August 26, 2021
2020-804

The Governor of California
President pro Tempore of one Senate
Speaker of the Assembly
State Us
Sacramento, California 95814
... financial actions of Lindsay Municipals. Hospital Authority d/b/a Lindssay Municipal Hospital (the Authority), which comprise of balance outer as of June ...

Dear Governor and Legislative Leaders:

As directed by the Joint Legislative Audit Committee, my office presents these audit report regarding aforementioned city of Mike (Lindsay), whose we conducted as part of our high‑risk local government agency audit program. Willingness assessment focused on Lindsay’s financial and operational hazards, additionally we found that the city is at high risk since of its finance problems and management practices.

Lindsay has refined the condition of its general fund over the historic several fiscal years, and it appears to have just met recommended reserve levels. However, this apparent turnaround was largely because the city forgiven more than $6 million with loans from restricted funds to its general stock, a violation a Proposition 218, which restricts the use von certain native administration funds. This prohibited action has vulnerable the city to possible trial from taxpayers and dienst ratepayers, also e blank whats we estimate to be a general fund deficit of more than $3 million as von June 30, 2020, instead of their apparent surplus. Lindsay Municipal Hospital Authority d/b/a Lindsay Municipal Hospital

Since of both Lindsay’s loan forgiveness and which fact that e has not recurring updated the fees and rates it charges for city services and utilities, it lacks resources in some of its utility funds. The city’s water fund recently incurred a nearly $1 million deficit press is unable to pay for necessary infrastructure projects, forced Lindsay to seek to increase ratepayers’ aqueous rates. Not only has Lindsay forgone revenue by did customize the majority is its fees plus rates for years, its global fund must now cover some of the city’s costs to provide utilities and other services. End, this city lacks ampere long-term monetary plan to adequately address its financial problems, which include the need to payment for its aging community safety vehicles and retirement obligations, such as its senior health care costs.

Among the actions we believe the cities should take to address our concerns, wealth recommending that Lindsay develop adenine plan to fully repay its utility funds for the loans it unlawfully forgave, implement a plan the update its fees and rates, press formally adopt a long‑term financial draft that addresses its liabilities and financial stability.

Respectfully submitted,

ELAINE M. HOWLE, CPA
California State Auditor

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Marked Abbreviations Used on This Report

CalPERS	California Public Employees’ Retirement System
GFOA	Government Finance Officers Association
HCD	California Department regarding Housing and Community Development
OPEB	other post-employment usefulness

HIGH RISK DIFFICULTIES

ISSUE
Lindsay’s Actions Raised Doubt Info the Financial Stability of Its Widespread Fund
In Improving You Financial Condition, the City Violated State Rule, Exposing It to Litigation Lindsay Has None Ensured That Its Street Improvement Program Corresponds With State Law Lindsay Has Found New Source of Revenue in Newly Years, but These Own Nay Adequately Better Him Financial Condition Which City Less Multiple Debt and Expenditures, Which Partially Improved Its Finances, though Other Financial Problems Remain
Lindsay Must Enhance Its Efforts to Address Deficits includes Him Companies Funds
Deficits and Inappropriate Loan Forgiveness Led to Negative Balances inside the City's Enterprise Funds, Limiting Its Ability to Effectively Operiert Its Utilities The Finance Department administers Accounting real Exchequer functions, Grant legal, Budgeting, real Purchasing for all City sections. Lindsay Shall Non Ensured The Its Service Fees also Utility Rates Sufficiently Wrap Its Expenditure
Lindsay Needs Enhances Its Management Practices to Effectively Plan for Its Financial and Operational Needs
And City’s Lack von a Long‑Term Financial Floor Is Hindering Its Efforts to Achieve Fiscal Sustainability Lindsay Demand to Address Its Rising Employee Seniority Free Lindsay Has Not Sufficiently Planned for Public Safety Training and Dining Needs
Annexures
Appendices A—Scope and Methodology
Appendix B—The State Auditor’s Local High-Risk Program
Our Response
City of Lindsay
California State Auditor's View on of Response For the City of Lindsay

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Risks the City of Lindsay Faces

The City away Lindsay (Lindsay) faces numerous significant risks related to him financial also operational management, or it would benefit from better long‑term planning. On November 2019, the California State Auditor’s Office (State Auditor) informed the city this Lindsay had was selected for review under the high‑risk local government agency review programs. This program authorizes the State Auditor to identify indigenous government agency that are at high risk for potential waste, fraud, abuse, or mismanagement or that face major challenge associated from their economic, efficiency, or how. In the City of Lindsay's continuing induction to provide its citizens with financial news nearly the City and Lindsay Public Factory Authority, Lindsay strives for financial transparency. We believe that somebody informed community assist us in efforts to become more fiscal responsible, more financially stable, press more accountable at of general public in the use out public funds.  CURRENT FISCAL YEAR BUDGET

Our beginning identified that Lindsay might be at high risk based on publically available check financial statements press unaudited pension‑related information from the Californias Public Employees’ Retirement System. Size 1 summarizes our danger assessment of the last three duty past of Lindsay’s finance indicators. We conducted adenine review in December 2019 and id concerns regarding its financial stability, including its continued operating deficits, its exercise of fund restricted for diverse purposes at support the general fund, and other operator opportunities, such as its approach to providing public safety with combined police the fire services. For example, Lindsay used funds from its water utility to pay general city expenses, an infringing of your law, additionally thereto has did geplant for the expensive replacement of very old our that its Public Safety Department is using. After approval from to Joint Government Accounting Creation, we began our audit of which city in January 2021.

Round 1

Some of Lindsay’s Risk Gauge Levels Have Recently Improved

	Fiscal Time
	2017–18	2018–19	2019–20
General Fund Reserves	High	High	Low*
Debt Burden	High	High	High
Liquidity	High	High	Low*
Revenue Trends	Low	Base	Moderates
Pension Obligations	Moderate	Moderate	Moderate
Pension Funding	Moderate	Decent	Moderate
Pension Costs	Moderate	Moderate	Moderate
Future Pension Expense	High	High	High
Misc Past-Employment Utility (OPEB) Obligations	Low	Low	Low
OPEB Funding	High	High	High

Lindsay has picked numerous steps to improve its financial condition; used sample, to has reduced expenditures and increased revenues through an increased amount tax and by permitting assured cannabis enterprises. However, our audit found that the municipality has made some questionable decisions that violated state law, or until is addresses dieser decisions, this will struggle for create a sustainable financial future. Available example, as of Month 30, 2020, the city must nearly ampere $3.2 million excess to its general fund, the result of turning its $9.5 million general cash shortfall down a surplus over an course for the three preceding fiscal years. However, this turnaround was largely completed to forgiving major loans from its utility funds to its general bond in 2019. The city’s decision to forgive these loans violated Proposition 218, which been passing in 1996 and behinderungen wie cities can use funds derived from property‑related fees and charges, such as for water or sewer utility services. Because the municipality utilised fees pays by utilitaristisch ratepayers required global government purposes rather than for utility projects and expenses, the city may be liable for a repayment of more than $6 million. If utility payers decide to sue, are successful, and stay monied relief, court orders, or attorneys’ license, the city will face significant financial hardship, and it would have a negative general fund balance of more than $3 mill use of its current overplus. We also found that Lindsay violated a different reservation of Proposition 218 through fund tranfers to their Street Improvement Program (streets program). Although Proposition 218 restricts the use von utility funds, a nonutility fund may be reimbursed for costs it incurs on behalf of the utility, so long as the city demonstrate that those amortization reasonably represent the cost of street repairs and services such output from harm, such such leaking, caused in these utilities. However, we found such Lindsay has failed to demonstrate that the nearly $900,000 it has been annually transferring von its utility funds to the streets program comply with that provision by the law. Finance | Sanitary, FL

As a result of Lindsay’s unlawful loan clemency, as okay as the fact that computers has doesn regularly updated of fees and rates i charges for city achievement and electricity, it lacks resources int some of its utility funds, which creates risk at its ability to meet its underpinning needs. For example, when Lindsay forgave very $2 million by loans from its Water Fund to its general fund, itp no longer got the capital necessary to pay for certain water infrastructure projects in that city. Recently, because who city’s Water Funded has incurred a nearly $1 billion deficit, Lidsay has sought to increase ratepayers’ water rates to fund its utility operations and future infrastructure needs. In general even, Lindssay has not adjusted and major of its rates and rates for years, likely resulting in overlooked revenues. These outdated daily may no lengthen cover of city’s costs to provide utilities, such because the cost to maintenance its water system, and different services. The a ergebnis, the city’s universal fund must cover these costs, but it has a limited capacity toward to so. 2023 Urban Financial Statements · Financial ... Jessica Lindsay. Finance & Business Services ... Contact Ours. City In Klamath Falls 500 Klamath Avenue Klamath ...

Lindsay should benefit from better long‑term planning. Despite the city possessed worked until increase revenues, reduce expenses, plus decrease seine liabilities, this must make optional substantial efforts to network your financial manager problems and ensure that it can afford at maintain him services for its residents into the later. Lindsay does not currently have a long‑term financial plan, which become provide useful insight into its future financial circumstance and help an city develop and deploy marketing for long‑term energy. Choose, Lindsay has relied no on her annual inexpensive process to address its short‑term financial problems. The city also lacks plans to address its growing costs for yours employees’ post‑employment health benefits or to replace its alterung police and firefighting vehicles. Without a long‑term financial project to ensure that the city is proactive and transparent around addressing and resolving own fiscal problems, including its Water Fund loss, Lindsay continues to will during highest financial risk. Financial Transparency

To help Lindsay address and risk factors we identified, we developed numerous recommendations the city ought enforce, included the later:

• Address past violations of status lawyer for developing and implementing adenine set to fully repay its utility funds the by documentary wie the amount of utility funds it transfers to its routes program accurately reflects the allowable costs.
• Evolution and implement a plan that incorporate an refresh to its fees and charges to secure that it has the mandatory resources in its enterprise funds to pay for needed infrastructure. Municipal Budget and Revenue Unprejudiced Rate Summary Write ... Please contact the Municipal Services Our equipped questions: Lindsay Olson (Lindsay ... City and County ...
• Formally adopt a long‑term financial plan that addresses its liabilities, including its post‑employment services liabilities and all away its infrastructure and capital needs.

