Report 2018-133 All Recommendation Responses

Report 2018-133: Fallen Leaf Lake Community Services District: Its Billing Practices and Small Electorate Jeopardize Its Ability to Provide Services (Release Date: July 2019)

Recommendation for Legislative Action

To ensure that the district has an electorate of sufficient size from which it can elect members to its board, the Legislature should enact legislation to allow landowners and holders of Forest Service permits within the district, along with otherwise domiciled registered voters in the district, to vote on district matters and serve on the board.

Description of Legislative Action

SB 96 (Dahle, 2021) would have authorized a voter who is not a resident of the district but owns a real property interest in the district to designate only one voter to vote on their behalf, regardless of the number of parcels in the district owned by the nonresident voter. This bill would have also provided that voters who are resident registered voters of the district, and voters who are not residents but either own a real property interest in the district or have been designated by the owner of a real property interest to cast the vote for that property, may vote in a district election. Furthermore, this bill would have provided that a person qualified to vote pursuant to these provisions is qualified to be a candidate for, and serve on, the district Board of Directors. On February 1, 2022, SB 96 (Dahle, 2021) died in the Senate.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Proposed But Not Enacted

On February 1, 2022, SB 96 (Dahle, 2021) died in the Senate.

Description of Legislative Action

SB 96 (Dahle) would authorize a voter who is not a resident of the district but owns a real property interest in the district to designate only one voter to vote on their behalf, regardless of the number of parcels in the district owned by the nonresident voter. This bill would also provide that voters who are resident registered voters of the district, and voters who are not residents but either own a real property interest in the district or have been designated by the owner of a real property interest to cast the vote for that property, may vote in a district election. Furthermore, this bill would provide that a person qualified to vote pursuant to these provisions is qualified to be a candidate for, and serve on, the district Board of Directors.

California State Auditor's Assessment of Annual Follow-Up Status: Legislation Introduced

Description of Legislative Action

SB 1180 (Dahle) would have provided that voters who are resident registered voters of the district, and voters who are not residents but either own a real property interest in the district or have been designated by the owner of a real property interest to cast the vote for that property, may vote in a district election. The bill would have required the designations of voters and authority of legal representatives to be filed with the El Dorado County elections official (county official) and the district secretary and maintained with the list of qualified voters of the district. The bill also would have authorized a voter who is not a resident of the district but owns a real property interest in the district to designate only one voter to vote on their behalf, regardless of the number of parcels in the district owned by the nonresident voter, and would have prohibited a parcel from simultaneously having a designated voter and a resident voter or voters. This bill died in the Senate.

California State Auditor's Assessment of 1-Year Status: Legislation Proposed But Not Enacted

Description of Legislative Action

As of January 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation for Legislative Action

To help voters in special districts elect full-size boards of directors and to help special district boards avoid quorum issues and service disruptions, the Legislature should amend state law to require a LAFCO to assess whether an electorate is of sufficient size when it considers creating or modifying a special district.

Description of Legislative Action

As of September 20, 2022, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of July 18, 2021, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

Description of Legislative Action

As of July 18, 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Description of Legislative Action

As of January 2020, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #3 To: Emergency Services, Office of

To better ensure that it reimburses local fire agencies appropriate amounts for responding to incidents, including the provision of strike teams for fighting wildfires, Cal OES should complete implementation of its plan to audit a sample of salary forms and invoices that local fire agencies submit under the fire agreement. It should, by September 15, 2019, complete its negotiations to have the State Controller's Office perform these audits.

6-Month Agency Response

Cal OES finalized an inter-agency agreement with the State Controller's Office (SCO), effective October 10, 2019.

The SCO and Cal OES have agreed upon the statement of work to be completed pursuant to the inter-agency agreement.

