Regulations Process (flowchart) Local Entities Reports

Local Government High Risk

The California Government Code section 8546.10, authorizes the state auditor to establish a high risk local government agency audit program (local high risk) to identify local government agencies that are at high risk for the potential of waste, fraud, abuse, or mismanagement, or that have major challenges associated with their economy, efficiency, or effectiveness. Regulations that define high risk and describe the workings of the local high risk program became effective July 1, 2015. Both statute and regulations indicate that the state auditor must seek approval from the Joint Legislative Audit Committee (audit committee) to conduct high-risk audits of local entities.

California Cities

Special Districts

The graphic below provides some information regarding the nature of our concerns and those local entities where we may plan to perform additional work or request approval from the audit committee to perform an audit.

Status: Monitor

Chico

Risk Indicators

  • Exhausted its Emergency Fund
  • Spent More Than It Earned For Six Years
  • Its Five-Year Forecast Was Bleak

Recent Action Taken

  • Established New Budget Policies & Reorganized Structure
  • Implemented Multi-Year Plan To Eliminate Deficit and Re-Build Reserves
  • In FY 2014-15, Contributed $3.4 Million Towards Remaining Deficit

Status: Audit Completed

Hemet

  • Auditor Raises Concerns in Initial Analysis: August 2015
  • Audit Requested and Approved: January 2016
  • Audit Completed: August 2016
  • City Submits Corrective Action Plan: August 30, 2016
  • Response to Corrective Action Plan: September 2016

Status: Audit Completed

Maywood

  • Auditor Raises Concerns in Initial Analysis: August 2015
    • ✓ General Fund Deficits
    • ✓ Significant Unfunded Obligations
    • ✓ Weak Financial & Reporting Processes
    • ✓ Weaknesses in Overseeing Finances
  • Audit Requested and Approved: January 2016
  • Audit Completed: August 2016
  • City Submits Corrective Action Plan: January 2017
  • Response to Corrective Action Plan: May 2017

Status: Monitor

Monrovia

Risk Indicators

  • Substantial Overtime Costs for Public Safety
  • Control Breakdowns In Budgeting and Managing Grants Resulted in Funding Shortages
  • Significant Pension Costs Projected

Recent Action Taken

  • Recently Hired New Staff to Mitigate Some Risk Factors
  • Revised Processes to Better Track and Monitor Grants and Contracts

Status: Monitor

Richmond

Risk Indicators

  • Budget Deficits
  • Changes in Primary Revenue Sources
  • High Level of Overtime Usage (Fire and Police Departments)
  • Substantial Unfunded Pension and Other Postemployment Retirement Benefit Liabilities

Recent Action Taken

  • Achieved a Budget Surplus Through Mid FY 2015-16
  • Working on a Plan to Improve Its Financial Stability

Status: Monitor

Ridgecrest

Risk Indicators

  • Operating With a General Fund Deficit For Three Years
  • City Declared Fiscal Emergency in 2012
  • Its Five-Year Forecast Was Bleak

Recent Action Taken

  • General Fund Showing Signs of Improvement
  • Revenue Growth Due to Voter-Approved Increase in Sales Tax
  • Entered Into Agreements to Promote City & Attract Business

Status: Monitor

Novato Fire Protection District

Risk Indicators

  • Insufficient Oversight of Funds
  • High Levels of Overtime Pay

Recent Action Taken

  • Reducing Non-pay Compensation
  • Increasing Board Oversight
  • Implementing Tighter Controls Over Purchasing

Status: Assessment Complete—
No Further Monitoring

Peninsula Health Care District

Risk Indicators

  • High Reserves
  • High Compensation
  • Weak Oversight

Assessment Conclusions

  • Transparency of District Operations
  • Reasonable District Funding
  • High Reserve Necessary
  • Comparable Compensation

Status: Monitor

Western Hills Water District

Risk Indicators

  • Insufficient Revenues to Fund Operations
  • Contaminants in Drinking Water

Recent Action Taken

  • Continues to Operate Under Agreement with Community Developer—District can continue to function and developer assumes financial risk for ongoing deficits
  • Installing Equipment to Reduce Contaminants in Drinking Water
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