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All council members were present for the Tuesday, May 16, City Council meeting. Open session started at 6:19 p.m. and ended at 10:53 p.m. Here's what you missed:
Council at odds over Special Events Fund Audit. Even though a recent audit of the City's Special Events Fund identified deficiencies in the funds budget process which “can lead to an inaccurate, insufficient or inefficient budget development, reporting and monitoring," the council voted 3 - 2 to continue the item and decide what to do about it later. The audit warns that improper practices could ultimately risk ill-informed decision making by stakeholders. The entire audit can be viewed here.
The City of Carson hired specialized internal auditors, Baker Tilly US, LLP, as the City seemingly continues to struggle utilizing proper internal controls of its Special Events Fund, despite passing a resolution on Apr 6, 2021 to refine accounting deficiencies. The goal of the audit was to evaluate the 2021 resolution which was established based off the recommendations of a 2019 financial review. The auditors offered several key findings of the City’s Special Events and its general procedures to tracking expenses including:
The audit claims that "The City Council does not have a clear understanding of how direct and indirect costs for Special Events are represented and accounted for in proposed budgets, particularly regarding event staffing fulfilled by City personnel. This can lead to Council-led Special Events to experience budget overruns." The audit recommends more detailed explanations of how indirect and indirect costs are calculated, as well a description of the special time code assignments used to capture staff time allocations for Special Events.
The City improperly classifies "Special events" vs " Program Events". According to the audit: "In fiscal year 2022, the Winterfest event was classified as a program event. All revenues and expenditures pertaining to this event were recorded in the General Fund. However, overtime expenses rendered by the Public Works Department for that event were recorded to the City Special Events fund. Inadvertently, there was no General Fund subsidy, resulting in an accumulated Special Events fund balance at year-end for Winterfest.”
Controls for monitoring general ledger entries in compliance to res. 21-012 do not exist. So far, all donations, regardless of source, have been allocated to the same donation account. General Ledger should have 2 separate revenue donation accounts to allow proper accounting of donations received from third-party organization/individual and nonprofits. Three out of ten events tested had donations that could not be determined whether it came from a 3rd party organization or a nonprofit.
The City fails to properly institute and enforce partnership agreements. At all three special events (JazzFest, Woman's Health Conference, and Philippine Independence Day) involving partnerships between the City and other external organizations; partnership agreements were not officially acknowledged. As per the report: "In the event of a failure to perform, the City of Carson nor the non profit have a documented acknowledgement indicating both parties understood the agreed upon terms and in good faith promised to uphold their responsibilities and obligations.
The City does not have a comprehensive and documented procedures for special event budget initiation, planning, preparation, review, approval, and modification.
The audit finds that the council is not given enough time to review the proposed special event fund 244 budget, prior to the budget workshop. As per the audit: "We recommend that the City submit the Proposed Special Event Fund 244 Budget, along with any planned presentation materials, to City Council members at least two weeks prior to the scheduled."
As per the audit, "Further, budget modifications for certain events supported solely by testimonial evidence creates inconsistencies in budget preparation practices, reduces the level of public confidence in the Council's approval, and leaves the City susceptible to the public perception of bias."
Time spent by City Staff on Special Events is not properly recorded.
Funds from the previous fiscal year were not fully exhausted and therefore the budget was excessive and the remaining funds should be reallocated. In FY2021-2022, approximately only 44% of the budgeted Special Event funds were used and with the majority of the current fiscal year complete, only 60% of budgeted funds in FY2022-2023 have been used.
This year some events will receive huge increases in their budgets including the Jazz Festival (95% increase), Philippine Independence Day (45% increase), Juneteenth (38% increase), and Women's Health Conference (37% increase).
The audit found multiple events with high costs-per-attendee last year despite Community Services Management indicating that attendance data is not considered reliable. The audit highlights Cajun & Blues White Linen Festival, at approximately $190 per person, and the Women's Health Conference at approximately $180 per person.
Mayor Lula Davis-Holmes asked to push the item to a later date implying that some of the recommendations given by the auditors were not realistic for the City of Carson stating, “there are some loopholes in here, as I read this report already.” The Mayor pointed to the audit’s findings on correctly designating indirect costs for special events and wondered why would the City charge extra for staff’s time when they are already working, “When we start talking about indirect cost, we're talking about staff that's assigned to these special events. That has been a stickler for me, because without these events, you don't need the staff. If these [events] are in partnership with the city, it's really a city event. I want to get away from this thinking that this is a nonprofit organization event because events can go on without the nonprofit as they've done for years” stated Mayor Holmes.
