AGENDA
FINANCE/AUDIT COMMITTEE
REGULAR MEETING NOTICE
MARCH 23, 2026
PUBLIC MEETING 4:00 P.M.
Me
mbers
Victor M. Gordo, Ma yor
Tyron Hampton, District 1
Rick Cole, Distr ict 2
Gene Masuda, District 4
STAFF
Karin Schnaider, Director of Finance
Arnold Lee, Chief Assistant City Attorney
G
loria Acevedo, Recording Secretary
MISSION STATEMENT
T
he City of Pasadena is dedicated to delivering exemplary municipal services, responsive to our entire community and consistent
with our history, culture, and unique character.
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REGULAR MEETING
AGENDA
FINANCE/AUDIT COMMITTEE
MARCH 23, 2026
Public Meeting: 4:00 P.M.
Council Chamber, Pasadena City Hall
100 North Garfield Avenue, Room S249
The Finance Committee
may take action within its authority on
any item listed on this agenda as it deems appropriate following consideration and discussion of the matter.
PUBLIC MEETING - 4:00 P.M.
ROLL CALL
PUBLIC COMMENT ON MATTERS NOT ON THE AGENDA – Public
comment will be limited to a total of 20 minutes at the beginning of the meeting and will continue at the conclusion of the meeting, inf necessary.
Please limit comments to 3 minutes each.
APPROVAL OF MINUTES
January 12, 2026 S
pecial Meeting
January 26, 2026 Cancellation Notice
NEW BUSINESS
1. AUTHORIZE T
HE CITY MANAGER TO ENTER INTO A GRANT
AGREEMENT WITH THE STATE OF CALIFORNIA DEPARTMENT OF
TRANSPORTATION IN THE AMOUNT OF $432,959 FOR THE
CALIFORNIA CLEANUP AND EMPLOYMENT PATHWAY GRANT AND
AMEND THE DEPARTMENT’S FISCAL YEAR 2026 OPERATING BUDGET BY RECOGNIZING REVENUE AND APPROPRIATING $432,959 IN THE
GENERAL FUND
2. AMEND THE HOUSI
NG DEPARTMENT’S FISCAL YEAR 2026
OPERATING BUDGET BY APPROPRIATING $28,897 IN THE GENERAL FUND AND $309,697 IN THE GENERAL FUND PROJECTS FUND FOR
THE PURCHASE OF REPLACEMENT VEHICLES FOR THE MUNICIPAL
ASSISTANCE, SOLUTIONS, AND HIRING (MASH) PROGRAM
2 3. QUARTERLY INVESTMENT REPORT - QUARTER ENDING DECEMBER 31, 2025
INFORMATION ONLY
Information only items contain no staff recommendations. The committee may, however, take action within its authority relating to informational items on the agenda as it deems appropriate following consideration and discussion of the matter.
4. FINAL REPORT ON PAYROLL AUDIT
5. FINAL REPORT
ON STREET PAVEMENT MAINTENANCE PROGRAM
AUDIT
ADJOURN
APPROVAL OF MINUTES
• January 12, 2026 Special Meeting
• January 26, 2026 Cancellation Notice
01 01/12/26 Finance Committee Meeting
CITY OF PASADENA
MEETING OF THE FINANCE COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
CITY HALL COUNCIL CHAMBER S249
JANUARY 12, 2026
SPECIAL MEETING
OPENING C
hair Gordo called the special Meeting of the Finance Committee to order at 4:03 p.m.
ROLL CALL: Mayor Victor M. Gordo (Chair)
Councilmember Rick Cole
Councilmember Tyron Hampton (Remote)
Councilmember Gene Masuda
Staff: Mi
guel Márquez, City Manager
Brenda Harvey-Williams, Assistant City Manager
Matthew Hawkesworth, Assistant City Manger
Karin Schnaider, Director of Finance
Arnold Lee, Chief Assistant City Attorney
Joaquin Siques, Director of Transportation
Scott Johnson, Principal Planner
Gloria Acevedo, Recording Secretary
APPROVAL
OF MINUTES: It was moved by Councilmember Cole, seconded by Councilmember Masuda, to approve the November 10, 2025, Special Meeting of the Finance Committee meeting minutes. (Motion Unanimously carried) (Absent: None)
AYES: Chair Gor
do, Councilmember Cole, Councilmember
Masuda, and Councilmember Hampton
NOES: None
ABSENT: None
ABSTAIN: None
NEW BUSIN
ESS: AUTHORIZE THE CITY MANAGER TO ENTER INTO A CONTRACT
WITH FEHR & PEERS FOR THE CITYWIDE ACTIVE
TRANSPORTATION PLAN (ATP) FOR A TOTAL AMOUNT NOT TO
EXCEED $890,989 AND APPROPRIATE $712,791 OF FEDERAL
HIGHWAY ADMINISTRATION (FHWA) GRANT FUNDS INTO THE
DEPARTMENT OF TRANSPORTATION (DOT) BUDGET
Chair Gordo introduced the item, Joaquin Siques, Director of Transportation, gave a brief outline and introduced Scott Johnson,
02 01/12/26 Finance Committee Meeting
Principal Planner, who provided a PowerPoint presentation and responded to questions.
Councilmember Masuda asked about the community’s concerns as it relates to bicycles and whether those that support bicycle initiatives and those that oppose them share their concerns with sharing the road. Mr.
Johnson shared that key messaging would focus on traffic safety and highlight the benefits of active transportation. This should create a middle ground for all who travel the roads regardless of the method.
Councilmember Cole asked for the Transportation Advisory Commission to be involved in the process and for the department to continue to review how the City is approaching active Transit in the 21 st
century. He shared this is a great opportunity to look at the social, economic, and environmental factors needed to balance a Citywide consensus. Lastly, he asked staff to provide periodic updates to the Municipal Services Committee.
Councilmember Hampton shared the need to have a comprehensive communication plan in order to get greater support for City initiatives, it should include key organizations, businesses , and institutions. Mr.
Johnson shared that staff are working on a strategy engagement document.
Following a brief discussion, it was moved by Councilmember Cole, seconded by Councilmember Hampton, to approve staff’s
recommendation and forward the item to the City Council for consideration. (Motion Unanimously carried) (Absent: None) AYES: Chair Gordo,
Councilmember Cole, Councilmember
Masuda, and Councilmember Hampton
NOES: None
ABSENT: None
ABSTAIN: None
INFORMATI
ON ONLY: RECEIVE AB 1600 MITIGATION FEE ACT REPORT
Chair Gordo introduced the item and Karin Schnaider, Director of Finance, provided an overview and responded to questions.
Councilmember Cole pointed out the residential fees being collected are not sufficient to cover the expenses for maintaining existing facilities; therefore, the feasibility of creating new recreational venues is not there.
