INDEPENDENT CITY AUDITOR. REPORTING DIRECTLY TO THE RESIDENTS. |
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First Biennial Audit of Measure Q Released - the City Underspent $22 Million in Collected Taxes
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Today, our Office released its first biennial audit required by Measure Q – the 2020 Parks and Recreation Preservation, Litter Reduction, and Homelessness Support Act – that Oakland voters passed in March 2020.
Measure Q authorized a parcel tax to support equitable park maintenance services, address homelessness in and around City parks, and improve water quality by reducing litter.
Between FYs 2020-21 and 2022-23, the City of Oakland collected $82.5 million in Measure Q funds. Although the City spent funds in accordance with the Measure’s spending restrictions, the audit found the City underspent collected taxes, accruing a fund balance of nearly $22 million as of June 30, 2023.
The audit also found the City did not have a baseline to assess the effectiveness of Measure Q funds in reaching its parks or homelessness goals, and also highlighted ongoing maintenance issues and encampments at parks. Additionally, the City has not fully implemented oversight activities outlined within Measure Q.
The report includes 16 recommendations to improve budgeting for the funds, create outcomes-based performance measures for park conditions and homelessness, and strengthen oversight of Measure Q-funded programs.
Read more about this audit in the Press Release below.
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Annual Whistleblower Program Report Released -166 Complaints Received During Fiscal Year 2022-2023
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The Report provides details about the whistleblower investigation process, the number and types of allegations submitted, the characteristics of the whistleblowers, and the complaints that warranted investigation. It concludes with a summary of the investigation outcomes and actions taken.
Notably, 166 complaints were filed in FY 2022-23, including allegations of wage theft, falsification of contracts, reports, or records, and misconduct or inappropriate behavior. A total of 159 cases were closed, and 26, or 16 percent, were closed after an investigation. The remaining 133 closed cases fell into the categories of: insufficient information to investigate, previously addressed by the Whistleblower Program, not fraud, waste, or abuse, or referred to appropriate City departments/channels.
Learn more about how to submit a complaint and our Whistleblower Program on our website.
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Ballot Measure Financial Analysis Released - Informing Voters Before the March Primary Election
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Oakland Municipal Code Section 3.08.210 requires our Office to prepare an impartial financial analysis of each measure qualifying for ballot placement. As such, our Office recently completed the financial analysis for a ballot measure, referred to as the Appropriations Limit Increase, which will be on the March 2024 City ballot. To help Oakland voters better understand this measure and its financial implications, below is a high-level description of the proposed ordinance and our independent financial analysis.
Appropriations Limit Increase Analysis
In 1979, California voters approved Proposition 4, which added Article XIII B to the State Constitution, requiring local governments to adopt an annual limit on the money they appropriate. This limit, referred to as the “Gann Limit,” caps the tax proceeds governments may spend in a given fiscal year. The voters may change the appropriations limit for a period not to exceed four years.
This proposed ordinance would authorize the City to increase the appropriations limit to continue spending the proceeds of twelve voter-approved tax measures (see Report for full details). It would not result in any new or increased taxes, but it would give the City the authority to raise the appropriations limit by an estimated $322.97 million to continue spending revenues previously approved by the voters through the next four fiscal years (FY 2024-25 through FY 2027-28).
If this measure does not pass, the City will be unable to spend the annual appropriations increase of approximately $322.97 million. Tax revenues exceeding the current appropriations limit would have to be returned to the taxpayers by revising the tax rates or fee schedules within the following two fiscal years.
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Press Release
FOR IMMEDIATE RELEASE
December 21, 2023
Audit Shows the City Spent Only $36.5 Million of the Nearly $53 Million Collected From Property Owners in the First Two Years of Measure Q
The City Lacked a Plan to Meet Goals to Improve Park Conditions and Reduce Homelessness in and Around Parks
OAKLAND, Calif. (December 21, 2023): Today, the Office of the City Auditor released an audit report related to the 2020 Parks and Recreation Preservation, Litter Reduction, and Homelessness Support Act. Oakland voters passed the Act in March 2020 as “Measure Q.”
Measure Q (the Act) was proposed and passed to improve park services. Specifically, the Act seeks to improve and increase maintenance, tree, and landscape services throughout Oakland parks; reduce homelessness in and around City parks; decrease disparities in life outcomes of marginalized communities; and reduce litter runoff into waterways.
