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Lindsay among most fiscally challenged California cities

Lindsay among most fiscally challenged California cities

Lindsay ranks fourth most fiscally challenged city in California according to new auditor dashboard

@TheSunGazette

SACRAMENTO – It is no surprise to anyone in Tulare County that Lindsay has the most uphill of financial climbs. Last week the California state auditor ranked the small municipality as the fourth most fiscally challenged city.

On Oct. 24, the California state auditor launched a new tool—an online dashboard—that ranks more than 470 California cities based on detailed information about their fiscal health. The ranking is part of the Auditor’s High-Risk Local Government Audit Program for determining whether a local government agency is at risk of fiscal distress.

“For the first time Californians will be able to go online and see a fiscal health ranking for more than 470 cities based across the state,” said California State Auditor Elaine M. Howle. “This new transparent interface for the public, state and local policy makers, and other interested parties is intended to identify cities that could be facing significant fiscal challenges.”

Lindsay ranked as “high” risk in nearly every category, including liquidity, debt burden, general fund reserves, current and future pension costs, and how much money the city has set aside for other post-employment benefits (OPEB) funding. OPEB are things such as health and dental benefits earned by employees other than wages. 

Its “moderate” risk areas were revenue trends, pension obligations and pension funding. The city ranked as “low” risk for OPEB obligations, which compares the city’s unfunded health and dental benefits to its revenue. 

In those subcategories, Lindsay ranked 10th in liquidity, 44th in debt burden, 17th in general fund reserves, 28th in pension costs, 86th in OPEB. “Based on the criteria for the determination, Lindsay being on the list is consistent with it’s financial condition. The City’s fiscal recovery has been gaining momentum. The City needs to build its reserves and pay down debt,” interim city manager Bret Harmon said via email to The Sun-Gazette. “Thankfully, the City’s management and Council are unified in our efforts to establish a fiscally sustainable future. We will continue to work our plan. We are seeing progress and know that progress will accelerate as we continue to carefully manage our resources.”

Lindsay did rank better in revenue trends at 130, 192nd in pension obligations, 217th in pension funding, 191st in future pension costs and 111th in OPEB.

While Lindsay was ranked the highest for cities in Tulare County, other cities in the county were not that far behind. Dinuba ranked 34th while Exeter ranked 54th, both of which were reviewed under the same criteria. Farmersville ranked the best at 388th. Woodlake was ranked 178th, Tulare was ranked 235th, Porterville was ranked 298th and Visalia was ranked 356th.

The top three most fiscally challenged cities were Compton, Atwater and Blythe. 

The Auditor’s Office used various financial indicators to assess the fiscal health of cities including those that determine if a city can pay its bills; the city’s level of debt; whether the city has reserves; how the city’s revenue is trending; and if the city can pay retirement benefits. The tool allows users to view individual city ratings which are scored using a stop-light indicator rating system with red being high risk, yellow being moderate risk, and green being low risk. 

To ensure the development of the list included third-party municipal fiscal health expert input, the Auditor’s Office established and consulted with an advisory panel made up of experts in municipal fiscal health including representatives from the Public Policy Institute of California, CalPERS, California Policy Center, S&P Global Rating Services as well as an advisor to the California Society of Municipal Finance Officers and the League of California Cities, and a professor at the Daniel J. Evans School of Public Policy and Governance at the University of Washington. 

“We ensured the rigor behind our approach by establishing and engaging an advisory panel of experts in municipal fiscal health. We are confident that our assessment will help distressed cities get in front of impending challenges,” Howle said.

The State Auditor will now use an independent, data-driven analysis to determine which cities to send audit teams into to get local officials’ perspective regarding the areas of concern. If the assessment determines it would be beneficial to conduct an official audit of the respective city to determine the extent of the fiscal challenges and to recommend corrective actions, the State Auditor will request approval to do so from the Joint Legislate Audit Committee (JLAC).

For a complete list of city rankings, including the top three fiscally challenged cities by region, visit: https://www.auditor.ca.gov/bsa/cities_risk_index.

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