Chair Gordo shared that fees were created with the City C ouncil strategy at the time. He also reminded the committee that a few parks
03 01/12/26 Finance Committee Meeting
and pocket parks have been added. Lastly, he pointed out the limited land space and challenged staff to continue to update the City Council on strategies to address the issue.
On the order of the Chair and consensus of the Committee, the item was received and filed.
ADJOURNMENT: On the order of the Chair, the special meeting of the meeting of the Finance Committee was adjourned at 4:44 p.m.
ATTES
T: ___________________________
Mayor Victor M. Gordo, Chair
Finance Committee
______________
______
Gloria Acevedo
Recording Secretary
NEW BUSINESS
ITEM 1
1. AUTHORIZE THE CITY MANAGER TO ENTER INTO A
GRANT AGREEMENT WITH THE STATE OF CALIFORNIA
DEPARTMENT OF TRANSPORTATION IN THE AMOUNT
OF $432,959 FOR THE CALIFORNIA CLEANUP AND
EMPLOYMENT PATHWAY GRANT AND AMEND THE
DEPARTMENT’S FISCAL YEAR 2026 OPERATING
BUDGET BY RECOGNIZING REVENUE AND
APPROPRIATING $432,959 IN THE GENERAL FUND
Department of Housing
Authorize the City Manager to Enter into a Grant
Agreement with the State of California Department
of Transportation for the Acceptance of the
California Cleanup and Employment Pathway
(CCEP) Grant in the Amount of $432,959, and
Amend the Department of Housing’s Fiscal Year
2026 Operating Budget by Recognizing Revenue
and Appropriating $432,959 in the General Fund
Housing Department
March 23, 2026
Department of Housing
BACKGROUND
• Since its inception in 1978, MASH has provided
meaningful
employment, paid skills training, and career
pathways for individuals who have traditionally faced
systemic barriers to work
• On ______2026, staff applied for and was awarded a
grant in t
he amount of $432,959 from the State of
California Department of Transportation (Caltrans)
California Cleanup and Employment Pathway (CCEP)
program
2
Department of Housing
BACKGROUND
• Funding will support MASH’s Pasadena Clean and
Green Pat
hways Project which includes community
cleanup events, beautification efforts, and workforce
development opportunities
• MASH-supervised cleanup crews will remove litter,
graffi
ti, and bulky abandoned items from public rights-
of-way, transit stops, and benches
• Provides paid work opportunities for new program
partici
pants
3
Department of Housing
BACKGROUND
• Funding will be allocated as follows:
➤ $398,323 for
programmatic costs, including
cleanup activities, workforce training, and
participant wages
➤ $34,636 for administrative costs to support
program implementation and oversight
• Grant term is April 1, 2026 through October 31, 2027
• Approximately $69,000 is projected to be expended in
FY 2026 and the r
emaining balance carried forward to
FY 2027
4
Department of Housing
FISCAL IMPACT
Approval of the recommended actions will amend the
Department of Housing’s FY 2026 Operating Budget by
recognizing revenue and appropriating $432,959 in the
General Fund (101) for the California Cleanup and
Employment Pathway (CCEP) grant to support community
cleanup services and workforce development activities in the MASH division.
5
Department of Housing
RECOMMENDATION
1. Find that the recommended actions are exempt from the Calif
ornia Environmental Quality Act (“CEQA”) pursuant
to State CEQA Guidelines Section 15061(b)(3), the
“common sense” provision that CEQA only applies to
projects that may have an effect on the environment;
2. Authorize the City Manager to enter into a grant
agreement
with the State of California Department of
Transportation for the acceptance of the California
Cleanup and Employment Pathway (CCEP) grant in the
amount of $432,959 to improve public spaces and
expand workforce opportunities in the MASH program;
6
Department of Housing
RECOMMENDATION
3. Authorize the City Manager to execute, and the City
Clerk
to attest, all related documents, agreements, and
amendments; and
4. Amend the Housing Department’s of Housing’s Fiscal
Year 2026 O
perating Budget by recognizing revenue and
appropriating $432,959 in the General Fund (101) for the CCEP grant.
7
NEW BUSINESS
ITEM 2
2. AMEND THE HOUSING DEPARTMENT’S FISCAL YEAR 2026
OPERATING BUDGET BY APPROPRIATING $28,897 IN
THE GENERAL FUND AND $309,697 IN THE GENERAL
FUND PROJECTS FUND FOR THE PURCHASE OF
REPLACEMENT VEHICLES FOR THE MUNICIPAL
ASSISTANCE, SOLUTIONS, AND HIRING (MASH)
PROGRAM
Department of Housing
AMEND THE HOUSING DEPARTMENT’S FISCAL YEAR
2026 OPERATING BUDGET BY APPROPRIATING
$28,897 IN THE GENERAL FUND AND $309,697 IN THE
GENERAL FUND PROJECTS FUND FOR THE PURCHASE
OF REPLACEMENT VEHICLES FOR THE MUNICIPAL
ASSISTANCE, SOLUTIONS, AND HIRING (MASH)
PROGRAM
Housing Department
March 23, 2026
Department of Housing
BACKGROUND
• Since 1978 MASH has provided essential services to
the comm
unity while offering employment and job
training opportunities to individuals from high-need
areas.
• Eaton Canyon Fire destroyed entire fleet of MASH
vehicles
which are essential for transportation of
crews, equipment, and materials
• Significantly impacted program operations and service delivery
• R
eplacement of vehicles is necessary to restore
operational c
apacity.
2
Department of Housing
BACKGROUND
• Insurance claim proceeds received in FY 2025 and FY
2026 for
vehicles lost during the Eaton Canyon Fire will
be used to purchase the following replacement
vehicles:
2-door utility truck (1 vehicle)
4-door
EV crew cab with tow (3 vehicles)
EV
cargo van (1 vehicle)
Box truck with liftgate (1 vehicle)
3
Department of Housing
FISCAL IMPACT
• Approval of the recommended actions will increase the Housing
Department’s FY 2026 Operating Budget by
appropriating $28,897 in the General Fund (101) and
$309,697 in the General Fund Projects Fund (105) for the purchase of replacement vehicles for the MASH program
• Funding for the proposed vehicle purchases will be
provided t
hrough insurance claim proceeds received in FY
2025 and FY 2026 for vehicles lost during the Eaton
Canyon Fire
• Ongoing operational costs, including maintenance,
repairs
, and fueling or charging, will be absorbed within
the existing MASH operating budget
4
Department of Housing
RECOMMENDATION
1. Find that the proposed action herein is not a “project” subjec
t to the California Environmental Quality Act
(CEQA) pursuant to State CEQA Guidelines Section
21065 and within the meaning of Section 15378(b); and
2. Amend the Housing Department’s Fiscal Year 2026
Operat
ing Budget by appropriating $28,897 in the
General Fund (101) and $309,697 in the General Fund
Projects Fund (105) for the purchase of replacement
vehicles for the Municipal Assistance, Solutions and
Hiring (MASH) program.
