Did the San Bernardino Unified School District Violate Education Code Section 7054 Regarding Advocacy For Measure N on The November 6, 2012 Ballot?

By Michael Reiter, Attorney at Law

Measure N is the San Bernardino City Unified School District’s bond measure is to sell $250,000,000 (250 million dollars or a quarter billion dollars) in aggregate principal of  bonds with a maturity not to exceed twenty-five years. The ballot statement and resolution do not give the total cost to the bond issue including principal and interest.  The District’s estimate is that it will cost property owners $34 per year for each $100,000 of assessed value to pay the principal and interest on the bonds (which is in addition to any existing bonds).  It was placed on the ballot by the Board of Education on August 7, 2012 by a six to one vote.  The members voting for were Barbara Flores, Mike Gallo, Margaret Hill, Bobbie Perong, Lynda Savage, Judi Penman.  Danny Tillman voted no.  The measure requires a 55 percent “yes” vote to pass per Proposition 39 (2000) and Education Code section 15264.  In connection with Measure N, the San Bernardino Unified School District has sent mass mailings, including this piece:

California Education Code section 7054 reads, as of today:

(a) No school district or community college district funds, services, supplies, or equipment shall be used for the purpose of urging the support or defeat of any ballot measure or candidate, including, but not limited to, any candidate for election to the governing board of the district.
(b) Nothing in this section shall prohibit the use of any of the public resources described in subdivision (a) to provide information to the public about the possible effects of any bond issue or other ballot measure if both of the following conditions are met:
(1) The informational activities are otherwise authorized by the Constitution or laws of this state.
(2) The information provided constitutes a fair and impartial presentation of relevant facts to aid the electorate in reaching an informed judgment regarding the bond issue or ballot measure.
(c) A violation of this section shall be a misdemeanor or felony punishable by imprisonment in a county jail not exceeding one year or by a fine not exceeding one thousand dollars ($1,000), or by both, or imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code for 16 months, or two or three years.
Therefore, a school district cannot use funds for the purpose of urging the support or defeat of any ballot measure or candidate.  California Education Code section 7054(a).  However, a limitation to California Education Code seciton 7054(a) is that a school district may expend public resources to provide information to the public about the possible effects of any bond issue if two conditions are met.  The informational activities are otherwise allowed by law, and the “information provided constitutes a fair and impartial presentation of relevant facts to aid the electorate in reaching an informed judgment regarding the bond issue or ballot measure.”  California Education Code section 7054(b).  The violation of this section is a wobbler, punishable as a misdemeanor or felony. California Education Code section 7054(b).
In the resolution of August 7, 2012, the San Bernardino Unified School District Board of Directors made this finding:
WHEREAS, the District needs to install lighting, replace and fix fences and update security
alarms to keep students safe during and after school and to protect our schools from gang
members who break into schools, vandalize and steal equipment;  . . .
The front of the mailer states “From the Desk of School District Police Chief Joseph Paulino”

The letter says

Dear Neighbor:

As School District Police Chief, my job is to keep our students and school sites safe.
I also seek to protect our schools from intruders who break into schools, vandalize, steal school equipment and tag walls with graffiti. Unfortunately, many of our schools have outdated security alarms, inadequate fences and limited lighting.
Measure N is on your local ballot.  Among the priorities included in Measure N are the following safety and security upgrades to San Bernardino and Highland schools:
  • Maintain safe, clean clasrooms
  • Repair/replace leaky roofs
  • Remove asbestos and other hazardous materials
  • Repair/replace fire alarms, security and electrical systems
  • Replace old playground equipment with new, safer equipment

Remember to vote on Measure N.

Sincerely,
/s/
Chief Joseph Paulino
San Bernardino School District
Police Department
The Measure does not give an actual project list (meaning, x amount is going to do x at Cajon High School on x date).   However, there is a more generic project list, and this is the relevant section:
School Safety and Energy Efficiency School Projects
Goal and Purpose: The District must protect its schools from gang members who break
into schools, vandalize and steal equipment and tag walls with graffiti. Unless the District
replaces outdated security alarms, inadequate fences and limited safety lighting, it can’t
keep them out. To keep students safe during and after school, projects such as proper
lighting, fences and security alarms are needed:
Student Safety
• Repair and replace security and electrical systems, such as security lighting, fencing,
gates and classroom door locks.
• Upgrade fire alarm systems including fire safety equipment and sprinklers to make
students safe in the event of an emergency.
• Upgrade schools to meet handicap accessibility requirements.
• Remove hazardous materials like asbestos and lead paint from older school sites.
• Increase after-school program space to reduce juvenile violence.
The headline’s question is whether the District’s statement has violated California Education Code section 7055 regarding advocacy for Measure N.  The California Supreme Court decision in Stanson v. Mott (1976) 17 Cal.3d 206 is important to consider in such cases. The Court ruled:
On June 4, 1974, California voters approved a $250 million bond issue to provide funds for the future acquisition of park land and recreational and historical facilities by state and municipal authorities. One day before the election, plaintiff Sam Stanson filed the present taxpayer suit, alleging that defendant William Penn Mott, Jr., director of the California Department of Parks and Recreation (department), had authorized the department to expend more than $5,000 of public funds to promote the passage of the bond issue. Asserting the illegality of such use of public funds, plaintiff sought a judgment that would require Mott personally to repay the funds to the state treasury and any other appropriate relief.

. . .