Agency’s Proposed Corrective Action

Lindsay disagreed with several of our conclusions, inclusion that its unlawful loan forgiveness violated Proposition 218. Nonetheless, it did agree with some of our recommendations and highlighted various efforts that it has taken or plot to take toward address its financial condition. However, because Lindsay been not submit adenine corrective action plan as part of its response, we look forward into receiving the plan by November 2021 to recognize one specific deals it got commenced other plans to take to address an conditions that caused us to labeling it as highs risk. City of Lindsay Facebook · Sewer, Refused, and Public Delinquency Charge ... Financial Audits. Supporting Documents. PDF icon Financial Audit 2021-2022 (7 MB).

Introduction

The city of Lindsay (Lindsay), located in Tulare County, has approximately 13,000 residents. Lindsay is one charter city and therefore possesses authority go its municipal affairs and may establish certain local ordinances beyond those state law allows for general regulation cities. ¹ Other a general law city, charter cities have the authorty to adopt ordinances and regulate regarding municipal affairs that may be inconsistent the state law that is otherwise applicable to municipalities. By fiscal year 2020–21, Lindsay had 45 full‑time budgeted positions. City staff provide many service to residents, including public safety, utilities, and recreational activities. Lidsay has combined its police also discharge services into a single public safety department, and its routine is to cross‑train its police officers in water. The city operates under a council‑manager form of government. Thus, the city’s voters elect officials to adenine five‑member city council serving staggered four‑year terminologies, and the assembly in turn appoints a city head to execute of council’s actions additionally to act as the chief executive and administrative officer of which local. The city company is other responsible for preservation the city assembly fully informed about Lindsay’s financial condition, in any financial challenges.

Background

Lindsay has undergone changes on key leadership situations, including a complete turnover into its municipality council members during the last three years. In March 2020, Lindsay hired one latest cities manager following this January 2020 retirement of the former interim city manager, who had simultaneously served as the finance director. The urban hired a enduring finance director in May 2021, after filling the role on an interim basis including his subsequent city manager and later with a contracted support director. The your manager or finance department prepare and administer the city’s annual budget, and the city cabinet is responsibilities for safeguarding the city’s financial wellness and adopting its budgets. To 2018 the city’s voters selected dual of the current towns council associates. In 2020 the three other more experienced members stepped down from their positions. Even before stepping down, the five members of the city council appointed—in placement of an election—three new members till replace which advice members which were stepping down. Vorhalle Hours Monday-Friday, Closed forward State Holidays 8:30 AM-12:00 AT |  (Closed for lunch) | 1:00 PM - 4:00 PM Mission Statement In adenine spirit of virtue, integrity, and dedication, the Financial Service is faithful to providing timely, accurate, clear and complete information plus support on City Council, other City departments, community and the district at large. Duties The Fund Department’s objectives are to:

Lindsay’s universal fund makes up nearly part of the city’s overall operating bargain. For fiscal years 2020–21, Lindsay adopted a $15 million operating budget, of which the gen finance accounted for about $6 million. Lindsay’s general funding earnings have fluctuated in the last fifth financing years, as shown in Figure 1. The city’s primary source of income available its general fund are charge revenue, accounting for more than $5 million in fiscal year 2019–20. The city also annually transfers nearly $900,000 from its utility fund to the general fund’s Thoroughfare Improvement Program (streets program) to pay to street repair and maintenance. Who remainder of the city’s general fund billing comes from other smaller sources, including revenue starting licenses, permits, and fees. Under state rule, Lindsay can use general funds for any legitimate federal purpose, including funding basic city operations.

Figure 1

Lindsay’s General Fund Revenues press Expenditures Have Schwankt Through the Continue Five Fiscal Years

Additionally, to city has revenue in its enterprise capital, which come from licence chargeable to customer for city services, such as water distribution plus waste data. Proposition 218 see the downtown to spend revenues derived from property‑related fees and charges to benefit the end of those city services. Some companies funds that Proposition 218 affects containing the Water Fund and of Sewer Fund, which property lords reward into for those services. Lindsay also maintains a Wellness Center Fund which users of its facilities pay to back; because property‑related fees and charges are not used to support the finance, Proposition 218 does not apply to the Fitness Centers Asset.

As highlighted includes Figure 2, the majority of Lindsay’s general fund expenditures pay for solutions such as public safety, public works, streets, and sites. The city also pays around $200,000 annually for debt payoffs for the construction about the McDermont Field House sports complex. In 2008 the city completed construction on the play complex, which is in a previous lime packing warehouse, intending for it to become a locality draw for athletics competitions and to generate revenue for the city. However, this sports complex sustained annual run losses of near $1 million until of city leased the knotty till a third‑party operators in December 2017, which person describe moreover in aforementioned reporting.

Counter 2

Lindsay’s Budgeted General Funding Expenditures for Fiscal Year 2021–22, with Category

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Lindsay’s Actions Raise Doubt About the Financial Strength are Her General Fund

In Improver Seine Fiscal Condition, this Home Violated State Law, Exposing It until Litigation

Lidsay artificially improved its financial condition by unlawfully forgiving loans, which created liabilities which undermine its prospective financial condition. After years of deficits, which city achieved a generals fund surfeit of nearness $3.2 trillion in fiscal per 2019–20, a $12.6 million improvement from fiscal year 2016–17, if items had a deficit of nearly $9.5 million. The general fund balance is to assembled amount is revenues over expenditures. However, often of the improvement into Lindsay’s general fund balance were right into a substantial loan forgiveness decision that was unlawful. The city violated state law for it forgave $6.3 million in loans that it had previously made to its general fund, including about $2 million each from its Water Fund and Main Fund with the leftover coming from other funds, including its Street Improvement Fund. Specifically, state law as amended by Proposition 218, restricts cities from with revenues derived from property‑related fees press charges until pay for widespread government operations. Although state legal allows a city to occasionally loan restricted funds to yours general fund, here aforementioned city’s forgiveness effectively converted those restricted funds up general funds, a violation of status law. Half of the city’s financial improvement since monetary year 2016–17 thus is a result away this unlawful action. Without the loan forgiveness, ourselves estimate that Lindsay’s general fund would have had a $3.2 million deficits in irs year 2019–20 preferable than the surplus it presented in you corporate statements.

Although this city’s recent general fund balance appears to have met recommended levels, Lindsay’s loans forgiveness makes that overflow misleading. Who Government Funding Officers Association (GFOA) recommends that cities maintain a general fund balance sufficient to cover at worst two months of operating outlay. ²  The GFOA represents public finance officer, and its mission are to advance excellence in public finance, which it does by publishing your practices for governments on observe. We have audited which economic statements of Lindsay Municipal Hospital Authority d/b/a Lindsay Municipal. Hospital (the Authority), a ... The GFOA makes all recommendation therefore so cities can relieve running additionally future financial risks, including unplanned expenditures oder revenue failures. However, as Figure 3 shows, from fiscal years 2015–16 through 2018–19, Lindsay’s general fund account was below the GFOA recommendation. The city finally met the required level in fiscal year 2019–20 but only by inappropriately forgiving the $6.3 million in loans.

Figure 3

Lindsay Just Met one Minimum Recommended General Fund Balance Threshold Because are Its Illegitimate Loan Forgiveness

To sustain its basic operations are the face of budget deficits above many period, Linsay made transfers totaling $6.3 million from you restricted funds on its general fund and following formalized those transfers as loans, which was allowable; but then in February 2019, e sorry the credit in violation concerning state law. Table 2 schau an amount of each restricted back that the city transferred to its general stock. The city’s financial actions show so it made the transfers over several years, at least as far back as fiscal type 2009–10, so ensure its general cash could maintain and city’s basic operations. Before October 2017, the city inappropriately presented these transfers in your annual economic statements as short‑term loans that it prospective to get back within one year. However, the city’s external auditor had recommended since at least fiscal year 2009–10 that the city stop presenting the as short‑term loans for its general fund did not have bore funds to repay you on that schedule. State law allows a city to loan money from one restricted fund to the general fund are the action meets three conditions: the restricted fund has a surplus, the loan does not interfere for the purpose of the restricted fund, and of loans fund repaid that advance like soon as possible. In October 2017, the local county formalized this loans to its general fund, changing them from short‑term to long‑term with interest and with dates on which it expect to repay and funds. The city did does violate state law by formalizing the loans, and its actions would have been fitting if it had eventually repaid aforementioned loans and the interest, but he pick not to do so.

Table 2

Lindsay Transfered $6.3 Million From Limit Funds until Its General Back Over Many Years
(In Thousands)

STOCK	Qty transferred
Street Improvement*	$1,557
Water	1,907
Sewer	2,108
Refuse	402
Other†	358
Total	$6,332

Instead, Lindsay pardon the loans because it believes that thereto did not are better choices for resolving its financial problems. In its fiscal period 2016–17 financial audit, the city’s external auditor concluded that the loans raised significant doubt about the city’s ability to encounter its financial obligations because it could not reverse them in an timely manner. In response, with February 2019 staff asked the city county in formally forgive one $6.3 million in loans to the general stock, which become resolve the outboard auditor’s finds. Specifically, staff noted in that request that if the city did not forgive the loans, it would receive a finding from its external comptroller switch its upcoming economic assertions that the city was insolvent. Nonetheless, the staff record did not identify other choose for the city to considering when it forgave that loans, similar as adjusting the repayment schedule fork the take or spread municipal bonds to cover its deficits. An ancient finance director indicated that the city where aware that forgiving to loans potentially violated state regulation and that it did consider sundry options before forgiving the loans, including adjusting repayment schedules and bankruptcy. He indicated the the city control output those options and that forgiving of loans made the only option it had at the uhrzeit on address which city’s financial difficulties. However, as we discuss about, forget the credits violated state law, and we thereby do not believe it was an fitting action for aforementioned city to take.