During the 2-year audit period, the City collected nearly $53 million from taxpayers, but only spent $36.5 million. As a result of underspending, Measure Q had accrued a fund balance of nearly $22 million by the end of FY 2022-23. While the overwhelming majority of spending was within allowable Measure Q uses, Acting City Auditor Michael Houston characterized a fund balance of $22 million as “services not yet delivered to Oaklanders.”
The audit called for improvements in how the City budgets Measure Q funds. For example, the audit found that the way the City carried over unspent Measure Q money to future fiscal years skewed budgeting such that budgeted amounts fell below the required allocations for parks, homelessness services, stormwater quality, or audit and evaluation. The Auditor’s Office made the Budget Bureau aware of this during the audit and indicated they could correct the allocation percentages before the extra funds carried forward are spent.
The audit also found that Measure Q’s unclear and counter-intuitive “maintenance of effort” terms allowed for lower spending on existing park services, rather than equal or higher levels of spending. Auditor Houston stated, “lower levels of spending belie the spirit of the legislation.”
The audit also found the City did not establish a baseline to measure park conditions. Without understanding baseline park conditions, the City is unable to determine maintenance needs nor is it able to measure the effect of Measure Q spending. Additionally, the City did not define target outcomes, and so far, conducts limited program evaluations. The audit calls for a data-driven strategy that would help identify existing service levels and track improvement. Acting City Auditor Houston stated, “the City needs to adopt and use performance data and performance management to quantify how programs are performing and how much is needed to reach the lofty goals within the Measure. The public deserves to know how it benefits from tax-funded services.”
In looking at outcomes, the audit highlights the conditions at parks, for which the largest amount (64 percent) of Measure Q funding is allocated. The audit describes how the City should set meaningful maintenance standards to inform maintenance schedules and ongoing evaluation of park conditions to understand improvements and needs, to ensure equitable access for Oaklanders.
Furthermore, performance measurement can inform oversight on Measure Q spending. The City Council assigned the Commission on Homelessness and the Parks and Recreation Advisory Commission (PRAC) as the citizen oversight bodies for Measure Q. The former oversees funding dedicated to homelessness and litter reduction. The latter oversees funding dedicated to parks, landscape maintenance, recreational services, and services to improve water quality and related litter reduction. The audit found the PRAC met its oversight mandate, but the Commission on Homelessness was not fulfilling its oversight role, meeting infrequently on Measure Q matters, and not completing required annual reports.
Last, the City has not conducted an annual financial audit of Measure Q, despite having a budget for it. California law requires actions to provide assurance that proceeds from special taxes are collected and spent for their intended purposes.
Acting City Auditor Houston stated, “I am glad our audit confirmed Measure Q revenue was applied to its intended uses, and the audit did not identify fraud and abuse. On the other hand, Oakland voters passed this special tax expecting their extra tax dollars would improve parks, and reduce homelessness and litter in or around parks. Unfortunately, we found that the City has not identified to what extent, or even if, Measure Q taxes have made progress towards those goals.”
The audit report outlines 16 recommendations to the City Administration, that when implemented, will create a structure for accountability, developing and implementing performance management processes, and regularly reporting performance outcomes to oversight bodies. The City Administration agreed with all the recommendations, and the City Auditor’s Office will follow-up on each of the recommendations to monitor progress. Acting City Auditor Houston recognized the Administration stating, “I’d like to thank the City Administrator’s Office and the Finance, Human Services, and Public Works departments for their time and attention during the audit, and for engaging us in productive dialog resulting in feasible, relevant, and impactful recommendations ultimately resulting in a cleaner and safer Oakland for residents, businesses, and visitors.”
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Wishing you a safe and healthy holiday season, |
MICHAEL C. HOUSTON, MPP, CIA
ACTING CITY AUDITOR
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SUBMIT A COMPLAINT TO OUR WHISTLEBLOWER PROGRAM |
This confidential hotline is for employees and residents to report fraud, waste, and abuse in the City of Oakland. Available 24/7. |
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PHONE
(510) 238-3378
FAX
(510) 238-7640
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HOURS
MONDAY THROUGH FRIDAY
8:30 AM TO 5:00 PM
FOR PRESS INQUIRIES CONTACT:
Dena Shupe: dshupe@oaklandca.gov
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