5
NEW BUSINESS
ITEM 3
3. QUARTERLY INVESTMENT REPORT- QUARTER ENDING
DECEMBER 31, 2025
Attachment A
FINANCE DEPARTMENT
Quarterly Investment Report
Quarter Ending December 31, 2025
Vic Erganian
Deputy Finance Director/City Treasurer
March 23, 2026
Finance Committee and City Council
Item XX (Finance Audit Committee); Item xx (City Council)
FINANCE DEPARTMENT
Gross Domestic Product
2
FINANCE DEPARTMENT
Inflation
3
FINANCE DEPARTMENT
Unemployment
4
FINANCE DEPARTMENT
Effective Fed Funds Rate
5
FINANCE DEPARTMENT
Implied Overnight Rates
6
FINANCE DEPARTMENT
Treasury Rates 12/31/2024 vs 12/31/2025
7 8 7
FINANCE DEPARTMENT
2 Year UST Yield – 03/12/26
8
FINANCE DEPARTMENT
The Stock Market
99
FINANCE DEPARTMENT
Dow Jones Index 03/12/26
10
FINANCE DEPARTMENT
11 Total Funds Under Management
Total Funds Under Management as of 12/31/2025 (Market Values):
Pooled Portfolio $847,426,361
Capital Endowment 1,561,705
Stranded Investment Reserve
Portfolio 45,939,555
Special Funds 18,044,639
Investments held with Fiscal Agents 243,247,221
PARS Section 115 Trust 17,830,662
Total Funds Under Management $1,174,050,143
FINANCE DEPARTMENT
As of December 31, 2025
12 Pooled Portfolio Structure
FINANCE DEPARTMENT
• CAMP AAA
• Municipal Bonds Aaa/Aa1/Aa2/Aa3/A1/A2
• Federal Agencies Aa1
• Corporate Bonds Aaa/Aa2/Aa3/A1/A2/A3
• US Treasuries Aa1 (Moody’s) AA+ (S&P/Fitch)
• Supranationals Aaa
• LAIF In Trust (Not rated)
13 Pooled Portfolio Credit Quality
FINANCE DEPARTMENT
Pooled Portfolio Liquidity as of
12/31/2025
14 Percent of
Aging Interval Par Value Portfolio
0-30 Days 205,202,057 24.31%
31 days - 1 Year 143,808,000 17.04%
1 - 2 Years 32,350,000 3.83%
2 - 3 Years 67,930,000 8.05%
3 - 4 Years 60,935,455 7.22%
4 - 5 Years 331,670,000 39.29%
Over 5 Years 2,281,924 0.27%
TOTAL: $ 844,177,436 100.00%
FINANCE DEPARTMENT
15 • Apple Inc Aaa
• Johnson & Johnson Aaa
• Trustees Princeton U Aaa
• New York Life Gl Aa1
• Wells Fargo Bank Aa2
• Credit Suisse NY Aa2
• JP Morgan Aa2
• Met Life Global Aa3
• Eli Lilly & Co Aa3
• Merck & Co Inc
Aa3
• RBC A1
• Bank of America A1
• Toyota A1
• Mutual of Omaha A1
• Cisco Systems A1
• Amazon.com Inc A1
• BNY Mellon A1
• Bristol Myer A2
• US Bancorp
A3
Corporate Credit Quality
FINANCE DEPARTMENT
Taxable Munis
• Santa Clara Vly Wtr Dist Aa1
• Anaheim Ca Union Sch Dist Aa1
• City of Corona Revenue Bonds AA+
• San Jose redevelopment Agency AA+
• University of CA Revenue Aa2
• Fr
emont Unified Sch Dist Aa2
• City of Los Angeles Aa2
• California State Health Facs Fing Aa2
• State of California GO Bonds Aa2
• Los An
geles USD Aa2
• Ci
ty Of Oakland Aa2
• California ST Public Works Aa3
16
FINANCE DEPARTMENT
Compliance
17 Pooled Investment Portfolio
As of 12/31/2025
Diversification Credit Quality Maturity
Portfolio State Gov't Portfolio Credit Quality Portfolio % of total Code limits Credit Quality per Gov Code compliance Maturity Collateralized Money Market 0.00% 100% In compliance 102% Collateral 102% Collateral In compliance In compliance Certificates of Deposit 0.00% 30% In compliance n/a n/a In compliance In compliance Municipal Bonds 7.40% 100% In compliance
Aaa/Aa3/Aa2/Aa1/A2/AA+/AA-
/AAA/AA A or better In compliance In compliance
US Treasury Securities 5.32% 100% In compliance Aa1 AA+/Aa1 In compliance In compliance Corporate Bonds 17.60% 30% In compliance* Aaa/Aa2/Aa3/A1/A2/A3 A or better In compliance In compliance Federal Agency Issues 44.24% 100% In compliance Aa1 AA+/Aa1 In compliance In compliance Supranationals 1.19% 30% In compliance Aaa AA or better In compliance In compliance Commercial Paper 0.00% 100% In compliance P-1 (Short-term)/A1/Aa1 P-1 (Short-term) In compliance In compliance Money Market-CAMP 14.00% 100% In compliance n/a n/a In compliance In compliance Money Market Fund-Us Bank 0.41% 100% In compliance Aaa AA+/Aaa In compliance In compliance LAIF 8.31% 100% In compliance n/a n/a In compliance In compliance Cash 0.33% 100% In compliance Collateralized Collateralized In compliance In compliance 100.00%
Portfolio Value 847,426,361
FINANCE DEPARTMENT
Pooled Portfolio Yield
18 0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
FINANCE DEPARTMENT
19 Conclusion
• All investments are in compliance with the State
Governm
ent Code and the City’s investment
policy.
• Ample liquidity is maintained to meet budgeted
expenditures.
• Adequate returns vs. portfolio risk.
INFORMATION ONLY
ITEM 4
4. FINAL REPORT ON PAYROLL AUDIT
Office of the City Manager
1 TO Finance/Audit Committee
FROM Ani Antanesyan, Internal Audit Manager
SUBJECT Final Report on Payroll Audit
DATE March 23, 2026
RECOMMENDATION This report is for information only. The Finance/Audit Committee may, however, take action relating to this item as it deems appropriate following consideration and discussion of the matter.
Background:
As part of ou
r FY 2025/2026 Internal Audit Plan, Internal Audit conducted a Payroll Audit. The objective of this audit was to evaluate the internal controls and processes for the City’s payroll system.
The City of P
asadena’s Payroll Services Division manages payroll for all City employees, supporting a biweekly payroll cycle with 26 pay periods each year. In FY 2025, the City processed $261 million in payroll, including $171 million in regular pay for 2,136 employees as of the June 11, 2025 pay date. Regular compensation is based on standard annual hours for fulltime employees, including higher totals for Fire shift personnel.