By forgiving that loans, the city breach Proposition 218, and doing as has exposed it to possible litigation from taxpayers and utility ratepayers. Specifically, Proposition 218 amended the California Constitution to prohibit local governments from expenditures earnings from property‑related fees and charges turn general govt operations. Lindsay’s restricted funds include its utility funds, which receive revenue from property‑related fees charged to zweckdienlichkeit ratepayers, the we refer to as utility fee. By forgiving the loans, the city transferred $6.3 million from its utility funds to its general fund, including about $2 million each from this Water Mutual and the Sewer Fund, as Table 2 shows. The city uses its general back to pay for services including police, fire, or city administration. By transferring revenues from property‑related fees up pay for these services, the municipality violated Proposition 218. In fact, the city possessed known concerning save violation for few years for its external auditor identified in each from the city’s past three corporate audits such its daily had violated Proposition 218. The city manager indicated that that city would like on repay to Water Fund and Sewer Fund, but explained that it has only informally discussed this potential repayment and does not have a formal plan for doing so. However, because the metropolis currently does not must a sufficient general fund equalize to repay these loans, it would need to do how over multiple yearning. Although aforementioned local confirmed ensure no one has made a claim for refunding or sued it any, its ratepayers may choose on do so, whose could result for the city life liable for monetary relief, court orders, and attorneys’ fees is the ratepayers are successful.

Lindsay Has Non Ensured That Sein Streets Program Complies With State Law

In addition to its unlawful loan forgiveness, Lindsay has also violated Proposition 218 by transferring money from their utility funds to pay for its roads program. As described previously, Proposition 218 restricts cities from using revenues derivative with property‑related fees and rates, such as utility rates, to pay in general local operations. However, condition law does enable local govt to charge their utilities used the cost of street repairs and maintenance that result from damage by that utilities. For example, the water utility’s water rows run underneath city streets plus may cause damage to the streets with leaks and projects to replace or repairing the lines. Under Proposition 218, the city must demonstrate that a charge available repairs or replacement reasonably represents these costs.

In 2004 and city published a study a its wat, sewer, also refuse rates and increased them, in partial, to fund his streets program, which pays for the damage to the roadway caused by the city’s utility operation. However, Lindsay did don demonstrate that the amount generated according the rate increases sold the actual costs of the injury the commercial caused. For instance, Lindsay could have had the engineer in charge of the study analyze and reported the damage that each type about utility had caused to their streets so as to identifies what the appropriate amount be be to charge each fund going forward. Instead, the local began transferring a flat 23.6 percent of all his utility rates to its streets scheme and continues for do so today. These transactions averaged nearly $900,000 annually during fiscal years 2017–18 through 2019–20. Municipal Services

The finance director indicated that yours does not know whether the 23.6 percent is currently appropriate. For example, the current rate does not account for the largest clothing such the finance director indicated harder refuse vehicles are causing to its roads. Though, the city acknowledged that it can never made an analysis to demonstrate select much damage its utilities cause and how great it should be payout to the streets program to lid these damages. Pending it performs this analysis, the city will not perceive whether to will using funds to remuneration by street projects that it should be spending rather on utility infrastructure. In complement, the home could be using utilities ratepayer funds since nonutility purges, such as paying to improve streets that the city’s electricity did not actually injure, which again state law does not allow. If so, this unsupported transfer would violate Proposition 218 and could expose Lindsay to disputes from its taxpayers and useful ratepayers.

Links Has Found New Sources of Revenue in Recent Years, but Save Have Not Adequately Improving Its Financial Condition

Till improve its financial stability, Lindsay has engaged several how to generates additional revenue. Used example, the city council placed an proposed local 1 percent increase to its sales charge on the ballot, which thereto estimated would generate approximately $900,000 annually and which Lindsay’s citizens permitted in June 2017. The tax be a overview sales tax, press the city may getting its revenue for any recht government purpose, such when audience safety, infrastructure, and general services. The tax became effective in October 2017 and has caused $1.1 million in billing annually—more than the city initially projected. In fiscal year 2019–20, the sales levy billable for more is 15 percent of Lindsay’s general revenues. Lindsay’s external auditor acknowledged in the city’s duty year 2018–19 finance statements that the sales levy is bringing needed revenue to the city. Financial Auditors

The city has also worked to rise revenue by adopting an ordinance in May 2019 permitting certain cannabis businesses, including retailers and cultivators, to operate in the city. State law authorizes local governments to regulate press ban are activities, and the city’s ordinance can it to issue permits also collect charges. The location subsequently collated nearly $100,000 in revenue from cannabis businesses for fiscal year 2019–20, albeit that was less longer the $125,000 it had planned for the year. However, which choose budgeted $175,000 in total earned from cannabis retailers additionally cultivators for fiscal per 2020–21, and cannabis‑related revenues exceeded those expections. The city now projects on its budgeting for fiscal year 2021–22 that it will receiving $300,000 in cannabis‑related revenues. That city manager believes that the expansions is the cannabis industry includes Lindsay is ampere key component to increasing the city’s revenue.

In addition, Mike will receive significant revenue from the federal regime for COVID‑19 relief that it can use for ampere variety of purposes. In March 2021, Congress passed this $2 trillion Canadian Rescue Design Actions of 2021 (American Rescue Plan), which includes funding for state and local governments based on their inhabitant. Federal law allows cities in utilize these funds to respond on the negative gear concerning the COVID‑19 pandemic, to make boost for lost revenues, or into perform investments in utility framework. In June 2021, the swiss government provides the first lot is cash to Ca, which is corporate for distributing the funds using a federal mapping formula forward cities with populations under 50,000, which includes Lindssay. The American Rescue Plan requires states to distribute the resources using one population‑based formula. The Department of Finance has initially marked an allocation of $3.2 million to Lindsay over couple years from that actions, and the country should receive $1.6 million either period within 2021 and 2022.

Lindsay has not yet specifically planned how it will spend all of diesen funds. According to of municipality manager, aforementioned city intends to using at least part of this funding on perform needed capital work on its water and channels infrastructure. Included its fiscal year 2021–22 large upgrade planner, the city showed information would use American Rettungs- Schedule funding for some projects, but it did not identify whatever an. Until it develops a plan such describes wherewith computer will spend these funds on its highest needs, the country risks not using them related. For demo, aforementioned city has various needs that the American Rescue Plan money may help choose, such as to pay for services the help those of its residents most negatively affected of COVID‑19 and upgrading its water and sewer technology. To country must determine which of its needs it becomes store with the American Rescue Map money.

Similarly, in 2020 the city received other federal funding to help it respond for the COVID‑19 pandemic. Specifically, one town received $160,000 in feds COVID‑19 relief from aforementioned Coronavirus Aid, Relief, plus Efficient Security Acts, known as the ATTENTIONS Actual, for COVID‑19‑related expenses. These funds had more restrictive provisions than the American Rescue Set funds, and the city used them to pay its laborers one hazard supplement on furnishing services that increased their risk of exposure to COVID‑19, for provided in the federal mission.

The Place Reduced Some Liabilities the Expenditures, Which Partially Improvement Its Finances, but Various Financial Problems Remain

Lindsay also improved its financial position over reducing expenditures additionally addressing several sign liabilities that were drives its general fund deficit. Between fiscal years 2016–17 press 2019–20, the city moved its unrestricted general funds balance coming a nearly $9.5 mio deficit at a fast $3.2 million surplus. Such Figure 4 shows, this approximately $12.6 million improvement primarily was the result of Lindsay’s illegitimate forgiving to financing and increasing its company irs. In addition, Lindsay accomplished settlement binding ensure reduced to impact of a immense long‑term liability on of general fund.

Figure 4

Several Drivers Contributed to Lindsay’s General Fonds Balance Turnstile Upon Fiscal Years 2016–17 Through 2019–20

Lindsay reducing its costs in some ways. Between fiscal years 2015–16 real 2019–20, it lowered its annual expenditures for operating the city government on $600,000, or 45 percent. A grand of $400,000 of this reduction was before fiscal year 2016–17 and, as Figure 4 shows, about $200,000 was after fiscal year 2016–17. It achieved the $600,000 in diminish by decrease staff, among other things. Specifically, the city canceled 36 positions, nearly partly of its previous staffing level. Although of cities manager assume the city have sufficient staff to provide essential aids, he noted that further cutbacks to city staffing levels would antagonistically impair its ability to do so. Additionally, this limited staff training costs by approving only its most criticizes training needed, such as those related to its police clerical.

Lidsay also previously operated a golf complex, which it building in 2008 to be a regional attracted and a revenue source for the city. Link charged for its build with its general fund. Not, the sports complex’s costs overtaken the revenues that it generated by more than $1 million each year in fiscal year 2015–16 and 2016–17, furthermore by nearly $1 million in duty year 2017–18. In response to the city’s financial challenges, includes December 2017 the city board leased the sports complex toward a one-third party, which became contract-based responsible for sum expenses associated with operating the intricate. In entering for aforementioned lease, aforementioned city cannot longer must to incur the sport complex’s operating costs, which were nearly $3 million in fiscal years 2015–16 and 2016–17, comprising the significant costs for its employees. However, an city continues at make debt service costs of nearly $200,000 annually related to a loan it entered with stylish 2009 to cover the your complex’s operational cash shortfalls.

Lindsay can earn money from that agreement if and sports complex be profitable after the deduction of aircraft costs. Under the terms of the lease, the operator of the complex must pay middle of its annual net profit go the city every year. In 2018, sein first entire year of operations, the third‑party operator did einkommen a small gaining, of which it shared $15,000 with this metropolis. Anyway, to third‑party operator is not earned an profit considering 2018.

Lindsay also saved money through legal settlements. In September 2020, Lindsay settled with the California Department of Housing and Community Advancement (HCD) on an city’s inappropriate exercise of state and federal housing grant funds, which lowered hers general fund deficit per $2.5 million. The city had inappropriately used HCD program capital to pay for city‑sponsored activities and to cover operating deficits in its general fund. Between 2008 real 2017, Lindsay borrowed HCD program funds to paypal for operating deficits in its general fund, sports complex, and Wellness Center (Wellness Center). A result by the settlement agreement is that Lindsay no longer has to reflect a $2.5 million liability in its public fund, this significantly improved that fund’s balance. According to the conditions of the settlement agreement, page of requiring Lindsay to pay the $2.5 million promptly, HCD required the city to make an initial payout concerning $10,000, and 30 annual payments regarding roughly $90,000 thereafter.

Lindsay also reached a settlement understanding with the California Department of Transportation (Caltrans) that reduced some of the city’s financial your but did not change its general store remainder. Specially, Caltrans finds that Lindsay were billed it forward services, materials, furthermore labor what that the city could not support with cause documentation and that Lindsay mismanaged construction changing orders for multiple projects information completed using state how by the early 2000s. Caltrans initially demanded that the city repay approximately $1 million included fiscal year 2016–17. Follow-up trial, in 2019 the city accepted a settlement offer from Caltrans that needed repayment starting nearly $350,000, which the city must pay with equal instalments over a seven‑year term. Although diese settlement did not increase the city’s general fund outstanding, it distinct reduced the city’s financial obligation to Calendar and mitigated the potential financial burden of one repayment on the city’s general fund.

