The California State Auditor released its annual analysis of the fiscal health of 430 California cities. The timing couldn’t be better for Ventura County cities as the cities begin budgeting for 2023-2024.
The Auditor’s Office selects a set of ten indicators to assess each city’s ability to pay its bills in both the short and long term. The indicators measure each city’s cash position or liquidity, debt burden, financial reserves, revenue trends, and ability to pay for employee retirement benefits. The auditor then assigns the city’s fiscal health a High (red), Moderate (yellow) or Low-risk (green) rating.
Trends Over Time Reveal Disturbing Patterns
The State Auditor’s Office releases the fiscal health picture for each city for the prior year. And, while the annual snapshot of a city’s financial health is valuable, looking at the trends over time is more beneficial.
The table below highlights each city in Ventura County and how it ranked against all 430 California cities from worst to best. Oxnard is near the bottom at number eight. Thousand Oaks and Camarillo are near the top at 396 and 398, respectively.
Over the past five years, Simi Valley, Santa Paula, Ventura and Ojai have shown improvement on the State Auditor’s Report. We commend them for their achievement. Yet, Santa Paula and Ventura have more work to do.
Conversely, Thousand Oaks, Fillmore, Port Hueneme, Moorpark and Camarillo slipped over the past five years. Yet, despite the fall in the auditor’s report, these cities remain financially healthy.
The most notable change on the list was Oxnard. Although Oxnard was in poor financial health in 2016, no one would have expected the city to drop a surprising 93 places to become California’s city in the eighth-worst fiscal health.
Oxnard’s General Fund Reserves deteriorated to $20 million from $45 million in five years. Even more troubling, Oxnard’s liquidity worsened significantly to 71% cash to their General Fund Liabilities from 322%, mainly because General Fund Liabilities increased to $56 million from $12 million.
Oxnard is at high risk to cover rising pension and other post-employment benefit expenses. If a recession depresses tax revenues and decimates pension fund assets, that risk compounds.
A Tale Of Two Cities
Comparing the financial performance of the different cities in Ventura County is difficult because not all cities face the same challenges. For instance, not all municipalities have fire and police departments. Yet, the oldest cities in the County—Ventura and Oxnard—are similar enough to contrast directly, and the differences couldn’t be more striking.
Over the five years, Ventura improved its General Fund reserves, liquidity and pension funding. Skeptics argue that all cities improved their pension funding because 2021 was an extraordinary year in the financial markets. As a result of the improvements, Ventura ranked higher in the State Auditor’s report by 48 places.
On the other hand, Oxnard’s General Fund reserves, liquidity and risk to cover rising pension costs worsened, causing the city to drop 93 places in the State Auditor’s report.
Here’s How All The Cities In California Ranked
For a city by city comparison, visit: CITY RANKINGS
Cities At High Financial Risk
The State Auditor ranked Oxnard near the high-risk category because Oxnard was in the bottom two percent of all California cities. Specifically, the auditor ranks the city as the eighth worst in California.
In the event of a recession, Oxnard risks financial distress because of insufficient General Fund reserves, high pension costs relative to citywide revenue, and a high debt burden, according to the report.
Oxnard ranks last in the State for setting aside funds to cover retiree health care benefits’ $55 million cost. The city should have allocated money for those costs in 2021 but didn’t.
Cities At Moderate Financial Risk
According to the auditor’s report, Santa Paula and Ventura ranked in the bottom 35 percent of all California cities.
In the event of a recession, the report said these cities risk financial distress because of insufficient general fund reserves, high pension costs relative to the city’s revenue, a high debt burden and low revenue growth trends.
Cities At Low Financial Risk
Moorpark, Fillmore, Simi Valley and Ojai ranked in the report’s top 60 percent of all California.
The auditor ranked these four cities at less risk in a recession because they have adequate general fund reserves, a reasonable debt load and solid revenue trends. However, the State Auditor noted concern about the City of Simi Valley’s ability to pay future pension costs while fulfilling its promise to pay retiree health care benefits to workers.
Cities At Very Low Financial Risk
Port Hueneme, Thousand Oaks and Camarillo ranked near the top 95 percent of all California cities.
The state auditor found these three cities have robust General Fund balances and relatively low debt. They also had adequate pension and retiree healthcare funding. And Thousand Oaks showed above-average revenue growth trends.
Why This Matters
Local governments directly impact our daily lives, so they must have their finances in order. When they don’t, essential services are at risk of being reduced. But when they do, they can better serve their community.
Understanding the financial situation and the factors that impact it allows city officials to tackle their challenges and leverage their successes. And you, the taxpayer, can use that information to advocate for your community and hold city officials accountable.
CLICK HERE to see last year’s analysis.
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Oxnard and Santa Paula should be looked at as “the Mexican” model rather then “the American” model. Certain ethnic groups just cost more to maintain then others and they don’t pay for themselves as the double whammy. Don’t blame the messenger here, this is just reality.
The stats show the myth of development as a municipal financial panacea based on the low rankings of Oxnard and Santa Paula. Also, the article should have been tagged ‘County’ and not “Camarillo’.