Vernon has failed to develop several policies and procedures to make key government reforms, a state audit reported. While the city of Vernon – plagued by a corruption scandal and mounting debt – vowed last year to implement numerous reforms, it lacks the procedures to make those changes, the state auditor concluded in a review issued yesterday.
“Although the city is making progress toward making those reforms, more work needs to be done,” said Margarita Fernandez, spokeswoman for the California State Auditor, which released a report [PDF] that found Vernon has failed to develop “the policies and procedures necessary to implement some of (the reforms).”
But a city spokesman said Vernon has already made several improvements.
“The city has taken some significant steps in the past 18 months – steps so significant that it has probably implemented more reforms to lay the groundwork for good governance than any city in southeast Los Angeles County,” said Fred MacFarlane, spokesman for the city of Vernon.
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Vernon, covering 5 square miles and with 112 residents, narrowly escaped being dissolved into Los Angeles County when Assembly Speaker John Perez, D-Los Angeles, introduced AB 46 in December 2010. The measure would have disincorporated any city with fewer than 150 people – singling out Vernon as the only potentially affected city.
The industrial city, which houses 1,800 businesses that provide 55,000 jobs, fought the bill and adopted 69 reform measures to improve how the city is run. In the past several years a former mayor was charged with voter fraud, a city administrator pleaded guilty to using public funds for personal expenses and another city administrator admitted to hiring his wife as a contractor.
Last August the Senate rejected Perez's bill.
The audit “underscores exactly why the Speaker sought to disincorporate Vernon last year, and that the same conditions that prompted that effort are still present in Vernon,” John Vigna, Perez’s spokesman, said in an email. “The report calls into question the city’s record keeping, financial decision making and management, and raises troubling questions about whether Vernon can even be considered a real city.”
The audit reported that Vernon has not properly evaluated executive city employees, maintains high salaries for top city officials, provides long-term city workers with large longevity checks and pays out “legally questionable retirement benefits.”
These are practices Vernon cannot afford, the audit said, with the city operating with a general fund deficit for more than 20 years. In the past five years, those shortages have been as high as $33 million, the report stated.
“We tried to pinpoint the structural deficit, what was happening there, so that they (city officials) can take action to try to put the city in a better financial position than it’s been in,” Fernandez said.
The audit recommended Vernon “exercise better control over contract expenses” after finding problems with 21 of 25 of the city contracts reviewed. In some cases, contracts were awarded without a bidding process and some had no payment limits or end dates, according to the audit.
For example, the city paid one real estate consultant $775,000 over three years after extending the contract four times without collecting invoices or rebidding the contract, the audit reported. The 13 contracts that lacked fixed end dates cost the city more than $105 million over six years.
The city also faces annual debt payments of more than $60 million for the next decade, Fernandez said. She also said getting information about the city's financial procedures was problematic.
“At one point we issued a subpoena because we wanted to make sure we fully exercised our right to obtain information during the audit,” she said. “The relationship … it was so difficult or so challenging that we wrote something up in the report. Typically we don’t do that.”
“They had full, unfettered access to anything that they wanted to review,” he said. “When you’re trying to run a city while at the same time respond to requests, sometimes it can be a little challenging, but that process was successfully completed.”
Vernon city officials are required to report back to the state auditor within 60 days of the audit's release, Fernandez said. They also need to report back at six months and again at one year after the release.
MacFarlane could not say specifically when the city would respond to the full audit report, but said Vernon officials would go through the report “soon” to determine which recommendations from the audit that “the city believes have merit.”
“The auditor didn’t take into full consideration the array of steps that the city of Vernon has taken to effect reforms and to position itself for a municipal governance platform that reflects openness and transparency and good governance practices,” MacFarlane said.