Board of SuPervisors ResPonse ,,Managing Public Properties in Sonoma County" Grand Jury Report

Sonoma County Capital Assets Policy FA-l fails to provide sufficient reporting for .inrg"r"nt to deiermine the extent to wnicn normal maintenance and repairs of buildings and oiher County facilities are being deferred. we disagree wholly with this finding. The purpose of Auditor-controller-Treasurer Tax Collector (ACTTCi Fiscal eoticy FA-1, Accounting for CapitalAssets, is to ensure accurate and complete physical'and financiair"cords needed for financial reporting. The policy is not intended to address areas such as planning and budgeting for capital asset purchases and disposals, asset maintenance activities, or the appropriate use of County-owned assets. General Services and the County Administrator's Office, through the capital project plan and budget development process, address maintenance and repairs needs.

The true cost of maintaining the County's facilities has been substantially understated for over a decade by deferring needed maintenance. We disagree partially with this finding. lt/laintenance needs are annually identified and valued in the Five-Year Capital lmprovement Plan (ClP).

Facility maintenance is persistently underfunded, at levels substantially below recommended industry standards. We agree with this finding. Competing public services and flat revenues stream have limited the Board's ability to fully fund building maintenance needs. However, over the last 3 years the Board made a policy decision to increase infrastructure investment by annually dedicating forty percent (4Oo/o) of all new property tax growth, which is above the growth needed to keep up with inflation for existing levels of General Fund services, to the Capital Projects Budget to be used towards addressing deferred maintenance of County facilities. See Board adopted Long Range Planning policies https://sonomacountv.ca.gov/CAO/Public-Reports/Budget-Repofts/Flnancial-Policies-for- FY-2A19-20201

Deferred maintenance costs are continuing to accumulate to an extent that they constitute a major reduction in asset value not reported in the Gounty's financial statements. We disagree wholly with this finding. The Sonoma County Comprehensive Annual Financial Report (CAFR) is prepared in accordance with GAAP applicable to state and local governmental entities. As such, the County is required to comply with Government Accounting Standards Board (GASB) Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for lnsurance Recoveries. ln order to record an impairment loss, GASB 42 requires that the impairment be significant, unexpected and permanent, and also result in a decline in service utility. Following the provisions of GASB 42, an outdated or decrepit office building that is still used as an office is not impaired, because there has been no decline in service utility.