As we explain, past decisions in both California and our sister states establish that, at least in the absence of clear and explicit legislative authorization, a public agency may not expend public funds to promote a partisan position in an election campaign; in the present case, no legislative provision accorded the Department of Parks and Recreation such authorization. Although the department did possess statutory authority to disseminate ‘information’ to the public relating to the bond election, the department, in fulfilling this informational role, was obligated to provide a fair presentation of the relevant facts. Since plaintiff specifically alleged that public funds were expended for ‘promotional,’ rather then ‘informational,’ purposes, his complaint stated a valid cause of action, and the trial court erred in sustaining defendant’s demurrer. If plaintiff proves the allegations of his complaint at trial, he will be entitled to at least a declaratory judgment that such expenditure of public funds was improper, and, perhaps, to injunctive relief as well.
Whether defendant Mott may be held personally liable for the funds which have already been spent presents a more difficult question. Although early California decisions held public officials strictly liable for any unauthorized expenditure of public funds, even when such expenses were incurred in good faith, subsequent legislation has considerably narrowed the circumstances under which public employees are generally held personally accountable for resultant losses. In accommodating the policy underlying this legislative development with the long-recognized public interest in protecting the public treasury from potential mismanagement or abuse, we conclude that defendant may be held personally liable to repay expended funds only if he failed to exercise due care in authorizing the expenditure of the funds. Stanson v. Mott (1976) 17 Cal.3d 206, 209-210.
What is the difference between promotional and informational? Stanson v. Mott says it’s a fine line, but in the case of Mr. Stanson v. Mr. Mott, left it to the trial court to decide:

Problems may arise, of course, in attempting to distinguish improper ‘campaign’ expenditures from proper ‘informational’ activities. With respect to some activities, the distinction is rather clear; thus, the use of public funds to purchase such items as bumper stickers, posters, advertising ‘floats,’ or television and radio ‘spots’ unquestionably constitutes improper campaign activity (see, e.g., Mines v. Del Valle, supra, 201 Cal. at p. 276, 257 P. 530; Porter v. Tiffany, supra, 502 P.2d at p. 1386), as does the dissemination, at public expense, of campaign literature prepared by private proponents or opponents of a ballot measure. (See 51 Ops.Cal.Atty.Gen. 190, 194 (1968); Stern v. Kramersky, supra, 375 N.Y.S.2d 235.) On the other hand, it is generally accepted that a public agency pursues a proper ‘informational’ role when it simply gives a ‘fair presentation of the facts’ in response to a citizen’s request for information (see Citizens to Protect Pub. Funds v. Board of Education, supra, 98 A.2d 673, 677; Stern v. Kramarsky, supra, 375 N.Y.S.2d 235, 239—240; 51 Ops.Cal.Atty.Gen. 190, 193 (1968)) or, when requested by a public or private organization, it authorizes as agency employee to present the department’s view of a ballot proposal at a meeting of such organization. (See Ed.Code, s 1073;cf. Citizens to Protect Pub. Funds v. Board of Education, supra, 98 A.2d 673, 677.)

      Frequently, however, the line between unauthorized campaign expenditures and authorized informational activities is not so clear. Thus, while past cases indicate that public agencies may generally publish a ‘fair presentation of facts’ relevant to an election matter, in a number of instances publicly financed brochures or newspaper advertisements which have purported to contain only relevant factual information, and which have refrained from exhorting voters to ‘Vote Yes,’ have nevertheless been found to constitute improper campaign literature. (See 35 Ops.Cal.Atty.Gen. 112 (1960); 51 Ops.Cal.Atty.Gen. 190 (1968); cf. 42 Ops.Cal.Atty.Gen. 25, 27 (1964).) In such cases, the determination of the propriety or impropriety of the expenditure depends upon a careful consideration of such factors as the style, tenor and timing of the publication; no hard and fast rule governs every case.  Stanson v. Mott (1976) 17 Cal.3d 206, 221-222.
The question, then, is this presentation “fair and impartial?  The mailer does not say Vote for Measure N, (it says “vote on Mesaure N”).  On the other hand, it says that the Chief wants to keep students and school sites safe, and protect schools from intruders, and that many schools have outdated security alarms, inadequate fences and limited lighting. It then says that Measure N is on the ballot.  It then says that the priorities included in Measure N are the following safety and security upgrades.  Arguably, each of these things are true.  However, someone may argue that in placement of the needs and the solutions to that need together, the San Bernardino Unified School District has gone from a strictly informational piece about Measure N to advocating for voters to vote for Measure N.  Further, the style of the mailer looks like a campaign advocacy piece, showing the picture of the Chief in his uniform, showing stock photos of alarms and a fire pull box, and a drug free, gun free, school zone sign.
Milligan, Beswick, Levine & Knox, LLP
A: 1447 Ford St. #201
      Redlands, CA 92374
T: (909) 296-6708

San Bernardino’s Fiscal Emergency Operation Plan Memo Dated July 23, 2012

By Michael Reiter, Attorney at Law

The City of San Bernardino recently released this memorandum.  The authors of the memorandum, dated July 23, 2012, are Interim City Manager Andrea Travis-Miller and Director of Finance Jason Simpson.  The memorandum is addressed to the Mayor and Common Council.

The summary on the first page says:

On July 18, 2012, the City Council directed the filing of a petition under Chapter 9 of the
United States Bankruptcy Code following the declaration of a fiscal emergency in the
City of San Bernardino. These actions were in response to findings that the financial
state of the City is such that the health, safety, and well-being of the residents of the
City will be jeopardized absent Chapter 9 bankruptcy protection.
This report proposes a Fiscal Emergency Operating Plan, which will enable the City to
operate while it is under Chapter 9 protection and includes recommendations for various
actions related to the City’s Preliminary FY 2012-13 General Fund Budget, which
combined will represent the City’s Financial Plan for FY 2012-13. This Fiscal
Emergency Operating Plan is necessary for the City to operate until the Pendency Plan
is developed under Chapter 9 and is presented for Council consideration as part of this
staff report.

This report covers the funding and operations of the City’s General Fund and does not
include any special purpose or restricted funds with the exception of capital projects.
The budgets for those funds will be provided to the Council by the end of August 2012.

Some other highlights:

From Page 2:

The Preliminary FY 2012-13 Budget has an operating shortfall of $45.8 million and does
not provide for any reserves nor does it address the estimated $18 million negative cash
balance in the General Fund. At Fiscal Year end, the negative cash is expected to grow
to $59.2 million in the absence of drastic measures to reduce the City’s obligations
through restructuring. The City’s financial situation is dire with no revenue or other
funding sources available to balance the City’s budget and address prior years’ deficits.

 

In bold, from Page 2:

The City must create a plan to emerge from this
fiscal crisis that is truly sustainable, with reliable ongoing revenues covering the
full operational costs, both direct and indirect, and sufficient reserves to weather
economic uncertainty, revenue fluctuations, and emergency spending
requirements.

