Gran Jurado del Condado de Santa Barbara
2017-2018
Hallazgos & Recomendaciones
11 hallazgos
F1:
The Internal Audit Division of the Santa Barbara County Auditor-Controller’s Office had a funded and filled staff of 10 FTE prior to the 2008 recession. Just prior to the discovery of the 2017 fraud, the funded staff had fallen to 5 FTE, and only 2.5 of those were filled.
Recomendaciones relacionadas (1)
R1:
That the Auditor-Controller maintain the number of Internal Audit Division staff at the funded level.
F2:
The financial management guidelines issued by the County of Santa Barbara Auditor-Controller are not applied consistently in operational departments, nor is compliance with those guidelines routinely audited by the Auditor-Controller.
Recomendaciones relacionadas (3)
R2a:
That County Board of Supervisors direct staff to use the consistent application of financial guidelines issued by the Auditor-Controller’s Office as part of the annual personnel management process.
R2b:
That the Auditor-Controller’s Office establish an audit schedule for County administration at all levels to ensure their proper compliance with the County financial management guidelines.
R2c:
That the Santa Barbara County Sheriff, District Attorney, Auditor-Controller, Clerk Recorder- Assessor-Registrar of Voters and Treasurer-Tax Collector-Public Administrator require consistent application of financial guidelines issued by the Auditor-Controller’s Office as part of the annual personnel management process.
F3:
Knowledge of financial management and risks by managers in some departments in the County of Santa Barbara is insufficient.
Recomendaciones relacionadas (3)
R3a:
That the Santa Barbara County Board of Supervisors direct staff to require training in financial management (including County financial guidelines, FIN, and reporting and accountability procedures) for all department and program heads.
R3b:
That the County Board of Supervisors direct staff to make successful completion of this training a part of staff evaluations.
R3c:
That the Santa Barbara County Sheriff, District Attorney, Auditor-Controller, Clerk Recorder- Assessor-Registrar of Voters and Treasurer-Tax Collector-Public Administrator direct all program managers to require mandatory training in financial management (including County financial guidelines, FIN, and reporting and accountability procedures) for all department and program heads.
F4:
Knowledge of potential conflicts of interest among some senior County of Santa Barbara employees is inadequate.
Recomendaciones relacionadas (1)
R4:
That the Board of Supervisors develop procedures for the conduct of annual training on conflict of interest policy for all relevant categories of employees.
F5:
There is no consistent policy of requiring program heads, division heads, or department heads within Santa Barbara County departments to account for spending under their control to their superiors and/or to the CEO through an annual formal and written statement.
Recomendaciones relacionadas (2)
R5a:
That the Santa Barbara County Board of Supervisors direct all program heads, division heads, and department heads to sign annual statements to their managers, stating that all funds under their control have been managed in compliance with County financial management guidelines and the County’s Internal Control Policy.
R5b:
That The Santa Barbara County Sheriff, District Attorney, Auditor-Controller, Clerk Recorder- Assessor-Registrar of Voters and Treasurer-Tax Collector-Public Administrator direct all program managers to sign annual statements to their supervisors, stating that all funds under their control have been managed in compliance with County financial management guidelines and the County’s Internal Control Policy.
F6:
The Jury found that the importance of the work of the Internal Audit Division within the Office of the Auditor-Controller and of internal controls generally has a low priority across County government.
Recomendaciones relacionadas (1)
R6:
That the Board of Supervisors direct staff to incorporate performance measures into the budget process to highlight the importance of internal controls for every department in County government.
F7:
It was stated by senior staff that a comprehensive investigation into the strengths and weaknesses of the internal controls in the County would be conducted by an outside consultant after the fraud; no such investigation took place.
Recomendaciones relacionadas (1)
R7:
That the Board of Supervisors direct staff to contract a complete independent evaluation and audit of internal controls, including the issuance of an opinion on the effectiveness of such controls and recommendations for improvement.
F8:
The Jury found that the actions taken by Santa Barbara County management in response to the 2017 fraud in the Department of Public Works were slow and inadequate.
Recomendaciones relacionadas (1)
R8:
That the Santa Barbara County Board of Supervisors direct staff to issue a public report stating the steps taken and their effective dates to strengthen public financial management in the County following the 2017 Department of Public Works fraud.