Auditing of six fire departments will begin approximately the first month of 2020.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

Cal OES is working on finalizing a contract with SCO in regard to conducting audits of submitted salary surveys and invoices. Cal OES completed and submitted the State of California, Department of General Services' Standard Agreement Form (STD 213) to SCO for review and Executive approval. STD 213 is comprised of the Statement of Work and agreed upon procedures. Cal OES hopes to have an inter-agency agreement with SCO by October 2019.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #4 To: Emergency Services, Office of

To further ensure that local fire agencies receive proper reimbursement for responding to incidents, Cal OES should recommend to the Agreement Committee that it include the following steps in the new fire agreement, anticipated to be effective starting in 2020:

1) Require local fire agencies to submit documents showing approval by their governing bodies of the average actual salary rates included on the salary form that the local fire agencies submit to Cal OES.
2) Require local fire agencies to submit documentation to support their average actual salary rates.
3) Revise the salary form and reimbursement invoice form so that authorized representatives of local fire agencies sign them under penalty of perjury.

1-Year Agency Response

July 17, 2020 One Year Update:

1) Require local fire agencies to submit supporting documentation showing that their governing body approved their submitted average actual rate forms;

Cal OES along with the CFAA Committee members addressed CSA's recommendations as a Committee and finalized stated recommendation through negotiations for a 4 year-8 month Agreement effective May 1, 2020, through December 31, 2024.

The consensus of the CFAA Committee (the Committee) determined that requiring local fire agencies to submit supporting documentation showing that their governing body approved their submitted average actual rate forms was not a best practice. The process of applying the methodology of determining salary rates (previously average actual rate) is an administrative function, generally performed by financial administrative staff. The concern of over implementing this particular recommendation was primarily in regard to the timeliness of fire agencies being able to update salary rates and have them applied timely and in parallel with the response activities through the CFAA. Rates have to be on file at the time of dispatch for reimbursement, and this would almost certainly delay having that ability. Agency's salary rates may change throughout the year through contract negotiations, and the proposed recommendation to have the governing body approve salary rates may significantly delay the submission of the updated rates to Cal OES, which could result in underpayments to the local agency.

Cal OES, along with the Committee, believes there are better approaches to support the accuracy of reported salary rates, such as conducting salary survey audits on local fire agencies. Cal OES has established a three-year contract with the State Controller's Office to ensure fire agencies report reasonable salary rates. These audits will continue to be conducted each year and shared with the Committee members once completed. The Committee feels this provides sufficient oversight of the salary rate calculations. However, CSA's recommendations will be reviewed as salary survey audits are being conducted and a discussion with the Committee during quarterly meetings will ensue Cal OES follow-up with best practices.

2) Require local fire agencies to submit documentation to Cal OES supporting their average actual salary rates;

In addition to the yearly audits, Cal OES has agreed to implement, by consensus of the Committee to establish a Committee yearly "review" process at one or more of our quarterly meetings. The process will include as noted in the Agreement:

"California Fire and Rescue Mutual Aid System Agencies will be required upon request to provide Cal OES supportive documentation used to establish rates and method of pay. Cal OES will request yearly samples from selected agencies for review by Cal OES and the Committee. Upon request, the California Fire and Rescue Mutual Aid System Agencies will have thirty (30) calendar days to provide Cal OES with required information. This process does not supersede the Examination and Audit process as outlined in this Agreement."

The annual review process joined with the formal annual salary survey audits being conducted by the State Controller's Office through an interagency agreement, provides for more efficient and effective oversight of the salary rates, not to mention, makes aware that the Committee is establishing an oversight and collaborative review process.

3) Revise the salary survey and reimbursement invoice forms to show that the authorized representatives of local fire agencies sign them under penalty of perjury.

The Authorized Representative is currently required to attest to the best of their knowledge that the information in the salary survey and reimbursement invoice forms is correct. Through consensus of the Committee, it agreed to update the survey and invoice to reflect: "As an authorized representative of my agency/dept., I certify to the best of my knowledge and belief, and under penalty of perjury that this information is correct. Furthermore, my signature below represents acceptance by my agency/dept., as a cooperator, to comply with the authorities, terms and conditions of the CFAA. I also agree to comply with all cooperator agency internal accounting expense and reimbursement standards.

The Committee will continue to evaluate and monitor local government fire agencies rates, methods and submissions based on the Agreement's terms established by the Committee to the best of its ability. Furthermore, it will continue to refine and implement best practices as a Committee through negotiations and consensus.

California State Auditor's Assessment of 1-Year Status: Resolved

Cal OES's responses for parts 1 and 2 of the recommendation demonstrate that the committee considered the recommendation and determined that mitigating controls (audits and reviews) should accomplish the same outcome more efficiently. Thus, we consider these parts of the recommendation resolved.

