Broward County

Hollywood responds to scathing state audit report

Just hours before it’s state-imposed deadline, Hollywood leaders responded to a scathing audit that criticized the city for failing to plan for rising pension costs and not considering all available funding before declaring “financial urgency” in 2011.

That declaration led to employees’ salaries and jobs being slashed, and to residents’ taxes and fees going up.

Using a compilation of responses from various city departments, City Attorney Jeffrey Sheffel wrote a 27-page defense of the city’s actions.

Among the highlights:

• The city would have needed a special act of the Legislature to make changes to its pension program; and

• The state auditor underestimated the city’s budget shortfall by nearly $7 million.

“In response to the preliminary and tentative audit findings, the City and Community Redevelopment Agency will detail reforms already taken to improve the budgeting processes, financial reporting and transparency; provide rebuttals on findings for which the City and CRA would request the audit team’s further consideration; address inaccuracies and inconsistencies in the preliminary report; and provide an action plan for addressing the Auditor General’s tentative recommendations,’’ Sheffel wrote in his cover letter.

In November, Florida’s auditor general sent a 25-page report to the state listing 13 findings, including some dealing with the city’s CRA.

Wednesday evening, Swanson-Rivenbark said the city had made many changes since the summer of 2011 that the state audit did not take into consideration.

“We addressed their inaccuracies, outlined improvements that have been in place prior to the audit and acknowledged additional enhancements,” said Swanson-Rivenbark. “Unfortunately they looked at a time period two or three years ago, which wasn’t able to acknowledge the important corrections that have already been made.”

Among the state audit’s findings:

• The city did not consider transferring $22.7 million from its water and sewer fund, which might have made it unnecessary to declare financial urgency. The report, however, acknowledged that the fund might have not been enough to end the budgetary crisis.

• The city did not set aside money to cover rising pension costs. The audit said the pay increases and pension benefits negotiated by employee unions and approved by city commissioners were likely to be unsustainable over the long run.

• The CRA spent $1.8 million in employee salaries and benefits, but did not properly track the amount of time and effort employees dedicated to the beach or downtown CRA districts.

• The CRA failed to follow state laws for some expenses, including spending $1.5 million on community policing and $187,000 for an enhanced maintenance program.

In October 2011, the state’s Joint Legislative Auditing Committee, at the request of state Sen. Eleanor Sobel, D- Hollywood, approved the audit. The request came not long after the city declared financial urgency and slashed employee salaries by at least 12.5 percent.

In fiscal year 2011-12, the city faced a $38 million budget deficit and increased taxes and fees by more than 11 percent. The city also asked voters to slash pension benefits for employees. Voters approved the referendum question.

For about eight months, the auditor general’s staffers camped out at City Hall, interviewing employees and looking at documents.

This year, the city has a balanced budget, with about $15 million in reserve and no plans to cut employees’ compensation or jobs, or to raise residents’ taxes or fees.

Marilyn Rosetti, an audit manager with the Florida auditor general’s office, said the state’s final report would include the auditor general’s findings — which may be modified — and the city’s response.