Office of the City Auditor

 
City of Berkeley
  
City Auditor Ann-Marie Hogan
   
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November 28th Council Meeting  

How is the City spending your money? Council votes Tuesday night, and every year, to approve use of funds for projects that were committed to but not completed (and not paid for) during the previous fiscal year (2017). Fiscally responsible actions that Council should consider:  

  • Increase the General Fund Reserve. Our audit General Fund Reserve Policy Fails to Convey that Maintaining the Reserve is a Priority recommended GF reserves of at least 16.7% of GF revenue or expenses and possibly more based on a risk analysis. The City Manager completed that analysis and recommended a longer term goal of 30%. Council voted to achieve the 16.7% goal by fiscal year 2020 if feasible; increasing to 30% within 10 years. The Reserve only increased from 13.8% to 13.9% last year; more action is needed. To reach 16.7% this year, Council would have to allocate $4.5 million in addition to the $3.5 million recommended in item 23 FY 2017 Year-End Results and FY 2018 First Quarter Budget Update. Management's proposed action includes "incorporate additional allocations as amended by subsequent Council action"  
     
    General Fund Reserves
    Beginning  Reserve Balance
    $22.6M
    FY 17 Excess Equity Allocation
    3.5M
    Tuolumne Camp Committed
    -3.3M
    Ending Available Reserve Balance
    22.8M
    16.7% Goal
    27.3M
    Difference
    $4.5M
  
  • Put a plan in place to bring down the City's unfunded liabilities, particularly pensions. Our 2010 audit Employee Audit: Tough Decisions Ahead addressed the generational inequity of our pension debt. Good news: the Standard & Poor's bond rating agency changed their assessment of Berkeley's management from "good" to "strong" this year because Council voted on a new debt management policy. More action needed: S&P also said Berkeley's large pension and OPEB obligation is a credit weakness, with no plan in place that will sufficiently address the obligation.  They noted that the City could improve its already good bond rating if it significantly reduced the unfunded pension liability. Action planned: Council will vote tomorrow on additional funding for the City Manager's office for a budget strategies consultant whose work will recommend a specific plan to address unfunded liabilities as well as revenue options (item 23 p. 12 FY 2017 Year-End Results and FY 2018 First Quarter Budget Update, and item 2 p. 19 Amendment: FY 2018 Annual Appropriations Ordinance).  
  • Measure GG
    Consent item #7 - Audit Report: Measure GG: Fiscal Year 2016 Non-Personnel Expenditures Aligned with Taxpayer Intent found the City is using Measure GG tax dollars as voters intended - to bolster emergency response services and enhance community disaster preparedness. Improvements are needed to ensure transparency in programming, but good practices are in place to prevent fund misuse. Audits of personnel expenditures can be considered after replacement of the City's antiquated payroll system.  
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City Auditor's 2017 Report on Results: a four page graphic report on how our audits and city staff actions made a difference. Click on the pictures on page two of the report to read the full audit reports.
Hear the City Auditor's 10/17/17 presentation of the report to Council here.

  
Ask us a question - send us advice
  
Thank you for your continued support for our work to help Berkeley deliver services in a more efficient, effective, and equitable way. Please contact me at auditor@cityofberkeley.info or at 981-6750 with your questions or comments. I'm always happy to hear from folks who want to get more involved. I look forward to hearing from you.
Sincerely,
  
Ann-Marie Hogan, City Auditor
City of Berkeley Auditor's Office

Audit News

from the City Auditor

November 2017

Ann-Marie Hogan 2015

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