The City manages ti
mekeeping through IntelliTime VTI, with the Fire Department using TeleStaff. Payroll Services imports time entries and eligible pay data into Munis, processes prior period adjustments, assigns VTI roles, and maintains pay codes, schedules, and calendars.
Departments review and release time entries, and new employees are added to VTI through Personnel Actions initiated in Munis. Payroll also prepares invoices for taxes, insurance, and union deductions near each payroll cycle’s close.
Munis is t
he system of record for pay rates, benefits, and deductions, maintained by Human Resources in accordance with MOUs and Salary Resolutions. Payroll is processed on a biweekly schedule, supported by five Payroll staff and HR assistance for specific Fire Department pay validations. The City provides a comprehensive benefits package to employees; employees with other medical coverage may opt out of City health insurance and receive an in-lieu payment, either as cash or a deferred compensation contribution.
Internal A
udit performed the following to accomplish the audit objective:
• Reviewed polic
ies and procedures for pay and benefits setup, timekeeping in VTI, pay rate changes, prior period adjustments, deductions, vacation accrual, and biweekly payroll processing.
• Interviewed staff across Finance, Human Resources, IT, Public Works, Water & Power, and Parks, Recreation & Community Services.
• Tested major pay types and a sample of employee pay for accuracy and compliance. • Tested high value deduction types for proper setup, withholding accuracy, and transmission to external entities.
Office of the City Manager
2 • Reviewed June 11, 2025 payroll to confirm proper approvals, documentation, authorization of changes, and functioning payroll controls. • Verified appropriate segregation of duties within the VTI timekeeping application.
Audit Fi
ndings and Recommendations:
Internal A
udit identified 11 audit findings and corresponding recommendations, which when implemented will improve payroll accuracy, reduce risk, and ensure transparent practices across the organization. Management agreed with all the recommendations. The general management responses are available in the report under each audit observation, and a detailed response from the Human Resources Department is also included in the audit report as Appendix A.
The audit rec
ommends strengthening payroll accuracy and controls by correcting imputed income errors, removing conflicting pay codes, ensuring proper benefit optout adjustments, and enforcing least privilege access in VTI and Munis. Additional actions include refining HR access controls, establishing a formal Administrative Leave policy, reviewing medical overage practices, and documenting taxability and pensionable status for all pay types. The City should also document vacation accrual practices, enhance FLSA compliance documentation, and update overpayment recovery policies, including criteria for waivers and implement controls to prevent ineligible bilingual pay.
Attachment
s (1):
Attach
ment A – Payroll Audit
Internal Audit Report
2026-03 Payroll Audit
February 10, 2026 City of Pasadena
Internal Audit Division
City Manager’s Office
100 N. Garf
ield Avenue
Pasadena, CA 91101
Data-Informed
Assurance and Advice
2 City of Pasadena | Internal Audit
Payroll Audit
2026-03
PAYROLL AUDIT
February 10, 2026
Objective
The objective of this audit is to evaluate the internal controls and processes for the City’s payroll system.
Re
port Highlights
This audit identified that while the City’s payroll services generally function effectively, there are critical gaps in benefits administration, system access controls, and policy documentation that expose the City to financial, compliance, and operational risks. Addressing these issues will improve accuracy, reduce risk, and ensure transparent practices across the organization. • Er
rors in Benefits Management: Resulted in overstatement of the imputed value of Group Term Life insurance, ineligible additional compensation, underpayment of Employee Option Benefit Fund (EOBF) allowances, and undocumented practices related to vacation accrual.
• Br
oad System Access Risks: Several employees have administrative level access to the Virtual Timecard Interface (VTI) and Munis payroll functionality with minimal compensating controls.
• Lack o
f Documented Payroll Processes: Key processes such as managing Administrative Leave pay, handling medical allowance overages, determining CalPERS pensionable pay types and the tax implications of deductions, FLSA compliance related to blended pay rates and overpayment recovery procedures either lack formal documentation or documentation can be enhanced.
The summary below outlines the number of audit observations and their associated risk priority levels
1:
Priority 1 Priority 2 Priority 3
4 5 2
Reason behind Audit
The a
udit was included in the FY 2025/2026 Audit Plan based on issues and concerns discussed during the annual City-wide risk assessment.
Ac
knowledgments
We w
ould like to thank the departments of Finance, Human Resources, Information Technology, Fire, Public Works, Water and Power, and Parks, Recreation, and Community Services for their assistance with this audit.
1 See Appendix D for details on the risk ranking methodology.
3 City of Pasadena | Internal Audit
Payroll Audit
2026-03
Table of Contents
A. Report Distribution .............................................................................................................. 3 B. About Internal Audit ............................................................................................................ 3 C. Implementation Strategy ..................................................................................................... 4 D. Background ........................................................................................................................ 5 E. Audit Observations and Recommendations ....................................................................... 8 F. Objective, Scope, and Methodology ................................................................................. 19 Appendix A: Management Response from Human Resources ................................................ 21 Appendix B: Detail from Testwork ............................................................................................ 27 Appendix C: Administrative Leave ........................................................................................... 30 Appendix D: Risk Ranking Methodology.................................................................................. 31 A. Report Distribution
For Action Michael Paliwoda, Principal Human Resources Analyst Christine Landis, Payroll Services Manager
Jessica Freeman-Wong, Assistant Chief Information Officer For Information Miguel M árquez, City Manager
Matthew Hawkesworth, Assistant City Manager
Brenda Harvey-Williams, Assistant City Manager
Nicholas Rodriguez, Assistant City Manager
Alex Souto, Deputy City Manager
Tiffany Jacobs-Quinn, Director of Human Resources
Phillip Leclair, Chief Information Officer
Karin Schnaider, Director of Finance
Audit Committee
B. About Internal Audit
Vision
The City’s Internal Audit division is the business intelligence arm that provides accurate, complete, highly reliable, risk-based, timely, and objective assurance, advice, insight, and foresight to City Management and the Audit Committee to assist in making data-informed decisions.
Team
A
ni Antanesyan, Internal Audit Manager, CIA
Steven Andersen, Senior Internal Auditor, CIA, CISA
Vis
it Us
www.cityofpasadena.net/city-manager/internal-audit/
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C. Implementation Strategy
The Implementation Strategy is essential because it translates the audit's findings and recommendations from theory into tangible action, ensuring that the City realizes the full value of the audit. It serves as a forward-looking roadmap, detailing the specific steps that will be taken to address identified control deficiencies, process gaps, or non-compliance issues.
Priority
Level2 No. Theme Recommendation
Anticipated
Completion
Date
Priority 1
1 Income Reporting
Accuracy
Correct imputed income errors, and implement review
procedures and system controls to ensure compliance with IRS rules.
