Glendale ranks low in grand jury report

Glendale ranks near the bottom in several categories of fiscal health compared to its fellow Los Angeles County cities, according to a recent grand jury report, an analysis city officials protested as flawed.

The categories, discussed in a 120-page report released by the Los Angeles County Grand Jury on June 28, include the percentage of revenue left after cities pay the bills, the ratio of assets to liabilities, and other financial indicators for fiscal years 2010-11 and 2011-12.

In addition to cash on hand, assets include the value of city-owned land and infrastructure. Liabilities include long-term debts, such as bonds, pension obligations, insurance claims and money owed to creditors.

According to the report for fiscal year 2011-12, Glendale ranked:

• 56th for net revenue percent of total funds — that is, leftover funds. This essentially means Glendale spent more than it took in through taxes, fees, permits, and other sources. Glendale spent about $29 million more than the roughly $259 million in revenue it generated, similar to most cities in the county.

• 70th for net revenue percent of General Fund, which pays for parks, libraries and other general services. The city has multiple funds, including the general, utility and enterprise funds.

• 42nd for ratio of assets to liabilities. It's ideal when the ratio is above 2, and Glendale had a ratio of 4.89, meaning the city has nearly five times as many assets as it does debts.

• 40th for unassigned General Fund money, which is money left over to pay for emergencies or budget imbalances. Glendale had about $38 million unassigned in its 2011-12 General Fund.

•70th for change in General Fund Balance. Glendale's General Fund balance dropped by about $75 million at the end of the fiscal year compared to the beginning. The prior year it increased by about $14 million.

While the grand jury report analyzed 88 cities in the county, only 77 were fully ranked. Several cities, including Azusa, Inglewood and Lawndale, did not have annual financial reports for 2011-12 complete when the grand jury conducted its analysis in April.

The grand jury, which consists of 23 volunteers from the public, suggested that cities spend down their reserves, liquidize assets and reduce services, among other recommendations to improve fiscal health.

"Cities cannot sustain a pattern of spending more than received in revenue and essentially not living within their means during the fiscal year," the report stated.

City spokesman Tom Lorenz discounted the report, calling it flawed.

"It is a snapshot in time without proper analysis," Lorenz said in an email, adding that it did not take into account the effect the end of redevelopment had on the city and Glendale's annual multimillion-dollar transfer from Glendale Water & Power to the General Fund.

In order to close a state budget gap, Sacramento lawmakers dissolved redevelopment programs throughout the state last year, forcing Glendale and nearly 400 other local governmental agencies to fork over the money previously used to spark economic development and encourage growth in blighted areas.

Lorenz also pointed to Standard & Poor's AAA rating and positive outlook of Glendale set in May as a sign of the city's fiscal health. AAA is the bond-rating agency's highest score.

The City Council is set to discuss a response to the grand jury report later this month, Lorenz said.

While Glendale ranked in the bottom half to bottom third on many of the fiscal health indicators, a bright spot for the city came from its responses to a questionnaire regarding governance and management practices.

Glendale ranked third in the best practices survey, answering 94% of the Grand Jury's questions positively. Best practices that Glendale carries out include measuring performance indicators, establishing an investment policy, setting annual executive goals and abiding by an ethics policy, according to the report.

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Follow Brittany Levine on Google+ and on Twitter: @brittanylevine.

 

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