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State Auditor Issues Individual City’s Risk Report

 

August 27, 2021

BY BRIAN HEWS

Each year, the State Auditor conducts audits 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.

The agency collects and analyzes key financial data about California cities and develops an interactive dashboard that identifies those cities that could be facing fiscal challenges.

The end result is that California residents, state and local policymakers and interested parties have a data-driven view of each of the 453 city’s fiscal health reviewed ranked from 453 to 1, with 1 being the riskiest.

The agency uses a point scale based on an overall score of 100 points and spread out over categories, including general fund reserve, debt burden, revenue trends and pension obligations.

In the wake of COVID-19 and a slow local economic recovery spurred by the State’s reopening, many cities are scrambling to get in front of impending challenges.

Hews Media Group researched cities in the area and found municipalities up and down the ranking scale.

Montebello took the “riskiest” prize in the area, ranked number 7 with 453 representing the lowest risk and 1 highest.

Long Beach’s risk went up, going from an already dismal 34 in 2019 to 23 in 2020.

Downey’s’ risk increased from 66 to 29; all three are in the bottom 10% of California cities.

Four cities improved their risk, including Maywood, from 18 to 48, climbing into the lower 20% rank; Santa Fe Springs improved, rising to 237 from 131 to reach the 50th percentile; Bellflower went from 266 to 288 to reach the 40th percentile.

Pico Rivera came in at the top 30%, ranked at 316 up from 284 last out of 453 cities.

“We are very pleased that Pico Rivera has received a “low risk” City designation in the 2020 report issued by the California State Auditor’s  Office,” Pico Rivera City Manager  Steve Carmona told HMG-CN. “The city scored well because of our liquidity and the strength of our reserve fund. Our designation is clearly a result of prudent planning and budgeting measures taken during a pandemic driven economy to ensure our residents received critical city services despite the current economic climate.”

Pico Rivera ranked the highest among its neighboring ten cities.

The only area cities higher than Pico Rivera are Lakewood (319), Hawaiian Gardens (337) Cerritos, (353) and La Mirada (397).

Pico Rivera Mayor Raul Elias told HMG-CN, “The residents of Pico Rivera determined that the financial stability and viability of the city was the number one priority of the new city council. In this time, the council has recruited new and qualified staff to implement strict budgeting, stringent cost controls and uncompromising accountability. Our plan to continue strengthening our financial condition is to diversify our revenue sources by creating public utilities such as power and broadband services for our residents and businesses.”

“I am very proud of the work conducted by our city staff in ensuring Pico Rivera received an excellent “low risk” assessment in the annual Local Government High-Risk Assessment and Audit Program conducted by the California State Auditor’s Office. The report review’s a city’s fiscal health and potential of waste, fraud, abuse, or mismanagement,” said Pico Rivera Councilmember Gustavo Camacho. “In fact, we received the highest ranking among our neighboring ten cities. What’s particularly important is that my colleagues and I managed to prioritize critical city services during the current pandemic to ensure public safety and important city services were delivered to residents while ensuring a balanced budget.”

La Mirada Mayor Ed Eng told HMG-CN, “I am honored that the city of La Mirada is being recognized for this distinction. I believe that prudent risk management is a fiduciary duty of all government leaders. Running a city is a tall order and creating a financially healthy city takes significant planning and strict conformance to the operating budget. The credit goes to the incredible city staff, who are disciplined in controlling unnecessary spending and intentional in saving for rainy day reserves so that we are in a position to weather any unexpected revenue disruptions.”

Cerritos Mayor Grace Hu commented, “The City of Cerritos is pleased to have been rated a Low Risk as it relates to the Fiscal Health of California Cities report recently released by the California State Auditor, the City takes the state of its financial health very seriously, which is evidenced by its excellent General Fund reserves and liquidity, and low debt burden.”

In other scores, cities that became riskier included Bell Gardens dropping from 93 to 56; Bell from 133 to 115; Norwalk 200 to 156; Lakewood dropped to 319 from 348.

The scores…. the lower the score, the more risk a city has:

Montebello 7

Long Beach 23,

Downey 29,

Maywood 48,

Bell Gardens 56,

Carson 71,

Bell 115,

Norwalk 146,

Commerce 207,

Santa Fe Springs 237,

Whittier 240,

La Palma 274,

Bellflower 288,

Pico Rivera 316,

Lakewood 319,

Hawaiian Gardens 337,

Cerritos 353,

La Mirada 397.

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