Report 2020-804 Recommendation 9 Responses

Report 2020-804: City of Lindsay: It Must Take Substantial Action to Address Its Financial Problems and Its Inadequate Management Practices (Release Date: August 2021)

Recommendation #9 To: Lindsay, City of

Lindsay should include in that financial plan a discussion of how it will reduce its pension and OPEB liabilities. As part of that plan, the city should consider requiring current employees to begin contributing to the future cost of their retirement health care benefits.

1-Year Agency Response

On February 22, 2022, the Lindsay City Council approved the City of Lindsay

Formal Repayment Plan FY 2022-2023. The Formal Repayment Plan will record

the advances to and from previously vacated at their originally vacated amounts.

While the total amount remains unchanged, the amortization terms and schedules

have been modified to allow the City to begin making annual payments based on

priority beginning in Fiscal Year 2022-2023.

On June 28, 2022, the Lindsay City Council approved the City of Lindsay

Adopting a Fiscal Sustainability and Financial Improvement Plan for the Water,

Sewer, and Wellness Center Enterprise Funds through Resolution 22-41. The Plan

represents an outline for a collaborative process that considers future scenarios and

will help the City navigate fiscal challenges and on-going operations from a purely

financial standpoint. The Plan will require policy creation, spending discipline,

renewed cost-sharing negotiations, and careful prioritization of City programs. It

will also be useful for decision makers and help to mitigate future fiscal

challenges, encourage a long-term approach and direction, and be a useful tool for

communications with internal and external stakeholders.

Additionally, the City plans to review and execute new memorandums of

understanding with all bargaining units in the 2022 calendar year that will include

discussion and negotiation of increased contributions.

Following negotiations with bargaining units, the City will update the City of

Lindsay Fiscal Sustainability and Financial Administration Improvement Plan

approved via Resolution 22-10 to reflect its pension and OPEB liabilities and

increased contributions (Exhibit E).

Estimated Completion: August 2022.

Responsible Staff: City Management, Finance Department.

Status: Complete.

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

6-Month Agency Response

On October 12, 2021, the Lindsay City Council approved the City of Lindsay Reserve Policy (Exhibit C). The reserve policy provides guidelines for Unfunded Liability Reserves that include pension and OPEB liabilities.

On December 14, 2021, the Lindsay City Council approved Resolution 21-51, Authorizing the City Manager to Execute an Agreement with the California Public Employees Retirement System's California Employers' Pension Prefunding Trust Program to Establish a Section 115 Trust and Delegating Authority to the City Manager and the Director of Finance to Request Disbursements from the Section 115 Trust (Exhibit J).

Additionally, the City plans to review and execute new memorandums of understanding with all bargaining units in the 2022 calendar year that will include discussion and negotiation of increased contributions.

Following negotiations with bargaining units, the City will update the City of Lindsay Fiscal Sustainability and Financial Administration Improvement Plan approved via Resolution 22-10 (Exhibit I) to reflect its pension and OPEB liabilities and increased contributions.

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

60-Day Agency Response

On October 12, 2021, the Lindsay City Council approved the addition of a City of Lindsay Reserve Policy to its finance and accounting policies. The reserve policy provides guidelines for Unfunded Liability Reserves that include pension and OPEB liabilities.

Additionally, the City is exploring the establishment of a Section 115 Trust and plans to review and execute new memorandums of understanding with all bargaining units in the 2022 calendar year that will include discussion and negotiation of increased contributions.

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

All Recommendations in 2020-804

Agency responses received are posted verbatim.