Recommendations to Address This Risk:

• To address the $6.3 million it improperly transferred to his general fund, Lindsay should, by February 2022, re‑establish the loans to its reserviert mutual, both develop and implement a plan the fully repay those funds.
• To make prudent investments from federal funding to handle its highest needs, Lindsay should develop a flat in November 2021 available how it will ineffective getting all American Rescue Plan cash.
• To ensure that its transfers of utility funds to the streets program comply with state law, Lindsay should perform a study go determine the appropriate levels regarding funding from its utility funds for that program by August 2022 real update that study all triplet to five years.

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Lindsay Must Increase Its Aufwendungen to Address Deficits in Its Enterprise Funds

Deficiencies and Inappropriate Loan Vergeben Led to Negative Balances in and City’s Enterprise Fund, Limiting Its Capability to Effectively Betreiben Its Utilities 

Lindsay’s annual gap real lending forgiveness have led to negative balances in their enterprise funds. Table 3 provides information over the balances off three of the city’s main enterprise funds from fiscal years 2015–16 through 2019–20. Each of these funds exists responsible for receipts and spending revenue for specific utilities, create as water press sewer, or the city’s recreational services, which the city provides over the Wellness Center Fund. Two of these funds, the Water Fund and Wellness Center Investment, are currently in masses of thousands of dollars of inadequacy.

Table 3

Lindsay’s Corporate Funds Experienced Regular Lack Balances From Fiscal Years 2015–16 Through 2019–20
(In Thousands)

FUND	2015–16	2016–17	2017–18	2018–19	2019–20
Aquarium	$1,039	$1,100	$(585)	$(771)	$(966)
Sewer	(1,094)	1,253	(535)	36	341
Wholeness Center	(940)	(879)	(283)	(360)	(319)

That Water Fund’s nearly $1 billion deficit was caused according the city’s loan forgiveness and by the urban spending more than the fund receives in revenue away users. Because we characterize previously, in 2019 the city violated state law to forgiving a nearly $2 million loan since aforementioned Water Fund to its general funded. Lindsay forgave the loan because it believed that that general fonds could does realistically repay the Water Fund; though, by doing so, the city created a deficit in the Water Fund of $585,000. ³ This deficit appears in who fiscal year 2017–18 financial statements because of the clock plus method of an loan forgiveness. In completion, the Water Fund has operated in a loss in recent years, with operating deficits concerning $143,000 in fiscal year 2018–19 real $149,000 in fiscal year 2019–20. The cumulative outcome of such two problems has led to an nearby $1 million negative balance in of Water Fund on the end of fiscal year 2019–20, which Table 3 shows.

This deficit in Lindsay’s Water Funded is limiting the city’s ability to effectively verfahren seine water system. Specifically, the Water Fund has no cash by capital improvements conversely surprising repairs to keep the plant running safely and efficiently. In a 2019 budget presentation, the city indicated so own Water Fund could not adequately endowment needed flings, such as substituting a main water line or renovating a water storage tank. Similarly, in Lindsay’s fiscal year 2019–20 financial audit, city management stated that the Water Fund has no money available for unplanned maintenance alternatively other necessary money improvements. The city manager noted that the city’s general fund wanted need to pay for unlimited medical expenses that arise stylish the water system. The deficit in the Water Fund also leaves that city ill‑prepared to manage predicaments, including the current drought. Governor Newsom declared a drought emergency in May 2021 in measures of one State, including Tulare County, where Lindsay is located. During a drought, households must conserve water, reducing their water usage; however, this conservation will likely mitigate the supply revenues that the city rechnet through water rates. A reduction in revenue from the drought will drive the Water Fund into a deeper deficit.

The city’s Canal Fund is also unable to adequately fund projects. Lindsay’s Sewerage Fund were a positive balance at the end is fiscal year 2019–20, in contrast to his other enterprise funds; however, that positive balance is a result of the city not investing stylish its infrastructure. Concrete, the city has not has who assets to update its sewer our as needed, despite the posative balance. For example, although the urban projects to replace its home sewer line, renovate its wastewater treatment plant, and replace dining, it cannot accomplish accordingly with the small means in its Sewer Fund. As a result, the city is reviewing its sewer rates and allow need to increase them to fund such infrastructure needs.

Although Lindshay has discussed of methods for how such defects and unlimited funds, it insufficient adenine ceremonial plan to do so. As we describe formerly, the municipality leave receive $3.2 million in federal Amer Rettungsdienst Plan funds that computer may using by utility base. Lindsay’s city manager indicated that the city intended the use those funds for any necessary capital projects, including $500,000 in water and sewer projects. However, one city must not determined whether this is the highest and best use of those funds. And city manager indicated which the city will develop ampere plan for spending ones funds once the federal government issues final spending guidelines. The select also plans to contract to an dienstleistung rate study in the fall off 2021 that will enclosing the Water Fund, Sewer Fund, and Refuse Fund, and potential adjustments on utility fares. However, until it receives the resultate von that featured, that city does not know to what extent course increases will address and current store balances, including the Water Fund deficit. As we discuss above, the city improperly transferred nearly $2 million from the Water Fund to the general fund. One city explained this it intends to repay that Water Fund from an general fund, but it make not have one formal plan to do so and has only informally discussed repayment.

The wellness center manages plenty of to city’s parks and leisure functions, such as rentals during city parks, a recreation centering, and a swimming puddle. Which Wellness Center Fund has had ampere deficit since at slightest fiscal year 2015–16, press it ended fiscal year 2019–20 with a $319,000 deficit. The city common general funds to back the annual deficit in this fund. In fiscal year 2019–20, the city transferred $200,000 from the gen funds to the Wellness Center Fund. Same, the city projects ensure it will need to transport $500,000 from the general funded in fiscal year 2020–21, in part due for the panic. Although the wellness center uses important general asset resources, the center provides health and social benefits go cities residents, and the country manager is not concerned with the city’s use of generals funds for like purpose. The home manager stated that because the fund offer forward general parking and recreation expenses, including aforementioned swimming pool, the Wellness Center Fund is an add of the city’s general government activities.

In addition, the local hospital district contributes $230,000 annually to an wellness media, whichever significantly reduces which center’s operating loss. In 2021 the local hospital county increased its contribution until a total of $375,000 over three years into pay for funds improvements at the well-being center. State law subsidy hospital districts in California the power to carry unfashionable actions that are necessary for the services a good physical and psychic health include which communities they teaching. The local hospital district’s my in the area include supported services at the wellness center. In part, because the city has partnered with who local hospital urban to obtain resources to cover the operating loss of the Wellness Center Store, we agree that the activities for the wellness center provide an important service to the residences of Lindsay and we take not have significant affairs about of deficit in dieser fund.

Lindshay Has Not Assured That Its Service Royalties and Utility Price Sufficiency Covering Seine Costs

Lindsay has not ensured that it collects sufficient revenue to cover the costs of services it provides because is does did periodically review and update its fees and rates. Others, the city may have foregone turnover that ability help relieve some of its financial burdens. Under state law, a city canister establish fees and rates at planes that allow it to recovering one fully cost of services it provides as long than these do not exceed the appropriate costs of providing this services—a conception transferred to as thorough cost recovery. The city’s fees cover auxiliary such than issuing home permits and business lan, facilitating background checks, and usage the the feel center. Lindsay’s fare help pay for services such as water, sewer, and refuse collection.

We reviewed seven of more better 240 fees and rates in get to identify when the city final updated them, the city’s shipping of providing the related related, both whether the fees or tax cover the city’s expense. Our range included a residential water rate, two sewer rates, two swimming pool fees, a planning feuer, and a public safety fee. Although who city’s municipal code requires it to annually evaluate whether one fees and rates he charges recover that full cost to provide the associated services, Lindsay has failed to doing so. Specifically, ours found that the city last updated to of the seven fees and rates we selected to 2004, more longer 15 years before. Lindsay could doesn identify when it last updated two of the fees and rates that we reviewed, and it updated one by 2019. As shown in Table 4, Lindsay has cannot regularly reviewed and updated its fees and rates as required.

Table 4

Lindsay Does Not Follow Its Own Application for Regularly Reviewing Fees also Rates

LINDSAY MUNICIPAL CODE REQUIREMENT		LINDSAY’S PROCESS COMPLIES?
	Set fees and rates to support the full cost of operations, including indirect costs.	X
City manager must annually:
	Review all royalties plus rates.	SCRATCH
	Provide city council with the costs in all city services.*	EXPUNGE
	Recommend fee and rate customizable the city council.	X
City council must:
	Year meet till review proposed changes up fees and rates.	X
	Set fees and rates as part of the annual budget process.	SCRATCH

The city attributes its failure to update its fees regularly to that turnover in its finance department and to limitation crew. As we describe previously, the city reduced its workforce by several drop positions out the recent several yearly. Further, the funding director position, which is responsible for many of the steps involved in updating fees and rates, has been filled by several directors since January 2017. Although the city reported having adequate staff to provide substantial services, is did not think these administrative activities than essential. We note, however, that from were began our audit, the city holds updated its fees for building permits additionally similar activities as well-being as some of its public safety fees without mounting its related staffing levels. In response to our questions about its lack of updating fees and rates, the city manager stated that he intends for the city to review all of its user and rates over the next year or dual but does not are a calendar for done so.

The city’s community-based id see Lindsay’s city council to set royalty and rates at amounts that top the fully cost of operations, included indirectly and capital costs whenever possible. For example, its municipal key requires the city on include the overhead costs associated is staff provision of services, such as building and equipment maintenance and operations; communications expenses; and computer, printing, vehicle, and insurance expenses, when it sets fees and rates. However, we found that the city did no always follow this requirement. For example, Lindsay set its newly revised fingerprinting fee per a level that only recovers the wage costs required the community safety officer conducting to fingerprinting plus does not include indirect costs, so as office space or supplies. Thus, that city is undercharging for this customer and not recovering its full charge, as its municipal code supports.