From Page 3:

City staff will be reducing costs through the realignment of the organization and will
present a balanced budget for consideration by the Council during the coming weeks.
However, the actions to date have been insufficient and without further reduction of
costs through restructuring of obligations and severe service level reductions, the City
will be unable to adopt a balanced budget as required by the City’s Charter and the
State Constitution.

General Fund Negative Cash Balance of $18 million dollars as of June 30, 2012:

Overall, the balance of the City’s total cash and investment portfolio, as reported in the
most recent financial statements for the year ended June 30, 2012, (unaudited) was $27
million. Of this balance, 100% was held in restricted funds (assessment districts,
bonds, trust funds, special revenues, and tax measures), and the General Fund has a
negative cash balance of $18 million. While the City continues to hold investment
balances, the balances are from restricted sources not available for general operations.

City’s Unfunded liabilities of $296 million:

In addition to the City’s bonded indebtedness and lease obligations, unfunded liabilities
total approximately $296 million. Unfunded liabilities include unfunded pension
obligations of $195 million, retiree medical of $61 million, compensated absences of $20
million, general liability of $10 million, and worker’s compensation of $10 million.

Actions for the next three months:

The
remainder of the schedule details the actions proposed to be taken to meet the cash
flow needs of the City during this interim time frame. Measures proposed include:
1. Deferring debt and lease payments due in the First Quarter in the amount of
$3,556,972 until some later date. Debt and lease payments include payments for
Pension Bonds and Infrastructure Bank Loans.
2. Deferring the annual debt payment on the New World system in the amount of
$645,000.
3. Maintaining vacancies resulting in a savings of $531,000 per month in salaries,
$158,031 per month in PERS payments, $53,919 per month in health insurance
costs, and $9,200 per month in other benefit payments.
4. Continuing the employment concessions agreed to by the General Unit, Middle
Management Unit, and Management/Confidential Unit in the amount of
$2,994,764. The agreements with the Police Safety, Police Management, and
Fire Management have not expired, and there currently is no contract with the
Fire Union.
5. Deferring the ARC contribution for retiree health due in the First Quarter in the
amount of $2,219,332.
6. Deferring capital improvement projects for the foreseeable future.
Unfortunately, these measures are intended to enable the City to meet its obligations
over a 3-month period and will not result in a sustainable, balanced budget. City staff is
preparing a Pendency Plan which will serve as the budget until the bankruptcy court
approves a long-term Plan of Adjustment. Over the next 30 days, staff will work to
prepare a Pendency Plan that focuses the City’s limited resources on sustaining basic
service delivery, addressing contractual obligations, and establishing a fair,
compensation structure so the City can retain quality employees to provide essential
public services. The Pendency Plan will balance anticipated revenues against
expenditures through a restructuring of the organization and service delivery
necessary to reduce expenditures by roughly 30% of the Preliminary Budget.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

A: 300 E. State St., Suite 517
Redlands, CA 92373-5235
T: (909) 296-6708

The Wrong Answer to Post-Bankruptcy San Bernardino

By Michael Reiter, Attorney at Law

There is a lot of misinformation out there about the City of San Bernardino regarding proposed reform efforts to the system of government for the City of San Bernardino.

One was a suggestion to transform the City of San Bernardino from a Charter city to a general law city.  There are generally benefits to being a charter city in that you have a modicum more home rule then a general law city.  However, if people think that converting to a general law city will get rid of the ward system they are mistaken for two reasons.  First, general law cities can have elections by district.  Redlands (a general law city), briefly, had elections by district, and Colton, a general law city, still has districts.

Second, when City Attorney Penman suggested a charter measure to do away with the ward system, he was met with challenges from rights groups.  I believe that effort was before the California Voting Rights Act was passed, which makes it easier to prove dilution in an at-large election.

If the City of San Bernardino’s structure (the composite Strong Mayor, Strong City Manager, Strong Council Form of Government) is the problem, removing the Charter gives the residents less choice in creating a government. If this is just an end-run to trying to get rid of the elected City Attorney, the voters have already shown with the resounding defeats of Measures C and M that they do not want that.  Going to a general law council-manager form of government would not have prevented this kind of insolvency, because if there were illegal activities by staff, they council still would not detect it, and if the council refused to listen to staff regarding the need for cuts, it wouldn’t matter if they were elected according to general law or a charter.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517
Redlands, CA 92373-5235
T: (909) 296-6708

City of San Bernardino Bankruptcy: What Did They Know and When Did They Know It?

By Michael Reiter, Attorney at Law

We do not yet know the full story about what went wrong as far as misstatements or miscalculations (incompetence) or concealment (fraud) of numbers in the City of San Bernardino that led to the situation wherein the City of San Bernardino had or has, at some point, less than $150,000 in its bank account.

First, from primary sources, City staff (on July 9, 2012) stated that as of April 3, 2012, City staff was still misreporting the fund balance.

The Finance Department of the City of San Bernardino created a report, dated July 9, 2012 , Page 7:

Starting General Fund balance has been erroneously stated for the past 2 fiscal
years

Fiscal Year                                July 1st Audited Fund Balance              Staff Reported Fund Balance
FY 2009-2010                           $2,708,319                                                     $2,557,900
FY 2010-11                               $410,293                                                             $1,770,400
FY 2011 -12                              $(1 ,181,603)                                                       $2,044,100*
*Mid-Year report presented April 3, 2012.

Going back to the April 3, 2012 meeting in the City of San Bernardino’s online archives, I was unable to find any minutes after January 23, 2012.  Here is the April 3, 2012 Agenda for the Joint Adjourned Regular Meeting of the Mayor and Common Council.

In a staff report by Rebecca Garcia, through City Manager Charles McNeely, for Item 3A, the purpose of the workshop was to “Discuss proposed revenue enhancements and cost containment strategies and provide direction
as to measures to be researched and presented for further Council review, analysis and consideration at a future meeting.”  This staff report includes the chart that gives the $2,044,100 opening fund balance for FY 2011-2012, but also has a different number (then in the July 9, 2012 report) for 2010-2011: $2,998,000.