Implemented
2 Conflicting Pays Remove conflicting pay codes, recover overpayments, and implement system validation and periodic reviews. 4/30/2026 3 Benefits
Accuracy
Ensure that employee Opt-Out benefits are adjusted based on any effective date change for higher or lower benefits. 4/30/2026 4 IT Risk Reduction
Reconfigure VTI and Munis roles to enforce least privilege, replace generic accounts, and implement audit logs or
compensating controls for admin-level changes.
4/30/2026
Priority 2
5 Access Controls
Assess and reduce broad HR access in Munis, reconfigure roles to align with least privilege, and institute periodic reviews for admin-level changes.
2/28/2026
6 Administrative
Leave
Establish and document a formal policy for Administrative Leave. 6/30/2026
7 Health Allowance
Overage
Evaluate current medical overage payment practices,
formalize or discontinue them, and adjust impacted
employee contributions to align with documented policy. 6/30/2026
8 Pay Subject to
Tax and CalPERS
Contributions
Create a cross-reference of pay and deduction types with authoritative sources and implement policies for
documenting and reviewing taxability and pensionable
status.
7/31/2026
9 Vacation Accrual
Practices Document existing vacation accrual practices. 6/30/2026 Priority 3 10 FLSA Compliance
Documentation
Enhance the existing FLSA compliance matrix with
supporting federal regulation references, document policies and conduct periodic reviews to ensure continued FLSA
compliance for new or modified pay codes.
1/31/2027
11 Overpayment
Recovery
Clarify MPAR language on overpayment recovery, define
authority and criteria for waivers, and implement controls to prevent ineligible bilingual pay.
6/30/2026
2 See Appendix D for details on Priority Levels.
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D. Background
Payroll Processing
The C
ity of Pasadena’s Department of Finance Payroll Division (Payroll Services) manages payroll services for City employees. In Fiscal Year (FY) 2025, the City expended $261 million dollars in payroll to City employees, Figure 1 below shows the top 10 pay types in FY 2025.
Regular pay comprised $171 million, or 66 percent of direct payroll. As of the June 11, 2025 pay date, the City paid 2,136 employees per a Payroll Services report.
Figur
e 1: Top 10 Pay Types by Amount in FY 2025
Fi
gure 2, below, shows the top ten payroll deduction types in FY 2025.
Figure 2: Top 10 Deduction Types by Amount in FY 2025
$31
$29
$13
$8
$4 $2 $2 $2 $2 $2
$0
$10
$20
$30
$40
FEDERAL TAX
WH
MEDICAL
PREMIUMS
STATE TAX WH 457 DEFERRED
COMP
MEDICARE 457 DEFERRED
COMP- LOAN
PERS CLASSIC -
PMA
PERS PEPRA -
PMA
457 DEFERRED
COMP - ROTH
SPERS NORMAL-
PPOA PP EE NT
Millions
$130
$25
$15 $11 $8 $7 $6 $4 $4 $3
$-
$40
$80
$120
$160
REGULAR PAY REGULAR PAY
SAFETY
56 HR
REGULAR
GUAR
OT 1.5 POSITION
COVER PREM
VACATION
LEAVE
HOLIDAY
LEAVE
SICK LEAVE OT 1.5 PPOA WC SAFETY
NON TAX
Millions
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The City has a biweekly payroll system with 26 cycles, or pay periods, per calendar year.
Regular employee pay is based on 2080 total work hours per year for 40-hour full-time employees, and 2,923 total hours per year for full-time Fire shift employees.
The C
ity manages employee timekeeping through the IntelliTime Virtual Timecard Interface (VTI) application, with the exception of UKG TeleStaff for Fire Department employees3. Payroll Services staff import timekeeping data from VTI into the Munis Enterprise Resource Planning (Munis) system for payroll processing. The Payroll Services team also imports any additional eligible pay (e.g., auto allowances, education pay) from the Munis Human Resources module to finalize each employee's biweekly pay. In addition, the Payroll Services processes any Prior Period Adjustments necessary to update a pay type, department change, or project charge from a prior period. Near the close of the payroll cycle, Payroll Services generates the invoices used for payments to taxing entities, insurance companies, and unions based on deductions withheld for those entities. Figure 3, below, shows a high-level view of the payroll process.
In t
he process flow below, a warrant is a Munis term used for each payroll batch processed.
Figure 3: Payroll Processing Flowchart Showing Timecard/Warrant Processing Source: Internal Audit design of Payroll Processing workflow.
Payr
oll Timekeeping System
VTI is the system of record for employee time entry and timekeeping. After employee time entry and supervisor or manager approval, department payroll liaisons review the entries and save them for Payroll Services to import into Munis. For new employees, Payroll Liaisons create Personnel Actions (PAs) in Munis. Once these PAs are output posted, the employee record is established in VTI via an import file from Munis. Payroll Services is responsible for assigning approver and other roles to users, as well as general VTI configuration, including pay codes, schedules, and payroll calendars.
3 A Fire Department Management Analyst provides biweekly TeleStaff data to Payroll Services, who imports it into VTI.
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Munis is the system of record for employee pay rates (including any additional compensation), pay-related benefits, deductions, and anniversary dates for vacation accrual. The Human Resources Department sets up and maintains pay rates and manages benefits (including non- hourly additional compensation) and deductions, in alignment with the City’s 11 bargaining unit Memoranda of Understanding (MOUs) and three Salary Resolutions. When MOUs or Salary Resolutions change or new provisions are added, Human Resources coordinates the necessary implementation of the updates in Munis and VTI. Employee pay periods begin on Mondays and end on Sundays. Employees are paid on alternate Wednesdays, ten days after the end of each pay period. If a pay date falls on a holiday, employees are paid on the prior business day.
The Payroll Services team is comprised of five individuals who perform 25 distinct tasks in support of the biweekly payroll process, and eight miscellaneous tasks as needed. A Human Resources Analyst also assists with validating pay for Fire Department employees who transition from a 40-hour to a 56-hour week, or vice versa. Payroll has identified 105 specific job duties that are the responsibility of the four position classifications in Payroll Services.
City Provided Benefits for Employees
The City provides a comprehensive benefits package for employees, including health, dental, vision, life, disability, and other insurance. Should an employee have health insurance through a family member, all MOUs and Salary Resolutions allow an employee to “Opt-Out” and receive a payment
4 from the City in-lieu of enrollment in a medical insurance plan. This opt-out payment can be received as cash at 65% of the value, or the full opt-out amount can be placed into a deferred compensation account.
4 The opt-out payment amount is determined by an employee’s MOU or Salary Resolution, as well as their hire date.
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E. Audit Observations and Recommendations
1. Overreporting of Imputed Income for Group Term Life Insurance PRIORITY 1
The Internal Revenue Service (IRS) requires employers to calculate, and report imputed income for Group Term Life (GTL) Insurance coverage exceeding $50,000 per year. This imputed value is determined based on the employee’s age and the amount of coverage provided.
