Local Government High Risk - California Cities
To identify local entities that may be high risk, we analyzed publicly available information, such as a city's financial reports and prior audit reports or analyses for more than 450 California cities. We perform a more detailed financial analysis for certain cities that cause concern in order to calculate fiscal indicators that may be indicative that a city is in fiscal stress. We also review publicly available information to assess the city's fiscal outlook over the next five years using financial and budgetary reports and we review other information that could affect city operations. We then analyze the results to determine whether each city is at risk for the potential of waste, fraud, abuse, and mismanagement, or has major challenges associated with its economy, efficiency, or effectiveness.
Based on our initial analyses of cities, we identify cities that caused us concern for being at high risk for major challenges. The table below presents some of the initial analyses conducted in 2017.
| CITY | KEY RISK INDICATORS | ||
|---|---|---|---|
| FINANCIAL INDICATORS | FINANCIAL FORECAST | OPERATIONAL RISK | |
| Atwater | High | High | Medium |
| Cudahy | High | Medium | High |
| Huntington Park | Medium/High | Medium | High |
| Lynwood | High | High | Low |
| Montebello | High | High | High |
| Placentia | High | Medium | High |
| Vallejo | Medium/High | High | Medium |
To better understand the factors that caused us concern, we visited each of the cities above and conducted an initial assessment to determine the city's awareness and responses to those issues, and identify any other ongoing issues that could affect our determination of whether the city is high risk.
After conducting our initial assessment, we concluded that four cities—City of Cudahy, City of Huntington Park, City of Placentia, and City of Vallejo—were taking steps to address the risk factors that caused us concerns. As a result, we concluded that we would not seek approval to perform an audit at that time, but would continue to monitor the cities' progress and may subsequently consider performing additional work.
However, we concluded that three cities—City of Atwater, City of Lynwood, and City of Montebello—may warrant an audit. On May 16, 2018, the Joint Legislative Audit Committee considered an audit of each of the three cities. The committee approved audits of the City of Lynwood and the City of Montebello, and held the audit request for the City of Atwater to be considered at a later time.
The table below outlines the cities where we have conducted assessments and the current status.
| CITY | INITIAL ASSESSMENT | STATUS |
|---|---|---|
| Atwater | 2017 | Monitoring Progress |
| Chico | 2015 | Monitoring Progress |
| Cudahy | 2017 | Monitoring Progress |
| Hemet | 2015 | Audit Completed, Monitoring Progress |
| Huntington Park | 2017 | Monitoring Progress |
| Lynwood | 2017 | Audit Requested and Approved |
| Maywood | 2015 | Audit Completed, Monitoring Progress |
| Monrovia | 2015 | Monitoring Progress |
| Montebello | 2017 | Audit Requested and Approved |
| Placentia | 2017 | Monitoring Progress |
| Richmond | 2015 | Monitoring Progress |
| Ridgecrest | 2015 | No Longer Monitoring |
| Vallejo | 2016 | Monitoring Progress |
