Report 2018-133 Recommendation 11 Responses

Report 2018-133: Fallen Leaf Lake Community Services District: Its Billing Practices and Small Electorate Jeopardize Its Ability to Provide Services (Release Date: July 2019)

Recommendation #11 To: Fallen Leaf Lake Community Services District

To improve its financial viability and safeguard its ability to continue providing services to the Fallen Leaf Lake community, the district should, by December 31, 2019, limit the extent to which it relies on volatile revenue sources to balance its budget.

1-Year Agency Response

The District agreed in response to the Audit Report to "strengthen its finances by taking the necessary steps to review and assess, on an annual basis, any revenue sources that it and its auditors may reasonably conclude are 'volatile'." The most recent audit did not find any volatile revenue sources. Nevertheless, this year the District has had great concerns regarding the potential for financial fluctuations due to the COVID-19 pandemic. The Governing Board has carefully reviewed and passed the most recent budgets on July 4, 2020 in light of these concerns. In addition, the District has ensured that there is adequate insurance and third-party indemnification available to protect itself from any lawsuits related to the pandemic or patron illness due to COVID.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DISTRICT'S RESPONSE TO NUMBER 11: As indicated in the District's response to the recommendation (contained within the Audit Report), the

District intends to "strengthen its finances by taking the necessary steps to review and assess, on an annual basis, any revenue sources that it and its auditors may reasonably conclude are 'volatile'." On August 31, 2019, the District adopted and began implementation of resolutions which of two Resolutions governing the reimbursement rates for firefighters who participate on strike team assignments under the fire agreement. The passage of these Resolutions is expected eliminate all financial risk to the District going forward with respect to strike teams. In addition, on August 31, 2019, the District's Board reviewed and approved Resolution 2019-8 to increase in the Fire Special Tax for the fiscal year 2019-2020 to be levied upon eligible properties in the District in an amount 1.5% above that same Tax assessed in the 2018-2019 fiscal year. The Resolution is attached.

California State Auditor's Assessment of 6-Month Status: Pending

Based on its response above and the "not fully implemented" statuses for recommendations #7, 8, 12, and 13 of our report, we do not yet agree that the district has fully implemented this recommendation. We will assess the district's implementation of this recommendation in early 2020 in conjunction with its implementation of these four recommendations.

All Recommendations in 2018-133

Agency responses received are posted verbatim.