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California Audit: Pico Rivera Continues to Improve Its Financial Position

By Brian Hews

October 24, 2022~The California State Auditor’s Office released its 2020-21 audit review on 430 cities in the state earlier this month identifying cities that are at risk for potential of waste, fraud, abuse, mismanagement, or that have major challenges associated with their economy, or internal efficiencies.

The audit assigns a point system with an overall rank of low risk, medium risk, or high risk.

The annual report calculates financial risk scores based on a number of factors including liquidity, revenue trends, pension fund and obligations, reserves, debt burden, and post-employment obligations and rates cities from 1 (worst) to 100 (best).

Coming in last for the fifth year in a row was the City of Compton; Montebello’s ranking went the wrong way, going from seventh to fifth place.

In the area, Pico Rivera’s position continues to improve, the city receiving 84 points, up from 82 in the previous year. The improvement was primarily attributed to enhanced revenue trends, climbing from 3%annually over the last few years to 4%; increased pension plan assets, from 66% to 77% and improved General Fund reserves ratio from .88 to 1.18.

As a result of the improvements, the city came in at the top 34% of all cities, ranked at #284, topping 10 neighboring cities:  

  1. Pico Rivera 84
  2. Whittier 83
  3. Norwalk 75
  4. South Gate 75
  5. Bell             65
  6. Bell Gardens 60
  7. El Monte 57
  8. Downey 53
  9. Monterey Pk. 53
  10. Montebello 42

 Categories logging in at moderate-risk included Revenue Growth and Debt Burden. Revenue Growth is exactly that; it measures the volatility of the city’s revenues and its ability to respond to economic changes and pay rising costs of services.

The city showed a .32 increase, 27% improvement, in its debt ratio-Debt Burden-but remained moderate per the state’s criteria.

“We were extremely excited over the report from the State Auditor’s office on the riskiest cities found the City of Pico Rivera continues to improve its rating, as demonstrated by the total number of points received in the report,” said Steve Carmona, Pico Rivera City Manager. “The rating is primarily attributed to the continuing improvement of our General Fund reserve, investment liquidity, healthy revenue growth, and continuing contribution to the trust account for unfunded needs. I want to acknowledge my dedicated staff who were determined to ensure we continue to do the work necessary to maintain our position as the least risky city in our area and one of the least risky cities in California.”

Pico Rivera Mayor Dr. Monica Sanchez said,.“I am particularly proud of the results of a recent report from the California State Auditor’s Office that places Pico Rivera among the lowest-risk cities in California based on our liquidity and our reserves’ strength. Our position is the direct result of our dedicated city manager and staff who worked hard to ensure we maintained best practices in prudent budgeting, providing quality services to our residents, and ensuring transparency in government throughout the entire year. They have done a stellar job and for that, the city owes them a debt of gratitude.”

 

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