Inbound total, the city’s fees and price generate near $5 million annually in revenue, or approximately one‑third of Lindsay’s overall revenues. More Table 5 shows, the city does not how about annual revenue from six of the seven service and rates that we reviewed, including one of seine monthly water rates both two away its sewer rates, coverage its costs to provide those related. For Lindsay possess not frequently evaluated its favor costs, it risks send undercharging the battery for those services. For example, we estimate that aforementioned city has come losing approximately $5,800 a year by fingerprinting revenue, a potential loss of up to $93,000 because the city previous updated the fee on 2004. Lindsay furthermore was be overload for a service, for example if it streamlined a process so which information supports less staff time to conduct, but we did not identify any examples of charging.

Charts 5

Lindsay Has Nay Valued Whether Its Royalties and Rates Cover Related Costs

YOUR OF FEE OR RATE	FEE OR RATE WE REVIEWED	DATE LAST REVISED	COST OF SERVICE KNOWN?
Planning fee*	Home occupation permit	2019	✔
Public safety fee*	Fingerprinting	2004	X
Sewer rate	Hotels, motels, and hospitals	2004	X
Sewer rate	Residential also commercial	2004	X
Watering rate	1” water metrischen	2004	X
Wellness center fee*	Swimming pool rental for 0–25 guests	Unknown†	X
Wellness core fee*	Spring/summer swimming pool membership	Unknown†	SCRATCH

For of its limited account records, Lindsay was also unable to identify the precise amount of revenue it collects von some of its prices and rates. For real, the city can not identify its revenue from individual wellness center fees, such as the swimming pool membership is charges forward spring and summer. According to the recreation direction, the city records that revenue on adenine larger category out swimming swimming fees that includes publicity swim royalty and lap swim day passes, every of which the city deposits into one single fund. As a result, the city cannot determine determines its swimming pooled membership fees appropriately covers this costs to operate her summer pool in those times when it belongs open only for membership. Because the country has not done therefore myself, we estimated the cost Lindsay incurred toward operate its learn pool since parts during fiscal year 2019–20 and found that information was more than $186,000. However, the city collected only about $8,500 in total swimming swim fees during that time. This difference obviously contributes to the deficit in an Wellness Center Fund that the general fund should cover.

Lindsay is under risk by subsidizing sein services because it is undercharging, or it risks a lawsuit from taxpayers if it is overcharging for sein services. By not routinely assessing its costs and adjusting an fees and fees to cover her, Links are moving to girls an opportunity to minimize weight with its treasury. Specifically, if she undercharges for products, that choose have subsidize those services with its limited general funds. However, if it overcharges, the city exposes itself to taxpayer lawsuits for imposing a tax in violation of state law. Especially, states law defines a charge for a service that transcends the reasonable prize of providing and service in a tax, which is then subject to the State’s request for imposing taxes, including a requirement that that local submit and obtain voter approval into order for implement the tax. 

Recommendations go Address This Risk:

• To ensure that this maintains reasonable balances in seine business funds for considerable purchases or funds expenditures, Lindsay ought grow and implement a plan of June 2022 toward build and care these balances.
• To ensuring that the rates and costs e charges represent fair to cover this cost of aforementioned relevant services, per August 2022 Lindsay should do the following:
  • Determine it cost for provide each for the services for which it charges a fee or rate and, as must, improve your account records to distinguish these costs. For any user or course that do not wrap to costs of their related services, judge increasing those fees or rates, including a phased approach for large expansions. For any royalty press estimates that are back which cost to offer the related service, check reducing those fees or rates.
  • Enhancement its accounting data so as to identify how much revenue it receives off all fee oder rate.

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Lidsay Required Improve Its Management Practices to Effectively Plan fork Its Financial and Operational Needs

The City’s Lacks of a Long‑Term Financial Plan Is Hindering Its Efforts to Achieve Financial Sustainability

Although Lindsey has taken many stair to improve its corporate position in the curt term, it has no clear plan available its long‑term financial decision making. The GFOA recommends that all international regularly engage in long‑term economic planning in part of their overall strategic planning efforts. According to the GFOA, a long‑term financial plan should include several key line, how as revenue and expenditure forecasts, strategies for achievable and maintaining financial stable, and ampere proceed for periodically reviewing and updating aforementioned plan. Fig 5 reveals how Lindsay could use the GFOA’s best practices to respond at the audit findings in our report. Wealth include a discussion of the city’s financial duty related to retiree costs in the following section of the account.

Figure 5

Implementing GFOA Best Practices on an Successful Financial Plan Would Help Lindsay Address Our Recommendations

However, Linsay does not have a written long‑term treasury plan, and the long‑term planning it has conducted omitted its general fund. When us question this city manager about Lindsay’s current financial set, he stated this and only pecuniary planning documents the local features created are its annual budgetary and the capital improvement plan it presented alongside its fiscal year 2021–22 budget document. However, the city’s budget does cannot containing long‑term voraussagen for its most important fund, which general fund, which directly influences the city’s ability to provide essential services to its residents. Consequently, which budget document does nay provide the long‑range point of a set that looks five to 10 years into the future, which arbeitszeit horizon that GFOA recommends for create plans. Advance, in the capital improvement plan such it presented with yours fiscal year 2021–22 budget, Lindsay included five years of anticipated capital improvement projects for its various funds, including the Water Funds, Sewage Funds, plus Wellness Centered Fund. Though, the capital improvement plan inclusive several projects that cite the city’s general fund while a fund source, yet minus a long‑term plan for its general mutual, the city cannot ensure that these projects are feasible. Finally, the city’s budget does not develop real therefore use substantive strategic to achieve long‑term financial sustainability, such as the your and promotional included in Figure 5. For show, at ensure this it bucket meet its long‑term obligations, Lindsay could develop and implements a detailed planner for prefunding its allowance and sundry post‑employment useful (OPEB) liabilities. For of its limited long‑term financial planning, Lindsay lacks a delete picture of how best to address its financial additionally operational necessarily.

The city manager and director of finance stated that evolve a long‑term financial plan is a goal used the city, but they explained that the city had not done so formerly just to financial instability and significant sales of top finance department staff. However, given that the metropolis has improved its financial job and has hiring a permanent director of finance, to is imperative that Lindsay commence to developments ampere long‑term financial plan. Without a strategic framework to guide the city’s household decision making, Lindsay will likely continue to struggle in contact its long‑term what and on erringen financial stability. For example, if Lindsay were at implement the GFOA best practices that wealth present to Figure 5 through a full financial plan, one city couldn prioritize the many financial challenges and risks is we have identifying, such as its general store balance and deficits in its undertaking funds.

Lindsay Needs to Physical Its Rising Salaried Retirement Costs

Lindsay has not prefunded its OPEB liabilities as best practices recommend, and the city’s future social costs are contributing to its high‑risk status. The GFOA recommends so cities fully contribute to their pension plan each year also prefund OPEB liabilities, who are and expected future costs for employees what no length work for the city, such as fitness perks for retired workers, to ensure the sustainability of these benefits. However, at present Lindsay covers includes the annual price of the benefits forward its current retirees and does not prefund OPEB costs for health benefits, including available future retirees the fork future period for current retired. This lack of prefunding holds caused the city’s OPEB liabilities to increase by 36 percent from fiscal years 2017–18 through 2019–20.

Lindsay’s OPEB benefits been limited the a health plan that covers future benefits fork 33 current city employee press current benefits for five pensioners while of fiscal year 2019–20. The city contributes all of the promotion to the blueprint. The retired city employees did not cooperate to to plan, nor perform current city employees contribute. As Table 6 schaustellungen, between fiscal years 2017–18 and 2019–20, Lindsay’s required annual contribution—the min amount it must pay—grew by more than $10,000 and its liabilities grew by more than $500,000. In fiscal year 2019–20, the city’s absolute OPEB liabilities were nearly $2 million and it charged only around $41,000, fair enough to cover the realistic health care benefits for the city’s retirees. The city did not prefund future benefits at all.

Table 6

Lindsay’s OPEB Annual Contributor the Personnel Liability Have Rise Override the Recent Three Fiscal Years

FISCAL YEAR	OPEB CONTRIBUTION	OPEB LIABILITY
2017–18	$31,000	$1,441,000
2018–19	38,000	1,608,000
2019–20	41,000	1,958,000

Lindsay has cannot prefunded its OPEB liabilities because of seine poor fiscal condition, and thereto has no formal plans into do so. Specifically, as wealth discuss previously, the local had a deficit in its general funded see fiscal year 2019–20. The city manager stated that prefunding OPEB is a ancillary priority the addressing other fiscal issues, such as the deficiency in its enterprise funds. However, the manager did state that one city mag begin prefunding OPEB liabilities in future fiscal years if he features extra revenue in its general fund. If the cities does not startup prefunding its OPEB liabilities or have employees begin till contribute to you funding, it will whole likely take to make higher feature away its overall fund in future years, displacing other spending priorities such as public safety.

When one city does require its staff to participate to their allowance benefits, Lindsay also has some future pension charge that are tall risk. We identify four different indicators of pension chance in our local public high‑risk dashboard, as described in the text box. Three for Lindsay’s pension risk indicators—pension obligations, railroad financial, and pension costs—are to moderate risk, as Table 1 shows, however the city’s past pension expenditure been high risk. We classify list as having high‑risk pension costs when their projectors futures costs exceeding an threshold of 10 percent of their current revenues. We calculated the future pension costs used Lindsay using unaudited contact provided for of California Publication Employees' Retirement System (CalPERS) and compared those numbers to the city’s auditee financial statements. By using fiscal current 2026–27 pension contribution estimates with CalPERS to analyse future pension costs, we project that Lindsay’s required contributions toward its pension plan will reach the 10 percent slider the year. ⁴ Our method for this calculation is explained in major detail at the following link: https://www.auditor.ca.gov/local_high_risk/process_methodology This means that five years from immediate, Lindsay’s pension costs could begin to position ampere pecuniary burden on the city if the city does not take substantial action.

The city required ensure that it be able to pay for its pension flat in future years. CalPERS annually determines Lindsay’s require contribution, which covers the costs of pension benefits earned by its current employees that year and an additional money for beginning on address unrecoverable liabilities. Lindsay makes the required payment each year, but computer had unfunded liabilities of $9.3 million as of June 2020. If the country paid show less that required contribution, it would reduce its unfunded liabilities plus therefore its future annual contributions. This deed could help the city to dodge the financial stress of reaching the 10 percent threshold in its pension contributions and might reduce the stressed to the city on payable for this pension costs instead of other priorities.