Cal OES implemented part 3 of the recommendation.

6-Month Agency Response

Cal OES completed an Executive Level CFAA meeting in order to provide direction to the CFAA committee.

The CFAA expired on December 31, 2019. An extension from January 1, 2020 to April 30, 2020 was signed by all parties.

The CFAA committee met on January 6, 2020 to begin renegotiations and will continue through the month of April. Cal OES staff informed the committee of the three CSA recommendations. The committee agreed to continue discussions regarding the recommendations and consider incorporating or improving the process into the new CFAA.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Cal OES is currently working with our local government committee members to determine the list of priorities for the new CFAA agreement. Once consensus is made, a meeting with executives from USFS, Cal Fire, and Cal OES will be held. This will determine the next steps in the renegotiation process. When renegotiation meetings begin, Cal OES staff will inform the committee of the three CSA recommendations.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: Emergency Services, Office of

To ensure that local fire agencies receive proper reimbursement for responding to incidents for the remainder of the current fire agreement, Cal OES should recommend that as part of the negotiations process, the Agreement Committee implement the following for the remainder of the current agreement:

1) Require local fire agencies to submit documents showing approval by their governing bodies of the average actual salary rates included on the salary form that the local fire agencies submit to Cal OES.
2) Require local fire agencies to submit documentation to support their average actual salary rates.
3) Revise the salary form and reimbursement invoice form so that authorized representatives of local fire agencies sign them under penalty of perjury.

1-Year Agency Response

July 17, 2020 Update:

With the adoption of the new CFAA, Cal OES has determined that implementation of this recommendation is not necessary. Although during the CFAA negotiation period, we were able to mitigate any issues related to this recommendation.

California State Auditor's Assessment of 1-Year Status: Resolved

We assessed this recommendation as having been resolved, as it pertained to a period that recently elapsed with the adoption of the new agreement.

6-Month Agency Response

The CFAA expired on December 31, 2019. An extension from January 1, 2020 to April 30, 2020 was signed by all parties.

The CFAA committee met on January 6, 2020 to begin renegotiations and will continue through the month of April. Cal OES staff informed the committee of the three CSA recommendations. The committee agreed to continue discussions regarding the recommendations and consider incorporating them into the existing CFAA.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Cal OES is currently working with our local government committee members to determine the list of priorities for the new CFAA agreement. Once consensus is made, a meeting with executives from USFS, Cal Fire, and Cal OES will be held. This will determine the next steps in the renegotiation process. When renegotiation meetings begin, Cal OES staff will inform the committee of the three CSA recommendations.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #6 To: Fallen Leaf Lake Community Services District

To ensure that the district complies with the reimbursement terms of the fire agreement and does not claim excessive reimbursement amounts, the district's board, by September 15, 2019, should create and implement a policy governing the reimbursement rate the fire chief claims for paid and recruit firefighters who participate on strike team assignments under the fire agreement. Additionally, the district's board should review and approve the annual salary form before the fire chief submits it to Cal OES.

60-Day Agency Response

District Response to 6: On August 31, 2019, the District's Board of Trustees adopted and began implementation of two Resolutions governing the reimbursement rates for firefighters who participate on strike team assignments under the fire agreement. The Resolutions are 2019-5 and 2019-6. The first Resolution provides the terms and conditions for Fire Department response away from official duty station and assigned to an emergency incident. The second Resolution governs overtime pay for those firefighters assigned to an emergency incident. The District's Board will be reviewing and approving the annual salary form before the Fire Chief submits it to Cal-OES in 2020. Copies of the two Resolutions are being provided to the State Auditor's Office

California State Auditor's Assessment of 60-Day Status: Resolved

The board's two resolutions collectively implement the first part of our recommendation ("create and implement a policy"). We also conclude that the board resolved the second part of our recommendation ("review and approve the annual salary form"). Resolution 2019-5 states that the district will compensate its personnel according to the current board-approved rate sheet or other directive regarding personnel compensation. The resolution also states that, in the event no compensation rate exists for a personnel classification, the district will use the base rate, administrative directive, or similar document to compensate such personnel.

