Fullerton city officials are hiring an outside accounting firm to take a hard look at the city\u2019s rocky budget after revelations that $10 million originally thought as set aside in reserves was actually allocated to other areas.\u00a0<\/p>\n
It comes as city council members grapple with an expected budget deficit they\u2019re going to have to patch this upcoming fiscal year.<\/p>\n
During a budget update last month, city staff publicly told council members the $10 million that was part of the $26 million in reserves was money actually allocated for other projects or in other funds \u2013 leaving the city with $16 million in savings while facing an expected $13.7 million deficit.\u00a0<\/p>\n
[Read: How Cooked is Fullerton\u2019s Budget?<\/a>]\u00a0<\/p>\n Now, auditors with Grant Thornton are expected to take a hard look at Fullerton\u2019s budget.\u00a0<\/p>\n \u201cWe understand there is a $10 million unassigned budget amount that\u2019s caused some concern and some confusion,\u201d said Grant Thornton partner Shawn Stewart to elected officials at Tuesday\u2019s city council meeting.\u00a0\u00a0<\/p>\n He said the aim is to figure out what happened.\u00a0<\/p>\n \u201cOur purpose is to really understand what happened, why it happened and who\u2019s responsible with the idea on how do we avoid this in the future and to restore trust,\u201d Stewart said.\u00a0<\/p>\n Grant Thornton is the same firm that reviewed Orange\u2019s municipal budget last year, warning in a public report the city could face bankruptcy in three years if officials didn\u2019t make real changes to the budget.\u00a0<\/p>\n [Read: Orange On Track for Bankruptcy in Three Years Without \u2018Radical\u2019 Change<\/a>]<\/p>\n In that report<\/a>, auditors highlighted numerous spending issues \u2013 like floating too many vacancies on the books and hiring full-time employees after getting COVID bailout money without creating long-term funding for those new positions.\u00a0<\/p>\n During Tuesday\u2019s Fullerton City Council meeting, Stewart said auditors will also look for any signs of fraud.\u00a0<\/p>\n \u201cIf we do find instances where we find problems of fraud, then we would let you know immediately,\u201d Stewart said.\u00a0<\/p>\n Earlier this month, city staff told Voice of OC that City Manager Eddie Manfro raised the issue of the $10 million<\/a> that was thought to be in reserves in February, but were surprised that council members didn\u2019t publicly discuss the item.\u00a0<\/p>\n Meanwhile, city council members pointed fingers at each other and city staff for the city\u2019s bleak budget.\u00a0<\/p>\n [Read: Fullerton Plays Hot Potato With Budget Crisis<\/a>]\u00a0<\/p>\n But city staff said council members knew for years that the city\u2019s been in an operating deficit \u2013 with expenditures routinely outpacing revenues.\u00a0<\/p>\n While cities are legally required to adopt a \u201cbalanced budget,\u201d that\u2019s often achieved through shifting money away from other funds \u2013 like capital improvements \u2013 to break even on spending.\u00a0<\/p>\n \u201cWe made decisions based on the fact it was presented to us in a certain way,\u201d Councilman Ahmad Zahra said. \u201cThere were these misallocations.\u201d\u00a0<\/p>\n Councilman Nick Dunlap said it\u2019s a critical time to take a hard look at the budget.\u00a0<\/p>\n \u201cWe\u2019ve really not seen a time more important in our city\u2019s history than now to figure out what our options are,\u201d Dunlap said. \u201cI think what\u2019s really important here is giving us all of the data and giving us actionable items that we can move on.\u201d\u00a0<\/p>\n Spencer Custodio is the civic editor. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter\u00a0@SpencerCustodio<\/a>.<\/p>\n \n\tRelated\n<\/p>\n \t