On 05/15/12 the City of Beaumont adopted Resolution No. 2012-23, authorizing another $20 million debt. The California State Treasurer's Office lists the total bond debt for this town of 35,000 people at $284 million.
How can a town of 35,000 with no revenue stream legally obtain $284 million in long term debt? Legally, it can not.
In the last 20 years the City of Beaumont has perverted the legal loophole California Government Code 53311 – better known as 'Mello-Roos Community Facilities Act of 1982'. This law was designed to allow local governments to circumvent Prop 13 and incur debt on existing property owners. However the law clearly states:
53345.8 (a) The legislative body may sell bonds pursuant to this chapter only
if it determines prior to the award of sale of bonds that the value of the real property
that would be subject to the special tax to pay the debt service on the bonds will be at least three times
the principal amount of the sum
of the following:
- The principal amount of the bonds to be sold.
- The principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to this chapter on property within the community facilities district or special assessment levied on property within the community facilities district.
Resolution 2012-23 Exhibit A lists the Property Descriptions subject to the $20 million debt. The Riverside County Assessors Office lists the total value for these properties at only $2.5 million. This debt should have never been allowed.
The State of California requires the following Checks and Balances:
Underwriter – This guarantees the Securities. The State Treasurers' Office lists the underwriter for Beaumont as O'Connor & Company Securities, Inc, also known as 'Southwest Securities' and 'Chilton & O'Connor'. Their website boosts of being experts in Mello-Roos and states: “William O'Connor has underwritten more mortgage revenue bonds in California than any other individual.”
Bond Counsel – This Attorney writes an official opinion stating that a local government is legally permitted to issue the bond. The City of Beaumont has used only one Bond Counsel in the last 20 years – McFarlin & Anderson. Their website advertises their expertise in Mello-Roos and affiliation with Southwest Securities.
Financial Advisor – This is another layer of oversight required by the State to protect the people's money. Ron Gunn Associates, Inc is listed as Beaumont's Financial Advisor. This person/company has no website. An address for an office space in Huntington Beach can be found. I know this person exists because I have emails from Ron Gunn to Alan Kapanicas requesting money transferred into the Union Bank Account for the “Cash Flow Management Fund”.
I had requested from the City of Beaumont copies of all banking and financial accounts held by the city, but this account was not released. I have requested it again with the specific account number. It is disturbing that there is a hidden account with the financial institution that is the Trustee for the City's debt.
Trustee – This is the Financial Institution that holds the loans. Beaumont's bond debt is held by three institutions: BNY Western Trust Co. holds debt incurred from 1993- 2000. Debt incurred from 2001 – 2008 is held by Union Bank of California. Debt from 2009 – Present is held by Union Bank NA.
Union Bank is fully aware of the City of Beaumont's financial problems because this bank has wired money back into the General Fund when the City's Bank Account was overdrawn. This is also the same bank account that has numerous deposits like $515,000 on 07/26/12 that was charged to the employee expenses as Worker's Comp.
Section 5 of Resolution No. 2012-23 lists additional consultants: 'Urban Logic' as Project Engineer and 'General Government Management Services' as special tax consultant. We already know that Urban Logic is not an independent company, and I can find no proof of life for a business called General Government Management Services.
Twice a year the City makes payments to Union Bank for the bond debt. The September payment was $8 million; $3 million paid on the principal and $5 million paid on the interest. In March the $5 million payment was for interest alone.
In December, 2010 the General Fund Bank Account was overdrawn, so the City withdrew $1million from LAIF – Local Agency Investment Fund to replenish the account. In January the City withdrew another $3 million from LAIF to cover daily expenses in the General Fund. The LAIF account went from $9.8 million on 12/01/10 to $5.8 million by 01/31/11. Authorized Caller that withdrew the funds from LAIF: William K. Alyward.
Resolution No. 2012-23 funding was to develop 'Area 17C', which is located northeast of town. Beaumont is surrounded with unfinished development sites. There are vacant lots remaining on most of the previous areas developed. Looking at the Beaumont area through 'Google Earth' it's hard to believe there's not environmental and erosion concerns. The Town is surrounded by developments that were never finished.
The City sells the projects to the citizenry on the theory that they will not be paying for the debt themselves, the property taxes collected will pay for the debt. But Section 8 of Resolution 2012-23 creates a clause that taxes will not start until the parcel is 'used for private residence purposes'. Because there are no houses on these properties; there is no tax revenue collected to pay for the debt. All of the property in Area 17C is owned by Pardee Homes, Inc. They list another development site they are selling houses on and a 'coming soon' area that looks like it's been sitting for years, so Pardee will not be developing this property in the near future.