Based on Internal Audit’s review of 934 employees that had this GTL deduction on their paycheck for the June 11, 2025 pay date, the following was noted:
a. 167 out of 198 employees in the Pasadena Police Officers’ Association (PPOA) group – representing 84% of that group and 18% of the total 934 employees that had this deduction – had imputed income amounts that were three times higher than IRS guidelines allow. These impacted employees were hired or transferred into a PPOA5 position before September 2022.
Per research by HR and the Department of Information Technology (DoIT), the error was caused by a double import of insurance coverage amounts into the Munis deduction screen for City-paid life insurance. This occurred during the update of the PPOA MOU in 2022, resulting in an inflated imputed income calculation.
HR management perform the following:
a. Review and correct, in coordination with
Finance’s Payroll Services, the imputed
income errors for the affected employees
by recalculating values per IRS guidelines
and updating W-2 forms, if necessary.
b. Establish review procedures to ensure
compliance with IRS rules and accurate
application of GTL deduction rates to
employees.
c. Review the feasibility of implementing
system controls to ensure accurate data
imports during MOU updates or
configuration changes.
Impact
This resulted in an estimated additional imputed (and IRS reported) taxable income between $72 and $1,524 per employee per year.
Management agrees with this recommendation and as of January 30, 2026, has implemented the recommendations. 5 Pasadena Police Officers Association
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2. Incorrect Receipt of Concurrent Additional Pays
PRIORITY 1
Based on Internal Audit’s review of 69 unique pay codes that had a total of $100,000 or more in payment to City employees during FY 2025, the following was noted:
a. One employee has been receiving both Advanced Peace Officer Standards & Training (POST) Certificate Pay and Educational Pay since May 2023, which is not in compliance with the PPOA MOU. According to the MOU, employees are eligible for one level of achievement pay, typically the highest level of pay for which they qualify. Receiving both POST and educational incentive pay simultaneously is not permitted.
In this case, when the employee qualified for Advanced POST Certificate Pay, the Educational Pay code was not removed from their Job Salary Record in the Munis system. As a result, the employee continued to receive both incentive pays concurrently, leading to an overpayment.
HR management perform the following:
a. Remove the Educational Pay from the employee’s
Job Salary Record to ensure compliance with the
PPOA MOU. (Implemented)
b. In coordination with Payroll Services, calculate and recover any overpayment made to the employee
following the Manual of Personnel and
Administrative Rules. (Implemented)
c. Review the feasibility of implementing system
validation rules in Munis to prevent the incorrect
application of various educational pays.
d. Establish a review process to periodically review
potential conflicts in pay codes, either, through
manual review or through system exception
reporting.
Impact
The employee received an extra $254 per pay period, or a total of $15,739 from May 2023 through September 2025. Per the City’s two-year overpayment recovery policy the employee repaid the city $13,200.
Management agrees with this recommendation and will implement by April 30, 2026.
10 City of Pasadena | Internal Audit
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2026-03
3. Underpaid Medical Opt-Out Allowance
PRIORITY 1
The City’s Memoranda of Understanding and Salary Resolutions establish varying cut-off hiring dates, based on an employee’s Bargaining Unit or Non-Represented Group. These determine the amount of the Employee Options Benefit Fund (EOBF) allowance that an employee can receive if they select to opt-out of City-provided health insurance. Employees hired after these specific dates receive a lower EOBF allowance.
Internal Audit reviewed 259 employees who opted out of City-provided health insurance for the June 11, 2025 pay date, and noted that:
a. Because the PMA6 bargaining unit offers a higher EOBF opt-out allowance for employees hired before January 1, 2016, an employee who transferred into PMA in August 2024 should have received $652.07 biweekly instead of the $200 amount applicable under their previous LIUNA7 unit. However, the allowance was not updated after the transfer, resulting in the employee continuing to receive the lower amount. b. At the time of the change, HR Benefits division did not review the Opt- Out criteria to correctly apply the new Bargaining Unit’s EOBF allowance.
HR management perform the following:
a. Calculate the difference between the lower
EOBF Opt-Out Allowance paid and the
higher allowance the employee was entitled
to for the period starting August 2024.
Process and issue the retroactive payment
to the affected employee. (Implemented)
b. Ensure the employee’s current EOBF Opt-
Out Allowance rate is updated to the correct,
higher amount associated with their new
Bargaining Unit’s criteria. (Implemented)
c. Establish a mandatory process step
requiring the HR Benefits division to review
and confirm the employee’s EOBF Opt-Out
eligibility status and associated cut-off dates
whenever an employee changes Bargaining
Units or non-represented groups.
d. Update the Munis Benefit Entries for Job
Class Change Personnel Actions checklist to
ensure that employee Opt-Out benefits are
adjusted based on any effective date change
for higher or lower benefits.
Impact
Payroll Services validated that the City underpaid an employee over $12,000 in deferred compensation through the pay period ending October 19, 2025.
Management agrees with this recommendation and will implement by April 30, 2026. 6 Pasadena Management Association
7 Laborers’ International Union of North America
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4. Risk of Privileged System Administrator Access
PRIORITY 1
The City's Administrative Access Policy states that:
• Administrative access shall only be assigned when necessary and required to complete work for which the administrator is responsible, and not for convenience.
• Administrator access to the City's computing resources shall follow the Principles of Least Privilege, using a separate account from a user’s regular “user” account where technically feasible.
The City’s User Provisioning Policy states that:
• Each user should have a unique user ID to access the computer network or application. User IDs should never be shared.
The NIST8 publication 800-53 defines least privilege as "allowing only authorized accesses for users (or processes acting on behalf of users) that are necessary to accomplish assigned organizational tasks." Based on Internal Audit’s review of all time-keeping related modules in VTI, and Payroll/Employee Master modules in Munis that provide access to change employee pay, benefits, accrual rates and time-off balances, the following were noted:
a. Two Payroll Services employees and three DoIT support staff have broad System Admin access to VTI, which they access via their regular Active Directory accounts, rather than separate admin accounts. Additionally, one generic vendor account was also noted to have broad System Admin access to VTI.
b. In addition, three DoIT support staff have broad system access to Munis Payroll and Employee Benefit functionality via the ZSYS_MUNIS role, which they access via their regular Active Directory accounts.
DoIT management perform the following:
a. Research VTI and Munis roles that allow Payroll Services and DoIT support staff to perform their needed functions without System Administration access. Reconfigure access for affected users based on the results of this research, or Research the feasibility of providing Payroll or DoIT staff a second super user network account that would be used for the performance of VTI (Payroll and DoIT) and Munis
(DoIT) administration tasks, and/or
Require stronger passwords for Payroll and DoIT staff
should they need to do administrative-level tasks with their regular network accounts.
b. Where feasible, replace generic vendor accounts with individual accounts tied to specific vendor personnel,
ensuring vendor access is appropriately restricted and
monitored.