Recommendation #7 To: Fallen Leaf Lake Community Services District

To rectify the excessive reimbursement amounts it received for strike team assignments, the district should, by December 31, 2019, develop and implement a plan for returning to the paying agencies the excessive reimbursements it received for 2016 through 2018.

1-Year Agency Response

The District has developed and implemented a plan to determine the amount, if any, of excessive reimbursements received for the years 2016 through 2018. To that end, the District's plan has consisted of two parts: 1) conducting an internal audit for fire seasons 2016-2018; and 2) engaging in regular communications with the Governor's Office of Emergency Services (Cal-OES) and any other agencies that contact the District. Those items have been accomplished.

The California Employment Development Department (EDD) conducted its own audit of the District's compensation of firefighter interns as independent contractors rather than employees. The EDD had initially concluded on February 27, 2020 that for the period of January 1, 2017 to December 31, 2019, the total amount the District owed for Personal Income Tax (PIT) was $4,679.05. However, the EDD further determined as of March 2, 2020 that the interns were independent contractors and abated the monetary determination. The EDD made the adjustment to its initial assessment, but required the District to pay a balance of $33.10 for interest owed, which the District has paid in March 2020.

Furthermore, the District's Fire Chief has had multiple communication with Cal-OES representatives regarding its recent submission of the 2020 Salary Survey for Fire Strike Teams. Cal-OES has informed the District that its previously enacted Resolutions regarding Strike Team regular and overtime pay are appropriate, as is the District's 2020 Salary Survey.

California State Auditor's Assessment of 1-Year Status: Pending

We disagree with the district's response that it fully implemented our recommendation. Although the district stated that it implemented a two-part plan including conducting an internal audit for fire seasons 2016-2018, it provided an audit of its financial statements for the year ended June 30, 2019, which was not responsive to our recommendation.

Additionally, the district stated that its plan included engaging in regular communications with the Governor's Office of Emergency Services and any other agencies that contact the District, yet the district could not provide evidence of discussions or agreements reached.

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 7: The District has developed and begun implementation of a plan to determine the amount, if any, of excessive reimbursements received for the years 2016 through 2018. To that end, the District's plan consists of two parts: 1) conducting an internal audit for fire seasons 2016-2018; and 2) engaging in regular communications with the Governor's Office of Emergency Services (Cal-OES) and any other agencies which contact the District. This plan has been put into motion. The District has been conducting its own internal audit, which is expected to be completed in the Second Quarter of 2020. District officials conducted a teleconference with representatives of Cal-OES on August 15, 2019, to discuss the process of review of any excessive payments to the District during the period in question. The District's Fire Chief has been in communication with Cal-OES representative Auburn Diede since that teleconference regarding the status.

California State Auditor's Assessment of 6-Month Status: Pending

Recommendation #8 To: Fallen Leaf Lake Community Services District

To rectify the excessive reimbursement amounts it received for strike team assignments, the district should, by December 31, 2019, work with Cal OES to identify the amounts of excess reimbursements the district received for 2013 through 2015 and then develop and implement a plan for returning those amounts to the paying agency.

1-Year Agency Response

As indicated in the District's response to this Recommendation (contained within the Audit Report), the District "will work with OES to determine overpayment, if any, for the calendar years 2013-2015 and, if so, will develop and implement a plan for returning any excess monies received." On August 15, 2019, District officials conducted a teleconference with representatives of Cal-OES to discuss the process to review of any excessive payments to the District during the period in question. The District has also been in regular communication with Cal-OES concerning the subject matter. The District's expectation is that Cal-OES will make the determination as to whether any excessive monies are owed for the period in question, using the full cooperation of the District and its resources. As far as the District is aware, no determination has been made by Cal-OES.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 8: As indicated in the District's response to this Recommendation (contained within the Audit Report), the District "will work with OES to determine overpayment, if any, for the calendar years 2013-2015 and, if so, will develop and implement a plan for returning any excess monies received." On August 15, 2019, District officials conducted a teleconference with representatives of Cal-OES to discuss the process to review of any excessive payments to the District during the period in question. The District has also been in regular communication with Cal-OES concerning the subject matter. The District's expectation is that Cal-OES will make the determination as to whether any excessive monies are owed for the period in question, using the full

cooperation of the District and its resources. That determination has not yet been made by Cal-OES.