In the staff report by Jason Simpson, Director of Finance, for Item 1A,  on the April 3, 2012 agenda he warns on Page 10:

A major concern that needs to be noted is that the City’ s General Fund continues to be in an
increasing weakening condition and immediate changes need to be made to reverse this financial
condition, build the General Fund Reserve, and stabilize this fund. If these efforts are not made,
insolvency or bankruptcy may result. The Council has an opportunity to resolve the issue and
change the City’ s course. If not, control may be taken out of the Council’ s hands. [Emphasis Added]

However, on packet page 12, Jason Simpson’s report gives the opening fund balance for 2012 as $2,044,100.

Imran Ghori wrote an article published April 3, 2012 at 9:15 p.m., “San Bernardino: City Faces $3.8 millon shortfall[;] The decline in sales and property taxes are hurting the city, a mid-year budget report shows.”  The story starts:

San Bernardino could be headed for insolvency or bankruptcy if it’s not able to get its general fund budget under control, according to a mid-year budget report presented to the mayor and City Council on Tuesday. [Emphasis Added].

The first time the fund balance issue was in the traditional press is in The Sun, “San Bernardino facing bankruptcy if deep cuts aren’t made” by Ryan Hagen, posted online on July 7, 2012 at 8:13:10 p.m. PDT.  In the article, ”

“[Council member Wendy] McCammack also said she was troubled by the budget report’s note that the general fund’s starting balance has been erroneously stated for the past two fiscal years.

That reached a peak several months ago, when then-City Manager Charles McNeely said the fund had a balance of $2 million but the audited fund balance on July 1 turned out to be in the red by $1.2 million.

It appears that the first time that City Attorney James F. Penman mentioned, in public, that 13 out of 16 budgets may have been falsified (and I am paraphrasing from the press account) was at the July 9, 2012 Council Meeting.

As far as what did people know and when did they know it, the rest is from press articles. This article, from public radio station KPCC, “San Bernardino authorities confirm probe into city finances” by Steven Cuevas with Nick Roman, posted 6:00 a.m. on Friday, July 13, 2012 says:

Before the San Bernardino City Council’s bankruptcy vote Tuesday, City Attorney Jim Penman announced that unidentified city administrators had cooked the books to make it appear the city had more cash in reserve than it actually had.

The alleged deceit was uncovered during an audit by new finance staff working under interim city manager Laura Travis-Miller, who took over four months ago.

. . .

Sixth District [sic] councilman Rikke van [sic] Johnson said Penman gave a short briefing to council members prior to the council’s emergency budget meeting Tuesday. But he said it was short on details.

“It wasn’t nothing as far as, ‘OK, this year that happened’ or ‘that year, this happened’ or anything like that,” said Van [sic] Johnson.

“There wasn’t no specifics, other than he said that it’s under investigation. And unfortunately, what was said in that so-called briefing should have stayed in that so-called briefing and went to the right parties. Because we’re dealing with an even bigger issue then that that as far as bankruptcy. All the sudden your issue becomes the lead issue when it shouldn’t be.”

Presumably, this information was given in closed session.
This blog piece comes from an interview yesterday with Interim City Manager Andrea Travis-Miller:  The piece appears in the Los Angeles Times Blog LA NOW, posted July 13, 2012 at 7:25, by Abby Sewell and Phil Willon, labled “Criminal Probe

Miller said the city’s financial problems had been evident for many years, but the full scope was not evident until more recently, when she and the new finance director took a hard look at the books.

She said there had been inaccurate financial reporting in the city for many years, which delayed the process of understanding the full financial picture, but she said she had not seen evidence of deliberate wrongdoing.

“I have not found that there’s anything more than negligence, maybe sloppiness,” she said, adding that staffers at the time were stretched thin because of cuts.

Andrea Travis-Miller became acting City Manager on May 8, 2012, but was assistant before.  Jason Simpson began work on March 28, 2012.  So, if the quotes from Andrea Travis-Miller are correct, the problem was found sometime between March 28, 2012 and when the July 9, 2012 report was posted.

Bankruptcy was first mentioned in the April 3, 2012 staff report.  The misstating of the fund balance was found some time after March 28, 2012, but not reported on April 3, 2012 by Jason Simpson in his staff report.  The first public document showing the wrong data for two years was in a report for the July 9, 2012 meeting.  Time will tell  what they knew, and when they knew it.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

A: 300 E. State St., Suite 517
Redlands, CA 92373-5235
T: (909) 296-6708

What Charter Reform Measures Might Have Helped the City of San Bernardino Avoid Bankruptcy? An Elected Auditor and an Elected City Prosecutor.

By Michael Reiter, Attorney at Law

We do not yet know the full story about what went wrong as far as misstatements or miscalculations (incompetence) or concealment (fraud) of numbers in the City of San Bernardino that led to the situation wherein the City of San Bernardino had or has, at some point, less than $150,000 in its bank account.  Some political campaigns in San Bernardino County have more than that in their accounts right now.

The Finance Department of the City of San Bernardino created a report, dated July 9, 2012, that blames, on page 1 in the Executive Summary:

. . . the City is still facing insolvency due to a variety of issues including accounting errors, deficit spending, lack of revenue growth, and increases in pension and debt costs.

Something went wrong with the way government is supposed to work, with checks and balances regarding these unspecified accounting errors.

The Charter of the City of San Bernardino has a variety of checks and balances, and there are also external checks and balances in the municipal system of government from California law and to some extent in Federal law.

Within today’s Charter, there are eleven elected officials in the City of San Bernardino: Council members from seven geographical wards, an elected Mayor, an elected City Clerk, an elected City Treasurer, and an elected City Attorney. However, the structure if the City lacks an appropriate check and balance to find either a well-concealed fraud, or even a miscalculation of numbers that appeared on financial reports but did not reflect actual amounts.

Here is the problem, from the same July 9, 2012 report, Page 7:

Starting General Fund balance has been erroneously stated for the past 2 fiscal
years

Fiscal Year                                July 1st Audited Fund Balance              Staff Reported Fund Balance
FY 2009-2010                           $2,708,319                                                     $2,557,9oo
FY 2010-11                               $410,293                                                             $1,770,400
FY 2011 -12                              $(1 ,181,603)                                                       $2,044,100*
*Mid-Year report presented April 3, 2012.

