Hawthorne Press Tribune Herald Publications - Inglewood, Hawthorne, Lawndale, El Segundo, Torrance & Manhattan Beach Community Newspapers Since 1911 - Circulation 30,000 - Readership 60,000 (310) 322-1830 - September 10, 2015 El Camino Celebrates Two New Buildings El Camino College will celebrate the grand opening of the new Center for Applied Technology (CAT) & Industry Technology Education Center (ITEC) with a ceremony scheduled for 4 p.m. Thursday, September 17 in front of the ITEC, then at the CAT building. The new CAT building houses the college’s welding technology, automotive technology, and air conditioning and refrigeration programs. The ITEC features 70 classrooms, 24 labs, and 209 new computers. The $29.9 million Center for Applied Technology and $38.3 million Industry Technology Education Center were made possible with funds from the 2002 Measure E facilities bond. Photo courtesy of El Camino College. Financial Audit Paints A Dire Picture: Cash Funds Could Be Depleted by 2016 By Derrick Deane With financial issues plaguing the city of Hawthorne, considerable interest was paid to the results of a financial audit that were released earlier this month. The study was conducted by the outside accounting agency, Vasquez & Company LLP in hopes of promoting “clarity and transparency regarding the City of Hawthorne’s financial condition.” “The scope of our study was to investigate certain records and transactions of the City’s Finance Department,” the report sent to Interim City Manager Arnold Shadbehr said. “We also considered claims against the City’s cash balance during the past few years.” The primary objective of the study was to provide an understanding about the cash balance of the City’s General Fund as of June 30, 2015. A multi-step process was carried out in order to execute the audit, including research and various investigatory procedures. They began by obtaining a detail of the general ledger of transactions in the city’s General Fund for the fiscal year of 2014-2015. Cash transactions were sorted through, revenue and expenditures from July and August 2015 were reviewed, and interviews were conducted with city management and staff within the Finance Department. The study found that, “the City’s financial condition has worsened subsequent to fiscal year 2013-2014,” the report said, “primarily because certain anticipated funding sources did not materialize and unplanned expenditures occurred.” The report states that the city has only $4.1 million of cash available in the General Fund and an additional $4 million of that set aside in a “Rainy Day Fund.” Vasquez and Company concludes that the amount of cash in the fund is enough to fund only about 3 weeks of city operations. While that might sound dire, it gets worse. The report found that during fiscal year 2014-2015, the General Fund budget had proposed expenditures of $62.6 million against an estimated income of $59.4 million and reserve funds of only $3.1 million. When including amendments that were made in July and August in reaction to the total income and expenditures came down slightly, but the deficit remained at $3.2 million. This deficit was funded by the General Fund cash reserves. While much is sure to change between now and the upcoming elections, the report states that the city is expecting a 2015-2016 income of $59 million and though the slight increase in revenue is much-needed, the city is still expected to be in a deficit. In fact, the report finds that “assuming a business as usual scenario,” city expenditures will be approximately $65.2 million, or a 5.3% increase year-over-year. “City management is evaluating options to reduce costs by $6.2 million on an annual basis,” the report states. “Because one-fourth of the year will likely have passed before substantial cost saving measures can be implemented, the City will only realize a portion of the annual savings potential.” The city recently balanced its budget by including General Fund Reserves as a financing source. In 2013-2014, $1.5 million was used while in 2014-2015, $3.2 million was spent. “The proposed 2015-2016 budget reflects spending an additional $6.2 million of General Fund Reserves in order to finance the deficit,” the report states. “Because the city considers $4 million of the cash to be it’s ‘Rainy Day Fund,’ and thus unavailable for appropriation for normal operations, the draft budget would have the city spending cash reserves which it will not have on hand.” The report goes on to state that “if the city spends its cash reserves pursuant to the projections, the General Fund Cash Balance will be substantially depleted if not exhausted.” While the idea of not having any “side money” to pay for expenditures is a harrowing reality, the report adds that certain costs that were not recorded in the General Fund will need to be paid with the money in there. Escalating retiree medical care costs of $49.7 million, escalating pension costs of $39.2 million, pension obligation bonds with escalating annual debt service payments and a $6.4 million insurance fund deficit are all expenditures that will need to be paid off at some point. “The city’s General Fund Balance is not sufficient to finance these increasing costs, and any worsening of the financial condition caused by operating deficits will place the city in an even more precarious financial position,” the report cautions. The City Council re-scheduled its first meeting since the report was released for Thursday, September 10 and with several of the members on the board involved with upcoming elections, residents may want to visit City Hall to see what their representatives have to say about the report findings. The situation has become so dire that one of the discussion items will center on voluntary participation with other city employees in on-going furloughs. City employees have been getting deferred payments to help balance spending budgets per departments, but with each month passing with no resolution in sight, yet another expenditure that continues to grow that the city will eventually have to pay out. • Inside This Issue Certified & Licensed Professionals.......................7 Classifieds............................2 Community Briefs...............3 Film Review..........................2 Food.......................................8 Hawthorne Happenings....3 Legals................................ 5-7 Pets........................................4 Police Reports.....................3 Sports....................................5 Weekend Forecast Friday Sunny 91˚/73˚ Saturday Sunny 90˚/72˚ Sunday Partly Cloudy 86˚/70˚ The Weekly Newspaper of Hawthorne
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