Taxes are collected for the basic needs of the community. Page 63 of the 2011 Financial Report lists total Property Taxes collected at $2,839,632. The City of Beaumont paid $13.4 million for bond debt - $10 million more than was collected through property taxes.
With the collaboration of of the Checks and Balances that are paid to protect the People's money; the City of Beaumont has placed 35,000 people in $284 million debt with payments until 2042.
The City of Imperial Beach calls this Department 'Redevelopment Non-Housing'. The Budget states this department is responsible for working with property owners to rehabilitate homes or with developers to construct new commercial and residential projects. The budget also list this department as 'Status Quo', meaning they 'leave it as it is'.
The total budget for this department is $1,678,258. Employee costs are budgeted at $781,395 and lists a percentage of wages for 15 city employees that are the heads of departments and their secretaries, the mayor, and all four councilmen. Each of these employees have a department to monitor their expenses. When I asked Mayor Janney why all of these hours are allocated to this department he replied: “Because that's where we spend our time.”
20-06 Professional Services total $298,804.50. All checks are coded '405-1260-413.20-06' except one that is coded '513' – which is not an accounting code on the budget.
02/09/12 - Check # 79938 - $200,000 – Paid to 'Goodwill' with the memo 'Settlement'. A settlement is not a 'professional service' and RDA money can not be used for settlements. This is why the State has froze the 9th/Palm property.
Of the remaining Other Costs; $98,777.65 is coded to '20-01 - Attorney fees', but there is $155,433.56 in total attorney fees. The other fees are coded under '20-06 - professional services'
$80,223.41 are checks issued to the City Attorney law firm of McDougal Love
$69,059.15 to Law Firm of Kane Ballmer
$5,497.00 to law firm of Lance Soll
$264.00 to law firm of Opper Varco
McDougal Love does have one check for $13,599.79 issued the same date the Goodwill check was issued with the memo stating: 'Southbay,Goodwill'. All other McDougal Love checks only state the month the work done. Most of the other law firms' memos state: '9th/palm' or 'RDA'.
DKC Association - $18,827.23
NBS Government Financing - $2,800.00
Nasland Engineering was paid $9,033.11 for 'Date Street End'.
Keyser Marston has one check for $2,745.88 with the memo: '9th/palm'.
KOA Construction has one check for $2,551.43 with memo: 'eco bike july'.
Mireles Landscaping has three $1,000 check with memo: '9th/palm.
Let's Review: From a $1,678,258 total budget $781,395 is employee costs. Of the $896,863 other costs listed on the budget we have $409,406.71 in actual expenses. $200,000 is a hidden settlement check and $ 155,433.56 is attorney fees. The rest of the charges should have been coded to the same department as the other charges for the job.
This Department's only use is to hide money..
In accounting; the 1st set of three numbers tells which fund the money is taken from and the 2nd set of four numbers tell which department used the product/service. A dump account zero's out the 2nd four numbers so the expenses never hit any department.
I've separated the dump accounts used by the City of Imperial Beach into three categories: '0000', '5000', and '402-5000'.
'0000' – A total of $2,223,706.80 is listed under six different fund accounts. $496,558.33 is coded as '101-0000' – meaning the money comes out of the general fund.
$348,824.07 are under ten different employee payroll deductions for health care, union, and retirement. These expenses should be coded to the individual departments that generated the expense just like the utility bills. Instead all employee deductions are lumped together – line workers and upper management. This would be acceptable if all city employees were receiving the same benefit packages, but employee benefits offered to line workers in the service departments and employee benefit packages provided to management and 'selected' city departments are very different.
$22,746,90 is coded to '101-0000-209.01-03' – Employee Computer Loan Payment. The theory is that the City is purchasing the electronics, but the electronics are paid for out of the employees' paycheck. Most of the purchases are made by the H/R Manager, but some are purchased by the employee and reimbursed by the City. It is a waste of manpower and taxpayer dollars for the city to be a purchaser, broker, and interest-free debt holder for personal use electronics.
'101-0000' is also where refunds of various types are recorded instead of coding the refunds to the specific departments.
101-0000-221.01-05 is used for building deposit bond refunds – but also includes check # 80570 for $5,000 to a city employee with the memo 'refund security deposit'.
The deposit refund to the Surfrider Association for use of the Dempsey Center is coded to four (4) different accounts - three of which have only one entry:
362.82-02 - $150.00 – Rental of City Property
371.83-03 - $107.00 - City Miscellaneous Revenue
374.85-01 - $107.00 – City Cost Recovery – Other Costs
But listed among those three entries is 371.83-02 for $575.00 – Miscellaneous City Revenue – Contributions - with the memo '2011 employee appreciation'.
