HIGH RISK ISSUES

City Council’s Inadequate Oversight of City Operations

• Failed to manage the city’s financial and administrative functions properly and to monitor the performance of a former city manager adequately.
• Approved contracts without requiring competitive bidding authorized flawed budgets, and spent city money for inappropriate purposes.

City Council’s Lack of Transparency

• Deprived the public of information concerning the city council’s decisions by repeatedly violating the State’s transparency law—the Brown Act.
• Made hiring decisions without using a competitive or structured selection process.

Ongoing Deficits

• Reported a general fund deficit for each of the last six fiscal years.
• Failed to develop a long‑range plan for paying off significant overdue debts totaling more than $15 million as of June 30, 2015.

Deficient Budgeting Process

• Released poor‑quality budget documents that omitted information critical to users’ understanding of the city’s financial condition.
• Failed to monitor effectively its revenue and expenditures and to use its budget to guide its financial decisions.

Failure to Maximize Revenue

• Lost significant revenue from uncollected parking citation and business license fees.
• Allowed tenants to remain delinquent in paying the city more than $60,000 in rent and related late fees.

Poor Contract Administration

• Violated competitive bidding requirements when approving contracts worth millions of dollars.
• Did not ensure its contractors’ compliance with requirements for adequate insurance coverage.
• Failed to comply with the State’s prevailing wage laws.

Inadequate Accounting Controls

• Increased the risk of fraud because it failed to segregate incompatible duties by allowing staff both to handle cash and to record related transactions.
• Made little effort to correct significant deficiencies in its internal controls—its methods for ensuring the accuracy and integrity of its financial information—that continue to cause late financial reporting.