California State Auditor's Assessment of 6-Month Status: Pending

Recommendation #9 To: Fallen Leaf Lake Community Services District

To ensure that it complies with all applicable labor and wage laws, the district should, by September 15, 2019, seek advice from appropriate experts, such as legal counsel and tax advisors, regarding the proper characterization and compensation of its recruit firefighters. It should develop and implement a policy in this area that meets all applicable requirements.

60-Day Agency Response

District Response to 9: The Board has consulted with legal counsel and its tax advisors concerning all applicable labor and wage laws with respect to the proper characterization and compensation of recruit firefighters. As a result, on August 31, 2019, the Board adopted Resolution 2019-7, entitled "Resolution for the Implementation of Firefighter Internship Program and Use of Firefighter Trainees (Nonpaid)." This Resolution formalizes the Firefighter Internship Program run by the District. The Resolution's contents meet all applicable federal and state legal requirements, and establish the permitted use of Intern trainees both at the official duty station and on emergency incidents away from the official duty station. In addition to passing Resolution 2019-7, the Board also approved a formal job description for Firefighter Trainee, which was vetted by legal counsel. Copies of the Resolution and job description documents are being provided to the State Auditor's Office.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #10 To: Fallen Leaf Lake Community Services District

To improve its financial viability and safeguard its ability to continue providing services to the Fallen Leaf Lake community, the district should, by December 31, 2019, monitor the financial risks it may face in the future, forecast their impact on its finances and budget, and plan and implement appropriate changes to its budget as necessary throughout the fiscal year.

1-Year Agency Response

The District agreed in response to the Audit that it "will strengthen its financial viability by incorporating the recommendation as appropriate." The District previously reported that August 31, 2019, the District adopted and began implementation of resolutions which of two Resolutions governing the reimbursement rates for firefighters who participate on strike team assignments under the fire agreement. The District then passed additional resolutions for 2020 on these same issues on July 4, 2020. Copies of these Resolutions are being provided to the State Auditor. Furthermore, the Board had discussions on this topic in creating its fiscal budget for 2020-21 when it reconvened this past summer. The District has provided those budgets to the State Auditor. In the event of a significant budget shortfall, the District is prepared to make cuts to certain line items, such as its paramedic program. Finally, in addition to completion of its internal audit in 2019, the District retained and authorized a third-party financial-consultant to conduct a research study starting in July 2020 to review District's operations and reserves so that the District may forecast economics for the next five fiscal years. That company, called Applied Reserve Analysis, through its principal, Eric Phillipps, RS, PRA, is expected to complete its research, analysis, and findings in Q3 of 2020.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 10: As indicated in the District's response to this Recommendation (contained within the Audit Report), the District "will strengthen its financial viability by incorporating the recommendation as appropriate." To that end, on August 31, 2019, the District adopted and began implementation of resolutions which of two Resolutions governing the reimbursement rates for firefighters who participate on strike team assignments under the fire agreement. The passage of these Resolutions is expected to eliminate all financial risk to the District going forward with respect to strike teams. In addition, on August 31, 2019, the District's Board reviewed and approved Resolution 2019-8 to increase in the Fire Special Tax for the fiscal year 2019-2020 to be levied upon eligible properties in the District in an amount 1.5% above that same Tax assessed in the 2018-2019 fiscal year. The Resolution is attached. Furthermore, most of the District's budget concerns events from May through November of each year, because the District's offices are closed in the winter time due to snow accumulation. The Board anticipates further discussion on this topic when it reconvenes in the Second Quarter of 2020.

California State Auditor's Assessment of 6-Month Status: Pending

Based on its response above and the "not fully implemented" statuses for recommendations #7, 8, 12, and 13 of our report, we do not yet agree that the district has fully implemented this recommendation. We will assess the district's implementation of this recommendation in early 2020 in conjunction with its implementation of these four recommendations.

Recommendation #11 To: Fallen Leaf Lake Community Services District

To improve its financial viability and safeguard its ability to continue providing services to the Fallen Leaf Lake community, the district should, by December 31, 2019, limit the extent to which it relies on volatile revenue sources to balance its budget.

