Audit: San Diego Shows "Remarkable Improvement" in its Financial Health

San Diego Ranks Among the Best in Financial Condition Compared to Similar-Sized Cities

San Diego - The City of San Diego's financial health has shown "remarkable improvement" over the past decade due to fiscal reforms and now ranks among the best when compared to other cities with similar populations, according to a PDF icon Performance Audit by independent City Auditor Eduardo Luna.

"The City's financial health is strong and getting stronger because of the fiscal reforms enacted by City leaders and approved by San Diego voters in recent years," said Mayor Kevin L. Faulconer. "By tackling tough issues that were too long ignored, we are now able to invest in our neighborhoods, expand city services, hire more police officers and pave more roads like never before. The City must remain faithful to the fiscal reforms and best practices in order for its financial health to remain strong and I'm committed to doing just that."

The Performance Audit concludes that the City's overall financial condition has improved markedly over the 10 years, especially compared to cities with a similar population.

"Our results suggest that the City is in a strong position to finance its services on a continuing basis and poised to meet the demands of natural growth, decline and change," the audit said. "These results are a testament to the efforts made by City leaders over the last 10 years, including implementation of strong fiscal policies, practices and controls that helped the City overcome a point of crisis."

A decade ago, the City was on the brink of bankruptcy following a pension crisis and decades of financial mismanagement by past City leaders. Rating agencies had suspended the City's credit rating and the Securities and Exchange Commission ruled the City had defrauded investors.

In response, City leaders enacted several financial fixes to boost reserves, reform retiree health care and restore the City's credit rating, among other things. Voters also overwhelmingly approved a switch to a strong mayor form of government and a pension initiative that reduced the City's future pension obligations by nearly $1 billion.

"The results of this extensive audit prove what San Diegans are already seeing," said City Councilmember Scott Sherman, Chair of the City's Audit Committee. "The hard fought reforms that were implemented have resulted in remarkable performance improvements in the City's health in relation to other comparable cities. This has allowed for much needed reinvestment back into our communities. It is important that we remain vigilant and not go back to the days of reckless spending. I want to thank City Auditor Luna for putting together this very thorough report."

To objectively rate the City's financial condition, the Auditor's Office used a nationally recognized 10-point test designed to assess performance in financial position, revenues, debt and capital assets. The audit then compared San Diego's condition to similar-sized cities - Philadelphia, Phoenix, San Antonio, Dallas, San Jose and Austin - from fiscal years 2005 to 2014.

San Diego ranked among the best when compared to the other cities for eight of the last 10 years. More importantly, San Diego scored significantly higher in fiscal years 2012 through 2014, at least doubling the score of the next highest city in each year.

"This independent evaluation of San Diego's financial position validates the achievements of the Mayor, City Council and management to restore the City's fiscal health and get San Diego back on track," said Chief Financial Officer Mary Lewis. "This is a high achievement for San Diego."

CONTACT: Craig Gustafson at (619) 453-9880 or [email protected]