City of Hemet takes corrective measures after the state audit. Or has it?

Photo by Mary Ann Morris/The Valley Chronicle
Hemet City Manager Alex Meyerhoff.

Part 1: Response to auditor stretches the truth just a bit

■ Melissa Diaz Hernandez / Reporter

The City of Hemet’s City Manager Alex Meyerhoff has responded to the California State Auditor with a similar version of the same letter sent 10 months prior with some progress made. Due to the volume of information, this will be presented in three segments over the course of several weeks.

Expenditures outpacing revenue
The main issue outlined in the letter is that “Expenditures continue to outpace revenue, impeding Hemet’s ability to meet its financial obligations. The city’s response: “In June 2016, the City of Hemet adopted the fiscal year 2016-17 General Fund budget of $36 million. The budget includes a $350,000 deficit (less than 1 percent) which is consistent with the 2015 Five-Year Financial Management Plan.”
Hmmm. That’s not entirely true. Joy Canfield has already stated that the attorney fund is already over budget for FY 16/17. Council members are expecting an update on the “true” numbers at an upcoming council meeting.
The response continues, “Pursuant to Resolution #1880, the City of Hemet has a policy which requires a minimum of 20 percent reserves. In the FY 16-17 budget the city included a 25 percent reserve, which is consistent with this policy. These reserves serve as operating capital. The City of Hemet has no indebtedness.”
Hmmm. That’s not entirely true. The City Council unanimously passed Ordinance Bill No.17-041 stating “an ordinance of the City Council of the City of Hemet, California amending Section 2-452 (general fund reserves) to exempt Measure U revenues from the reserve requirements therein.” Now that Council has exempted Measure U from these calculations, the reserves requirement can remain lower.
Council also unanimously passed the Memorandum of Understanding with the Hemet Police Management Association (HPMA), Hemet Fire Fighter’s Association (HFFA) and Hemet Police Officers Association totaling $770,830 for FY 16/17 and $2,011,400 for FY17/18 – from the general fund reserves.
“The City of Hemet will continue to monitor all financial activity, including presenting quarterly financial updates to the City Council.”
That one’s true. The city has provided financial updates on a quarterly basis.
“Additionally, the City will continue to update the Five-Year Financial Management Plan [the Plan] at least annually and when significant changes to revenue or expenditures are identified. The Plan will continue to be used as a guide for budget preparation each year. The City of Hemet will continue to seek efficiencies for the reductions of expenditures and opportunities for enhancing ongoing revenue, with any recommendations for new fees subject to policy approval by the City Council. The City will continue to update existing fees annually to ensure the costs of providing services are recovered. The Plan will continue to serve as a roadmap for budget preparation for financial stability.”
That one’s true. Fees are definitely increasing. Just ask people about their water bills.
“Auditor’s Recommendation: “Hemet should identify additional sources of revenue and reduce costs, such as establishing and collecting fees for services it currently provides without charge and other options identified in this report.”
“City’s Corrective Action Plan: (1) City Council placed a general purpose revenue measure on the November 2016 ballot, estimated to generate $10 million annually. (2) Continue to update the Plan at least annually, with thorough analysis of projections for accuracy and feasibility.” Per communication from Administrative Services Consultant Joy Canfield during a Hemet City Council meeting, the city should receive information regarding what Measure U generated its first quarter [April 1 – June 30] sometime in the fall.
Another risk area outlined by the state auditor is the “lack of coordinated approach to promote community engagement. Does not have a citywide coordinated effort for community engagement. Has not sufficiently communicated information on citywide concerns to members of the public.”
“The day-to-day coordination of City events, event calendars and keystone City functions is coordinated through the City Manager’s office. The City has identified the need for the establishment of a Public Information Officer (PIO); the City will continue to evaluate the need for this position as well as ensuring for appropriate policy and fiscal support. Public Safety Departments (Law and Fire) have robust community based outreach programs; Hemet Fire Department has created a community-based newsletter, participates in a wide variety of social media platforms and conducts community-based outreach activities, as well as handling media relations. The City is actively engaged in community outreach consistent with community needs and existing resources which includes social media, newsletters, websites, publications, city cable channel, city website and other media outlets. City staff is proactively engaged with local press and editorial boards.”

