RANCHO MURIETA (MPG) - Significant strides have been made since the release of a critical report by the Sacramento County Grand Jury in March 2023, which highlighted the loss of public trust in the Rancho Murieta Community Services District's (CSD) ability to make sound financial decisions.

A one-year progress report, uploaded to the district’s website on April 18, summarizes these advancements. Written by General Manager Mimi Morris, the concise four-page update is displayed on the homepage, accompanied by direct links to both the original 14-page Grand Jury report and the CSD Board’s responses from March to June 2023. 

Here is a selection of the general manager’s responses to the 12 findings and 13 recommendations outlined in the Grand Jury report:

l The initial finding highlighted the erosion of trust in the district's ability to make wise financial choices. The corresponding recommendation advised an upgrade of billing and accounting systems.

Morris reported that the implementation of the Tyler Technology billing system commenced in April, encountering initial challenges that have since been resolved. However, plans to transition to the Tyler accounting system were put on hold "due to concerns that adopting a new financial system before completing all pending audits could lead to accounting complications," Morris said. "Staff is confident that the current system is operating as intended, and we are planning an upgrade to improve efficiency in Fiscal Year 2025-2026."

l Three findings identified deficiencies in financial reporting, including two outstanding audits, susceptibility to fraud and the need to rebuild public trust regarding fee increases. The recommendations included completing the audits, recruiting and training competent personnel, generating monthly accounts payable listings, monitoring invoices and creating manuals outlining accounting protocols.

Morris reported the district had collaborated extensively with auditors to finalize the 2020-21 audit by late February 2024. She anticipates the completion of audits for 2021-22 and 2022-23 before January 2025.

Qualified accounting staff, including Morris and Director of Finance and Administration Mark Matulich, a CPA, have been recruited by the district. The new team has “strong financial management skills to ensure proper accounting procedures are established and followed to guarantee the integrity of the accounting data,” Morris said.

Positive Pay, a system guaranteeing the clearance of only verified payments from district accounts, has been implemented. Additionally, monthly budget-to-actual reports on revenues and expenditures are generated and presented at all board meetings.

l Three findings highlighted deficiencies in staff management, turnover rates and the erosion of institutionalized accounting expertise, which have impeded district operations. Recommendations included enhanced and mandatory training, a heightened level of scrutiny for adverse personnel actions, and quarterly reports addressing staff development and concerns.

“The district agrees that sound human resources management is important for organization effectiveness and has put many legacy HR (human resources) issues behind it,” Morris said. “The district has made great strides in improving employee morale in the last year.”

Nonetheless, the district still needs to implement a policy ensuring that impartial persons not directly involved in the chain of command review adverse actions against employees to guarantee the fair and consistent application of disciplinary measures, Morris said. 

She includes an update about staff development in her monthly report to the board.

l Two findings focused on reserve funds designated for infrastructure repair and replacement. 

The grand jury report highlighted the absence of an updated Capital Reserve Policy and a $10 million shortfall in reserves, both posing threats to the district's financial stability. The report recommended that the board amend its existing policy to delineate specific funding targets for each capital asset and establish adequate fees to address infrastructure requirements (for water, sewer and drainage).

“Staff is updating the 2012 District Reserve Policy to more accurately define the current reserve ‘buckets’ and to reflect the need for reserves that fully cover anticipated future capital outlay needs,” Morris said. “A 20-year capital improvement plan study is underway with recommendations expected by May of 2024.”

Morris further noted the board's acknowledgment of the vital importance of service fees in meeting both current operational expenses and long-term infrastructure demands, which was  reflected in both the 2023-24 budget and the proposed 2024-25 budget.

l Another finding reported that relying on property taxes to subsidize escalating security expenses without adjusting security fees had endangered the district's financial stability. The recommendation urged the district to limit funding to a level supported by resident fees (Measure J taxes) and allocate all property taxes to reserves.

Morris reported that the security budget was trimmed by $250,000 in the 2023/24 fiscal year, resulting in only $50,000 in property taxes being necessary for supplementation. 

Furthermore, recent staff adjustments reallocated administrative overhead previously assigned to security, eliminating the need for property tax reliance. With current staffing levels for patrol and gate operations, the existing program operates with a surplus. However, a recent wage increase negotiated by the security employee union will surpass the 2% increase in security taxes authorized by Measure J in 1998.

“The district is now focused on how to determine what level of security services can be provided within available security resources and is working with the Rancho Murieta Association (RMA) to map out security levels,” Morris said.