Councilmember Jim Dear argued that by pushing the item to a date not yet determined, the council was seemingly ignoring the findings made by the auditors who flew from out of town to make their presentation. Dear made a substitute motion to immediately implement the recommendations made in the audit, “I don't think we should continue this item because if we continue it, it might not get on the agenda for some time,” said Dear. “These recommendations from this audit’s firm are what the city needs for transparency, accountability, [and] professionalism. The last five years we've had deferred maintenance on our infrastructure of our city. Well, the analogy is why are we doing deferred maintenance on our policies and procedures?” However, only Councilmember Arleen Rojas agreed with his suggestion as his motion failed 2-3 with Mayor Davis-Holmes, Mayor Pro Tem. Hilton, and Councilmember Hicks voted against his idea.
The recent audit stems from improper accounting practices of the City’s Special Events discovered years and years ago. In 2019, certified accounting firm Gruber & Associates attempted to conduct an audit on the internal controls and processes of the City Special Events Fund as well as the Carson Community Foundation and City of Carson Cultural Arts Program. During the Feb 18, 2020 City Council meeting, the independent auditor noted that an audit was at the time impossible due to the City’s improper financial reporting. “We were asked to do an audit of the special events. Not possible. Can not do it” said the independent auditor at the time specifically responding to then Councilwoman Lula Davis-Holmes’ contentions on indirect costs, mirroring the similar arguments Mayor Davis-Holmes utilized to continue the recent agenda item. Ultimately, the council would use the recommendations from the audit to approve a resolution improving internal controls and accounting practices for special events on Apr 6, 2021. Included in the audit was a letter sent by CAT noting Councilmember’s Davis-Holmes was featured on fliers for two separate events hosted the Cultural Arts Foundation.
3rd Budget Workshop reduces this year’s $1.2 million surplus down to $518,694. The third budget workshop for this fiscal year ended on a bittersweet note as the City’s surplus projection from the second budget meeting fell from $1.2 million by over half that amount. This most recent workshop depicted the City’s special events budget, 5-year Capital Improvement Program (CIP), updated expenses of the City’s operating budget, budget requests from each department, and a new estimated surplus of $518,694.
The main expense updates come from an annual increase in the Los Angeles County’s Sheriff Contract, a $2 million bill for the special election held on November 2021, and $752,244 in requests from City Departments for additional positions. According to the presentation, the Los Angeles Sheriff’s contract is expected to increase by 8% or $1.924 million but Assistant City Manager Tarik Rahmani admitted that the actual contract increase won’t be known until later this month and the increase in price does not equate to an increase in police officers in the City.
The Los Angeles County Registrar sent the City Clerk’s department a $2 million invoice for the 2021 Special Election of which the City still needs to pay $1,524,878.84. The Registrar’s office offered a payment plan to the City, splitting the payments equally to $304,975.77 over the next 5 years until May 2027. As a result the City Clerk’s department requested an additional $104,975 in the budget to pay off this year’s amount. However, Senior Budget Analyst Ralston Turner warned that the City Clerk’s department will need more funding next year to pay for the upcoming Mayoral and Presidential election in 2024, ““When I draft the budget for [fiscal year] 24-25, the city clerk’s operation budget is going to expand another million dollars. Why? Because we have the second installment for that payment plan plus that's an election year for both the mayor and presidential election.”
Several Departments requested full-time equivalent (FTE) positions for the next year, increasing the City’s operational expenses by $752,244. The Public Works Department requested an additional three FTE Groundworkers to combat additional maintenance requests due to heavy rains the City experienced earlier this year. Community Services Department requested for a new Park Superintendent over the expansive Park Maintenance Division. The City Manager’s Office requested funds for a Senior Council Aide position to supervise the five current council aides. Finally, Public Safety is looking for two part-time Code Enforcement Officers and two part time Public Safety Engagement Officers.
