November 29, 2016 2016-111

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 requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the city of Irwindale’s (Irwindale) finances and governance structure.

This report concludes that Irwindale must exercise more fiscal responsibility over its spending so that it can continue to provide core services to its residents. From fiscal years 2011–12 through 2015–16, the city experienced deficits as high as $5.3 million. These significant deficits forced the city to rely on its reserves to maintain services. Although the city has made limited efforts to control costs, it continues to overspend because it has not developed a long-term financial plan, adjusted some of the benefits it provides to its residents, or adequately evaluated its use of police overtime. Specifically, Irwindale provides its employees with generous health and retirement benefits, in addition to competitive salaries. Also, Irwindale has spent almost $1 million annually to provide generous prescription drug and vision benefits to its residents. Further, the city spends, on average, $525,000 per year on police department overtime.

In addition, Irwindale’s Housing Authority (Housing Authority) has made some decisions that undermine its housing programs. Specifically, the Housing Authority has forgiven completely $9.1 million in loans to low-income residents, and it plans to forgive another $10.2 million. This practice may leave limited funding available to sustain future housing programs. Finally, the Housing Authority gives an unfair advantage in its housing programs to residents who have lived in the city for 15 years or longer, which limits opportunities for other residents to participate in these programs.

Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor