Report 2012-104 Recommendation 1 Responses

Report 2012-104: Southeastern Los Angeles County: Various Reasons Affect the Rates Water Suppliers Charge and the Rate Increases They Have Imposed (Release Date: January 2013)

Recommendation #1 To: Downey Department of Public Works

To ensure that it can meet the burden of proof that its water fees comply with Article XIII D of the California Constitution, Downey should be able to provide, upon request, documentation that all transfers out of the Water Fund are for water-related purposes. Such documentation should be sufficiently detailed and understandable to the layperson.

Agency Response*

The City's annual budget review and approval process at an open Public Hearing is the vehicle by which the City approves proposed expenses and transfers related to water and other City funds on a Fiscal Year (July 1 to June 30) basis. The City recently completed its annual budgetary preparation process for the fiscal year 2013-14 on June 11, 2013. The City utilized this process for the purposes of implementing your audit report recommendations of sufficiently documenting transfers out of the Water Fund and establishing that they are for water-related purposes.

Among the documentation and tasks completed as part of this process, which have also been emailed for your information, are the following:

13/14 Budget Study Session - Agenda (6/7/13)

13/14 Budget Study Session - Presentation (6/7/13)

13/14 Budget Public Hearing Adoption - Agenda (6/11/13)

13/14 Budget Public Hearing Adoption - Minutes (6/11/13)

13/14 Budget Public Hearing Adoption - Water Fund Transfer Item (6/11/13)

13/14 Budget - Utilities Division Description - Adopted by Council 6/11/13

13/14 Storm Water Eng & Mgmt 72-3182 Budget - Adopted by Council 6/11/13

13/14 Storm Water Eng & Mgmt 72-3182 Expenditure Detail - Adopted by Council 6/11/13

Note: the City is still printing the budget document. Therefore the City will provide final formatted versions for the bottom three draft budget documents adopted by Council on 6/11 upon final printing.

  • Response Type†: 6-Month
  • Completion Date: June 2013
  • Response Date: July 2013

California State Auditor's Assessment of Status: Fully Implemented

Although the City of Downey (Downey) has not changed its practices since the time of our audit, we consider this recommendation to be fully implemented because Downey provided water rate payers with an opportunity to better understand the rationale for these transfers. Ultimately, the water fee revenues that Downey collects must reasonably represent the cost of providing water services to its customers. If rate payers decide to challenge the water fees, it will be up to Downey to demonstrate that its water fees comply with the California Constitution.


Agency Response*

Downey indicated that it intends to implement the recommendation via its annual budget preparation and approval process. Downey scheduled a public hearing to approve its fiscal year 2013-14 budget for June 11, 2013.

  • Response Type†: 60-Day
  • Response Date: March 2013

California State Auditor's Assessment of Status: Pending


All Recommendations in 2012-104

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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