South Pasadena Audit Shows Solid City Cash Position

South Pasadena City Hall (Photo – Graphics Dept.)

The sky is not falling on South Pasadena’s financial house, according to a long-awaited audit after a furor last spring over potential financial mismanagement at city hall.

By William J. Kelly

The audit comes just in time to bolster public confidence in the city’s financial management practices ahead of a crucial vote on a utility tax renewal measure Nov. 3.

Rather than a financial mess, the audit, known as the Comprehensive Annual Financial Report by the accounting firm Rogers, Anderson, Malody & Scott LLP for the fiscal year ending June 30, 2019, showed a city with rising prospects.

The city’s overall assets exceeded liabilities by $81,483,541. This is an increase of $3,833,082, or 5 percent, over the previous year, according to Elaine Aguilar, interim assistant city manager. In her memo to the South Pasadena City Council for its Oct. 21 meeting, she added that the city’s general fund cash balance stood at $18,417,885 at the end of the fiscal year. This includes $12,017,146 in undesignated reserves available for discretionary city use. Cash reserves, according to Aguilar, represented about 49 percent of the city’s general fund budget.

The annual financial report did note problems with South Pasadena’s accounting work.  This includes budget document errors, such as mislabeling line items, and an inability to provide year-end closing reports due to software deficiencies and inadequate staffing in the Finance Department.

“We need some help in dealing with the ongoing workload,” Interim City Manager Sean Joyce told the City Council Wednesday. Accordingly, city staff plans to request that the council hire more Finance Department staff.

Presently an ad hoc committee recently appointed by the City Council is working with the Finance Department to improve its operations and produce regular financial reports. Councilmember Steven Rossi, who heads the committee, said that some of the accounting problems stemmed from inadequate staffing.

Work lies ahead. This week’s report, to be discussed and approved at the city council’s Nov. 4 meeting, could well bolster voter support for South Pasadena’s Measure U. This would permanently renew the city’s 7.5 percent utility use tax.  That tax provides the city about $3.4 million a year in general fund revenue, or some 12 percent of its general budget. Unless renewed, it will expire on June 30, 2022.