Perhaps in both cases the money was hidden because the City can not award 'gratuity' to one union employee without awarding it to all union employees.
101-0000-121.00-00 has five checks issued with the memo: 'mr refund' (Marina Vista Center) – and Check # 80273 for a $116.00 parking ticket. There are also deposit refunds for the Marina Vista Center under 221.01-03.
101-0000-221.01-03 – Liabilities – Miscellaneous Deposits. This account totals $80,247.32. $4,087.56 of this account lists three more Marina Vista Deposit refunds, another refund entry for $550.00 to the Surfrider Foundation for the Dempsey Center, a Special Event refund, and an Air Jump refund. And then there is check # 79791 - $76,159.76 to the San Diego County Sheriff's Department with the memo: 'Sandcastle 2011'.
The Sheriff's Department has their own set of accounting codes. The charges for Sandcastle and any other event that requires additional sheriff staffing should be coded to: '101-3010-421' – with the charges broken down to reflect the products/services used. This information should be listed on the bill presented by the Sheriff's Department.
'5000' – When the 2nd set of numbers begin with '5' it indicates the departments will be under the umbrella of Public Works. $721,888.39 was coded to public works dump accounts using five (5) different funds.
'101-5000-532.20-06' – General Fund-Public Works-CIP Administration.Contract-Professional Services. This totals $554,514.69 and are payouts to Lawyers, Consultants, and Contractors. Most of the checks have the memo: '9th/Palm'.
'201-5000-532.20-06' – Gas Tax Fund – These three (3) checks totaled $83,965.25 to Ramona Paving Company with the memo: 'Louden Lane Crosswalk'.
'216-5000' – Housing Authority - $36,283.08 - All Attorney Fees.
'217-5000' – Housing Authority Bond - $21,752.62 – All Attorney Fees.
'502-5000' – Risk Management Fund - $35,372.75 - $34,359.00 to Play Smart with memo: 'Vet Park Tot Lot'.
402-5000-532 – CIP 2010 bond – Public Works - Administration. These accounts total $2,567,722.00 for the last fiscal year. My big problem with this account is that the City has been spending this money for two years, but never added the department to the budget. A department to track this money should have been added to the budget when it was created.
$2,566,305.09 is coded to 532.20-06 – CIP Public Works Administration-Contract Services. This code is for contract services, but has random expenses for items like drill bits & work books. Most of the money went to lawyers, consultants, and contractors. Southland Paving collected $1,579,967.23 in four (4) checks issued between May 11th and August 9th with the memo: 'Street Improvements Phase 4/5'.
This account also lists Check # 79738 - $174,000.03 to San Diego Association of Governors with the memo: 'Regional Beach Sand Project'. Agenda Item 6.1 for the 06/06/12 Council Meeting states the City's expense would be $187,940.00 as 'outlined in a cooperative agreement between the City and the Redevelopment Agency'. This would imply that the City would pay the expense from the general fund and one of the seven (7) RDA fund accounts listed on the budget.
$5.5 million dollars did not hit any accounts last year. Every tax dollar should be allocated because every tax dollar is used for a specific purpose.
City of Imperial Beach
November 27, 2012
RE: Request of Public Records 4th REQUEST FUEL LOGS
I am requesting the following items from the City of Imperial Beach:
- List of every Employee with a Fuel Key & Code to access fuel from 07/01/10 – 06/30/12.
- Department and Date Issued for Employee in possession of Fuel Key & Code from 07/01/10 – 06/30/121.
Amount of fuel used by each Employee from 07/01/2011 - 06/30/2012.
- Documentation showing reimbursement by Sheriff's Department for fuel used and and explanation as to how this amount is derived without individual accounting of fuel consumption.
I have requested an itemization of fuel usage numerous times. I have received a summary allocation sheet, but have not received the Itemized Daily Logs listing the date, time, person, department, & amount of fuel consumed.
The City has repeatedly stated: “No such documents exists”.
The City has provided a one-page monthly summary listing 16 Departments that have Regular Fuel allocations and 7 Departments with Diesel Fuel allocations. Unless there are daily logs showing individual consumption there is no way to come to monthly conclusions. Either there are individual logs showing the consumption of fuel by every city employee or the monthly fuel logs provided by the City are forged documents.
Each department except the Sheriff's uses the Accounting Code: '28-15'. This accounting code is not found on any budgets. The Sheriff's account is a dump account: '00-00'.
In the last fiscal year the City of Imperial Beach has spent $224,299.38 for fuel. The City claims that the Sheriff's fuel is 52% of total cost, which would be $116,635 in the last year. This amount should be credited to the City, but the City receives no credit for the fuel used by the Sheriff's Dept.