Community Services Director Michael Whittiker presented the proposed 2023-2024 budget for the City’s Special Events totaling $545,791. The breakdown of Special Events Allocations can be viewed below:
Special Event | FY 22/23 Adopted Budget | FY 23/24 Proposed Budget | Increase/Decrease |
Samoan Flag Day | $10,000 | $10,000 | $0 |
Heroes Day/9-11 Tribute | $20,488 | $22,131 | $1,643 |
Cajun & Blues White Linen Festival | $29,990 | $30,417 | $427 |
Jazz Festival | $34,674 | $73,774 | $39,100 |
Women’s Health Conference | $45,010 | $58,233 | $13,223 |
Country Western Fair | $28,551 | $25,042 | -$3,509 |
Winterfest | $25,713 | $26,087 | $374 |
Earth Day Kids Fest | $14,214 | $15,250 | $1,036 |
Cinco de Mayo | $33,516 | $36,294 | $2,778 |
FamFest | $33,370 | $38,984 | $5,614 |
Philippine Independence Day | $34,195 | $55,180 | $20,985 |
Juneteenth | $33,796 | $53,408 | $19,612 |
Samoan Heritage Day | $23,464 | $30,992 | $7,528 |
Mayor State of the City | | $70,000 | |
Total | $366,982 | $545,791 | |
Public Works Director Arlington Rogers introduced the City’s proposed Five-Year Plan for the City’s Capital Improvement Program where he expects the City to pay $56 million this year and $387 million over the next five years. According to Rogers, the breakdown of this year’s City projects include 40 street improvements, 16 park projects, 15 building developments, 5 bikeways, and 3 stormwater plans. Rogers notes that over half of this year’s CIP allocation will be spent on street improvements at $30.6 million. The 5-year CIP plan can be downloaded by clicking here.
League of California Cities: A Collective Voice for Local Municipalities. CEO of the League of California Cities, Caroline Coleman, spoke at the council meeting to express her gratitude for the City’s continued membership with the league and provided an update on the league's advocacy priorities. The goal of the League of California Cities is to protect local control for municipalities by preserving existing City resources and securing billions of dollars of funding for its members. Coleman specifically warned about the California Business Round Table Measure which voters will vote on in 2024. According to Coleman the California Business Round Table Measure would interfere with local funding already established and could eliminate the City’s Measure R, the UUT continuation, which according to recent budget reports is projected to generate $9.5 million.
Council took positions on several State bills. The council took positions on several Senate and Assembly bills currently being circulated through the State's legislature.
On April 4, City Council voted to support AB 1538. AB 1538 would create a program incentivizing getting clean, zero-carbon capacity resources online to decrease electricity rates and increase power grid reliability. Written by Assemblymember Al Muratsuchi AB 1538 would establish the Clean Energy Reliability Program to be administered by the California Public Utilities Commission (CPUC) to provide incentives in the form of payments to clean energy distributors, such as the California Clean Power Alliance, to bring in more clean energy resources above their compliance requirements. This should help get more capacity online, which in turn should bring increased competition to the clean energy market and reduce prices.
At the April 18, City Council meeting the council unanimously sent a letter opposing SB 423 which forces cities to approve certain housing projects without opportunities for public input.
On May 2, City Council agreed to support AB 1465. This bill would possibly triple the level of potential civil penalties imposed on refineries for violating six provisions of existing law related to air quality, which would help ensure that the penalties associated with unlawful emissions of air contaminants are no longer treated as the cost of doing business.
Resolution passes condemning construction industry labor law violations. The council unanimously passed a resolution formally condemning bad practices by construction companies resulting in labor law violations. The council’s decision was spurred mainly by the requests of several representatives from teamsters, electrical workers, sheet metal workers, carpenters, and other labor unions who claimed that workplace fraud in the construction industry has expanded to some of the largest commercial construction sites in California resulting in “underground economy.” Furthermore, Mayor Lula Davis-Holmes instructed city staff to find a way to make all public infrastructure development projects in the City of Carson subject to a project labor agreement (PLA) including an on-going 157 acre project which currently is not under a PLA.
The council made the following Proclamations:
Recognizing the month of May as Mental Health Awareness Month.
Recognizing the month of May as Asian and Pacific Islander Month.
Recognizing the week of April 30 – May 6 as National Small Business Week.
Recognizing the week of April 30 – May 6 as Professional Municipal Clerks Week.
Recognizing the week of May 7 – 13 as National Teacher Appreciation Week.
Recognizing the week of May 21 – 27 as Public Works Week.
Events:
Coffee with the Carson Sheriff's Station: Hosted by the Boys & Girls Club of Carson Wednesday, May 24, 10 - 11 a.m. Prevailing Family Life Center Ministry 1609 E. Del Amo Blvd, Carson, CA, 90746
Memorial Day Tribute: Thursday, May 25, 6 - 8 p.m. Carson Event Center 801 E. Carson St., Carson, CA, 90745
125th Annual Philippine Independence Day Celebration: Saturday, June 10, 7:30 a.m. - 6:00 p.m. Veterans Park 22400 Moneta Ave., Carson, CA, 90745
Juneteenth: Saturday, June 17, 11 a.m. - 6 p.m. Mills Park 1340 E. Dimondale Dr., Carson, CA, 90746