Investigative audits of Lincoln city operations: 2012 to 2022

External audits.They're a fact of life for every government organization and every public company (and private company if they're smart). They're not fun but they can be very useful to improving the organization.The city of Lincoln has undergone external audits of its finances and operations, annually by an outside accounting firm that reviews its finances, and by separate state and Placer County agencies based on a citizen request for a specific investigation.The accounting audit is an annual exercise that reviews all revenues and expenses of the organization. It's designed for transparency. As part of the review, the external accounting firm also submits a Management Discussion and Analysis, which calls out specific areas for improvement. There is no requirement that the government accept the recommendation(s) but they are virtually always on target. Simple improvements are typically made immediately; harder improvements, e.g., remedying inter-fund loan transfers and repayments, can take a while.Lincoln underwent a state of California Joint Legislative Audit Committee (JLAC) investigation in 2018-2019 resulting from issues raised by certain Lincoln citizens about the city's finances and operations. Its audit findings weren't pretty but they were (in this writer's opinion) on target. Once surfaced, most all of the findings were resolved. There are a few issues still to be remedied, i.e., inter-fund loans, and these haven't been fixed (yet) because the issues are difficult.The third type of investigative audit are those initiated by the Placer County Grand Jury and this week's column will concentrate on the past 10 years of grand jury investigations and findings. Grand jury backgroundThe typical Placer County Grand Jury reports state at the beginning: "The grand jury is an investigatory body created for the protection of society and the enforcement of the law. The grand jury in California is unusual because its duties include investigation of local and county. The objective of the investigations is to produce beneficial reports that persuade local officials to run agencies more effectively and efficiently."Grand juries have no enforcement powers but they definitely have the power of "moral suasion."Overall, the city has fared pretty well in these audits. Of the last 10 years, there were no Lincoln issues investigated in four of them (fiscal 2013, 2014, 2015 and 2018). Reviewing the six years of investigations over the past 10 years2015/2016: Code enforcement practices were reviewed in all the political jurisdictions in Placer County. Lincoln was found to be deficient in the tracking of complaints and complaint resolution. The city agreed with the finding and fixed the problems.2016/2017: There was an abrupt resignation of Lincoln's police chief, which caused the grand jury to investigate transparency issues. This area has complicated overlays regarding personal information and what might not be released to the public. The grand jury recognized this and just called for increased transparency.2018/2019: This investigation was a follow-on of the Joint Legislative Audit Committee audit, specifically about water rates and connection fees. There were five findings and six recommendations. The city agreed with one finding and disagreed wholly or partially with four others. Of the six recommendations, two were already implemented, two were not implemented but would be in the near future, and two recommendations were deemed by the city to not be warranted or were not reasonable.2019/2020: This audit was on Lincoln's Airport, an operation having long-standing issues of management and structure. The fact is that the Airport Fund wracked up $5- million in cumulative losses and essentially hid them with accounting slight-of-hand tactics. The grand jury made nine recommendations, all of which were disagreed with by the city. The airport is now at breakeven, financially, but significant work has to be done to make it truly self-sustaining and viable. 2021/2022: This audit centered on…frankly I don't know. Let's review what the grand jury says it's supposed to do, specifically "The objective of the investigations is to produce beneficial reports that persuade local officials to run agencies more effectively and efficiently." All well and good.This year's audit, however, seems to be out of touch when it comes to recommendations. The grand jury made four recommendations:1. "By Oct. 1, 2022, the City Council shall approve a raise in the sales tax." The problem with this recommendation is that the City Council cannot raise the sales tax: that requires a vote of the electorate.2. "By Jan. 1, 2023, the Lincoln City Council shall establish a new task force to develop a plan to bring more retail and commercial business into the city." First, the city already has an Economic Development Committee that is working on this. One of their successes is a hospitality incentive program that will generate $300,000 to $400,000 per property every year, 100 percent of which stays with the city. The Economic Development Committee is also working on identifying new fueling sites in the city. Second, it's businesses that make the start-up decisions. Governments can only generate incentive packages and create a friendly development environment.3. Recommendation Three involves the city manager setting goals for realistic planned growth. Yes, of course, and that's called the budget process. The new city manager and the new finance director are already working on developing long-range financial plans.4. And finally, and perhaps most unbelievably, "By Jan. 1, 2023, the Lincoln City Manager shall utilize the formal update process to amend the city plan to reflect the current and forward-looking situation of the city." Perfect. Take three months to accomplish what is a multi-year, very expensive process that involves bringing on board consulting specialists and involving a large citizen body to analyze and recommend actions that will drive development over decades. And do all this while the entire construct of where and how businesses develop, and where people want to move to, is undergoing significant change. Really, in three months?City Manager Sean Scully submitted a five-page, detailed response to the audit on Aug. 8, stating to all issues, "The city does not agree with this recommendation and it will not be implemented at this time."Bottom line, external audits can be both worthwhile and productive, and should be welcomed. Recommendations, however, need to be realistic in terms of outcomes and timing. Merely stating the obvious, i.e., the city needs more revenue, is not helpful. Richard Pearl is a Lincoln resident and retired consultant to local governments. He is also the elected city treasurer. This column represents only his personal, and not elected, opinions. The column's goal is to present issues that impact city residents in an impartial and understandable format. He can be reached at richardpearl.lnm@gmail.com.