On Feb. 9, I watched the City Council meeting webcast, and I found the city staff report on the budget ending July 2008 very brief and disturbing.
First of all, this report is 7 months past the June 30 ending date. Further, the nonchalant manner in which city staff presented it bothered me.
Maybe it was the late hour. But I expected at least one of the Council members to react to what city staff was reporting.
Instead, all we got were a few comments like “it looks bad” and” the citizens of Culver City are going to have to tighten their belts.”
For the financial well-being of Culver City, I hope that this current City Council is just naive, uninformed, inexperienced, or unaware.
Warning of a Catastrophe
I hope they will be able to see through this financial facade. The alternative to this is that the City Council is well aware of what is going on, and that it would be disastrous for the City.
Back on Dec. 12, I wrote an op-ed, “Taking a More Skeptical View of City Hall’s Financial Reports.” In that article I predicted what that final report would say, that city staff would predict bad times ahead, but say that for now, we have a surplus of $2 million.
I am not a financial psychic, and I do not purport to be one. I am just a lowly civil servant who has worked in this system 31 years.
I know “How we do things in Culver City.”
Here are a couple of things the City Council and the new City Manager may want to look at.
First, the bottom line numbers reported by city staff in their annual reports. I have always said that you cannot rely on these numbers. You have to see that the money is being spent from the approved accounts. It’s like giving your teenager $1,000 to buy school clothes. He or she comes home and says, “I still have $20 left over.” You still are going to want to see the school clothes and the receipts showing where the money was spent.
An example is, city staff reported on Feb. 9 that the good news was we had a $2 million plus surplus in our July 2008 General Fund fiscal budget. We budgeted 86 million, and we had expenditures of only $83.96 million. The problem is that only $80,895,987 was approved for expenditures by the City Council in the July 2008 General Fund budget. That is $4 million over budget. This information is from the city’s website, culvercity.org, city, Adopted City Budgets).
A More Realistic Deficit
From what I see, I will stick with my previous projections made on Dec. 12, and the General Fund budget will have a minimum $10 million shortfall. That is, if the City Council acts now, not later.
The second area of concern is the Liability Reserve/Self Insurance Fund.
In 2005, when City Manager Jerry Fulwood was completing his first complete budget for the city, he exposed a dark secret that only the citizens of Culver City did not know.
The city had been budgeting $3.5 million into the fund for years. In 2000, we had a $20 million reserve. From 2000 to 2005, the city spent all of the money in this account, approximately $38 million dollars. But no one can tell you where it was spent.
Mr. Fulwood requested that we increase the money being put into this fund, to build up the reserve for future liabilities.
He was able to do this without increasing the budget, by eliminating positions in the city. Most of these positions were in the Police Dept., and they would be eliminated through attrition.
What About This Crucial Detail?
The only problem was, no one left then, not until years later.
How did we pay millions of dollars each year for positions that were cut from the budget? This answer is a simple one: We used the money from the Liability Reserve/Self Insurance fund to pay the salary and benefits for these positions.
In June 2007, did anyone on the Council ask how we could give Mr. Fulwood and the city management staff 20 percent to 30 percent pay raises while General Fund budget increased very little.
Here is that bottom line thing again.
The total General Fund budget for 2006-’07, 2007-‘08 remained almost the same. But millions of dollars were moved from the Liability Reserve/Self Insurance Fund into the salary accounts to cover the big pay raises. Since the money was moved from one account in the General Fund to another, the bottom line remained the same. So it wasn’t the unexpected payout for the Cranks Road landslide in Culver Crest several years ago that devoured the Liability Reserve Fund. That payout was talked about in June 2007 when the City Council approved the budget.
Yet city staff would have you believe that all of this money went to pay for liability claims.
Not true. One area that this Self Insurance Fund covers is the city’s workers compensation claims.
On this issue, I can speak from experience.
The city has not been paying their worker compensation medical claims for injured employees even after claims have been determined to be work- related.
The main reason is, this money already has been spent on other things in the General Fund. This is widespread and several people have filed complaints of violations with the federal Americans with Disabilities Act.
The city may be looking for additional money from the federal government to help it through these hard economic times. But the city of Culver City has always had problems following the rules in handling federal grant money. Several employees in the city can testify to this.
Every time the City Council signs to accept federal money, they agree to comply with all federal laws including discrimination, ADA and fair pay laws.
One violation of these rules could stop all federal money the city receives for transportation, housing, police, fire, parks and other departments.
Look at it this way:
The community has to wonder why a city with a $2 million excess in its July 2008 General Fund budget, cannot fund a $179,000 animal control officer program that already was in the 07/08 budget or a $9,000 car show.
My advice to the City Council:
Whether it is a federal grant or the city budget, know what you are signing. Read the fine print.
May I conclude in honor the Paul Harvey, the late radio broadcaster, who died over the weekend. ” And now you know the rest of the story.”
Mr. Smith, retired from the Police Dept., may be contacted at scsinvest@sbcglobal.net