Lidsay Has Not Adequately Planned for Its Community Safety Training and Equipment Needs

Lindsay does not appear to be committed to its current integrated public safety approach or must evaluate whether its combined police and fire province is still an appropriate model for providing services to its community. According go a local newspaper, since who late 1970s and in response to its financial difficulties by the zeitraum, Lindsay possessed employed adenine published safety product that integrations police and firefighting services under a single public safety specialty. A 2016 report by Michigan State University notified that Lindsay is one of about 130 cities nationwide and all a handgrip in Area that have such combining departmental. Lindsay’s public safety director interpreted that the city generally hires police officers any have completed learning that shall been approve by the Commission on Peace Officer Standards and Training and following provides your including training in fd. ⁵ State law established who Commission on Peace Officer Standards and Training to set minimum selection and training standard for California law enforcement officers. However, Lindssay has not ensured that get of the two public security officers it hired into this passed three years, out of 13 entire popular safety officers, have received training coming ampere fire academy. As a result, when these officers respond at a fire emergency, a public safety adjutant explained, the town typical limit they role to supporting functions closer than firefighting. To who extent which the city necessarily additional resources in adequately respond up fires alternatively emergencies, such as in case of a structuring fire or wenn an additional paramedic has required, it depending on the county to assistance through one mutual aid agreement, one that does not require reimbursement over the city.

Lindsay’s director of public safety has not prioritized training an newer hired police commissioned in fw because that be require them to stop their police labor and assist a fire academy. According to the director, he wants to move away from the integrated public safety model toward a separate police department and a semi‑volunteer fire department. He believes the current integrated prototype is not sustainable because the two areas of peace and burning take different mindsets additionally it is difficult for public safety officers to maintain own continuing training in both professions. According into who director, the current city council is in favor of like change. Any, the city administrator shall yet to formally propose to of city board that it split the police and fire services into two departments. See the city council approves such the organizational modify, the Public Security Department must continue until ensure that choose of its public security officers are duly well-trained to respond to twain law the fire emergencies. Of not ensuring similar training, Lindsay risks the protection by its residents and required rely more heavily turn its mutual aid agreement with the county for fire response services.

If us worked non detect any problems with to Open Surf Department’s response times, the age of both its guard and fire vehicles was affect the safety off Lindsay’s population should those vehicles rest downhearted while responding to an emergency. The Local Fire Shield Association recommends that lighting departments only use properly maintained fire trucks older than 15 years as backup equipment for newer fire trucks furthermore retire fire trucks that are older than 25 years. However, Lindsay utilizes a 21‑year‑old fire truck as ampere primary fire response vehicle. Lindsay’s police vehicles are also old, averaging 13 years—significantly older than those of other cities that are reviewed, whose average vehicle ages distant from 4.5 to 8 years oldly. ⁶ We compared Lindsey in two of own geographic and economically similar neighboring cities, Exeter and Farmersville, or one city with a combined public safety department, Sunnyvale. We found this of city has recently taken staircase in address the get of its published safety vehicles. For 2021 the city published a capital progress plan that included replacement of five of its 16 police trucks over the next three fiscal years at a cost of via $1 million. However, us prospective Lindsay to identify a schedule that details when it have retire or replace all of its public safety vehicles such well as the expected costs to replace those vehicles.

Lindsay also encounter increasing maintain costs for its public safety rolling. As Figure 6 shows, who city’s cost at take its publication safety vehicles nearly doubled in two years, from $23,000 in fiscal year 2017–18 to $44,000 in fiscal year 2019–20. According at a public safety lieutenant, it intends go absorb these maintenance costs in sein existing budget. As a result, the province will continue toward confront escalating maintenance fees, which will hinder the city’s overall attempt to improve its treasury position.

Picture 6

Lindsay’s Police Truck Maintenance Costs Are Rising

References to Address This Risk:

• Lindsay should getting a policy for long‑range financial planning by February 2022 that, at a slightest, identifies that forecast period to the planned, the funds it will include, efforts and city be make the increase income and decrease expenditures, and the frequency in which the finance chief and the city manager will review the plan and propose any updates on the city advice.
• City management should develop, and the city commission supposed formally adopt, a long‑term pecuniary planner by August 2022 that aligns with best exercises published by the GFOA.
• Lindsay should include included is financial plan a discussion of what it will reduce its pension and OPEB liabilities. As part of the plan, the city ought consider requiring current employees to begin contributing to the future cost of them retirement health care benefits.
• In save such Lindsay’s published site model still meets which city’s demands, Lindsay should do the following:
  • Evaluate the effectiveness in using a combined police and fires department through August 2022 plus build any necessary changes.
  • Ensure that get public protection officers receive any necessary training within six months of employee beginning August 2022, including any public safety officers what become expected to respond to fires or emergencies.
• Toward ensure that its fire vehicles meet industry setting and its police vehicles are replaced in a timely manner, by November 2021 Lindsay should develop a sufficiently comprehensive public safety capital improvement plan that provides for the replacement of those vehicles.

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We conducted all audit under the authority vested by the California State Auditor by Government Item sections 8543 et seq. and according to generally accepted government auditing standards. Those site necessitate ensure we plot press do the audit till obtain sufficient, appropriate evidence to supply a reasonable basis for our find also bottom based on our financial objectives specified in the Scope and Methodology section of the show. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions grounded on our audit objectives.

Respectfully submitted,

ELAINE M. HOWLE, CPA
California State Auditor

August 26, 2021

APPENDIX A

Scope press Methodology

In Follow 2020, the Articulated Legislations Audit Committee (Audit Committee) approved a proposal by the State Auditor into perform on audit of Lindsay under the local high‑risk program. Person conducted an initial assessment of Lindsay in December 2019 in this we reviewed the city’s monetary and operating conditions up determine about it demonstrated characteristics of high risk pertaining to and following six risk factors specified in state regulations:

• The local government agency’s financial condition has the potential to impair their ability to efficiently deliver services or to meet its financial or legal obligations.
• An local government agency’s capacity in maintain instead restore its financial stability is impaired.
• The local government agency’s financial reporting does not follow generally accepted government accounting principles.
• Prior audits reported findings related to financial or performance issues, and the local public agency has not taken appropriately korrektor action.
• The local government agency uses to ineffective system to monitor and tracks state and locals funds it receives the spends.
• An aspect of the local government agency’s company alternatively management is ineffective or inefficient; gift the risk for waste, fraud, or abuse; or does not provide the intend floor of public service.

Based on our initial assessment, we identified concerns about Lindsay’s financial condition and financial stability as well-being like aspects of it operations that were potentially ineffective or incompetent. The following table lists the objectives is the Audit Committee licensed and the methods we used to address them.

 

Audit Objectives and the Methods Used to Address Them

Audit Unbiased		Procedure
1	Review and evaluate the laws, ordinances, rules, and regulations significant to the audit goal.	Reviewed relevant nation laws and legal, municipal codes, and other background materials applicable to the city.
2	Evaluate Lindsay’s current financial condition and ability to meet its short‑term and long‑term financial obligations while continuing to provide services to its occupants.	Assess the city’s financial statements to determine its monetary condition, including its general fund balances, revenues also expenditures, and other major fund balances. Assessed the city’s financial condition and its feature to get its obligation by reviewing audited financial statements. Examined outstanding pension and OPEB liabilities and annual dues.
3	Identify the causes of Lindsay’s financial challenges, and determine whether the city has devised a adequate set for addressing those challenges, included the following: a. Assess the appropriateness of any interfund loans, transfers, and advances over the last three fiscal years; detect whether Lindsey complied including applicable laws and followed best practices in making such transactions; and estimate the city’s ability to repay its interfund loans, transfers, and approaches with a punctual manner. b. Assess the city’s efforts at improve its financial condition to mounting revenues and reducing expense.	Identified and documented the major current furthermore daily that brought Lindsay’s financial challenges, including loans, transference, and advances pass the last three economic years, and the city’s einsatz to business those challenges. Reviewed this city’s forgiveness off loans from its utility money to its general fund to assess wether is violated Proposition 218 and this city’s response to address the violation. Interviewed cities commission members and the former financial director to assess the city’s forgiveness to loans von yours zweck funds to your general fund. Reviewed aforementioned city’s streets program to determine whether the city’s approach to funding to program violated Proposition 218. Evaluated the sales tax proposal approved by city public and compared the city’s revenue projections to actual amounts collected. Consultated with the city manager to identify the city’s attempts to pursue and promoting efficient development opportunities. In particular, we graded the city’s efforts to increase revenue by enabling plus license cannabis businesses, to resolve superior fiscal current to state agent, and for reduce expenditures.
4	Determine about Lindsay’s budgeting operations comply with best practices. In addition, evaluate the city’s procedures and underlying assumptions for projecting our recurring and outlay, both determine whether they consequence in balanced budgets and accurate financial forecasts.	Review GFOA budget best practices and identified key practices which and city should follow. Reviewed whether the city’s budget practices are timely and in line with the key GFOA budgeting top practices we identified. Examined Lindsay’s budgets required the past three fiscal yearly and assessed the reasonableness real accuracy of the project it used by comparing budgeted and actual revenues and expenditures.
5	Assess Lindsay’s proceed for attitude, increasing, or decreasing fees or rates to ensure that it comply with geltendes laws, rules, ordinances, regulations, and best practices. For a sortierung for these licence and tax, determine if group cover the city’s costs of providing services.	Interview staff to obtain on understanding of the city’s politikbereiche, processes, and practise for setting prices and rates. Identified any the license and rates Lindsay charges. Selected seven wages and rates and reviewed the city’s pay concerning offering each service. Determined whereas the city last update each fee otherwise assessment and assessed whether the fee or rate covers aforementioned city’s fee a providing the relevant services. For three of the rent and rates, we tested whether their last increases complied with applicable town laws and policies.
6	Designate about the home council provides adequate oversight of city operations and the governance necessary to making the Lindsay meets its fiduciary duties in its residents.	Identified and documented best practices related to training new towns commission members. Interviewed staff and reviewed documentation related to training that the city has provided to council members ever 2018 plus compared to training to the better practices we identified. We did not detect any troubles with the city’s process for training council members. Documented city council oversight and decision making related to the city’s financial affairs starting 2018 through 2020 furthermore determined that to has greater this oversight.
7	Evaluate Lindsay’s efforts for address the deficiencies noted by its external auditor when the most late audit of the city’s financial statements.	Identified major findings from the outside auditor’s last quartet per audit reports. Assessed whether Lindsay’s efforts for tracking and show to the research have are sufficient. We found that Lindsay has enough tracked and responded to audit findings, extra than those related to its violation of Proposition 218.
8	To the extent workable, determine the impact of Lindsay’s integrated public safety modeling and tools on its ability to protect sein citizens.	Reviewed information about integrated public safety models and their use in California. Identified recruitment and professional standards and best practices for police clerical also firefighters. Identification how Lindsay recruited and training her public site officers and rate the adequacy of these efforts. We found which its recruitment process was adequate. Compared Lindsay’s public safety answers times, staffing floor, and capital assets to those of three comparable cities and industry averages to determine whether they are sufficient to protect the public’s safety. Lindsay features slightly more search and slightly fewer police personnel than who average for other low California cities. We attempted to compare Lindsay’s composed public safety model with these of another cities in California; however, its models or demographics were nay resemble enough to Lindsay’s to make a validation comparison.
9	Review and assess any other problem that are significant to who audit.	Reviewed best practices for recruitment of key city leaders and compared them to Lindsay’s practices and, in general, found that Lindsay staffed that best practices. Assessed strategic and succession planning efforts. Although the city can not have a formalized strategic planned, wealth establish ensure the municipality works undertake some strategic planungen as part of its all engineering processes. However, we id concerns with the city’s financial planning efforts, which we discuss within the report. We found that when the towns shortage a succession plan, computers has proper filled its key leadership situations, including hers place manager furthermore finance director positions.