F9:
The Financial Information Network is an insufficient and inefficient system with many weaknesses that have caused most departments to create, or to have created, complementary financial software. Some of the weaknesses in FIN may have contributed to the 2017 Department of Public Works fraud.
Recomendaciones relacionadas (3)
R9a:
That the Santa Barbara County Board of Supervisors direct staff to commission an independent evaluation of the benefits and costs of acquiring, installing and maintaining Enterprise Resource Planning software from a major vendor. The evaluation should: • be procured competitively and should exclude any firm or individual that has previously worked with the County to avoid conflicts of interest; • compare major software options, analyze where such options have been used in governments of comparable size to the County; • present a full analysis of the costs of and benefits of current financial management software used in the Auditor-Controller’s Office and throughout the County Government; and • give a proper comparison to the costs and benefits of Enterprise Resource Planning software.
R9b:
That the Enterprise Resource Planning evaluation be presented at an open session of the Santa Barbara County Board of Supervisors to allow public comment.
R9c:
That all Santa Barbara County staff using FIN, or its eventual successor, submit annual financial disclosure.
F10:
The Jury found that minimum professional and academic qualifications for financial staff positions are not standardized nor consistent throughout departments in Santa Barbara County.
Recomendaciones relacionadas (1)
R10:
That policy throughout Santa Barbara County be standardized with respect to the minimum academic and other professional qualifications of financial staff.
F11:
Some Santa Barbara County staff commented that there might be significant other potential financial risks in Santa Barbara County, including management of property tax reimbursements and warrant payments through the Sheriff’s Civil Bureau.
Recomendaciones relacionadas (2)
R11a:
That the Santa Barbara County Board of Supervisors direct staff to commission an independent audit of the property tax reimbursements made through the Santa Barbara County Assessor’s Office during the past 10 years.
R11b:
That the Board of Supervisors direct staff to commission an independent audit of civil warrant payments made through the County Sheriff’s Office during the past 10 years.
Hallazgos & Recomendaciones
2 hallazgos
F1:
At this point only the income from Lompoc Valley Medical Center operations is available to service the debt obligations of the Cal-Mortgage revenue bond, which will require at least a $1 million per year repayment until 2042.
Recomendaciones relacionadas (2)
R1a:
That the Board of Directors of the Lompoc Valley Medical Center report to its constituents how they propose to repay the Cal-Mortgage revenue bond.
R1b:
That the Board of Directors of the Lompoc Valley Medical Center explain to its constituents how the repayment to Cal-Mortgage will affect its existing operations.
F2:
The Lompoc Valley Medical Center leadership did not provide a full explanation to its constituents for the failure of the Champion Center.
Recomendaciones relacionadas (1)
R2:
That the Board of Directors of the Lompoc Valley Medical Center provide a clear and detailed explanation of the failure of the Champion Center to its constituents, consistent with its stated core principle of transparency.
Hallazgos & Recomendaciones
2 hallazgos
F1:
Identifying odors and locating their source is a challenging process that can involve county and local agencies, making it difficult to mitigate the odors.
F2:
There is no clear point of contact for citizens to make odor complaints on the City of Santa Maria’s website.
Recomendaciones relacionadas (1)
R2:
That the City of Santa Maria create a section on its website that clearly directs citizens where to lodge complaints about odors.
Hallazgos & Recomendaciones
7 hallazgos
F1:
The General Fund balance of the City of Guadalupe has improved slightly over the period 2015-16 to 2017-18 compared to the period 2012-13 to 2014-15 fiscal years.
F2:
The total primary government balance – the sum of the General Fund balance and the Enterprise Fund balance – has also improved because of better financial results from the City of Guadalupe’s enterprises.
F3:
The ratio of current assets to current liabilities in the City of Guadalupe General Fund averaged 3.5 over the period 2015-16 to 2016-17, which is an improvement over the period 2012-13 to 2014-15.
F4:
Guadalupe does not generate enough General Fund revenue from the sources on which most cities rely (property, sales and transient occupancy taxes) to provide basic administrative and safety services while maintaining a positive General Fund balance.