Sheriff's Contract, Page 11 Section F. Vehicles Equipment, and Supplies:
“ COUNTY shall provide all supplies, equipments, and materials required
for performance of the required law enforcement services....”
Fuel costs belong to the Sheriff's Department. Checks from the Imperial Beach General Fund shows a reimbursement for double tickets, but not for the fuel.
City of Imperial Beach
November 27, 2012
RE: Request of Public Records 4th REQUEST ATTORNEY FEE CHECK INVOICES
I am requesting the following information for the list of attached checks from the City of Imperial Beach:
- All Purchase Orders and Documentation enlisting the services of the City Attorney Jennifer Lyon and the Law Firm of McDougal, Love, Eckis, Boehmer, & Foley.
- Invoices and Billing information for the City Attorney Jennifer Lyon and the Law Firm of McDougal, Love, Eckis, Boehmer, & Foley.
Page 42 of The City of Imperial Beach Budget lists the Cost of Total Services for the City Attorney at $205,000. Attached are a listing of the checks issued to McDougal, Love, Eckis, Boehmer, & Foley for the services of Ms. Lyon totaling $416,548.89 for the fiscal year 2011-2012. These checks are coded to 21 different accounting codes; seven are legitimate, seven are dump accounts, and seven are accounts that are not on the budget. The City if Imperial Beach was charged $211,548.89 more than contracted, but the People have no evidence of work done by Ms. Lyon.
The City Attorney is a contract position. California Government Code Section 41804 states: The City Attorney shall receive such compensation as is allowed by the legislative body. There must be both documentation showing the request for services and invoices showing services rendered.
For the past two years the City of Imperial Beach has held Closed Session City Council Meetings with 5 – 9 items on the agenda without any description. At every Council Meeting City Attorney Jennifer Lyons has stated regarding these closed door sessions: “Nothing to report.”
The City of Imperial Beach refuses to disclose any information regarding checks issued to the City Attorney. I have made three (3) record requests for invoices to show why this money was paid. Each time the City has cited Government Code Section 6254(k), Evidence Code Section 952, & Code of Civil Procedure 2018.010 in their reasoning to refuse to release the invoices showing any use of tax payer money.
There is no State law that allows elected and appointed officials to hide expenditures from the People.
California Bar Association Rule 4-200 Fees for Legal Services states that a member shall not enter into an agreement for, charge, or collect an illegal or unconscionable fee. Ms. Lyon has violated the following:
(1) The amount of the fee in proportion to the value of the services performed: The People have no information as to why they were over-charged $211,548.89. Repeated requests for copies of invoices have been ignored by Jennifer Lyon and the Law Firm of McDougal, Love, Eckis, Boehmer, and Foley.
(5) The amount involved and the results obtained: The City is paying over twice as much as agreed, but the only results seen are the City's inability to pay for the basic needs of the community.
(10) The time and labor required: The City and Ms. Lyon has refused to provide any invoices showing time and labor utilized by Ms. Lyon or the Law Office she represents. Ms. Lyon is also Attorney for the City of Calexico and does training and presentations so it is unlikely that she has devoted the amount of time and labor required to justify her fees.
(11) The informed consent of the client to the fee: The City of Imperial Beach was not informed nor did the People consent to these additional fees. For the fiscal year 2010-2011 Financial Statements show the City of Imperial Beach claimed $242,444 in City Attorney fees, but $407,311.01 in checks was issued. This was a material misstatement of $ 164,867.01. These services were coded in nine (9) different accounts. Last year the fees were hidden in 21 different accounting codes, which demonstrates escalating abuse.
Your prompt action on this request is appreciated.
I stumbled upon the nightmare of the 1920 account while tracking the Clean & Green Grant. The General Fund Check Register uses this code with three different fund accounts, but only one fund account appears on the budget. Below are the highlights of the audit. If anyone has any questions or would like to see the spreadsheets please email me at email@example.com.
The 1st set of numbers on an accounting code identifies the fund where the money comes from. The 2nd set of numbers describes the department. The definition of '1920' is: 'Miscellaneous, Non-Departmental'. This department was created to track the expenses & revenues of events that do not regularly occur in normal operations. This is where the Sandcastles money should go in and out so that we can clearly see the profit or loss to the City.
The City of Imperial Beach lists one 1920 account on the budget, but the City is coding checks under two other 1920 accounts that are not listed on the budget. Page 47 of the budget shows the department 101-1920. 101 is the code for General Fund money, but the City is issuing checks to two other hidden accounts: 248 and 408. The definition of both codes is: 'RDA 2003 TAB'. The City did not close down RDA, they only hid the accounts. Hiding accounts is a technique used in the private sector to launder & embezzle money. It 's illegal in the private sector and absolutely unacceptable in the public sector.
