Chico City Council agrees with nearly all of 2013-14 Butte County Grand Jury report

Disagreement on only one finding, one recommendation

September 2, 2014

Chico Enterprise-Record

By Ashley Gebb

CHICO >> The Chico City Council will agree with all but one finding by the 2013-14 Butte County Grand Jury, conceding to statements that the council and prior city management both failed in some of their responsibilities.

Councilors voted 6-1, with Ann Schwab dissenting, to approve the council's response to 15 findings and seven recommendations in the June report. The response is due Monday but Mayor Scott Gruendl pledges to provide additional detail to the jury if necessary.

The Grand Jury report, published in late June, states that while there was no evidence of illegal wrongdoing or personal profiting from the city of Chico's financial management, the City Council has known since 2007 it was running a deficit.

A follow-up to a prior Grand Jury investigation, the report on Chico finances states the city's financial crisis was caused by inflated salaries and benefits that clearly outpaced revenues, fees charged by various enterprise funds that did not cover service costs, enterprise accounts used inappropriately to balance the general fund as revenues declined, and city administration failing to provide pertinent information to council to make the necessary adjustments.

Among the city's areas of agreement were that the City Council failed in its responsibility to oversee actions of the management team and allowed it to frame its own agenda.

"The only fact we need is the city was allowed to burn through $20 million in cash it didn't have and come dangerously close to insolvency and it's our job that didn't happen," said councilor Mark Sorensen.

The council also agreed that during 2008-2012, upper level management failed to share complete and accurate information with council members.

"The information was not only not given, it was directly asked for and not given," said councilor Sean Morgan.

Another point of agreement was that with respect to finances and structural deficits, it appears a prior city manager abdicated his responsibility and allowed the finance director to take charge.

"This current council would not put up with that for 10 seconds," Morgan said.

The one finding with which the council did not agree was that a council-manager model of governing leads itself to potential problems. The response is that California's government code expressly provides for such a model, it has been identified as far superior to other alternatives and it has been effective in many other cities.

The council also mostly agreed with or reported it has already implemented to at least some degree all but one of the Grand Jury's recommendations moving forward. The only contention was with a recommendation that the City Council and city manager work together to develop a plan to rehire lost staff when funds become available, instead of contracting out for services.

The response is that it would not be prudent to rehire all staff lost during reductions and the city must give significant consideration to long-term best interests. The City Council feels it needs to retain flexibility to keep all options available in determining the most efficient and effective means for providing excellent service to the community.

Also Tuesday, the City Council voted 5-2 to approve Mark Orme's contract as city manager. After weeks of negotiations, they agreed to a $207,000 annual salary, $10,000 less than his predecessor Brian Nakamura earned.

Councilors Ann Schwab and Randall Stone were the dissenting votes, saying they disagree with the salary and benefits.

And after lengthy discussion about the myriad details that would and could be included in a waste franchise agreement, further direction was given to the consultant, who expects to return to the council in two or four weeks to continue moving forward with the negotiation process. He is expected to gain additional details on matters including rate impacts to customers, the impact of transferring city services such as street sweeping and leaf collection to the haulers, and matters related to flow control.

The goal is to negotiate an exclusive franchise with Waste Management and Recology based on two exclusive residential service zones based on a split of current revenue base. Commercial services would remain in current open market competition between the two companies. The city would set the maximum rates for both commercial and residential services.