1-Year Agency Response

The District agreed in response to the Audit Report to "strengthen its finances by taking the necessary steps to review and assess, on an annual basis, any revenue sources that it and its auditors may reasonably conclude are 'volatile'." The most recent audit did not find any volatile revenue sources. Nevertheless, this year the District has had great concerns regarding the potential for financial fluctuations due to the COVID-19 pandemic. The Governing Board has carefully reviewed and passed the most recent budgets on July 4, 2020 in light of these concerns. In addition, the District has ensured that there is adequate insurance and third-party indemnification available to protect itself from any lawsuits related to the pandemic or patron illness due to COVID.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 11: As indicated in the District's response to the recommendation (contained within the Audit Report), the

District intends to "strengthen its finances by taking the necessary steps to review and assess, on an annual basis, any revenue sources that it and its auditors may reasonably conclude are 'volatile'." On August 31, 2019, the District adopted and began implementation of resolutions which of two Resolutions governing the reimbursement rates for firefighters who participate on strike team assignments under the fire agreement. The passage of these Resolutions is expected eliminate all financial risk to the District going forward with respect to strike teams. In addition, on August 31, 2019, the District's Board reviewed and approved Resolution 2019-8 to increase in the Fire Special Tax for the fiscal year 2019-2020 to be levied upon eligible properties in the District in an amount 1.5% above that same Tax assessed in the 2018-2019 fiscal year. The Resolution is attached.

California State Auditor's Assessment of 6-Month Status: Pending

Based on its response above and the "not fully implemented" statuses for recommendations #7, 8, 12, and 13 of our report, we do not yet agree that the district has fully implemented this recommendation. We will assess the district's implementation of this recommendation in early 2020 in conjunction with its implementation of these four recommendations.

Recommendation #12 To: Fallen Leaf Lake Community Services District

To improve its financial viability and safeguard its ability to continue providing services to the Fallen Leaf Lake community, the district should, by December 31, 2019, develop and implement a budget plan that realistically estimates changes in revenues and expenditures, and identifies approaches to address such changes.

1-Year Agency Response

As explained in the District's response to the recommendation (both contained within the Audit Report), the District "will strengthen its budget plan by annually reviewing and assessing any potential changes in revenues and expenditures." The District's budget for this fiscal year (2020-2021) was approved by the District's Board of Trustees on July 4, 2020. The District's budget reflects consideration and discussion by the Board of Trustees to assess potential changes in revenues and expenditures, particularly due to the COVID-19 pandemic.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 12: As explained in the District's response to the recommendation (both contained within the Audit Report), the District "will strengthen its budget plan by annually reviewing and assessing any potential changes in revenues and expenditures." The District's budget for the next fiscal year (2020-2021) will not go into effect until July 1, 2020. In the meantime, the District is developing this budget, which will be reviewed by the Board in the Second Quarter of 2020, to be passed prior to July 1, 2020.

California State Auditor's Assessment of 6-Month Status: Pending

Recommendation #13 To: Fallen Leaf Lake Community Services District

To improve its financial viability and safeguard its ability to continue providing services to the Fallen Leaf Lake community, the district should, by December 31, 2019, develop a five-year forecast of estimated revenues and expenditures and a plan to guide its decisions and actions in the event of fluctuations.

1-Year Agency Response

The District's Board has retained and authorized a third-party financial-consultant to conduct a research study starting in July 2020 to review District's operations and reserves so that the District may forecast economics for the next five fiscal years. That company, called Applied Reserve Analysis, through its principal, Eric Phillipps, RS, PRA, is expected to complete its research, analysis, and findings in Q3 of 2020. In addition, the District met on July 4, 2020 and discussed the potential for COVID-19 pandemic-related loss of revenues, and potential climate-related increases in spending, as well as new sources of revenues.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 13: The District's Board has retained and authorized a third-party company to conduct a research study

starting in May 2020 to review District's operations and reserves so that the District may forecast economics for the next five fiscal years. In addition, the District met on December 7, 2019 and discussed the potential for climate-related increases in spending, as well as potential new sources of revenues.

California State Auditor's Assessment of 6-Month Status: Pending

All Recommendations in 2018-133

Agency responses received are posted verbatim.