The 101-1920 department lists no employees, but the 2012-2013 budget has a NEGATIVE $74,000 coded to 'PERS-CITY PORTION'. To quote the RDA Auditor from the State Controller's Office: “How can that number be a negative?”
I don't know. It seems that the City is taking $74,000 from the City's contribution to the Employees' retirement and spending it in this account. Where is the Union Representative for our Line Workers?
At the bottom of the budget the account '90-01 TRANSFER OUT' lists $860,000. Transfer out what? This is a general fund account, there is no 'leftover' money to transfer out.
Page 13 of the 2011 Financial Statements show's the Original Budget at $312,015; the Final Budget at $1,293,467; and the Actual Amount at $3,402,103. The City not only 'missed it' by $3.1 million, but there was a $2,108,636 difference between where the City tried to close the books and the actual numbers. A $3 million error in a company this small is unacceptable, but a $3 million discrepancy in a department that should be empty is insanity.
101-1920 ACCOUNT: The budget states that this account is used for expenses such as telephone, copy & postage machines, but there is no reason to have 'communal' office supplies because every department has their own office supply budget. The postage meter bill was $10,328.38.
In the last fiscal year there was a total of $171,437.97 General Fund Checks coded to the 101-1920 Account. $64,597.70 were for 'Professional Services': $15,000 to J Simms/Che Agency and, most the rest to law firms such as Kane Ballmer or Opper Vargo. Most of the checks' memos state: 'Palm RDA'.
Even though this department has no employees $80/month is deducted for PERS 'professional services'. There are two '20-06' codes now listed on the Budget; one listed as 'Professional Services', and the other listed as 'S/S Reductions'.
This account also has tuition reimbursement expenses that should be coded to the Fire Dept., one person's vision insurance, and random tax assessments and fees.
248-1920 ACCOUNT: This is where the City hid the 'Clean & Green Grant' expenses. There was no additional funding for these expenses – all of the money came out of the general fund. This account lists $1,140,242.93 spent in 2011 and $636,907.72 in 2012 for a total of $1,777,150 out of the General Fund in the last two years. In the 400 checks issued; about 3/4s looks legitimate, but there are checks issued to fictitious addresses or housing that didn't fall into the guidelines.
408-248 ACCOUNT: A total of $891,540.26 has been coded to this account in the last two years. This account was used to hide legal fees, the 9th and Palm settlements, and to pay for signs and facades on private businesses. This account also pays regular landscaping and EDCO services – which makes no sense because all government buildings have their own departments & budgets. The 9th and palm settlements checks in this account are:
08/20/10 – ck # 71567 – Oscar Padron – $80,544.90
09/03/10 – ck # 71627 – Best $1 – 165,000
11/04/10 – ck # 72080 – Inner Vision – $100,000
02/01/12 – ck #79867 – Shawki Settlement - $149,843
These are two accounts that are hiding 9th and Palm expenses, but they are not the main accounts that are hiding the expenses.
The total for the three 1920 accounts FYE 2011 was $2,009,168.45; but the Auditors forced the City to close the 'Non-Department' Account at $3,402,103.00. Apparently the Auditors found another $1.3 million in expenses that were not accounted for.
The level of corruption in any organization can be measured by how those in power treat those that can not defend themselves. The Senior Services Audit exposes the sad reality of Imperial Beach City Officials' priorities.
The Budget lists Senior Services 'Other Costs' at $10,077 - but the Seniors are receiving virtually none of their budget money.
The 'ABC Accounts' total $7,077 – which is 3/4's of the Other Costs' budget.
The SDG&E bill runs $1,000/yr, but is listed on the budget at $1,500.
Senior Services has listed $200 for maintenance and repair, $75 for postage/freight, $100 for Printing Services, $125 for Membership Dues. This totals $500 – none of which are used by the Senior Services Department.
That leaves $500 for Office Supplies and $500 for Operating Supplies. But Senior Services are not getting $1,000/year in supplies. Senior Services doesn't even know that they have money coming to them – and that is what a budget is for: To give each department the funding they need to operate.
Listed below are the total Other Costs for Senior Services in the last two years. Yes, every item purchased for Senior Services in the last two years can be listed on ½ page.
These purchases were listed on the July 2010 Check Register, but were actually made in the 2009-2010 Fiscal Year.
