As Oxnard’s top management sifts through years of fiscal mismanagement (a conclusion of by the Ventura County District Attorney’s office in 2012 after two years of searching for financial criminal activity and malfeasances at Oxnard City Hall), unraveling the mysteries of bureaucratic disorder seeming an arduous task. With a vocal disgruntled populace, many of who are tired of excuses and apparently unfair expectations, such as the 2016 wastewater fee hike that was repealed through ballot initiative in November, the relaying of information is often met with an overwhelming amount of skepticism and suspicion. This new periodical column, Focus on Oxnard’s Finances, will attempt to untangle and clarify various issues that have caused concern among residents. This week, the $11 million question.
In the October 2016 Oxnard Treasurer monthly investment report, according to the recently installed City Treasurer Phillip Molina, it became evident that close to $11 million had been sitting in an account untouched, money that would be used to pay certain city bills. Molina had brought this to the attention of City Council members and the press in January. This money had been accounted for in the city’s budget, but according to Oxnard Chief Financial Officer Jim Throop, who assumed the duties of CFO on Nov. 7, 2016, the city relies on two accounts to pay bills, something Throop says was unusual in his experience in municipal management. The second account receives payments from the county through property taxes paid by owners of Successor Agency properties, formerly Redevelopment Agency (RDA) properties. Gov. Jerry Brown dissolved redevelopment agencies as a state fiscal solvency measure in 2012.
Throop discusses the Oxnard’s Successor Agency account and how the city overlooked the millions sitting in it.
VCReporter: How much money flows into that account in one year?
Throop: Approximately $10.4 million per year
That money comes from property taxes. Explain how the city receives these funds.
All properties in the five project areas pay the same property tax as any other property outside the five project areas. There is a calculation that is done that uses the base year for assessed value of when the project area was created, and the incremental portion above that level used to go to the Redevelopment Agency (RDA). Now, just enough funds are transferred to the city to pay the debt service on outstanding bonds. The remaining funds are distributed to all other taxing entities. The owners of the property would pay the taxes.
How long had that $11 million been sitting in that account?
Considering that the Successor Agency receives over $10.4 million per year, the funds were in there for approximately one year or less, depending on when they were actually received by the city. There was no discovery of the $11 million, as it was all accounted for in the city’s General Ledger. This account does have monthly activity, but the transfer of the $4 million from the approved Recognized Obligation Payment Schedule (ROPS), from one checking account to the other, did not occur but was noted in the city’s financial system. The city’s financial system is separate from the checking accounts.
What exactly are the expenses covered by that checking account? We keep hearing that the city budget has a shortfall, but you say that the $11 million was accounted for in the budget.
The city has two checking accounts: (1) General Account (everything but RDA/SA) and (2) the RDA/SA account.
The RDA/SA account is used solely for the payments approved on the ROPS. The General Account is used for all other payments in the city. The funds in the RDA/SA checking account, the $11 million, were accounted for in the budget.
Please remember that the General Checking Account and the RDA/SA Checking Account are the checking accounts that hold the cash for payments (actual cash) and are not the General Ledger for the city.
The General Ledger had all the cash from both accounts posted in the proper manner. The General Ledger is the system that is THE financial document for the city. The funds that are in this account (RDA/SA) may only be used to pay outstanding debt or other administrative expenses related to the closure of the city’s prior Redevelopment Agency. The funds in the second checking account (RDA/SA) may not be used for any purpose other than what is approved by the state’s Department of Finance. The remaining funds in this checking account (RDA/SA) are for all of the debt payments that are made during the year.
I am currently checking with our external auditor on the option to close the RDA/SA checking account and merge it into the General Account. This places all funds into one account. I am not certain when the second account was opened, or why, but it is my belief that the city does not need the two accounts. The city’s external auditor will verify.
Again, there was no found money, as it was all accounted for in the General Ledger.
Focus on Oxnard’s Finances will run periodically as concerns arise. If you have a question or concern about Oxnard’s finances, email firstname.lastname@example.org and be specific about the issue you would like clarified.