Shouldn’t an audit have found the problem? Maybe, but if there was actual fraud, it can be difficult to find because some skilled in financial deceit can falsify document to make the numbers match up.  Even if a skilled City Council member with a background in accounting exists, they probably won’t find the discrepancy.   However, from these numbers, it seems that an audit did catch these numbers, though it doesn’t say when and who it was reported to.

What about the City Treasurer?    The Treasurer’s Duties are:

The Treasurer shall receive and pay out all moneys belonging to the City, and shall keep an account of all receipts and expenditures, under such rules and regulations as may be prescribed. He/She shall make a
monthly statement to the Mayor and Common Council of the receipts and expenditures of the preceding month, and shall perform all duties required of him/her by law and the Mayor and the Common Council. He/She shall not pay out any monies belonging to the City except on claims presented, allowed and submitted in the manner provided by this Charter.   Charter section 70.

However, if numbers are falsified by members of the Finance Department (which the Charter gives day-to-day supervision to the City Manager), the City Treasurer’s Office may not catch the problem.

What then, is the answer?  Part 1, Create a City Auditor, like the City of Los Angeles Controller, that is elected and has the power to audit, investigate, and request prosecution or discipline according to the needs of the situation.

The Controller in Los Angeles, per the Los Angeles City Charter, has these duties:

BookmarkSec. 260.  Auditor and General Accountant.

The Controller shall be the auditor and general accountant of the City and shall exercise a general supervision over the accounts of all offices, departments, boards and employees of the City charged in any manner with the receipt, collection or disbursement of the money of the City.  The Controller shall be elected as provided in Section 202.

BookmarkSec. 261.  Powers and Duties.

The Controller shall:

(a)     appoint assistants, deputies, clerks and other persons as the Council shall prescribe by ordinance;

(b)     prescribe the method of keeping all accounts of the offices, departments, boards or employees of the City in accordance with generally accepted accounting principles, except that any change of the system of accounting shall first be authorized by the Council;

(c)     regularly review the accounting practices of offices and departments and upon finding serious failings in accounting practices, be empowered to take charge of the accounting function, and thereafter assist the office or department in implementing appropriate accounting standards and practices;

(d)     maintain a complete set of accounts which shall be deemed the official books and accounts of the City, which shall show at all times the financial condition of the City, the state of each fund, including funds of departments responsible for managing their own funds, the source from which all money was derived and for what purposes all money has been expended;

(e)     in compliance with generally accepted government auditing standards, audit all departments and offices of the City, including proprietary departments, where any City funds are either received or expended; be entitled to obtain access to all department records and personnel in order to carry out this function; establish an auditing cycle to ensure that the performance, programs and activities of every department are audited on a regular basis, and promptly provide completed audit reports to the Mayor, Council, and City Attorney and make those reports available to the public;

(f)     maintain a reconciliation between the accounts in all offices and departments with the accounts in the Controller’s office, and from time to time, verify the condition of all City funds in the City Treasury, and report to the Mayor and Council thereon;

(g)     allocate among the several respective funds all public money at any time in the City Treasury not otherwise specifically allocated and appropriated by law or ordinance, and promptly notify the Treasurer of the allocation or appropriation;

(h)     report to the Mayor and Council, at times established by law, the condition of each fund, and make other reports as the Mayor or Council requests;

(i)     maintain each fund on a parity with its obligations at all times by transferring from the Reserve Fund as a loan to any fund which may become depleted through tardy receipt of revenues, and upon receipt of revenues sufficient to make an allocation as will restore each fund to parity, retransfer the amount of the loan to the Reserve Fund;

(j)     monitor the level of debt incurred by the City and report periodically to the Mayor and Council on City debt; and

(k)     conduct performance audits of all departments and may conduct performance audits of City programs, including suggesting plans for the improvement and management of the revenues and expenditures of the City.  Nothing in this subsection shall preclude the Mayor or Council from conducting management studies or other review of departmental operations.

BookmarkSec. 262.  Approval of Demands on Treasury.

(a)     The Controller shall, prior to approval of any demand, make inspection as to the quality, quantity and condition of services, labor, materials, supplies or equipment received by any office or department of the City, and approve before payment all demands drawn upon the Treasury if the Controller has adequate evidence that:

(1)     the demand has been approved by every board, officer or employee whose approval is required by the Charter or ordinance;

(2)     the goods or services have been provided, except that advance payment may be authorized by ordinance for specified categories of goods and services;

(3)     the payment is lawful;

(4)     the appropriation for the goods or services has been made;

(5)     the prices charged are reasonable;

(6)     the quantity, quality and prices correspond with the original specifications, orders or contracts; and

(7)     any additional criteria established by ordinance have been satisfied.

(b)     Notwithstanding subsection (a), the Controller shall delegate to the various offices and departments the duties of inspection of goods and services and approval of demands, in accordance with methods for inspection and approval established by the Controller, but the Controller may suspend the authority delegated pursuant to this subsection upon a finding of abuse of that authority or on a determination that the office or department lacks adequate controls to exercise that authority properly.  In the event of suspension of the authority delegated pursuant to this subsection, the Controller shall assist the office or department to achieve adequate controls and standards prior to reinstatement of that authority to the office or department.

(c)     The Controller shall withhold approval of any demand, in whole or in part, if there is a question as to whether it is improper, illegal, or unauthorized, and immediately file a report with the Mayor and Council stating the objections to the demand.  The Council shall promptly consider the report and may overrule or sustain the objections of the Controller.

(d)     The Controller shall keep a record of all demands on the Treasury approved by the Controller and of all demands to which objections have been made and overruled.

BookmarkSec. 263.  Approval of Expenses of Controller.

All demands for the expenses of the office of the Controller shall, before payment, be presented to the Mayor, who shall have the same powers as to approval or disapproval as are exercised by the Controller in the case of other demands. The action of the Mayor shall be subject to review by the Council.

BookmarkSec. 264.  Reduction of Demand on Treasury.

No demand upon the Treasury shall be allowed by the Controller in favor of any person or entity indebted to the City without first deducting the amount of the indebtedness, to the extent permitted by law.

BookmarkSec. 265.  Payment of Bonds.

Nothing in this Article shall be construed as interfering with or preventing the payment by the Treasurer of principal and interest on bonds payable by the City in accordance with the California Constitution, laws and ordinances authorizing the issuance and payment of those bonds.