07/23/10 - $340.81 – Senior Lunch
07/23/10 - $32.49 – Kettle Pot
07/23/10 - $39.66 – Lunch Decorations
07/23/10 – 115.73 – Fans – Senior Center
07/23/10 – $169.00 – Play Res
Fiscal Year 2010-2011
08/06/10 – $27.50 – Paper, File Storage
08/25/10 - $125.00 – Trolly Trip
08/25/10 - $120.00 - Senior Lunch
02/17/11 - $66.98 – Ink Cartridge
07/22/11 - $1,175.95 – Bus Trip/Lunch
07/22/11 - $26.44 – HP Ink Replacement
Total Less Lunches: $ 120.92
Fiscal Year 2011-2012
09/02/11 – $23.91- Coffee Maker
10/20/11 - $19.20 – Propane Exchange
03/02/12 - $92.95 – Ink Cartridge
Page 13 of the Financial Statements for Year End 2011 lists Senior Services total Expenses at $28,098. There is one part-time Employee that receives no benefits – total cost is $18,000/year. Actual Total Expenses of the Senior Services Department for 2011 was less than $20,000.
Any donations made to Senior Services goes into the City's pockets – the Senior Center never sees the money. In the past there was a line on the Financial Statements showing $2 Million/year in donations made to the City. The City has removed the line from the Financial Statements.
There is a $1.00 lifetime membership fee – and the City takes that too.
Taxes and fees are collected to provide community services, yet we don't provide coffee or tissues to the Senior Center. Every month we pay thousands of dollars for meals with lawyers and consultants, but we do not provide a light snack for our Seniors.
The Senior Center charges $.25/cup for coffee. And from that 'petty cash' the Program Coordinator is somehow running the entire operation. There is one Yoga Instructor that is paid by the non-profit organization 'Silver Age Yoga', but everyone else at the Center is donating their time.
Who is responsible for the welfare of the Senior Services Department?
Linda Leichtle – Human Resource Manager. She is also paid to be the Supervisor of the Senior Services and Sports Parks. The employee at the Senior Center stated that she has worked in Senior Services for over a decade and the Seniors have never received their Budget.
City Council – We pay Council to look after the general needs of the community, not to jet-set around the country and not to be the heads of other authorities.
Lorie Bragg was the Program Coordinator for 1 ½ years before she was elected to Council. For six years Ms. Bragg has 'reviewed the budget' and 'voted on the budget', but she's never had the intellectual curiosity to glance at her old department.
Or she's known the entire time that the Senior Services Department doesn't receive their budget and she never said a word.
I recently audited the Imperial Beach Sports Park and Recreation Center. At $267,258; the Sport Park has one of the smallest budgets in the City, but it's still over-stated by $50,000.
As I explained in the Fire Dept. audit; every department listed on the budget is broken into two sections: Employee Cost and Other Costs. The Other Cost budget 2012-2013 for the Sports Park is $113,959. I've totaled the Check Register for the last two fiscal years and found actual expenses much lower:
2012-2013 Budget $113,959
FYE 2011 $68,419
FYE 2012 $61,681
The budget lists $45,169 in ABC accounts – which is 40% of their other costs budget. These are the accounts they use to funnel expenses from other departments.
The 11-04 Life Insurance account is listed with Employee Costs on the Budget, but it is listed here because every item coded to the Sports Park on the General Fund Check Register is included. Life Insurance is budgeted at $300, but the costs were less than $50/year.
There is no '20-06 Professional Services' on the Budget, but as of 01/01/12 the Sports Park has an $80.00 monthly charges with the memo 'Public Agency Retirement Service'. The $80.00 service fee is also being attached to the Fire Dept., Lifeguards, Tidelands, and Clean & Green budgets.
Fire, Lifeguards, and Tidelands have numerous employees to absorb the $80 fee, but the Sports Park only has four (4) employees which makes this a $20/month 'service charge' per person.
The Clean & Green budget has no employees, but the Budget lists '11-01 PERS-City Portion as a negative <$74,000>. A negative means they are taking $74,000 that should be going to their employees' pensions and using it fund Clean & Green.
Page 13 of the Financial Statements for year end 06/30/11 list the Sports Park expenses at $270,762 - which is $21,503 over budget. Payroll and General Fund accounts for the 2010-2011 fiscal year only total $203,596.52 – which is $67,165 under budget. A $67,000 difference may not 'sound' like a lot, but it's 25% of the Sports Park's total budget.
There are other employee costs that the City 'bundles' instead of allocating, so I can not directly tie them to the departments. On the Budget the City lists $6,712 in PERS-City Portion, but I find it hard to believe when the Employee PERS is only $831. The City is generously funding PERS, but it's not going to the these four employees.
