SAN DIEGO (CN) — Commissioners with the California Coastal Commission kicked off their first meeting of the year Wednesday by questioning the commission’s apparent money problems which were highlighted in a recent finance audit by the state Department of Finance.
The Department of Finance’s “non-audit review” stemmed from a $1.46 million General Fund loan the commission requested last year when it was unable to make payroll and rent before the new fiscal year kicked in.
Because the commission requested a significant loan and there were “difficulties” in getting reimbursement and expenditure information from the commission, the Department of Finance ordered the report, on the commission’s dime.
The Coastal Commission owes $250,000 to $300,000 for the report.
Its staff told the commission at the Wednesday meeting in San Luis Obispo that the expense would force it to tighten its belt and hold some staff positions open until more money comes in later this year.
The 2015-2016 budget for the agency was $22.8 million. The Coastal Commission is a powerful agency that can approve or deny developments on the state’s 840-mile-long coast, in its role of enforcing the state’s Coastal Act.
The Department of Finance evaluated the commission’s fiscal management from July 1, 2015 to June 30, 2016.
The Department of Finance found that lack of communication between Coastal Commission departments contributed to its poor money management. The staff apparently knew the commission faced a cash flow shortage months before it requested the loan, yet several commissioners said they did not know about a budget shortfall until the loan was approved in June
Many of the commission’s money woes hinge on its billing and collection practices, as reimbursements from other agencies such as Caltrans account for $2.7 million, or 12 percent, of the commission’s annual budget. The audit noted as of June 30, 2016 – the end of the period the audit considered – there was still $645,000 in unpaid reimbursement invoices commission staff had not collected from fiscal year 2014-2015.
As of September 2016, a little more than half that amount – $342,000 – had been received.
Commissioner Greg Cox said Wednesday that if commission staff had collected on those outstanding invoices in a timelier manner perhaps they would not have had to request that general fund loan.
He suggested fiscal management skills should be something the commissioners use to evaluate applicants who are vying for the open executive director spot, which will be filled sometime in the next couple months.
“One of the things that should be included and evaluated is management skills, including fiscal,” Cox said. “We need a strong manager. We needed a loan for $1.4 million at the same time we had a remainder of millions that were delayed in collection. That tells me we need to do a better job of fiscally managing the contracts we have.”
Questioning of the staff was led by Commissioner Martha McClure, who was not pleased by the staff’s response to the audit, which basically stated that the commission would need more money to make the changes and recommendations the Department of Finance outlined.
“The response was a bit weak. If this is our bucket full of money we have to decide how we’re going to use it. … I’m just not comfortable saying to the Legislature, ‘You need to give us more money, and then we’ll figure it out,’” McClure said.
She suggested the commission could save money by having one or two permanent meeting sites, to reduce travel costs for traveling across the state for its monthly meetings.
The Coastal Act was enacted 40 years ago, McClure said, and technology today allows people to live-stream meetings from home, and even accept public comment remotely.
Commissioner Roberto Uranga disagreed. He said it’s important to travel to the places that major land-use decisions will affect, and that the commission frequently receives complaints from citizens if public comment for a major agenda item affecting them is not discussed at a meeting in or close to their community.
He did agree with McClure’s budget concerns.
“One of the first things I did when I came on the commission was ask about the budget, and I didn’t get a satisfactory response,” Uranga said.
“You can tell the health of an organization by the health of their budget, and we’re not healthy. We’re doing some deficit spending that’s inefficient.
“The commission’s budget is below what it probably should be. I hope you get some accounting staff, because we have been remiss in getting our revenue in a timely manner and that’s maybe because of staff.”
The staff insisted that commissioners’ references to a “budget deficit” was incorrect, that it was a “cash flow problem” at the end of the fiscal year.
Commissioner Effie Turnbull-Sanders said the staff should pay close attention to the non-audit review, given its significant cost to the commission.
“I would like to see a path forward if the commission is now going to be paying between $250,000 to $300,000 for this non-audit. We should take it seriously,” Turnbull-Sanders said. “We owe it to the expenditure of funds to have a deeper dive on this.”
McClure and Commissioner Carole Groom volunteered to serve on a subcommittee to come up with budget solutions and commission responses to be included in a corrective action plan the commission must submit to the Department of Finance by next month.