge report was issued on January 1, 2003, Fresno has largely corrected its fee structure to move closer to full cost recovery for services that do not directly affect children and seniors. A major review of new revenue sources is under way, and resource requirements have now been identified through the process of carrying out a newly adopted general plan.
A public safety master plan, developed in parallel with the new general plan, identifies what the police and fire departments believe they will need during the next 25 years. A new, independent public safety commission is being appointed to review these reports and the assumptions that went into them. Peer reviews of other police and fire departments are among the keys to this review.
And perhaps most important, the double-digit unemployment rate, which has been largely ignored and tolerated for the past two decades (when it first appeared in Fresno), now is the number-one community-wide priority under the umbrella of the Regional Jobs Initiative (RJI).
The RJI is a public/private partnership and a multijurisdictional governmental collaborative effort to cut unemployment in half within five years. It has received support from the highest levels of the federal government and expects to get similar support from California’s new governor.
Conclusion
It was a bit risky to do a comparison of Fresno with our peers because we really didn’t know what it would show. While the results were surprising and the problems identified daunting, we now have in place a set of steps to address what was previously ignored or denied.
We may not succeed in correcting all of the decades of accumulated problems, but we know that we now are in the thick of things doing our level best to leave Fresno a much better place than it was when we began working here.
Daniel Hobbs is city manager, Fresno, California (daniel.hobbs@fresno.gov). He was assisted with the article’s preparation by Timothy Lynch, special assistant to the finance director, Fresno.