Two audits conducted by state Comptroller Thomas DiNapoli’s office highlighted fiscal mismanagement by the City of Long Beach resulting in almost a quarter-million dollars worth of paid leave accruals.
One audit was in response to the payments for unused leave accruals that former City Manager and current county Comptroller Jack Schnirman, and nine other former and current Long Beach employees received from 2017-2018.
The other analyzed a four-year period and focused on the lack of financial oversight and planning by Schnirman and the city council from 2014-2018. The audit also presented recommendations for the city to take to prevent fiscal mismanagement occurring in the future.
“Our auditors found severely lax oversight and excessively poor fiscal practices led to a rapid decline in the city’s fiscal condition,” said Tania Lopez, a spokeswoman for the state comptroller’s office. “Auditors identified nearly $750,000 in questionable leave payments made to employees. It is time for city officials to work together and address the fiscal issues that could weigh down the city’s future for years to come. Our auditors offered several recommendations, including recovering any unlawful separation payments, and stand ready to provide additional technical assistance.”
During the time period of 2014-2018, auditors noticed a 68 percent decrease in the city’s general fund balance from $9.9 million to $3.2 million. The audit also criticized the city council’s lack of knowledge on the code and proper financial oversight.
“At least three of the five Council members did not know the City had experienced operating deficits for five years straight until they demanded the City’s financial advisor prepare a report analyzing the budget,” according to the audit. “Because the City Manager did not prepare a multiyear financial plan, including a fiscal improvement plan, there is no assurance that the City’s financial condition will improve.”
According to the audit and the city code, employees are allotted to receive 30 percent of accrued unused sick and vacation time. Schnirman was paid $73,113 for 100 percent of his 878 unused sick hours. The audit calculated the appropriate payout to be $21,934 for 263 sick hours.
“I now understand that the methods Long Beach has been using to calculate payout amounts for at least the last 25 years are different than the stricter formula originally set out in the City Code,” Schnirman said in a September statement.
Schnirman said he returned overpayments he received after resigning as the city manager of Long Beach in September.
The audit states that the 10 employees were overpaid for over 1,600 hours of accrued sick time. City employees claimed it was best practice to payout the full 100 percent of the accrued sick time despite the 30 percent cap stated in their contracts.
Drawdown payments, or when an employee is paid for a portion of accrued leave time, within the city were also analyzed by the audit.
A one-year payment period in which the city paid $229,494 to eight employees were specifically looked at by the auditors. The audit explained that these issues of overpayment have been present in the city long before Schnirman was city manager.
The audit states, “Although the City did amend City Code sections addressing personnel code in 1997 in an apparent attempt to address our concerns, similar conditions continue to exist more than 25 years after the first report, with City officials still saying they paid employees for leave based on long-standing policy instead of adhering to the City Code.”
Auditors recommended that the city prepares a multiyear financial plan including a fiscal improvement plan. In response to the overpayments of employees, the audit recommended the city to amend the city code to clarify paid leave accruals and to review the overpayments and seek financial restitution.
The city council responded to these audits and recommendations made by the state comptroller’s office, stating that the city specifically delegates fiscal oversight to the city manager.
“The Comptroller’s criticism that the Council has not taken the appropriate steps to oversee the financial condition of the City has to be read in context with the City Charter and the Council’s lack of authority to take appropriate measures in terms of oversight,” the city wrote. “The City Charter imbues all administrative authority in the City Administration — specifically in the hands of the unelected, and appointed City Manager.”