BookmarkSec. 266.  Periodic Surveys of Proprietary Departments.

(a)     The Controller, Council and Mayor shall jointly cause, at least once in every five years, an industrial, economic and administrative survey to be made of the business and property of each of the Harbor, Water and Power and Airports Departments and shall select an independent qualified industrial engineer or organization specializing in such surveys to conduct the survey.  The cost of each survey shall be paid for from the funds of the surveyed department.

(b)     Each survey shall be made in consultation with the Mayor and City Council to ascertain if the surveyed department is operating in the most efficient and economical manner.

(c)     A copy of the report of each survey shall be transmitted to the Mayor, Council, and board of the surveyed department and shall be made available to the public.

Solution Part 2: Create an Elected City Prosecutor.  The City Attorney in San Bernardino is already the City prosecutor.  However, by splitting the functions, the City will have the best of both worlds.  An elected City Attorney will give advice to the City as an entity without the fear of being fired for not giving advice to the other elected officials in power, and a City prosecutor can prosecute violations of the Municipal Code and the areas of State law given by Charter or state law with the independence necessary, with the independently elected City Auditor, to root out these kinds of corruption.

If an elected City Attorney is an elected watchdog, a City Prosecutor would be doubly so.  The City Attorney’s client is the City of San Bernardino, the entity, and the City Attorney must protect the entity’s pocket book.  The role of exposing corruption sometimes is at odds with that goal.  Adding a separate elected City Prosecutor can rectify that situation and protect, in the long run, the People’s interest without regard to the City’s financial interest.

Of course, the bad numbers shown above do not add up to the alleged deficit, but if Council members were going on the correct numbers to start with, perhaps they would not have made the political choices that led to the fiscal emergency.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

A: 300 E. State St., Suite 517
Redlands, CA 92373-5235
T: (909) 296-6708

City of San Bernardino’s 1919 Charter Amendments: Pay Raises

By Michael Reiter, Attorney at Law

After the people of San Bernardino adopted a charter in 1905 amended it in 1908, rejected amendments in 1911, and  amended it  in 1913, the Charter was amended again in 1919.     The amendments concerned salaries of local public officials.  I have drafted a legislative version with the 1913 version with the amendments adopted by the citizens of San Bernardino and approved by the California Legislature.

A special municipal election was held on March 19, 1919, and a majority of voters approved Proposed Charter Amendments One through Five.  Below is a strikeout version:

 

Sec. Section 24. The officers hereinafter named shall receive the salaries, following annual salaries: The mayor shall receive an annual salary of , $800; councilmen, each, $200; city clerk, $1000; city attorney, $600; chief of police, $1500.00; police judge, $1000, who shall be ex-officio treasurer. Salaries of all officers shall be , payable monthly.

Section 24A.  The councilmen shall each receive an annual salary of $300.00 payable monthly.

Section 24B.  The City Clerk shall receive an annual salary of $1500.00 payable monthly.

Section 24C.  The City Attorney shall receive an annual salary of $1500.00 payable monthly.

Section 24D.  The police Judge shall receive an annual salary of $1500.00 payable monthly.  The Police Judge shall be Ex-officio City Treasurer.

 

Section 24, salary of the Mayor, was approved again on June 4, 1974, March 6, 1974 and November 5, 2002.  Section 24-A was amended at least once, as the annual Council salary is now a princely $600 a year.  Section 24C was amended, and repealed.  Section 24D was also repealed.
Currently, these sections read:

Section 24. Salary of Mayor. The Office of Mayor shall be a full time
position and the incumbent shall not engage in any business, professional or
occupational activities which interfere with the discharge of the duties of such
office. Effective January 1, 2003, the annual salary of the Mayor shall be set at
fifty percent (50%) of the salary for a Superior Court Judge, County of San
Bernardino, State of California, as of July 1, 2002, and shall thereafter be adjusted
and implemented January 1 of each subsequent year at the same fifty percent
(50%) figure of the salary for said Superior Court Judge then in effect on said
January 1 date.
Section 24-A. Salary of Council. The Council Members shall each receive
an annual salary of six hundred dollars ($600.00), payable monthly.
Section 24-B. Salary of City Clerk. That the salary to be received by the
City Clerk shall be fixed by the Mayor and the Common Council.

 

Here is the preamble from Assembly Concurrent Resolution No. 23 “Approving certain amendments to the charter of the City of San Bernardino in the county of San Bernardino, State of California, voted for and ratified by the qualified electors of said city of San Bernardino, at a special municipal election held therein on the eighteenth day of March, 1919 [Filed with Secretary of Sate April 11, 1919.]  Found at Chapter 38 of the Statutes of California 1919, starting on page 1485:

PREAMBLE

            Be it known that,

WHEREAS, The city of San Bernardino, of the county of San Bernardino, State of California, has at all times mentioned herein been and now is a municipal corporation of said State of California, containing a population of more than three thousand five hundred (3,500) inhabitants, and has been ever since the eighth day of February, 1905, organized and existing and acting under a freeholders’ charter adopted under and by virtue of section eight, article eleven of the constitution of the State of California, which charter was duly ratified by the qualified electors of said city at an election held for that purpose on the sixth day of January, 1905, and approved by the legislature of the State of California, on the eighth day of February, 1905 (Stats. 1905, page 940, et seq.); and

WHEREAS, the mayor and common council of said city of San Bernardino, did by resolution designated as “Resolution No. 928” adopted by said mayor and common council on the twentieth day of January, 1919, and approved by the mayor of said city on the twentieth day of January, 1919, and pursuant to section eight of article eleven of the constitution of the State of California, duly propose to the qualified electors of said city of San Bernardino certain amendments, hereinafter set forth, to the charter of said city to be submitted to said qualified electors at a special municipal election to be held in said city on the eighteenth day of March, 1919; and,

WHEREAS, said resolution and said certain proposed amendments hereinafter set forth was published for one day in a daily newspaper  printed and published in said city and of general circulation therein, to wit: In the San Bernardino Daily Sun, said publication being on the twenty-second day of January, 1919; and

