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Multimillion-dollar deficit in Compton

Surplus of $22.4 million vanishes

Merdies Hayes Editor In Chief | 3/22/2018, midnight
Overspending of more than $16 million a year, pervasive internal deficiencies and..

Overspending of more than $16 million a year, pervasive internal deficiencies and a lack of city council oversight have contributed to a multimillion-dollar budget deficit in Compton, according to an audit released the state controller’s office.

According to the review published by State Controller Betty T. Yee, at the start of fiscal year 2007-08, Compton had a general fund surplus of $22.4 million. Three years later, the surplus had become a $42.7 million deficit due to overspending at an average of $16.3 million a year above budgeted expenditures, according to Yee.

In June 2014, the Compton City Council adopted a repayment plan, but over the next year the deficit increased by another $6.4 million, the controller said.

“While violating the city’s charter and continually overpaying themselves, the city council’s brazen overspending contributed to the city’s financial hardship,’’ Yee said. “Clearly, the city council needs to right the ship and make deficit spending a part of its past by exercising meaningful oversight of the city’s duties.

The controller said Compton’s City Council expenditures are three times those of comparable charter cities in Los Angeles County. Where other small cities have one full-time assistant for an entire council, Compton has one for each of its five council members.

“Correcting nearly three decades of mismanagement and a resulting impaired governance structure, including nearly 50 percent of staff reductions, is a process that requires stable leadership, new policies, adequate organizational capacity and time,” said Compton Mayor Aja Brown. “Compton was on the brink of bankruptcy as publicly reported in 2012, and is now solvent, as currently reported.”

The audit determined that total compensation for the mayor and city council members themselves exceeded limits in Compton’s city charter by nearly $1.3 million from January 2010 through July 2017. The review also found that all charges to city-issued credit cards were questionable, because city management did not enforce its policies and procedures.

Material weakness in internal controls -- such as a lack of segregation of cash-handling duties -- allowed a former deputy treasurer to embezzle more than $3.7 million from May 2010 through December 2016, for which he received a federal prison sentence of six and a half years, according to the controller.

Auditors also found that staff turnover and a lack of consistent leadership prevent employees from performing some critical functions. The city has had nine different city managers in seven years and has been without a human resources director for three years, according to the report.

“Compton is on a firm and definitive path to recovery,” Brown added, “which includes a new solid source of annual tax revenue, new economic development, new fiscal policies, stable senior management and full city council support—which all occurred under my administration.”