HomeMy WebLinkAbout07.A- Discuss Whether to Continue Funding Operations on San Bernardino Employment and Training Agency 7.A
DOC ID: 4369 A
CITY OF SAN BERNARDINO — REQUEST FOR COUNCIL ACTION
Agreement
From: Mark Scott M/CC Meeting Date: 03/21/2016
Prepared by: Tanya Romo, (909) 384-
5122
Dept: City Manager Ward(s): All
Subject:
Discuss and Take Possible Action on Whether to Continue to Fund Operations of San
Bernardino Employment and Training Agency (SBETA) Using City Funds, Subject to
Possible Reimbursement from the State of California (#4369)
Current Business Registration Certificate: Not Applicable
Financial Impact:
Financial Impact: Potential expense of approximately $125,000 per month, with
possibility of reimbursement.
Motion: Discuss and take possible action.
Synopsis of Previous Council Action:
July 20, 2015 - The Common Council authorized a budget amendment equal to 1/12th
of SBETA's annual budget to keep the agency open until July 31 and to discuss the
matter further at a meeting on July 29, 2015.
July 29, 2015 - The Common Council authorized to allocate up to $250,000 to continue
SBETA in operation until September 21, 2015.
September 21, 2015 - The Common Council authorized to allocate $375,000 to
continue SBETA in operation through the end of December 2015.
December 21, 2016 - The Common Council authorized to allocate funding through
March 31, 2016 at approximately $140,000 per month.
Background:
SBETA serves as the City's employment and training services provider for the purpose
of implementing federally-funded workforce investment programs. The City receives
funding from the United States Department of Labor for SBETA's operations. The
funding is administered by the California Employment Development Department (EDD).
In October 2014, EDD placed the City on cash hold due to incomplete audits. A local
entity that receives federal funding is required to submit a single audit annually,
covering all its federal programs and showing how the funds were spent. Pass-through
recipients of federal funds, such as EDD, are required to impose sanctions, which can
include cash holds, on local entities that do not complete their single audits on time.
Updated: 3/17/2016 by Tanya Romo A I Packet Pg. 673
7.A
4369
The cash hold has remained in place and the City has received no funds from EDD
since October of last year. In the interim, the City has funded SBETA from other
sources.
Discussion and Possible Fundinq Regarding San Bernardino Employment and
Training Agency:
The City of San Bernardino has been engaged in efforts to secure reimbursement from
the State Economic Development Department (EDD)for costs associated with SBETA
operations. The EDD has withheld reimbursement pending satisfactory completion of
the City's financial audit reports for the last two years. The audits have been
complicated by the bankruptcy.
At present, it appears unlikely that the EDD will release the reimbursements in the near
future. The city continues to believe the reimbursement payments should eventually be
received, but it is apparent that they will not be forthcoming in the near term.
SBETA currently employs 12 employees and leases office space. In total, it is estimated
that the operation is costing the City's General Fund approximately $125,000 per
month. Because of the City's cash flow challenges, SBETA employees were given
notice in December that their employment will be terminated on March 31, 2016. The
Mayor and Common Council had hoped that the reimbursements would be resolved
prior to that date, but efforts have been unsuccessful.
Due to serious cash flow consequences, staff is unable to recommend any further
funding from the City's General Fund. It is requested that the Common Council discuss
this matter during the March 21 meeting and consider whether or not to accept staff's
conclusion that funding should be stopped.
As the currently-approved City funding for SBETA runs out at the end of this month, the
Mayor and Council are requested to consider whether to continue the funding beyond
that time and if so, for what period of time.
Supporting Documents:
Updated: 3/17/2016 by Tanya Romo A Packet Pg. 674