1Glendale Budget Study Session #4 • Policy Briefing
POLICY BRIEFING & ORAL TESTIMONY
Independent Evaluation via the California State Auditor's Local High-Risk Program Event: Glendale City Council Budget Study Session #4Date: June 2026 Speaker/Submitter: Herbert MolanoTarget: Glendale City Council & Executive Management PART 1: ORAL TESTIMONY TRANSCRIPT
1. Introduction: The Illusion of Compliance
2. The Core Problem: The Off-Balance Sheet Stranglehold "Good afternoon, Mayor Kassakhian, members of the City Council, and City Manager.
We are here today at this final budget study session to discuss the five-year forecast, structural deficits, and the mandatory 5% departmental cost-reduction measures. While staff has worked diligently to bridge the immediate $31.7 million shortfall down to an estimated $2.2 million for the upcoming fiscal year, we must confront a deeper reality: balancing a single-year budget through deferred capital expenditures and internal rate reductions is not the same as solving structural fiscal distress.
Our city routinely points to balanced general fund summaries and a wall full of GFOA 'Excellence' awards as evidence of fiscal health. But as any rigorous financial analyst will tell you, those awards are checkboxes for procedural completeness and minimal GASB compliance. Reviewers spend roughly two hours per report checking formatting; they do not analyze the underlying economic reality of our long- term structural debt."
"The true fiscal distress facing Glendale is driven by liabilities that are systematically smoothed, deferred, or relegated to secondary disclosure footnotes:
Compounding Pension Interest: Under GASB 68, we report a static snapshot of our net pension liability. What we do not prominently project in our headline budget documents is the compounding interest velocity on that Unfunded Actuarial Liability (UAL). When CalPERS applies its discount rate, that liability grows quietly every single year by millions in interest alone, before a single new service is added.
Locked-In Bond Obligations: Our long-term general obligations—including locked-in, non-callable bond interest—represent an immutable cash-flow stranglehold on future General Funds. By splitting principal from mandatory future interest, the true structural drain on our discretionary revenues is effectively masked.
2Glendale Budget Study Session #4 • Policy Briefing
3. The Solution: Invite the California State Auditor
4. Conclusion: A Choice Between Cover and Clarity
When a city council relies heavily on public safety employee endorsements, managing the 60% to 75% of the General Fund tied up in police and fire budgets becomes politically radioactive. The path of least resistance inevitably shifts away from tackling structural overtime, minimum staffing mandates, or internal nepotism, and moves toward permanent 'revenue enhancements'—asking the taxpayers to fund a structural cost curve that is mathematically unsustainable." "If this council is truly committed to independent, unvarnished fiscal transparency, it should not hire regional boutique management consulting firms. The secondary municipal market is heavily populated by retired city managers and finance directors who have spent their careers inside the very system that created these structural deficits. Their business model relies on maintaining relationships, and their reports predictably sanitize local problems to provide political cover for revenue hikes.
Instead, I am requesting today that this Council proactively invite, or work with our state legislators to engage, the California State Auditor's High-Risk Local Government Agency program.
The State Auditor possesses absolute political immunity from local labor unions and local councils.
They do not issue decorative certificates. They have subpoena-equivalent access to internal general ledgers, actual time-card data, and actuarial tables. They specialize in looking past GASB compliance to expose structural risk, waste, and systemic labor contract exposure." "Hiring another boutique firm staffed by ex-insiders will only yield a sanitized document telling you what you want to hear to protect core budgets. Inviting the State Auditor will provide this council—and the taxpayers of Glendale—with a truly objective, independent blueprint of our actual financial condition.
Let us move past the single-year cosmetic fixes and bring in the state's highest level of objective forensic oversight to ensure Glendale's long-term solvency.
Thank you."