WHEREAS, copies of said proposals containing said proposals containing said proposed amendments were printed in convenient pamphlet form and until the date fixed for election hereinafter described and required by law, an advertisement was published in said San Bernardino Daily Sun, that such copies could be had upon application thereof, at the office of the city clerk;

WHEREAS, Thereafter the mayor and common council of said city did by an ordinance designated “Ordinance No.714” which was duly passed and adopted on the third day of February, 1919, and approved by the mayor of said city on February 4, 1919, call and order the holding of a special election in the city of San Bernardino on the eighteenth day of March, 1919, which said last-mentioned date was at least forty days and not more than sixty days after the completion of the publication of such resolution and proposed amendments to said charter for one day  in said San Bernardino Daily Sun, a daily newspaper of general circulation, printed, published and circulated in said city, and which said ordinance calling such special election specified and ordered and ordained that said proposed amendments be submitted to the qualified electors of said city at said special election for ratification or rejection, and designated the time of such election and established election precincts, and designated the polling places therein, and the election officers for each such precinct, and which said ordinance was published ten  times in said San Bernardino Daily Sun, the last date of such publication being on the twentieth day of February, 1919; and

WHEREAS, Said amendments were duly submitted to the qualified electors of said city of San Bernardino at said special election held on said eighteenth day of March, 1919, which said special election was held not less than forty days nor more than sixty days after the completion of the publication of such proposal for one day in said daily newspaper; and

WHEREAS, In and by said ordinance and said resolution so passed, approved and published as aforesaid, said proposed amendments were submitted to the qualified electors of said city at said special municipal election; and

WHEREAS, On the twentieth day of March, 1919, at a meeting of said mayor and common council of said city of San Bernardino duly convened in accordance with law and with the provisions of said charter of said city, said mayor and common council of said city of San Bernardino did duly and regularly  canvass the returns of said special municipal election so held on the eighteenth day of March, 1919, and did find thereupon that each said proposed amendments to said charter, hereinafter particularly set forth, was duly ratified by the electors voting thereon; and

WHEREAS, Said mayor and common council after canvassing said returns and at said meeting so held as aforesaid, after said canvass, did duly find and declare that said proposed amendments had been ratified and adopted by the majority of the electors voting thereon; and

WHEREAS, Said amendments so ratified by the electors of said city of San Bernardino at said special municipal election held on the said eighteenth day of March, 1919, are now submitted to the legislature of the State of California for approval or rejection, as a whole, without power of alteration or amendment, in accordance with the provision of section eight of article eleven of the constitution of the State of California; and

WHEREAS, No other proposed amendment to said charter had been submitted to the electors of said city of San Bernardino within two (2) years immediately prior to said 18th day of April, 1913 [sic, it was unchanged from the Preamble of the 1913 amendment];

Now, THEREFORE the undersigned, J.W. Catick, the mayor and chief executive of the city of San Bernardino, and J.H. Osborn, city clerk and clerk of the mayor and common council of said city, authenticating their signatures, with the official seal of said city, do hereby certify, that said amendment to said charter of said city so ratified by the majority of the electors, voting thereon at said special municipal election, held on the eighteenth day of March, 1919, as submitted to said electors in the words and figures as follows, and are and shall, if so approved by said legislature, be in the words and figures following, to wit:”

The Charter of the City of San Bernardino, as amended in 1919, was not amended again until 1921.  I find it amusing that even in 1919, the Preamble was largely a cut-and-paste job.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

A: 300 E. State St. Suite 517
      Redlands, CA 92373-
T: (909) 296-6708

City of San Bernardino’s 1913 Charter Amendments: Raising the Debt Ceiling

By Michael Reiter, Attorney at Law

After the people of San Bernardino adopted a charter in 1905 and  amended it in 1908, they amended it again in 1913.     The amendment concerns the bonded indebtedness  of the City of San Bernardino for public improvements.  Effectively, the qualified electors of 1913 raised the debt ceiling found in the 1905 Charter.  The 1905 Charter capped the City’s debt for public improvements at $350,000.  The 1913 amendment raised the ceiling to 15 percent  of the assessed value of the City’s real and personal property.   This particular section amendment is not mentioned in the 2005 annotated charter, but some of the concepts survived the 1956 amendment that exists today.  I am not sure if there were any amendments between 1913 and 1956 related to bonded indebtedness.  I have drafted a legislative version (with additions and strikeouts of the 1905 (as amended in 1908) Charter with the amendments to the Charter added by the 1913 election and approved by the California Legislature.

A special municipal election was held on April 18, 1913, and a majority of voters approved “Proposed charter amendment one.”  Below is a strikeout version I created comparing the 1905 version of section 133 with the changes in the 1913 version.

Section 133. Whenever the mayor and common council shall by ordinance or resolution, determine that the public interest or necessity demands the acquisition, construction, or completion of any municipal improvement, the cost of which would be too great to be paid out of the ordinary annual income and revenue of the city, they are hereby given the power and authority to call a special election and submit to the qualified voters of the city the proposition of incurring indebtedness to pay the cost of such improvement set forth in said ordinance or resolution. If said proposition be accepted by a two-thirds vote of the qualified electors voting at such election, the mayor and common council may issue and dispose of bonds of said city in evidence of said indebtedness.; provided that such indebtedness, together with the unpaid and outstanding bonded indebtedness actually existing at the time such proposition is submitted to said voters, shall not exceed three hundred and fifty thousand dollars.  But the city or municipal corporation of San Bernardino shall not incur any indebtedness for public improvements which shall in the aggregate exceed fifteen (15) per cent of the assessed value of all the real and personal property of said city or municipal corporation.  In all other respects not herein provided for, the procedure for calling and holding such elections and the issuance of bonds shall be governed by general law of the State of California applicable to cities of the fifth class.

