On Oct. 15, the Our Town column “County grand jury gives Santa Monica a big fat ‘D’” discussed the grand jury’s ranking of Santa Monica as a result of a county-wide survey of cities’ practices. Unfortunately, the grand jury should get an “F” for follow up.
In 2012, City Hall completed an extensive survey issued by the grand jury to all 25 charter cities in the county. In August and November, 2012, City Hall sent them additional information, including supporting documents that City Hall was indeed following the recommended best practices. A year later, the jury issued a revised report of all 88 cities in L.A. County. That report failed to acknowledge any of our responses to the report, even those items where we provided links to where the information was posted online. The 2013 report represents a lapse in the jury’s due diligence needed to ensure that the community receives fair, accurate reporting of your local government’s management.
Santa Monica has a long, proud history of good government, fiscal responsibility, and progressive policies. Over the past several years Santa Monica has:
• Maintained its AAA bond rating;
• Increased its financial reserves to 15 percent, established a $9.7 million Economic Uncertainty Reserve, and currently maintains total reserves of 18 percent;
• Received the Government Financial Officers Association (GFOA) Certificate of Excellence in Financial Reporting for the past 29 years, most recently on Oct. 10, 2013;
• Santa Monica employees have contributed toward their pensions since they were increased in 2007, and currently pay up to 9.2 percent of salary toward retirement;
• Paid down retirement unfunded liability using savings, lowering retirement cost by $1.6 million per year;
• Increased employee contributions to healthcare over the past four years;
• Lowered retirement benefits for new employees even before the state passed the pension reform bill;
• Achieved a 5 percent General Fund budget decrease in the 2013-15 biennial budget.
Within this context, city staff was surprised and dismayed by the report that was the subject of the Our Town column.
The report contained numerous incorrect findings about Santa Monica that we sought to correct by providing the jury documentation and proof of our practices in August 2013. Seven out of the 10 findings in the report are incorrect, and we sought to correct them on three separate occasions in letters to the jury. These include proof that:
• City Hall has adopted financial planning revenue and expenditure policies to guide the development of balanced budgets;
• City Hall does develop balanced budgets;
• City Hall does not use one-time revenues to fund ongoing expenditures;
• City Hall has adopted methods of saving into a reserve or rainy day fund. In fact, we recently amended our rainy day reserve policy to increase the reserve from 10 percent to 15 percent of the operating budget. In addition, City Hall maintains $9.7 million in economic uncertainty funds;
• City Hall does have a policy requiring financial policies to be reviewed annually.
Additionally, the ranking the column refers to also misstates the city’s policies. In eight of the 12 instances where it appears that City Hall is not following best practices, City Hall has a strong set of internal policies and practices that are adhered to regarding fraud assessment and investigation and internal, as well as external, controls and auditing. The jury’s interpretation of best practices strictly relies on formalized, codified policies and procedures, thereby resulting in City Hall appearing to not follow these procedures when, in fact, we do.
These findings were made despite staff providing the actual policies and backup documentation to the jury and detailing our adherence to balanced budgeting practices and policies. Further explanation and copies of the reports and responses can be found at www.smgov.net.
City Manager, Santa Monica