State Auditor places six cities on watch list

The State Auditor has identified six California cities as potential high-risk government agencies as part of an effort to crackdown on waste, fraud and mismanagement.

The effort was authorized under a state law that went into effect July 1. None of the municipalities singled out by state officials are in San Diego County.

The nearest city at risk of financial insolvency is Hemet, in Riverside County, where the state recommended an audit to confront a budget deficit, significant turnover, the high cost of delivering services, insufficient revenue and high retiree medical expenses.

The report, issued Wednesday, also identified the Los Angeles suburb of Maywood and the city of Richmond in the San Francisco Bay area for immediate audits for many of the same reasons.

The Northern California city of Chico, Ridgecrest in the Central Valley and the Los Angeles suburb of Monrovia were placed on monitor status for bleak financial forecasts, high pension liabilities, operating deficits and other problems.

Those three communities have taken some steps to address the financial challenges, according to the State Auditor’s report.

The program relies on financial reports and other materials previously published by each particular city. The State Auditor reviewed records for more than 450 cities before identifying the six at-risk cities.

“The more detailed analysis included using the financial data to calculate fiscal indicators that may be indicative that a city is in fiscal stress,” auditors said.

The process also included site visits for those municipalities with weak financial forecasts as well as meetings with local officials to review the state findings and offer suggestions to correct reduce risks.

The proposed special audits would require approval from the Joint Legislative Audit Committee, the panel that oversees and assigns the State Auditor’s Office.