F5:
Inadequate General Fund revenue necessitates continuous transfers from Guadalupe’s Enterprise Funds. Given the slow growth of population and of per capita income in Guadalupe and the limited new investment in housing and business, it is unlikely that public revenue can eliminate the dependence of the General Fund on transfers from the Enterprise Funds.
F6:
Following the March 13, 2018 Guadalupe City Council meeting, at which the Draft City Audit of 2016-17 was discussed, the City may have used restricted monies from Measure A and Gas Tax funds to finance its General Fund and other fund deficits.
Recomendaciones relacionadas (2)
R6a:
That the City Council of Guadalupe analyze the Measure A, Gas Tax, and Enterprise Funds to determine if those fund(s) were used to loan monies outside the Cost Allocation plans for 2016-17 and 2017-18, to the General Fund, Library Fund, Wastewater Treatment Fund and Solid Waste fund.
R6b:
That once the amounts in Recommendation 6a are determined, the City Council of Guadalupe pass a resolution and a repayment plan to repay any questioned funds.
F7:
The City of Guadalupe is considering several recommendations to improve its financial condition, in light of material deficiencies found in previous audits.
Recomendaciones relacionadas (1)
R7:
That the Guadalupe City Council formally consider, in an open session of the City Council, all recommendations it has received to improve its financial condition and to issue a written statement to the public about its decisions on each recommendation.
Hallazgos & Recomendaciones
5 hallazgos
F1:
The impact of mandatory overtime on custody deputies is unknown.
Recomendaciones relacionadas (1)
R1:
That the Sheriff’s Office conduct a survey of custody and law enforcement deputies to gauge sentiment on mandatory and voluntary overtime policies and assess the impact on morale, performance, health, retention, and productive hours.
F2:
Recruiting is a low priority for the Sheriff’s Office.
Recomendaciones relacionadas (2)
R2a:
That the Sheriff’s Office consult a professional recruiting firm to review current recruiting practices and provide recommendations, including on incentive programs.
R2b:
That the Board of Supervisors direct staff to have a market survey conducted to determine how recruiting and personnel policies, including incentives, in the Sheriff’s Office compare to local police forces in Santa Barbara County and Sheriff’s Departments in other counties.
F3:
The Sheriff’s Office has not considered all possible measures that could help reduce the mandatory overtime requirements in the short term.
Recomendaciones relacionadas (4)
R3a:
That the Sheriff’s Office review budget allocations with County auditors and accountants to identify potential cost savings that could be shifted to recruiting and personnel.
R3b:
That the Sheriff’s Office review the assignment of custody deputies to non-line positions to assess whether any of these non-line duties can be performed by civilian employees, contractors, or retired former deputies.
R3c:
That the Sheriff’s Office conduct an assessment of alternative business models, such as cross- training law enforcement deputies to work rotations in custody positions, to enlarge the available pool of custody personnel.
R3d:
That the Board of Supervisors direct staff to conduct a comprehensive staffing study of the Sheriff’s Office to provide a clear understanding of staffing requirements, shortfalls, and costs, including: • the allocation of positions to law enforcement and custody • how the average of 1578 productive hours compares to other law enforcement entities • the number of additional custody deputies required to eliminate the standing mandatory overtime policy • the projected costs of funding additional positions
F4:
The Jail Operations Division’s Transportation Unit is particularly understaffed, creating acute mandatory overtime requirements.
Recomendaciones relacionadas (2)
R4a:
That the Board of Supervisors direct a near-term assessment of the timeline and costs to the County of implementing video arraignments at the Main Jail and the Northern Branch Jail once open and the impact on custody deputy staffing requirements.
R4b:
That based on the results of this assessment, the Board of Supervisors seek agreement from the Court to implement video arraignments as soon as possible.
F5:
The impact of the 2019 scheduled opening of the Northern Branch Jail on existing overtime requirements is unknown.
Recomendaciones relacionadas (1)
R5:
That the Sheriff’s Office produce a study on the projected impact of the opening of the Northern Branch Jail on overtime requirements for custody deputies, assuming two scenarios: 1) all funded positions are filled, and 2) recent vacancy rates remain unchanged.
Hallazgos & Recomendaciones
3 hallazgos
F1:
The use of Measure U funds at the Carpinteria Children’s Project at the Main Elementary School is allowed under the terms of Measure U.