2Glendale Budget Study Session #4 • Policy Briefing
3Glendale Budget Study Session #4 • Policy Briefing
PART 2: BRIEFING ATTACHMENTS & ANALYSIS
Exhibit A: The "Ex-City Manager" Boutique Consulting Pipeline When California cities sidestep major global accounting firms to find a boutique municipal consulting group, they typically turn to prominent regional players whose rosters are almost exclusively populated by retired city managers, finance directors, and assistant city managers who cycle through a closed-loop economy. •Management Partners (Baker Tilly): Historically the preeminent boutique firm specializing in local performance audits and strategic budgeting. Their model relies entirely on hiring former city executives to evaluate current structures.
•Kosmont Companies: Focuses heavily on municipal finance, real estate monetization, and economic development, leveraging former municipal officials to advise on revenue generation. •Bob Murray & Associates / Peckham & McKenney: Nominally executive search and HR firms, but routinely cross over into organizational assessments, setting the parameters for municipal leadership.
Exhibit B: Institutional Biases driving "Sanitized" Output Boutique firms staffed by former insiders operate under structural capture that shapes their findings toward revenue increases rather than structural expenditure overhauls:
•The "Silo" Perspective on Cost Retention: Former executives view public safety allocations (60%–75% of General Funds) as politically untouchable. They treat labor and pension structures as fixed, immutable variables. •The Reference-Dependence Incentive: A boutique firm's subsequent contract relies on references from current city managers. Exposing structural overtime, payroll padding, or deep administrative nepotism guarantees a firm is labeled "unfriendly to staff," eliminating future market opportunities. •The Pension-Consulting Loophole: Retired associates frequently bill premium consulting hours to cities while simultaneously drawing their full taxpayer-funded CalPERS pensions, fundamentally disincentivizing them from criticizing or restructuring the system.
Local Case Studies Verification:
•Yasmin Beers: Retired as Glendale City Manager and transitioned directly into the ecosystem as a Senior Vice President & Executive Recruiter for Bob Murray & Associates. •Jim Starbird: Retired as Glendale City Manager (after 14 years) and subsequently operated as an independent consultant, securing premium advisory contracts and interim management roles across California. 3Glendale Budget Study Session #4 • Policy Briefing
4Glendale Budget Study Session #4 • Policy Briefing
THE PUBLIC SAFETY UNION ENCLOSURE LOOP
Public Safety Union Endorsements
▼
Secures Electoral Majority
Sitting City Council
▼
Appoints & Hires Insiders
Boutique Consultant
(Ex-City Managers)
▼
Sanitizes Costs & Provides Cover
New Taxes & Fee Enhancements
4Glendale Budget Study Session #4 • Policy Briefing
5Glendale Budget Study Session #4 • Policy Briefing
Exhibit C: Structural Evaluation of Independent Forensic Alternatives To cut through the institutional masking of technical formatting awards—such as the GFOA Certificate of Excellence which allocates a mere two hours of review per pre-published financial statement—the City must employ alternative oversight architectures that prioritize economic truth over checklists.
AUDIT ENTITY PRIMARY OPERATIONAL
FOCUS
POLITICAL
INSULATION
SANITIZATION
VULNERABILITY
California State Auditor Systemic fiscal risk, contract Absolute None (High-Risk Local Program) structural analysis, line-item State-level Possesses full statutory overtime, and statutory constitutional officer enforcement and compliance. answerable to the subpoena-level data
Legislature. access.
Specialized Forensic Transactional reality, line-item High Low Accounting Firms compliance, cost-of-capital Directly accountable Bound by strict forensic (e.g., Harvey M. Rose extraction, and payroll fraud/ only to the specific accounting standards, Associates) waste. contracting oversight not peer approval. body.
Actuarial Research Think Macro-actuarial truth, real-world Absolute None Tanks recalculation of UAL Independent Explicitly structured to (e.g., Reason Pension compounding, and taxpayer endowment and donor- challenge GASB/GFOA Integrity / TIA) burden clarity. supported accounting loopholes. infrastructure.
Note: Standard accounting procedures technically fulfill GASB mandates while successfully burying long-term cash flow drains in obscure footnotes. A truly objective turnaround requires the tools and authority mapped above.