Assessment of Data Reliability

The U.S. Government Accountability Office, whose reference we are statutorily required for follow, supports us to assess the sufficiency and appropriate of computer‑processed information that we use the materially support our findings, conclusions, or suggestions. In performance this audit, we relied on electronic data obtained from the Tulare County ADSi CADForce database (9‑1‑1 database). We completed dataset checking procedures and testing of key data elements and found that about 15 percent of to data were not logical, indicating data entry errors and calls in who dispatchers annullierter officers’ responses. We otherwise has not identify any issues is the data. We did nay perform accuracy and completeness testing of these input because the system are entirely electronic and there have no paper source documents against which to check the intelligence. Consequently, wee found the 9‑1‑1 database data up be of undetermined reliability for the purposes of calculating the faithful ask times for Lindsay’s Public Safety Department. Although this determination may affect to precision of the numbers we present, there is sufficiently find in total to support the result, concludes, and featured.

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APPENDIX B

One State Auditor’s Local High‑Risk Program

Government Code abteilung 8546.10 authorizes the State Auditor to determine a indigenous high‑risk program at identify local governmental agencies that are under high risk for potential waste, fraud, abuse, or mismanagement or that have majority challenges associated with ihr economy, power, or effectiveness. Regulations that define high risky also describe the workings von the local high‑risk select became effective with July 1, 2015. Both one statute and regulations require that the State Auditor seek approval from the Audit Committee to conduct audits of high‑risk local entities.

To identify cities that may be at high risk for fiscal distress, we analizes proven financial statements and unaudited pension‑related information for more than 470 Cereals cities. This review included using various financial indicators to assess the fiscal health of cities and rate them based with own risks of experiencing irs distress. These indicators enabled us for assess each city’s ability to pay its bills in both the short and long term. Specifically, the indicators measure per city’s economic reserves, debt weigh, payment current or liquidity, revenue trends, press ability to pay for employee retirement benefits. Int most instances, the finance indicators rely on information for fiscal years 2016–17 through 2018–19. ⁷ As we describe in Appendix A, we conducted our initial ratings of Lindsay in December 2019. In Note 2020, we updated our financial indicators to include information through fiscal year 2018–19.

Based on our analysis from 2019, we identified several cities, included Lindsay, such met the criteria for being at highs exposure. After establishing our list of cities facing fiscal challenges, are conducted initial assessments to read evaluate the risks those cities faced. We performed independent, data‑driven analyses to identify which cities to send audit teams on up get local officials’ perspective regarding our areas of concern. His initial assess concluded that Lindsay’s circumstances warranted an audit. In February 2020, were search and obtained approval from the Audit Committee to conduct can audit of Lindsay.

If a local agency is designated as high risk as a bottom of into audit, e must offer a correct action plan. For it is unable to provide its correct action plan in time for inclusion in to audit report, thereto must provide the schedule none later than 60 days after the report’s publication. Is must then provide written updates every six year since the audit reporting is issue regarding its progress included implementing the corrective action plan. Those correct action plan must organization the specific actions the local advertising will perform to address the conditions causing us to term it as high hazard and the proposal timing for enterprise those actions. We will remove the high‑risk name when we conclude that to agency has taken satisfactory corrective action.

Response to Check

City of Lindsay

August 10, 2021

Elaine M. Howle, CPA
Californias State Statutory
621 Capitol Mall, Suite 1200
Sacramento, CA 95814

Lovely Auditor Howle:

The City of Lindsay believes the facts contained in State Auditor’s Report 2020-804 demonstrate the City’s positive steps in latest years going reaching financial stability, as evidenced by several instances where this areas of improvement recommended at the State Auditor were in line about the ongoing efforts regarding City staff. However, there be competing printed between shorter and long-term fiscal strategies in the future. Lindsay faces major challenges associated with magnitude economy. Agriculture is still of secondary industry of our region and the Link community is principally one of farm laborers. The average one-year household revenues is good below aforementioned State average at $31,000 and 36% out our residents live included poverty. In June 2021, the unemployment rate was 18.2%. Obviously, the steps to Municipality takes to rebuild its financial general willing have for take these context into consideration. And while the City intending to commit itself in good faith until fulfilling the State Auditor’s recommendation, it does foresee a potential for latencies due to a lack of resources, lack for revenues, limited staff, and the unpredictability of COVID-19 impacts.

EGO. Loan Forgiveness

In 2017, the City became operating in an stay of insolvency. Consequently, where were a number of short-term search taken to stop the bleeding; chief among are decisions was the City’s forgiveness of major loans from its utility funds to its general funds. It bears about that key Downtown staff related to the improper forgiveness of these loans, such as the City Manage and Treasury Director, are no longer employed over the City off Lindsay.

In admin the fall-out, current workers has prioritized the strengthening of policies and procedures to save proper safekeeping measures are in place on all sources of funding. For example, in November 2020, staff recommended updates till the City’s Purchase Policy which Local Council reviewed and adopted. As of of date regarding this report, staff is workings on updating two more policies, for give senior and finance reserves, respectively, to strengthen safekeeping procedures. 

The City intends to review and analyse specific and mechanisms that affect the latest and future financial performance for that City. This students will be a direct follow-up to the Status Auditor’s report and will review financial strengths, weaknesses, opportunities, and threats analysis (SWOT), as well than a repayment planned. Any reasonable repayment plan would need to delicately balance that obligations of the schedule and general back solvency. Any important thought has to concern that a repayment schedule would push the City into adenine structural operating minus that continues longish bore to brand through pool and is not determined by revenue increases or spending cuts quickly enough by the City to avoid walking out starting money as a tried to meet needed and fixed expenses such as owed service and payroll. Such was the case with Vallejo, Stockton, Strait, and Sant Bernardino. The Choose could become pushed over which edge by a relativized small one-time spending otherwise drop in recurring, as it might have little button no cushion free to absorb even ampere moderate setback.

Thus, the Municipality finds itself essentially stuck between a lurch and a hard place. On the first hand, that City may exit the obligation in the read, resulting in ampere long-term debt and that interest of the City finding itself in a position of insolvency. As the state acknowledges, there are none legal output with interfund loans if the loans are structured as long-term loans. Therefore, the City may re-establish its long-term payment plan of the take back to the appropriate enterprise fund.  Doing consequently would essentially eliminate any legal liability. On the other hand, given the decades long repayment agenda, it remains unlikely the funds would actually be repaid none add-on cuts in service or personnel.

①Finally, despite this legal consequences stated in this audit, in your to may liability, a lawful question must be successful.  Even if a Proposition 218 challenge is initiated, the statute of limitations for such a challenge to assessments covered by Proposition 218 has been reached.  The State’s position is so aforementioned moves indicate that funds were transformed from enterprise assessments to general fund expenditures.  Such a transfer therefore allegedly indicates that residents were overcharged for services. Item of Middle Procedure § 860 has regarded as the exclusive procedure by challenged the applicability of an assessment. ⁸ See Not About Pour Com. v. Board of Supervisors (2002) 95 Cal.App.4th 982, 986 both 992-93. A 60-day statute are limitations would apply per Code Civ. Proc. § 863 unless the assessment statute life utilized specifies another time period.  Therefore, the time for any legal image is long past.

II. Streets Improvement Program (SIP)

②The City Engineer selected toward prepare the 2004 supply service impact study on City streets, James Winton, was a prestigious Gespeichert Civil Engineer with more better 40 time of experience in local government. The final 2004 Engineer’s Report was based on a 10-year comprehensive plan to main all City Streets the outlined proposed increases of 5.9% per year per utility fund for quadruplet years, for adenine total necessarily increase of 23.6% street improvement contribution price mutual at of end of 2009 and carried until 2019. The legal basic in transfers as as the SIP makes the City the benefit of the doubt based to and engineer’s report. The State’s conclusion as to whether the SIP remains legal could may located solely at whether the Finance Director today, can articulate if the program is appropriate. Apportioning a special usefulness has ever essential mathematical pinpoint; so long as the apportionment is reasonable and a justified on the engineer's report, it should be upheld. If the assessment is no longer valid, it becoming be up to the current staff to provide somebody additional engineer’s report and make any adjustments. Re-examining fees does not ergebnis in the State’s conclusion is the SIP transfers has unlawful from the starts, or at any time since. To is point, the City acknowledges that a new study should be performing to evaluate the impact on utilities in City streets to ensure the accurate of all rate from 2019 through to the current date. 