The Sports Park generates revenue through various means, but they are not getting any credit on their budget. The food purchased for resale is listed as '30-02 Operating Supplies' – which is for purchases like cleaning supplies and batteries. Items purchased for resale should be accounted for separately to track profit/loss.
Most of the $65,000/ year Sports Park expenses are for the grounds keeping and utilities. The grounds crew is contracted at $3,052.83/month, which is $36,634/year. Utilities make up another $10,000/year. Operating Supplies run another $10,000, but half is food and drink the Sports Park is re-selling, so there is profit to account for.
I don't have little kids, so I'd never been to the Sports Park. Going from City Hall to the Sports Park is like going from the shores of La Jolla to the slums of El Cajon. The front room is a place for kids to gather. It has some table games, a couple computers, and some books; but the furniture is sadly cheap and uncomfortable. Overall the place is spotless and the staff makes the most of every penny and square inch of space.
The $7,000 in checks issued for musical instruments and a few hundred dollars in building supplies is because the staff converted some space into a two-room recording studio. The Staff covered the labor themselves so the entire project costs under $10,000.
After auditing the Sports Park I don't know how they run the operation on $200,000 a year. They open 6 days a week, offer a wide variety of services & activities, and most importantly provide a safe place for our kids to gather. The City is over-charging them and keeping their revenue. Frankly, it stinks of serfdom.
Throughout the Nation Fire Fighters are being targeted as the reason for their city's budget problems - and in some cities it's true. But in Imperial Beach the City Officials are padding our Fire Department's budget by $1/2 million to hide other expenses.
Every department listed on the budget is broken into two sections: Employee Cost and Other Costs. Employee costs include wages along with all insurances and deductions including those paid out by the employee.
Other Costs are all products/services used by the department. This is broken down into 28 different accounts to track the actual costs of everything from electricity to pencils that is used by the fire department.
Budget forecasts are projected based on past usage of the products and services of the department. Page 52 of the Budget lists the Fire Dept. total Other Costs at $699,350, but according to the General Fund Check Report the total operational costs were $206,441.43 for year end 06/30/11 and $121,269.91 for the past fiscal year. The budget is projected at $1/2 million more than the fire department has spent in the last two years.
Part of the discrepancy can be traced to the 20-06 Professional Services Account and 21-04 Technical Services Account. The Budget lists Professional Services at $53,000, but the check register shows the fire department only spent $15,262.50 in 2011 and $20,844.95 in 2012. Technical Services is listed on the Budget at $92,000, but the fire department has only spent $20,814.40 in the last year. Together 21-04 and 20-06 codes account for about $100,000 of the difference.
But most of the money is hidden in four ABC Accounts: These are listed as 'Internal Service Charges'.
26-04 Administration Service Charge - $247,788
26-05 Technology Service Charge - $35,467
26-06 Risk Management - $72,080
26-07 FMP Equipment Charge - $68,812
The ABC Accounts alone total $424,147.
79% of the Other Costs on the Imperial Beach Fire Department Budget do not belong to the fire department. This $570,000 in added charges represents 25% of the fire department's total budget.
The basic function of the Accounting System is to tie all of the financial information together. When money is paid out the check is coded to the department that used the product/service. The accounting codes on the budget should match the accounting codes on the checks issued. The City of Imperial Beach Budget has almost $4 million in ABC accounts hidden within their 32 departments; yet there is NOT ONE '26-' coding in the General Ledger Check Reports in the last two years.
How long has the City been funneling expenses into the Fire and other Departments? I don't know, but it's been going on for a few years. The 2008 Budget Report states $352,321 in ABC accounts were attached to the fire department's budget in 2005-2006.
What about the wages?
The total wages for the Imperial Beach Fire Department have held steady at $1.2 million for the past two years. Our firefighters have very little overtime – they do not abuse the system.
What about the benefits?
On September 7, 2011 the Council adopted Resolution no. 2011-7074, a 'Memorandum of Understanding' with the Imperial Beach Fire Department. Effective 07/01/11 Firefighters began to pay the entire amount of their CalPERS and set a maximum of $825 per month in 2011 and $855 per month effective 07/01/12 as the City's health care contribution to our 12 firefighters.
How did I know the firefighters' budget would be corrupt?
Because in that same 'Memorandum of Understanding' that took away the firefighters' benefits also lists item 10)
“ Employees hired on or after July 1, 2011 must be non-smokers and remain non smokers and cannot use tobacco of any kind as a condition of continued employment. Effective January 1, 2012, employees are prohibited from smoking and using tobacco of any kind while on duty...”
and item 12)
“ A new article will be created related to personal appearance and visible tattoos, earrings, punches, and piercings ...”
If the reason behind reducing benefits for the firefighters was financial the City would not have included personal attacks.