Really? That is news to the local press.

Auditor’s Recommendation: “Hemet should create and implement a plan for community engagement, including strategies to educate and engage the community in the city’s needed reforms and its efforts toward achieving financial stability. This plan should focus on seeking public involvement in a more participatory, deliberative, inclusive, and collaborative manner.”
The “City’s Corrective Action Plan” includes, “(1) City will create a plan for community engagement, including strategy to educate and engage community in city’s needed reform and its ongoing efforts to achieve financial stability. (2) Develop a public involvement program that is participative, inclusive, and collaborative. Timing: (1) City Council will consider development of Citywide Newsletter in FY 17-18 Budget (2) Pending approval of FY 17-18 Budget.”
The city has finally started streaming the meetings held in the council chambers. Unfortunately, a recorded version of those meetings does not exist at this time, so people who can’t go to the meeting and can’t sit in front of a computer screen for several hours during that timeframe are out of luck.
Spending money on a newsletter when the city must use general fund reserves to balance a budget seems fiscally irresponsible. A simpler, straight-forward and transparent response would require city officials to be available to the community, answer questions from the press, and meet the people paying the bills.
The final risk area discussed in this issue is the “Turnover of key positions and lack of consistent leadership.”
The auditor points out that the city “has experienced frequent turnover in its city manager and fire chief positions. Is likely to have some city departments heavily affected by upcoming retirements.”
City of Hemet responds, “Succession planning is one of the hallmarks of responsible organizational development. The City has been negligent in this area. The City Manager has identified the need for long-term succession planning. This plan will build up on the findings of the comprehensive organizational analysis. The City must identify its next generation of leadership as a sizeable cohort of employees approach retirement age. The plan must provide for organizational development, educational development, skill development while also providing clear career-pathways for both early-career and mid-career employees. The recently commissioned report Service Options Delivery Analysis, completed and presented to the City Council, identified the need to re-establish critical key management positions within the Fire Department. The City is taking steps to conduct a class and compensation study for the position of Battalion Chief. The City will re-establish this position as significant changes to revenue or expenditures are identified. The City has identified the need to establish a cohesive succession planning strategy; Hemet Fire Department is in the process of evaluating the creation of a Firefighter Trainee position to expand its hiring outreach as well as rank specific training to identify and develop personnel for future leadership roles in the organization. Staffing needs will be addressed annually and will be predicated on appropriate funding locations.”
This is pretty accurate all around. The city has been negligent. And while they say they want to provide clear pathways, the city somehow persists in hiring new people in key management positions rather than promoting from within. Such was the case with Derek Wieske, who served as Engineering Director/City Engineer for about six weeks.
The auditor recommends that “Hemet should complete a strategic plan that identifies goals, initiatives, responsibilities, funding requirements, potential funding sources, and key performance measures by January 2017.” The Valley Chronicle reported on July 20 that a strategic plan has yet to be finalized and implemented.
City’s Corrective Action Plan: (1) Complete a comprehensive organizational analysis that identifies goals, initiatives, responsibilities, funding requirements, potential funding sources and key performance measures. (2) Prepare an organization-wide succession plan and planning process.” The city’s plan to correct this issue is to hire an assistant city manager.
The Valley Chronicle asked Meyerhoff prior to the July 11 council meeting how this will correct the issue. He stated that the assistant city manager will work to reorganize departments and depending on qualifications, work in Risk Management and Human Resources. This position is dependent on the adoption of the FY 17/18 budget, should council choose to approve the position.
The letter to the auditor states, “Timing: (1) Pending approval of Assistant city Manager position in FY 17-18 Budget (2) Pending approval of Assistant city Manager position in FY 17-18 Budget.”
The remaining items in the letter will be addressed over the next few issues. The state auditor is expected to release a report in August, according to their website and communications with The Valley Chronicle.

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