F2:
A significant part of the facilities at the Carpinteria Children’s Project at Main Elementary School is used by non-profit organizations and/or the County of Santa Barbara.
F3:
The leasing of the Main Elementary School in Carpinteria to the Hutton Parker Foundation complies with the California Education Code. Under California Penal Code Section 933 and 933.05, this report does not require a response. 5
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Hallazgos & Recomendaciones
12 hallazgos
F1:
Pension solvency risks are moderate in Buellton and Goleta; pension liquidity risks, as indicated by projected years of negative cash flow under projected CalPERS actuarial returns, are nil.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F2:
In Carpinteria, Guadalupe and Solvang, pension solvency risks are minimal to moderate, except in the closed Carpinteria Safety Plan. Pension liquidity risks in those cities are higher, with several years in all three cities having projected negative cash flows under projected CalPERS actuarial returns.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F3:
In Lompoc, Santa Maria and the City of Santa Barbara, solvency risks are high in the pre-PEPRA plans that have most of the Actuarial Liabilities in the municipal plans.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F4:
In Lompoc and the City of Santa Barbara, liquidity risks are high as measured by projected years of negative cash flow. Managing those risks will require employer’s pension contributions of 40 percent of payroll in Lompoc and 50 percent in the City of Santa Barbara at least until 2030.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F5:
While the City of Santa Barbara does not have a “PEPRA Police Plan,” it does respect the 2013 PEPRA Law for those hired after December 31, 2012. Therefore, the absence of a “PEPRA Police Plan” does not adversely affect the funded ratio or other risk indicators for the City of Santa Barbara system.
F6:
Liquidity risks in Santa Maria are lower than in Lompoc and the City of Santa Barbara, in that Santa Maria projects no years of negative cash flows. However, Santa Maria would have negative cash flow if CalPERS investment returns fall below their projected actuarial values. Managing that liquidity risk requires that Santa Maria maintain high total employer contributions to its pension plans until at least 2034.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F7:
The City of Santa Maria faces greater pension risks because of its comparatively low General Fund revenue per capita, which is less than 50 percent of that of the City of Santa Barbara and less than 67 percent of that of Lompoc. Santa Maria has taken steps to end employer contributions in lieu of employee contributions in its pension plans; this step moves some of the burden of repaying its unfunded pension liabilities from the City to its active employees.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F8:
The 12 PEPRA plans in the cities of the County of Santa Barbara have a funded ratio of 0.90 and the 20 non-PEPRA plans have a funded ratio of 0.68. This is a small, but positive, sign that the 9 PEPRA law is having the intended effect of strengthening the security of pension benefits in the County.
F9:
Funded ratios of the municipal pension systems in Santa Barbara County are sensitive to the discount rate applied by CalPERS. A cut in that rate to 6 percent, from the 2018-19 rate of 7 percent, would push the funded ratios of several municipal systems close to 0.5 and might impose further increases in the employer’s contributions in Lompoc, in the City of Santa Barbara and in Santa Maria.
Recomendaciones relacionadas (2)
R1:
That in view of the 12 Findings, the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara analyze capital spending, employer/employee contribution rates, staffing levels, and all existing taxes and revenue sources under their control to identify potential revenue gains and cost savings.
R2:
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. 10
F10:
It is unlikely that the largest municipal plans - Lompoc Safety; City of Santa Barbara Miscellaneous; City of Santa Barbara Fire; City of Santa Barbara Police; and City of Santa Maria Miscellaneous - can apply the revised CalPERS amortization schedule of 20 years to all their unfunded liabilities without higher new employer’s contributions. Such new contributions would be particularly problematic in Lompoc and in the City of Santa Barbara given the high employer’s contribution rates that already apply in those cities.
F11:
The solvency risks to the SBCERS plans are moderate and manageable. The SBCERS decision to apply an accelerated amortization schedule to the unfunded liabilities generated during the 2007- 09 period of low asset returns is appropriate because it will shorten the period in which high employer contributions are necessary.
F12:
The SBCERS policy of not participating in the CalPERS risk pool is appropriate because SBCERS has achieved portfolio returns comparable to those of CalPERS over the past 25 years.