City's financial health remarkably better over past decade, performance audit says
Published - 08/06/15 - 01:32 PM | 3922 views | 0 0 comments | 34 34 recommendations | email to a friend | print
The City of San Diego’s financial health has shown “remarkable improvement” over the past decade due to fiscal reforms and now ranks among the best when compared with other cities with similar populations, according to a performance audit by independent city auditor Eduardo Luna.

“The city’s financial health is strong and getting stronger because of the fiscal reforms enacted by city leaders and approved by San Diego voters in recent years,” said Mayor Kevin Faulconer. “By tackling tough issues that were too long ignored, we are now able to invest in our neighborhoods, expand city services, hire more police officers and pave more roads like never before. The city must remain faithful to the fiscal reforms and best practices in order for its financial health to remain strong... .”

“Our results suggest that the city is in a strong position to finance its services on a continuing basis and poised to meet the demands of natural growth, decline and change,” the audit said. “These results are a testament to the efforts made by city leaders over the last 10 years, including implementation of strong fiscal policies, practices and controls that helped the city overcome a point of crisis.”

A decade ago, the city was on the brink of bankruptcy following a pension crisis and decades of alleged financial mismanagement by past city leaders. Rating agencies had suspended the city’s credit rating, and the Securities and Exchange Commission ruled the city had defrauded investors.

In response, leaders enacted several financial fixes to boost reserves, reform retiree health care and restore the city’s credit rating. Voters also overwhelmingly approved a switch to a strong mayor form of government and a pension initiative that reduced the city’s future pension obligations by nearly $1 billion.

In compiling its report, the auditor’s office used a nationally recognized 10-point test designed to assess performance in financial position, revenues, debt and capital assets. The audit then compared San Diego’s condition to similar-size cities – Philadelphia, Phoenix, San Antonio, Dallas, San Jose and Austin – from fiscal years 2005 to 2014.

San Diego ranked among the best when compared with the other cities for eight of the last 10 years. San Diego also scored significantly higher in fiscal years 2012 through 2014, at least doubling the score of the next highest city in each year.

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