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California State Auditor Report Number : 2015-806

City of Hemet
Its Ongoing Budget Deficit and Organizational Inefficiency Threaten Its Financial Stability and Delivery of Public Services

August 4, 2016 2015-806

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As approved by the Joint Legislative Audit Committee, the California State Auditor presents the results of our audit of the city of Hemet (Hemet), conducted as part of our high-risk local government agency audit program.

This report concludes that Hemet is a high‑risk city due to its financial and organizational risks. Specifically, Hemet’s budget deficit has persisted for many years and our projection indicates that it will continue through at least fiscal year 2019-20, raising concerns about the city’s ability to fund its services. Although the city developed a five-year plan to address its deficit, inaccurate information and overly optimistic assumptions distort the validity of the city’s projection. In addition, we identified inefficiencies in the city’s management. For example, Hemet has not adequately funded its fire department resulting in minimal staffing. The low staffing level combined with high demand for services results in potentially unsafe conditions. Further, the city lacks a coordinated approach to community engagement, and interrelated functions of city government do not have shared reporting relationships. To address these concerns, we present several recommendations, such as implementing a fee for services that the city currently provides but does not charge for as a way to generate additional revenues and outsourcing its parks maintenance to reduce costs. We also recommend changing the city’s organizational structure, such as assigning its code enforcement division to report to the police or fire department to better address the city’s high crime rate.

Respectfully submitted,

State Auditor

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