City cites employee resignations/retirements and the cost of recent public safety MOU agreements as reasons
■ Melissa Diaz Hernandez / Editor
Newly appointed Finance Director Lorena Rocha gave the Hemet City Council a year-end update on the fiscal 2016-2017 budget and reported the status of the budget’s first quarter at the Dec. 12 Hemet City Council meeting. The adjusted budget gives total revenue at $41,440,440 and total expenditures at $43,102,329.
The actual to-date numbers have total resources [total revenue plus transfers in] at $40,080,394 and total uses [total expenditures plus transfers out] at $42,336,296. The city had received 96.72 percent of the total resources and 96.22 percent of the total uses as of June 30, according to the General Fund Reserve and Expenditure Report included with the agenda.
The staff report submitted by Rocha states, “The attached report begins with a review of the fiscal year-end 2016-2017 preliminary ending balances. These numbers are currently being audited by an independent auditing firm. This review includes an analysis of general fund balance at June 30, 2017 with a breakdown of all committed balances.” The fiscal year ends June 30 and the independent audit is routinely done.
The fund balance analysis provided in the agenda shows a $12,867,815 total fund balance as of June 30. The required 20 percent reserve requirement leaves the fund at a minimum of $8,319,079. The other expenses such as the PEG (public access) fees ($1,432,941), Measure U Reserve balance ($1,208,719) and an amount designated for specific programs ($263,504) give an available fund balance of $1,643,572.
In order to balance the FY 16/17 budget, the city of Hemet is having to go into the reserve fund.
The PowerPoint presentation given by Rocha at the council meeting states that the “General Fund Expenditures of $41,674,740 are slightly over budget. Main reasons for this: Employee resignations/retirements and the cost of new MOU agreements with the Safety Units [public safety].”
Rocha was appointed as the Finance Director approximately six weeks ago. She has been with the city of Hemet for 11 years serving eight of that as the accounting manager, according to City Manager Allen Parker in an email to the Valley Chronicle dated Nov. 28.
First Quarter of FY 17/18
With only 10.13 percent of the revenue received and 22.29 percent of the expenditures used, the city of Hemet is seeing more money going out the door than coming in. Currently, the city has spent $11,059,117 and received $5,102,636. According to Rocha, it is normal to see the expenses initially outpace the revenue because it takes time for the city to receive tax revenues.
The Valley Chronicle previously reported that during the 2017 State of the City then-Mayor Linda Krupa stated “The city has more than the required 20 percent [general fund] reserve balance to cover any deficit in the budget. However, it is unacceptable to live with deficit spending. Therefore, efficiencies and cost containment must remain at the forefront of the conversation.”
On Nov. 30, Parker gave The Valley Chronicle an update on Hemet’s Corrective Action Plan presented to the California State Auditor.
“I have been in contact with Nathan Briley of the State Auditor’s office since Oct. 4,” wrote Parker. In the email Parker outlined the following tasks he and Briley have tackled including, “a report showing that monthly cash balances for 2016 averaged $65 million. Of course, this is for all funds; but the City is not cash poor.”
Also addressed, according to Parker, was the “City Council’s decision not to charge non-residents a fee for use of the City’s library.”
With regards to the City’s current operating budget, Parker said, “Yes, the mayor was correct in stating that the general fund is projected to have a $2 million deficit by June 30, 2018; and yes, the deficit will be erased by using funds set aside in the city’s 20 percent reserve fund, which is currently at $8 million. The deficit arose because the decision was made to fund Public Safety raises–annually, $2 million–from the general fund rather than Measure U funds.”
The last item listed by Parker was the “Measure U funded staffing for public safety for the next five years.”
“My last contact with Mr. Briley was Nov. 1,” wrote Parker. “To the best of my knowledge, the only areas left to address are rising pension costs and retirees’ health benefits. Most cities in California are having to address these two areas, and frankly, there’s no easy answer.”
Council elects new mayor
At the Dec. 12 city council meeting, the council voted Councilman Michael Perciful to serve as Mayor of Hemet for 2018 and Councilwoman Karlee Meyer to serve as Mayor Pro Tem. Krupa served as Mayor of Hemet during 2017.
New City Manager
Meyer told the paper that the Hemet City Council had named Parker as the new city manager. The decision was reported out of closed session after the regular city council meeting on Dec. 12. Parker was hired as the interim city manager after Alex Meyerhoff resigned from the position of city manager on Aug. 8. The Hemet City Council unanimously approved the hiring of Parker for the interim position during a special meeting Aug. 31.