City of Hemet audit update: employee turnover and budget deficits persist

Some audit items have been partially addressed; others have not

Photo by Melissa Diaz Hernandez/The Valley Chronicle
Since the city was placed on the list of “high risk” cities by California State Auditor Elaine Howle, some progress has been made in the right direction. However, turnover of key city employees and a budget deficit still plague City Hall.

■ Melissa Diaz Hernandez / Editor

Hemet’s former City Manager Alex Meyerhoff wrote a letter to State Auditor Elaine Howle just days before his departure, outlining the progress made to hopefully remove the city’s designation as “high risk” for failure during an audit that began in 2015.
“On July 25, 2017, the City of Hemet adopted the fiscal year 2017-18 General Fund budget. The FY17-18 General Fund budget includes Revenues of $50.3 million and Expenditures of $49 million,” wrote Meyerhoff. “The budget is consistent with the City’s Five Year Financial Management Plan. Pursuant to Resolution #1880, City of Hemet policy requires a minimum of 20 percent General Fund reserve. The approved FY 17-18 General Fund Budget includes a 22 percent reserve, which is consistent with this policy. Reserves serve as operating capital. In addition, the City of Hemet’s General Fund has no bonded indebtedness.”
The Valley Chronicle challenged Meyerhoff’s assessment when the budget was passed on July 25. The newspaper believed that the city was running a deficit per the actual budget document included with that meeting’s agenda. Mayor Linda Krupa’s “State of the City” presentation Oct. 26 reflected the Chronicle’s assessment that Council had passed an unbalanced budget.
“The city has more than the required 20 percent [general fund] reserve balance to cover any deficit in the budget,” stated Krupa during her address. “However, it is unacceptable to live with deficit spending. Therefore, efficiencies and cost containment must remain at the forefront of the conversation.”
Krupa’s statement contradicts the letter Meyerhoff sent to the auditor before his departure.

Balancing the books
Former administrative services consultant Joy Canfield presented a corrective plan to the Hemet City Council on June 20. Canfield determined that the city attorney’s fund balance was negative by $1.23 million.
“The bills were paid out of the attorney fund, which now has negative cash,” stated Canfield.
During that same meeting, Mayor Pro Tem Michael Perciful remarked that the bills were paid from somewhere. Canfield replied that “the money informally came from other funds” and the city had to correct the negative cash balance to get the fund back to zero.
Canfield was temporarily filling the position of former Finance Director Jessica Hurst, who resigned in late February.

Turnover of key city employees remains problematic
A high turnover rate of key employees still plagues the city as it tries to find and retain a city engineer. Steven Latino resigned in December 2016. He was replaced by Derek Wieske, who served as the city engineer for less than 90 days.
Wieske formally began his position as engineering director/city engineer on April 24. His last day was June 1, and The Valley Chronicle was told Wieske left because “the commute was too long.”
According to a source inside City Hall, another candidate for city engineer was going through the required background check but withdrew shortly after Meyerhoff resigned.
Interim City Manager Allen Parker responded to an email sent by The Valley Chronicle asking about the current vacancies in City Hall.
“Nino Abad was the acting city engineer, and he left approximately Oct. 1 to take a position with the city of Temecula. He was replaced with Sudi Shoja and her firm, Engineering Solution Services (EES), who were recommended to me by Nino as she/they were familiar with the city, having provided contract services previously,” said Parker. “Owing to a lack of engineering funds provided in the adopted budget, be it staff or contract services, I will be going to the Council in January for a budget transfer to underwrite EES’s services for the last half of this fiscal year.
“Lorena Rocha, the accounting manager for the past eight years, was the acting finance director,” continued Parker. “An employee in the city’s Finance Department for the past 11 years, she was appointed as the finance director approximately four weeks ago. We are now recruiting for the position of finance manager, the No. 2 person in the department.
“Starting this week, we will be advertising for the vacant deputy city manager position,” concluded Parker’s email.

City’s response to auditor is late
The Valley Chronicle previously reported in May that the city was almost three months overdue in providing a corrective action plan in response to the State Auditor’s report, “City of Hemet: Its Ongoing Budget Deficit and Organizational Inefficiency Threaten Its Financial Stability and Delivery of Public Safety Services (2015-806).”
“As of this date [May 9], our office has not received the city of Hemet’s February 2017 corrective action plan and thus, we have no responsive documents to your CPRA request,” said Margarita Fernandez, chief of public affairs for the State Auditor’s office in an email.
As of now, the city is waiting for the state auditor to respond to the items listed as pending on the auditor’s website: ongoing budget deficit; lack of coordinated approach to promote community engagement; inefficient structure of city government; turnover of key positions; and lack of consistent leadership.
The auditor has noted that no action was taken by the city regarding the use of the city-supported library by nonresidents and inconsistencies in outsourcing maintenance activities.
Items that have been partially addressed include rising pension costs, significant retiree medical costs, unfunded liabilities, and an underfunded fire department.

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