With outdated accounting systems and city staff stretched thin, millions of dollars in bills owed to various city departments have gone unpaid, contributing to budget shortfalls in recent years, said Long Beach City Auditor Laura Doud during a presentation on April 7 to the North Long Beach Community Action Group (NLBCAG).
After being elected in 2006, Doud began conducting audit reports with a primary focus on areas that have the greatest impact on revenue streams as the City has struggled with budget deficits and has had to cut nearly 1,000 positions in the last decade. Her office has uncovered outstanding balances in city departments, including $18 million in unpaid parking citations and more than $2 million in uncollected business-license payments.
Part of the problem is that, in some cases, employees without proper training are handling books, and records are being kept manually rather than through an automated system, she said. Following the city auditor’s recommendations, Long Beach city management is now working to streamline operations, take steps to upgrade accounting technology to provide a more “uniform system” and more supervisorial oversight, Doud said.
“I think any time an auditor comes in, people get nervous,” she said. “I try to let them know our goal is not to embarrass anyone. This is all about accountability and efficiency. Our office is about transparency for the public and how we’re doing as a city… We try to be sensitive and understanding, but at the same time this is taxpayer money, and we can’t just take it lightly.”
During the NLBCAG meeting that drew a small group of about 10 people to the North Patrol Substation, Doud gave an overview of her duties and accomplishments during the eight years she’s been in office.
Aside from auditing her own department, the city auditor first reviewed the Long Beach Police Department, which alone accounted for 50 percent of the City’s general fund budget when Doud first took office. Since then, the City has implemented a “proportional share” system, which ensures that public safety, including the fire department, still accounts for a majority of general fund expenses (68 percent) but preserves funding for other city departments as well.
The audit on the police department, however, outlined various inefficiencies that needed correcting, including how the department distributed overtime, she said. After implementing recommendations, such as using more civilian officers for desk jobs and consolidating technology services, the department was able to save $4 million in police overtime during the first year, Doud said.
“We were going to look into finding efficiencies on how we can get more patrol officers out on the street for less dollars,” she said. “They knew that they had to implement this and they did and it worked well.”
Another one of Doud’s accomplishments during her tenure was launching a campaign for a ballot measure to increase the city’s oil-production tax, which is a fee charged to oil operators. The proposal was to raise the rate from 15 cents per barrel of oil to 40 cents per barrel of oil, with the added revenue being split between police and fire departments. She said the tax hadn’t been updated since 1990 even though the price of oil had tripled during that time.
Voters ultimately approved overwhelmingly for the tax increase, with an unprecedented 70 percent of voters in favor, Doud said. “It was really historic and a huge victory for Long Beach,” she said. “Since then, Long Beach has hired a number of police officers, has bought a new fire truck and purchased several public-safety equipment… So it’s been a huge benefit for our city.”
In an audit on the Long Beach Parks, Recreation & Marine Department released in May 2012, Doud uncovered that the department takes in more than $6 million a year in fee payments that are collected from 34 different sites. The audit, however, found that the department’s billing process, often conducted by part-time employees, was manual, decentralized and outdated. As a result, the audit found that management was unaware of almost $400,000 in outstanding receivables.
“Anytime you’re dealing with cash, you just have to have the strictest controls over it to ensure that it’s all being collected and deposited within the city treasury, because we know where there’s cash there’s fraud, and we can’t bury our head in the sand and think that doesn’t exist, because it does,” she said.
In addition, the city auditor found that the cost of providing lighting for adult soccer leagues to play has created an outstanding receivable for $50,000. “They didn’t pay it, but the City continues to allow them to play,” she said.
Doud has also uncovered a case of fraud. In auditing the Long Beach Animal Care Services Bureau, she uncovered that Jongluck “Lucky” Matrais, who had worked at the department for 21 years, had embezzled $250,000 over an 11-month period. The employee, who is currently in prison after pleading guilty in August last year, eventually admitted to taking $600,000 of which she now has to pay back to the City of Long Beach. She said the incident occurred primarily because the employee was the only person in charge of handling the department’s financials. “It was just a perfect storm for a terrible thing to happen,” Doud said.
She added that the auditor’s office is providing training to managers on a “limited” basis and is also responsible for “enforcement” of recommendations by following up with departments. Doud said that departments are required to report back to the city auditor on their progress within 60 days of a report being released.
Unlike other city departments that have many layers of bureaucracy, the city auditor’s office only “works for the taxpayer,” Doud said. “I’m certainly open to ideas and paths for us to look into, and we’re doing our best to improve and streamline operations and get rid of fraud, waste and abuse,” she said.
Anonymous tips of potential fraud may be submitted by calling the city auditor’s fraud hotline at (888)-FRAUD-07. ß