To the Editor: Open letter to City Council

I reviewed the draft FY19 Ridgecrest budget prior to the 14 May Finance Committee meeting. I hope my comments below will be useful to you at the May30 budget review workshop.

1) The city hired a finance consultant to develop a new methodology for calculating administrative overhead transfers. The draft FY19 budget does not include the calculations for the adopted methodology. Historically, admin transfers have been a major source of abuse of the enterprise funds and the road fund. The budget documentation must be complete, clear and equitable.

2) The finance consultant also developed a new methodology for the risk-management overhead transfers. The draft FY19 budget does not include the calculations for this new methodology. These transfers have also been a major source of abuse of the enterprise funds and the road fund. This budget documentation must also be complete, clear and equitable.

3) The consultant who generated the above methodologies was hired originally to correct the misappropriation of funds that occurred in 2016. Hundreds of thousands of dollars were inappropriately transferred between funds. The consultant’s final report containing the proposed corrective action has now slipped until August. The council must be prepared to do a budget amendment when the report is delivered.

4) The draft FY19 budget does not include the methodology for calculating the vehicle maintenance ISF transfers. This has been a problem for many, many years. The methodology needs to be based upon known vehicle maintenances data and then used consistently across the various funds. The methodology needs to be equitable to all funds, and the budget documentation must be complete and clear.

5) The draft FY19 budget has raised the workers compensation fees to meet the expected FY19 payout. However, the fee increase is not sufficient to compensate the risk management fund for the last five years of undercollecting workers compensation fees and then using the risk management gund to subsidize the workers compensation costs. These different costs should not be comingled. We need a plan to compensate the risk management fund for past comingling.

6) The FY19 proposed budget contains a column that is the FY18 year-end estimate, which has not been included in the budget status for many years. This is hopefully an indication that the three-quarters of a million dollars spent on a new finance system will actually be of benefit. Addition of anther column that is the expected ‘rollover” would be an additional benefit.

7) Last, but not least, the council needs to seize control of the Measure L/V expenditures and use them for their intended purposes, police and roads, or provide the public a thorough explanation for why they are being used the way they currently are.

Items 1 through 5 are crucial to reestablishing the integrity of our financial system. FY16 saw a complete failure of our system.

We not only need to implement well-documented overhead, vehicle ISF, and workers compensation strategies, but also need to implement internal financial controls that ensure that we never repeat the failures of FY16.

Stan Rajtora

Story First Published: 2018-05-25