The City Manager states the Fiscal Impact of the Memorandum of Understanding will save $52,200 over a 2 year period “...from a combination of increased employee retirement pickup, elimination of city contribution to CalPers, reduction of health insurance cash out, creation of lessor paying positions..”
The City cuts their responsibility to our firefighters to save $25,000/year while they pad the fire department's budget by $45,000 every month.
Where is the Union?
I don't know. Every month a check for $300 is issued to the IB Firefighters Association, but there doesn't seem to be anyone negotiating on the side of our firefighters.
Taxes are collected for the essential services of the community and the fire department is one of the most essential of services. Our firefighters deserve the community's respect and support. Firefighters are paid well because it's a dangerous job, they have to leave their families for days at a time, and their job requires the moral integrity not to abuse their position.
It's time to stop letting our elected and appointed officials point the blame at the line worker when it is their own poor choices that are causing our economic hardships.
QUESTION: What is it called when City Officials falsely ratify checks?
For two months the City of Imperial Beach has refused to release the Payroll Account. I assumed that it was because they were cutting themselves massive checks – but that would be the least of their problems.
The 'problem' is that the City has a hidden Payroll Account.
Last Thursday the City finally released the Bank Statements for the Account now known as 'Payroll #1', but they did not included the A/P report. Aside from check # 42886 issued on 07/22/10 for $22,256.56, there are not very many many big checks cut. We have ½ dozen people on the payroll making over $100,000/yr, so there should be ½ dozen paychecks for $5,000 every pay period.
When I audited the checks ratified by Counsel compared to the bank statements – there was no comparison.
The most current Counsel Minutes available are 05/02/12. The Counsel ratified checks number 44572-44596 for $145,254.71, but that's only 24 checks and we are supposed to have 123 employees on the payroll. And when I added up the checks they only total $11,308.70. That leaves a $133,946.01 discrepancy.
From 07/01/11 – 05/02/12 there has been $3,262,420.41 ratified, but the checks only total $354,294.23. That leaves $2,908,126.18 unaccounted for.
Let's review: $354,000 is what we've spent to pay ALL of our line workers. $2.9 MILLION is what the few at the top are costing the taxpayers.
How long has this been going on? I don't know. I can tell that they've had the hidden payroll account since last year. On 07/21/10 the Counsel ratified checks 42800 – 42865 for $183,761.00, but the checks are only worth $51,517.12, which leaves $132,243.88 discrepancy.
Can't get any worse you say?
In September, 2010 they issued checks 43038 – 43073 for $21,468.41 without ratifying the checks at all – nor was there any reason to cut payroll checks. The Counsel ratified the payroll for the pay period ending 08/12/10 on 09/01/10 and ratified the payroll for pay period ending 08/26/10 at the 09/22/10 Counsel meeting.
It took me 15 minutes to figure out what was going on. I've nicknamed our elected and appointed city officals 'the goonies' because they have the mastermind capabilities of 5th grade misfits.
But it took me 6 hours to dig through State and Federal case law because I have never seen or heard of this in the private or public sector. Even the City of Bell wasn't this stupid. I still have not found any precedence, but I did find the laws that apply.
It's considered forgery and the state federal laws run very deep in this area and have very stiff prison sentences. Stealing the money is embezzlement, but falsely ratifying the checks is forgery and perjury. Twice a year for two years is 48 counts.
Who's responsible? All of them. The 'big three' would be the Finance Director, Mike McGrane – who I have named 'walking dead'. Accountants have extra laws governing them because it is our job to stay within the law. He'll get more jail time than anyone else.
Next would be the City Manager, Gary Brown – who i've named 'mr. lizard' because reptilians are slimy and have very small brains. I believe he is the mastermind behind most of the illegal activity and the overall negative predatory practices by our city officials. Both the Finance Director and City Manager sign the checks.
Then we have the City Clerk, Jacque Hald, who I've named 'the question mark'. I don't know what to think of her. She seems like a nice person, but her hands are very dirty. Cali state law 372208 (b) holds the City Clerk responsible for certifying the checks warrants.
City Counsel is also guilty of dozens of counts conspiracy, forgery, perjury, and embezzlement. They can't say they didn't know because all of them are pulling money from the hidden account too.
The Bar Association told me there are no 'extra laws' governing City Attorneys, but she will face the same state and federal charges as Counsel for her part in the conspiracy.
The 'good news' is that there are a lot of retribution laws in place. The State and Feds will confiscate their assets to recoup some of the money for us.
Is there any way this could be legal?
Nope. Not at all. Not in any form or function.
The Kingfish used to call this: 'having them by the ying yang'.