If individual accounts are not practical due to the vendor’s service delivery model, implement compensating controls to ensure vendor access is guided, limited in scope, and
properly logged and monitored.
c. Determine whether VTI has an unalterable audit log
capability to detect configuration or other major changes. If so, use the audit log as a compensating control.
Impact
Failure to implement more comprehensive administrative access controls exposes the City to both security and operational risks.
Without separate admin accounts and least-privilege controls, compromised user accounts can lead to unauthorized access. Broad permissions increase the risks to sensitive payroll and timekeeping data, and generic vendor accounts pose high risk of misuse.
Management agrees with this recommendation and will implement by April 30, 2026. 8 National Institute of Standards & Technology
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5. Risk of High-Level Munis Access
PRIORITY 2
The City of Pasadena's User Administration (Provisioning) Policy emphasizes the principles of least privilege, stating that "Access should be limited to least privilege." This principle is further defined by the National Institute of Standards & Technology publication 800-53, which describes least privilege as "allowing only authorized accesses for users (or processes acting on behalf of users) that are necessary to accomplish assigned organizational tasks.” Based on Internal Audit’s review of Payroll/Employee Master modules in Munis that provide access to change employee pay, benefits, accrual rates and time-off balances, it was noted that six Human Resources employees have broad access to change
payroll parameters via the Munis “ZHR_Admin” role.
DoIT management, in coordination with HR
management, should perform the following:
a. Assess the access rights of the six Human
Resources employees with the “ZHR_Admin” role
and remove any permissions that are not essential
to their job responsibilities.
b. Reconfigure user roles to align with the principle of least privilege, ensuring that employees only have
the access necessary to perform their assigned
tasks.
c. Establish a periodic review process for instances
where an employee requires Admin access to make
changes or corrections.
Impact
Having broad-level administrative access can lead employees to make changes that are not warranted by their position and/or their duties, including retroactive pay changes, therefore compromising the integrity of payroll data.
Management agrees with this recommendation and will implement by February 28, 2026.
13 City of Pasadena | Internal Audit
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2026-03
6. Usage of Administrative Leave is Not Formally Documented PRIORITY 2
The City’s Manual of Personnel and Administrative Rules allows employees to be placed on paid Administrative Leave, (1) during investigations related to discrimination or retaliation complaints, (2) during investigations related to an employee’s behavior due to safety concerns, (3) during investigations that may lead to disciplinary action, or (4) for police officers, pending the completion of an administrative investigation (e.g., use of force) or the filing of administrative charges. The City also extended this leave to those directly impacted by the Eaton Fire. The City paid $348,000 in Administrative Leave pay in FY 2024, and $796,000 in FY 2025.
Although the MPAR references Administrative Leave, it does not formally define the following:
• What Administrative Leave is,
• Who qualifies and under what triggers,
• The pay basis (e.g., regular base rate vs. other components), • Duration limits, and
• Approval requirements.
The Pasadena Police Department Policy Manual does provide policy guidance for the application of Administrative Leave specific to police officers; however, there is no citywide guidance. Ambiguity increases the risk of likelihood of inconsistent application, potential inequitable treatment, disputes/grievances, and audit findings – especially in surge events (e.g., disaster response) where use can spike.
HR management perform the following:
a. Establish a documented policy that defines
Administrative Leave that addresses:
• Definition of pay, specifying whether employees
are entitled to full base pay, and/or other pays,
• The circumstances under which it may be
granted, such as investigations, emergencies,
etc.
b. Update the Manual of Personnel & Administrative
Rules to include the definition, criteria, and pay
structure for Administrative Leave to ensure
consistent application across departments.
c. Establish a standardized and documented approval
process for granting paid Administrative Leave,
including justification, duration, and applicable pay
rates.
d. Establish a periodic review process of
Administrative Leave to ensure that only authorized
staff are receiving this pay and that the pay is timely terminated.
e. Maintain centralized records of all Administrative
Leave decisions to support transparency, oversight,
and future audits.
Impact
The rate of pay for Administrative Leave is determined based on institutional knowledge rather than documented policy. As a result, employees may be unable to verify or challenge discrepancies in their compensation during Administrative Leave, increasing the risk of inconsistent pay practices and potential disputes.
Management agrees with this recommendation and will implement by June 30, 2026.
14 City of Pasadena | Internal Audit
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2026-03
7. Lack of Policy for Payment of Medical Overage
PRIORITY 2
Based on a review of 340 employees whose City offered health care allowance exceeded their actual medical premium amount as of June 1, 2025, Internal Audit noted the following:
a. These 340 employees receive payment of overage (medical allowance minus medical plan cost), however, there is no official policy to account for this practice, other than general information on overage payment on the Benefits website.
b. Six of the 340 employees received this payment of overage in cash.
However, they did not receive the full cash amount, but 65% of the full amount. The rest of the 334 employees received a full deferred compensation contribution for their payment of overage. The treatment of the payment of the medical overage mimics the way the City provides payments to those employees that choose to opt-out of City provided health care. They can, either, choose 65% of the full value as cash, or transfer the full amount to a deferred compensation account. c. One of the 334 employees received a lower deferred compensation allowance amount than they should have received per the existing practice. Although the employee was hired before the reduced allowance policy took effect, they incorrectly received the lower, post-cutoff allowance amount. The impacted employee received $3,332 lower City 457 contribution per year than the employee would have received per the standard practice.
HR management perform the following:
a. Review the current practice of covering the
gap between City-provided medical
allowance and actual employee selected
medical plan and determine whether this
should be continued. If it is determined to
be continued, then formally document the
practice.
b. Based on evaluation from part (a), if the
current practice will be formalized,
evaluate and document the rationale for
reducing the overage between the medical
allowance amount and actual medical plan
amount to 65% when it is selected by
employee to be taken as cash.
c. For the impacted employee, review their
deferred compensation contributions of the
overage amount between City provided
medical allowance and their selected
medical plan and make the necessary
adjustments to match the formalized
practice.
Impact
340 employees are currently paid a benefit that, per City MOUs and Salary Resolutions, is intended for employees who decline medical coverage. They are receiving both the medical coverage and a payment for the benefit overage up to the City’s allowance amount without formal policy that authorizes that payment.
Management agrees with this recommendation and will implement by June 30, 2026.
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2026-03
8. Incomplete Documentation of Pensionable and Taxable Status of Pay Types and Deductions PRIORITY 2
Munis contains detailed tables to calculate payroll deductions, allowing for the inclusion or exclusion of specific pay types and related deductions to determine net pay (e.g., taxable amounts or amounts subject to an employee’s pension9). However, these tables and their supporting documentation do not reference authoritative sources – such as IRS publications, California law, or CalPERS regulations10 – to justify the taxability or pensionable status of each pay or deduction type.