The section was amended in 1956.  Here is the current (2005 Charter) version:

Section 133. Indebtedness for Municipal Improvement. General obligation bonded indebtedness of the City for any purpose for which the City is
authorized to provide or for carrying out any of the powers possessed by the City may be incurred in the manner provided by the general laws of the State of
California at the time such proceedings are taken. The City shall not incur any indebtedness evidenced by general obligation bonds which shall in the aggregate
exceed fifteen percent (15%) of the total assessed value for purposes of City taxation of all the taxable real and personal property in the City. The City shall not
incur any bonded indebtedness constituting a general obligation of the City unless such indebtedness is authorized by the affirmative votes of not less than two-thirds
(2/3) of those electors voting on the question of incurring such indebtedness at any election at which such question is submitted to the electors of the City.
Notwithstanding any other provision or limit in this Charter, bonds of the City payable solely from the revenues of any revenue-producing improvement, building,
system, plant works, facilities or undertaking used for or useful in (a) the producing, obtaining, conserving, treating, storing, transmitting, distributing and supplying of
water for domestic use, irrigation, sanitation, industrial use, fire protection, recreation or any other public or private use, and (b) the collection, treatment or
disposal of sewage, garbage, refuse waste or storm water, including drainage, may be authorized and issued in the manner provided by the general laws of the State
of California at the time such proceedings are taken. The issuance of such revenue bonds must be authorized by the affirmative votes of a majority of the electors
voting upon the proposition of their issuance at any election at which such question is submitted to the electors of the City.

When two or more questions or propositions for the incurring of general obligation bonded debt or for the issuance of revenue bonds are submitted at the same election to the votes cast for and against each question or proposition shall be counted separately.

The preamble of the charter amendment sent to the Legislature is interesting in that it gives some procedural history.  The Legislature had to approve the Charter pursuant to the California Constitution then in effect.  In 1913, the Charter could not be changed more than every two years.  The procedure for publishing also was different than in 1908 (including a switch of newspapers). The City Clerk also refers to himself as the clerk of the Mayor and Common Council, even though that’s one of the duties of the Clerk in the Charter. Here is the preamble from Assembly Concurring Resolution No. 32, May 6, 1913:

PREAMBLE

            Be it known that,

Whereas, The city of San Bernardino, of the county of San Bernardino, State of California, has at all times mentioned herein been and now is a municipal corporation of said State of California, containing a population of more than thirty five hundred (3,500) inhabitants, and has been ever since the 8th day of February, 1905, organized and existing and acting under a freeholders’ charter adopted under and by virtue of Section 8, Article XI of the Constitution of the State of California, which charter was duly ratified by the qualified electors of said city at an election held for that purpose on the 6th day of January, 1905, and approved by the legislature of the State of California, on the 8th day of February, 1905 (Stats. 1905, page 940, et seq.); and

Whereas, the mayor and common council of the city of San Bernardino did by resolution designated as “Resolution No. 593” adopted by said mayor and common council on the 17th day of March, 1913, and approved by the mayor of said city on the 17th day of March, 1913, and pursuant to section 8 of article XI of the Constitution of the State of California, duly propose to the qualified electors of said city of San Bernardino a certain amendment, hereinafter set forth, to the charter of said city to be submitted to said qualified electors at a special municipal election to be held in said city on the 18th day of April, 1913; and,

Whereas, said resolution and said certain proposed amendment hereinafter set forth was published for ten (10) times in a daily newspaper, printed and published in said city and of general circulation therein, to wit: in the San Bernardino Daily Sun, said publication ending on the 28th day of March, 1913; and

Whereas, Thereafter the mayor and common council of said city did by an ordinance designated “Ordinance No. 516” which was duly passed and adopted on the 17th day of March, 1913, and approved by the mayor of said city on said last mentioned date, call and order the holding of a special election in the city of San Bernardino on the 18th day of April, 1913, which said last mentioned date was at least twenty (20) days and not more than forty (40) days after the completion of the publication of such resolution and proposed amendment to said charter for ten (10) times in said San Bernardino Daily Sun, a daily newspaper of general circulation, printed, published and circulated in said city, and which said ordinance calling such special election specified and ordered and ordained that said proposed amendment be submitted to the qualified electors of said city at said special election for ratification or rejection, and designated the time of such election and established election precincts, and designated the polling places therein, and the names of the election officers for each such precinct, and which said ordinance was published five (5) times in said San Bernardino Daily Sun, the last date of such publication being on the 23d day of March, 1913, and which said ordinance was approved by the mayor of said city on the 17th day of March, 1913; and

Whereas, said amendment was duly submitted to the qualified electors of said city of San Bernardino at said special election held on said 18th day of April, 1913, which said special election was held not less than twenty (20) days nor more than forty (40) days after the completion of the publication of such proposal for ten (10) times in said daily newspaper; and

Whereas, In and by said ordinance and said resolution so passed, approved and published as aforesaid, said proposed amendment was submitted to the qualified electors of said city at said special municipal election; and

Whereas, On the 21st day of April, 1913, at a meeting of said mayor and common council of said city of San Bernardino, duly convened in accordance with law and with the provisions of said charter of said city, said mayor and common council of said city of San Bernardino did duly and regularly  canvass the returns of said special municipal election so held on the 18th day of April, 1913, and did find thereupon that said special proposed amendment to said charter, hereinafter particularly set forth was duly ratified by the electors voting thereon; and,

Whereas, Said mayor and common council after canvassing said returns and at said meeting so held as aforesaid, after said canvass, did duly find and declare that said proposed amendment had been ratified and adopted by the majority of the electors voting thereon; and

Whereas, said amendment so ratified by the electors of said city of San Bernardino at said special municipal election held on the said 18th day of April, 1913, is now submitted to the legislature of the State of California for approval or rejection, as a whole, without power of alteration or amendment, in accordance with the provision of Section 8 of Article XI of the Constitution of the State of California; and

Whereas, No other proposed amendment to said charter had been submitted to the electors of said city of San Bernardino within two (2) years immediately prior to said 18th day of April, 1913;

Now, therefore the undersigned, J. S. Bright, the mayor and chief executive of the city of San Bernardino, and S. G. Batchelor, city clerk and clerk of the mayor and common council of said city, authenticating their signatures with the official seal of said city, do hereby certify, that said amendment to said charter of said city so ratified by the majority of the electors, voting thereon at said special municipal election, held on the 18th day of April, 1913, as submitted to said electors in the words and figures as follows, and is and shall, if so approved by said legislature, be in the words and figures following, to wit:”

The Charter of the City of San Bernardino, as amended in 1913, was not amended again until 1919.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

A: 1255 W. Colton Ave. Suite 104,
Redlands, CA 92374
T: (909) 708-6055