Out of the total 453 cities rated, we were rated as a “low-risk” city, as indicated by our fiscal health score, primarily because of our liquidity and our reserves’ strength.
The State’s rankings report identifies the City of Compton as the riskiest (#1), with the least risky being the City of Tehama at #453. The City of Pico Rivera came in at the top 30% of all cities, ranked at 316 (up from 284 last year). The rankings are based on an overall score of 100 points, where Pico Rivera received 82 points (compared to 75 points received in the previous year).
The State’s indicators, such as Revenue Growth, Debt Burden, Liquidity, and General Fund Reserves, were taken from our 2018-19 financial results. Areas where our City displayed the strongest fiscal condition were: General Fund Reserves, Liquidity, Pension, and Retiree Health Benefit Risk (the risk that these obligations will have big spikes in future years). These outcomes were by design and did not happen overnight. In the years of good financial results, the City began increasing its General Fund Reserves in case of an economic downturn. Additionally, the City was proactive in addressing pension reform and began sharing ongoing pension obligations with the labor force.
Moderate risk categories include Revenue Growth (the 3-year trend showed a 6% growth) and Debt Burden. The Revenue Growth indicator measures the extent to which a city’s general fund revenues are increasing or declining over time. The State’s position that a city with relatively flat or declining revenues may have difficulty maintaining service levels, especially in times of rising costs.
Areas showing us coming in at high risk were in Pension and Retiree Health Benefit Pre-Funding; in these challenging times, we share this category with many neighboring cities across California. In the coming months, as we plan for the City’s fiscal future, we are confident that we will improve our strength in these areas.
The City of Pico Rivera ranked the highest among the neighboring ten cities shown in the table below: Fiscal Health of California Cities – City Ranking
|City||Percentile||Overal Rank||Overal Risk|
As is evident, only half of the neighboring cities share our low-risk ranking. The City’s commitment to prudent fiscal practices and long-term strategic planning will undoubtedly improve future rankings and our overall economic outlook.
Full survey results can be accessed through the following link: https://www.auditor.ca.gov/local_high_risk/dashboard-csa.html