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Police Union Consultant Calls City’s Finances ‘Robust’

Economist Peter Donohue contends there are enough funds in Santa Barbara's budget to allocate to the Police Department

Ongoing labor negotiations with the city of Santa Barbara prompted members of the Police Officers Association to hire consultant Peter Donohue, an economist looking into the city’s finances.

Donohue has been meeting this week with members of the City Council, the POA and the media, although his final report isn’t yet complete.

Sgt. Mike McGrew, president of the POA, said the city-presented budget difficulties would result in cutting more than 20 police officer positions, but the numbers drastically lowered as negotiations went on. Donohue was then hired to dig further into the numbers, McGrew said.

Donohue’s main reference points have been Comprehensive Annual Financial Reports, or CAFRs, which are essentially bank statements for the city’s finances that show assets and liabilities for all funds. His main focus were the unrestricted net assets — monies that are not legally restricted for any particular purpose. For all city funds, there are $116.32 million in unrestricted net assets, which contributes to “pretty much near excellent” bond rates, Donohue said.

While the budgeting processes of the past few fiscal years have represented Santa Barbara as being in distress, a 10-year history shows strong ending fund balances, Donohue said.

“We’re not suggesting anything inappropriate,” he said. “It’s something facts have to resolve.”

Jaycee Hunter, a POA member and cold-case detective, said proposed employee cuts have been the city’s answer to budget problems, with the insistence that funds aren’t available.

“We don’t want to be told unrestricted funds are restricted to ward off a broader discussion of priorities,” Donohue said.

Donohue’s final report most likely will await the release of the newest CAFR, which will be completed sometime this fall. However, his numbers show that expenses have come in lower than budgeted, and revenues have come in higher than budgeted.

Regarding negotiations, McGrew said the POA rejected the city’s latest offer Wednesday night, as the proposed concessions would cause a few dozen employees to either retire or move laterally to a different city department.

“The heat’s on, and I’m feeling it,” McGrew said.

He and other POA members asserted that the city’s policymakers — City Council — aren’t always given all available information by staff.

Donohue’s bottom line was that, based on his analysis, the city’s finances are “robust” and there are enough available funds to allocate to the Police Department.

City Finance Director Bob Samario sent a letter to Donohue outlining each fund’s spending restrictions, which the consultant said was inconsistent with listing those funds as “unrestricted.”

“Why accrue a fund balance in strong years and not spend it in weak years?” he asked.

The $116 million is liquid assets available to each fund, but the amounts can’t cross over from fund to fund, Samario said. The CAFRs lump the funds together for accounting purposes, not to explain how they can be spent.

Samario said he has told the POA how much is truly unrestricted (can move from fund to fund) —  about $29 million, which is mostly in the governmental funds’ net assets. The rest is reserved for disasters and economic uncertainty, he said.

“We have it set aside for a reason,” he said.

Exceptions to the rule about net assets staying within their respective funds are the downtown parking and golf funds, whose unrestricted net assets can be used for any other fund’s purposes.

The Police Department’s budget was $18.7 million in 2000 and $33.6 million in fiscal year 2009, and the total number of employees has decreased to 201 from 217 in that time, according to city documents. McGrew said there are 133 sworn employees currently in the department.

Half the department commutes at least an hour and a half per day, which makes it more difficult to stay competitive and retain employees, Hunter said.

Noozhawk’s upcoming Common Sense California project will take a detailed look at all aspects of the city of Santa Barbara budget.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address).

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