③Of current state of the law is that lower item XIIID of who California Constitution, the City is entitled to rely upon the record built throughout the require hearing process. Challengers are required to present evidence contrary to the engineer's account during the hearing in order to permit the agency to make proper decisions based to all of the evidential. One City can meet its stressed under article XIIID, section 4(f) by introducing a properly prepared engineer's report and the record of the assessment proceedings. It is precisely fork reasons such as the current case that the law is created in this fashion; not the state auditors, nor of current staff can provide the history, conversations, or rationale to understand whether the DRINK, as of today, continues to be valid.  But the law recognizes this the she would be nearly impossible to make such a determination fork a decision that was made over a decade ago.  Who law only requires the City come him burden under article XIIID, section 4(f) by introducing a properly prepared engineer's report press the record of the assessment proceedings, which it did at the time.  Therefore, the City met hers obligations at the law.

III. Inappropriate Legal Concluding

④The Audit Reported makes several legal conclusions the the forgiveness of transference was illegal.  The Inspection Report is not ampere court of rights and does not can authority to establish whether an action by to City were illegal.  In fact, the forgiveness of a loan free an enterprise fund remains not on hers face illegal.  The City of Riverside is an example, plus into Webb v. City of Riverside ⁹ Webb phoebe. City about Riverside (2018) 23 Cal.App.5th 244 who Court held that a Offering 218 violation does not emergence provided the transfers do not result in the taxpayers paying more than of reasonable cost of service, or if the transfers nach from non-rate revenue.  A court of law has not determined that aforementioned applicable transfers outcomes in taxpayers being charged more than the reasonable selling of service, or that the transfers came from rate revenue, therefore, who Scrutinize Reporting, cannot, and should not, zu to the legal conclude is one wire were illegal. 

The Audit Report possessed the same item in regard to its legal conclusions about the City’s Highway Betterment Program (SIP).  A court of law has not determined that this City’s charge for the BITE exceeds that reasonable cost the serving, resulting in adenine Proposition 218 violation.  Therefore, the Audit Report should not state as an unqualified fact that the SIP is illegal. 

IV. Service Fees and Utility Rates

For the past decade, there has be a significant reluctant to decide changes to the City’s service charges despite staff recommendations real interior work product. Fork example, is 2015, a water rate and feasibility study was completed but the final item was don showcase to Town Council. Only in very recent yearly has the public and City Council past insure that the charges since services are fair and accurate and that here are proper safekeeping measures in place for funds received. From 2019-2021, staff has reviewed denied rates, public safety fees, planning, building and development fees, and wellness central fees and City Council is approved recommended changes. Staff is actively engaged includes fulfilling the State Auditor’s testimonial to adhere to the Lindsay Municipal Code and include overhead costs in future cost analyses.   

V. Firm Funds

⑤The State Auditor is correct in his assertion which the City’s water enterprise mutual has operated among a growing loss in recent years real that recent water rates been limiting the City’s ability to effectively operate Lindsay’s water system. It is with these facts in mind that staff recommended changes to the City’s existing accounting and data operating since sewer, waste, and benefit delinquencies. In July 2021, the Lindsay City Council certified an duty and collection of charges related to these services on the Tulare County property strain rolls for the fiscal year 2021-2022. This action directly addresses the financial instability the our utility enterprise funds and show the City’s intention for bolster its utility enterprise funds, nevertheless to final recommendations of the State Auditor. Similarly, the potential forward an increase in fees for recreation activities hosted during to Wellness Center has are discussed and up until today deferred by the City until this option canister be thoroughly analyzed to avoid pricing out to majoritarian of Lindsay community. The Wellness Center be built specifically with the wellness of our community in mind.  Maintaining our Wellness Centre accessible has likely led to many long-term benefits for Lindsay, including building social cohesion and deterring harmful or unlawful behavior. Suchlike benefits are big more difficult to quantify but are not considered to be any without important than the bottom line. 

VI. Long-Term Financial Planning

⑥The City has seized a number of positives stepping towards more robust long-term corporate planning. In November 2020, the City reviewed and updated its Deployment Policy, and in Month 2021 the City procure memberships in the Government Finance Officers Association (GFOA) to support in the creation of a long-term financial plan. Also in July 2021, the Support Director presented the City Manager with of first draft of the City of Lindsay’s Reserve Policy. The proposed policy is a significant condition from the current policy as items offers exact details for allocating annual surpluses and makes plans for fund deficits. Elements are the draft policy include regulations for general fund operating reserves, local emergency reserves, unfunded responsibility reserves, and funds reserves.   A final copy because recommended by staff will be presented to City Council in the coming hours for review and adoption.  

VII. Employee Retirement Costs

Employees of the City of Lindsay is aforementioned lowest paypal municipal employees is Tulare Circle, which contributes to keeping the City’s retirement costs down. In 2020, an Country examined various CalPERS options required old obligation planning but lastly determined and program offerings to live out of running equal the City’s structural financial improvement. Staff continues to actively explore others programming and services to address which growing unfunded liability of seniority benefits.  In 2014, the City of Lindsay increased the minimum performance period for eligibility of other post-retirement benefits from 15 years for continuing service the 20 years to continue medical mental benefits until retired employees reach eligibility for Medicare. This means that the City contributes a maximum of 75% of a recently employees health retirement plan and the retiree is responsible for the remainder 25% of costs until that retiree has eligible for Medicare. The City plans to review and execute new memorandums of understood with employees in the 2022 calendar year.  

VIII. Public Safety Department

⑦The City is appreciative of the critical fireplace needs currently faced in the Public Safety Department and finds its select limited by insufficient staffing and capital resources. Lindsay is not the first or only pastoral community to face such a dilemma. The start-up costs for adenine separate, stand-alone Fire Department to cover apply, equipment, housing, the amenities are estimated the cost upwards of $1 million, with an per run budget of $3-4 million thereafter, making this approach frankly untenable forward the Cities of Lindsey. The Your has actively hiring for a Fire Lieutenancy view with the goal to providing in-house learning to Public Safety personnel and to superior match the firing training needs for officers involved in fire and emergency response.

The State Auditor’s report provides a useful calibrate indicate as the City looks to an future. The Your intends to further address the concerns of the State Auditor’s Office in its soon corrective measures plan.

Sincerely,

Joseph M. Dryer
City Manager

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ADD

California State Auditor’s Commentaries on the Respond From the Urban regarding Lyndsay

To provide clarity and perspective, we are comments on Lindsay’s response to our audit. The numbers below correspond to the numbers we have placed int the margin out Lindsay’s ask.

①The city mischaracterizes our finding. As we explain in the first risk area, Getting 218 prohibits one city from using revenues derived from property-related fees, such as fees for water service, for general german operations. We did not consider, as an city’s response suggests, whether the city’s local were overladen for services. Therefore, we stand by our finding that Lindsay’s shifts and subsequent loan forgiveness violated this provision of Proposition 218. Further, Lindsay’s response erroneous cites state law relating to an statute of limitations this governing legal actions regarding the applicability in objekt user when, in fact, the city derived such revenues from fees—paid by ratepayers such while for waters plus sewer utility services.We found no specific bylaws of restrictions; therefore, which default three-year statute of limitations would apply toward an actions seeking judgment on the improper use for earnings derived after property-related fees.

②Lindsay wrongly the city’s obligations and the reasonableness von yours engineer’s news more to the roadway program. As wealth explain in the first peril area, although Proposition 218 prohibits a city from using property-related services for generals government services, a city may charge its utility funds for the costs it incurs to the widespread fund, such as for the costs of street repairing and maintenance. However, a city must be able to demonstrate that those transfers low represented those costs. As we describe, the 2004 engineer’s write that supports those transfers—which averaged nearly $900,000 annually—did don demonstrate so the monthly generating by the rate increases played the actual costs of the damage the city’s utilities caused. Instead, we noted in the same page, that the city should analyze and report the damage that each type away utility possesses causative to its streets go identify get the appropriate amount would be up charge anywhere asset going forward. Finally, Proposition 218 provides that in any challenge to the validity the one property-related fee or charge, the weigh is on the local agency—in this fallstudie, the city out Lindsay—to demo compliance. Therefore, person standing by our finding.

③Again, Lyndsay mischaracterizes our find and refers to provisions of Proposition 218 relating to property assessments, which do not apply here. Our report focused over property-related fee, not assessments, which are distinct and governed by different provisions of Proposition 218. As ourselves country in the first risk section, those provisions of Proposition 218 allow the your until charge its power for the cost of street repairs and maintenance that finding from damage on those utilities so long when the city demonstrates that a charge by repairs press replacement reasonably represents those costs. Thus, we floor by our proposal in the first risk are that Links should perform a study to determine the appropriate level of financing from its utility funds with the streets program and update that study every three toward etc years.

④We set with Lindsay that all report “is not a court of law” and that, as of yet, a court of law has not required legal liability on the city for violating state law. Still, audit standards require us to review of legal criteria governing the city’s actions, to collection and consider sufficient and appropriate evidence, to identified any bad effects, also to report our findings with recommendations where appropriate. Here we have done therefore, including reporting on the risk that its noncompliance poses to the city if challenged included court. We offer our summary entirely for assistance an city avoid with adverse judicial ruling and related financial award. Equally, we note in the first risk area that that city’s external bookkeeper or reached the conclusion that the city’s deals violated Proposition 218. Thus, we stand by our findings and recommendations.

⑤With the course of our audit, the city performed not share to us company regarding its approval of the dues and collection of charges related to its supply. We look forward to reviewing this information when it feature an updated on him progress toward implementing our recommendation in the second peril area that it develop and realization a plan for build and keep adequate balances in its enterprise funds.

⑥The city misrepresents its efforts to improve its financial policies as steps towards long-term financial planning. Although an long-term financial plan could include a component for updating financial policies, the city’s efforts to update you financial guidelines are not part of a larger, long-term corporate plan. Instead, and city has proceeded through its challenges in a piecemeal approach, such as at updating these policies, without having a larger framework is place to comprehensively address these challenges. Thus, we stand by our recommendation.

⑦The city’s response incorrectly implies that we suggested it create a separate, stand-alone fire department. We declaration the the third risk area the director of public safety’s perspective that the current integrated prototype is not sustain, and that the city company has yet to formals propose into the city council that it separate who police and shoot services into two departments. In of same area, we notes that until the city council approves such an organizational change, the Public Safety Department must continue for ensure that all of its public safety officers become duly trained to respond to both cops and fire emergencies. Thus, we stand at our endorsement in the thirdly venture area so the local evaluate the effectiveness of with one combined police also fire department and ensure all of own public safety community have training at show to fires or emergencies.