By Jason Islas
Staff Writer

October 17, 2013 -- Santa Monica City officials blasted a report Wednesday by a County Civil Grand Jury that claims the bayside city's financial and governmental practices are substandard.

The report, released in June, came to light when a recent opinion piece ran in the local media pointing out that the Jury ranked Santa Monica -- a city that prides itself on good governance -- in the bottom 25 percent of Los Angeles County's 88 cities.

However, in a special meeting Wednesday, City officials told the press that the findings of the eight-person Jury were “erroneous” and based largely on factually inaccurate or incomplete information.

“The Civil Grand Jury report contains errors of fact and information that we sought to correct twice in writing to no avail,” said City Manager Rod Gould in an email to The Lookout Tuesday.

“The City practices excellent financial management as is demonstrated by a host of metrics and outside checks and balances,” Gould said. “Unfortunately, the Grand Jury’s report fails to reflect this reality.”

Santa Monica is one of only eight cities in California that enjoys a AAA credit rating and has received accolades for the past two decades for its thorough budget reporting.

Gould said that, for one thing, the report applies a rigid set of standards that doesn't take into account that not all cities operate alike.

Santa Monica was docked, for example, for not having a formal audit committee.

“This Council doesn't like committees,” said Gould. Instead, the Councilmembers prefer to hear reports on the City's finances at regular Council meetings, in front of the public.

This year, the Council held two back-to-back public meetings for the exclusive purpose of going over the City's two-year budget before adopting it in June. (“City Council Reviews Santa Monica's Half Billion Dollar Budget,” May 30)

“Cities do things differently,” he said. “It doesn't mean that it's wrong.”

Santa Monica was also docked for not having a formal internal auditing function. Gould said that while the City does, in fact, have an internal auditor, the position is not formalized in the city's charter.

While this fact was brought to the attention of the jury, Gould said, it was ignored.

The Jury also claimed that Santa Monica had adopted budgets that put the City in the red, which is simply factually inaccurate, according to Gould.

“The operating budget is always balanced,” he said. While officials believe the Jury's finding was based on a misunderstanding over how the City calculates its capital improvement projects fund, they said that the Jury was deaf to any clarifications.

“We explained this to them three times,” said Santa Monica's Director of Finance Gigi Decavalles-Hughes.

The report recommended that in order to keep up its fiscal health, Santa Monica should adopt a policy of keeping a “rainy day reserve,” a practice the City has done for years.

Gould also expressed frustration that much of the information about Santa Monica in the June report came, unaltered, from a previous Grand Jury review of only charter cities in Los Angeles County in 2011 and 2012.

As of press time, City officials had received no response from the County after requesting again that the report be updated to reflect information provided by City Hall to the Jury.County counsel did not return requests for comment from The Lookout.

Santa Monica did stand out as a city that pays its staff well. The report shows that in 2011 Santa Monica had 64 people on staff that it pays more than $200,000, 29 of whom are in the fire department.

Beverly Hills, which has about a third of Santa Monica's population, also has 64 people on the payroll earning more than $200,000.

Gould pointed out that those numbers aren't necessarily salaries, but wages earned in a particular year.

“Most of these guys don't do this very long,” he said, referring to the fact that firefighters will sometimes work extra hours and pick up overtime for short periods of time.

Despite their frustrations with the Jury's methods, City staff said that what the County is trying to do is laudable.

The Civil Grand Jury convened as an oversight committee in the wake of the July 2010 revelation that city officials in Bell, California -- a small, working-class town in L.A. County -- had embezzled millions of dollars of taxpayer money.

Like Santa Monica, Bell is a charter city, which gives it greater autonomy from state laws about municipal governance than general law cities.

“Santa Monica will never be Bell,” said Gould. “These residents are watching everything we do. And that's healthy.”

But, he said, the Jury's report “doesn't help confidence in local government.” It only adds to “suspicion and distrust,” he said.