When new pay or deduction types are introduced, Payroll Services works with HR, including Benefits, to research and obtain approval for tax and pension implications before implementation. Although a Pay Master List exists with a PERS Earnings field indicating whether a pay type is pensionable or not, the supporting rationale and authoritative references for these determinations are not documented or archived. Similarly, while MOUs and salary resolutions generally state whether a pay type is pensionable, these references are not included in the Pay Master.
For deductions, the Deductions Master includes a “Pre-Tax/Post- Tax” field but lacks documentation of the underlying rationale. As a result, the process relies heavily on institutional knowledge rather than formalized, verifiable sources.
Finance management perform the following:
a. Establish and document a cross-reference between pay and deduction types with source criteria to enable validation for taxability and pensionable status based on authoritative sources such as IRS publications, California State law, CalPERS regulations, and/or other relevant regulations or criteria.
b. In conjunction with Human Resources, establish and document policies and procedures that address the following:
• New pay or deduction type changes include written
justification and references to applicable laws or regulations before implementation,
• Changes to existing pay and deduction types that includes review and approval steps for any updates.
c. Schedule periodic reviews to ensure the pay and deduction tables are in continued compliance with evolving laws and regulations.
Impact
Without comprehensive documented justification for the taxability and pensionable status of pay and deduction types, the City risks payroll errors and non-compliance. Reliance on institutional knowledge makes it difficult to verify the accuracy of pay and deduction types—especially during staff turnover or regulatory changes.
Management agrees with this recommendation and will implement by July 31, 2026. 9 Pay types from which CalPERS member contributions are deducted. 10 E.g., 2 CCR §§ 571 et seq
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9. Undocumented Practices for Vacation Accrual
PRIORITY 2
HR Benefits currently assigns an "anniversary date" of December 31 of the year prior to an employee’s hire date to calculate vacation accrual. This practice was introduced when the City transitioned from annual vacation allotments to per-pay-period accruals. Management reviewed and confirmed this approach during the 2019
implementation of the Munis HR/Payroll system and the upgraded timekeeping system.
Depending on when an employee is hired, this practice can grant anywhere from a few extra days to nearly a full year of additional vacation accrual. This approach is not documented in any MOUs, Salary Resolutions, or the Manual of Personnel & Administrative Rules. As a result, employees may not be aware that their start date can significantly affect their vacation benefits.
HR management document the current practice of
calculating employee vacation accrual based on the
calendar year ending December 31 prior to the
employee’s hire date.
Impact
The City’s practice of assigning a prior-year anniversary date for vacation accrual is currently without formal documentation or policy.
Management agrees with this recommendation and will implement by June 30, 2026.
17 City of Pasadena | Internal Audit
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10. Supporting Documentation for FLSA Compliance Can Be Strengthened PRIORITY 3
Under the Fair Labor Standards Act (FLSA) (29 U.S.C. § 207(e)), non-exempt employees must receive overtime pay at no less than one and one-half times their regular rate of pay for hours worked beyond 40 in a workweek. The regular rate must include all forms of compensation unless specifically excluded under one of eight statutory exceptions.
To comply, the City has developed four Blended Rate Calculators tailored to different bargaining groups (Non-Sworn, Pasadena Fire Fighters’ Association (PFFA) (40 hour), PFFA (56 hour) and PPOA). These calculators determine the blended overtime rate based on various pay types.
Currently, there are 30 pays that are being paid using Blended Rate Calculators. However, the City does not maintain a formal FLSA compliance matrix that documents which pay codes are excluded from the regular rate and the rationale for each decision. While the calculators show what is included, there is no supporting documentation to confirm whether exclusions align with FLSA statutory requirements.
HR management perform the following:
a. Establish and document an FLSA compliance matrix
that maps each payroll pay code to its exclusion
criteria in the regular rate of pay, with references to the applicable statutory exclusions under FLSA, or
other criteria.
b. Document policies and procedures for evaluating new
or modified pay codes to ensure FLSA compliance
before implementation.
c. Conduct periodic reviews and updates of Blended
Rate Calculators and the FLSA compliance matrix to
reflect changes in laws, regulations, or bargaining
agreements.
Impact
The lack of documentation related to FLSA compliance increases the risk of non-compliance with federal labor laws and may result in inaccurate overtime payments.
Management agrees with this recommendation and will implement by January 31, 2027.
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2026-03
11. Overpayment Recovery Procedures Lack Formal Criteria PRIORITY 3
According to the Manual of Personnel & Administrative Rules (MPAR), employees working at least 20 hours per week may qualify for bilingual pay. The MPAR also states that the City may recover overpayments for up to two years from the date the overpayment is identified.
Internal Audit found that one employee received pro-rated bilingual pay of $10.52 per pay period despite working fewer than 20 hours per week, resulting in an overpayment of $547.04. Although Human Resources discontinued the bilingual pay, recover of the overpayment was not pursued.
Additionally, MPAR Section 3C contains conflicting language regarding overpayment recovery:
• “The employee will be responsible for reimbursing the City for the overpayment.”
• “Overpayments can be recovered by the City for a period of two years from the date of knowledge of the overpayment.”
• “Employees who are required to repay the City for an
overpayment may make bi-weekly installments for the repayment up to thirty-six months.”
The MPAR does not clearly define whether recovery of overpayments is mandatory or discretionary, nor does it specify the authority or criteria for management to waive recovery.
HR management perform the following:
a. Clarify and reconcile conflicting language in
MPAR Section 3C to clearly state whether
overpayment recovery is mandatory or
discretionary.
b. Define the authority and criteria for waiving
overpayment recovery, and update the
MPAR accordingly, including approval
requirements for exceptions.
c. Implement a control mechanism in Munis to
prevent bilingual pay from being used to
employees working fewer than 20 hours per
week, and/or establish a formal review
process for bilingual pay eligibility during
onboarding and any changes to work
schedules.
Impact
The lack of clear policy language and defined authority for overriding overpayment recovery creates inconsistency in enforcement and increases the risk of financial loss and employee disputes.
Management agrees with this recommendation and will implement by June 30, 2026.
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F. Objective, Scope, and Methodology
The objecti
ve of this audit is to evaluate the internal controls and processes for the City’s payroll system.
The scope of the audit covers pay types, and deductions from employee pay, for FY 2025. The scope excluded City-paid deductions. The scope includes review of payroll processes and systems (VTI and Munis) that support payroll.
The scope excludes review of Overtime Pay justification and associated approval, the Fire Department’s TeleStaff timekeeping system, and pay related to the City Council, City Attorney’s, and City Clerk’s Offices.
Internal
Audit performed the following to accomplish the audit objective:
• Reviewed pol
icies and procedures for employee pay and benefits set-up, timekeeping in VTI including time entry, approval and adjustments, pay rate changes, prior period adjustments, deductions, vacation accrual, and biweekly payroll processing. • Interviewed City staff from the Finance, Human Resources, Information Technology, Public Works, Water & Power, and Parks, Recreation, and Community Services departments.
• Performed detailed testwork on 69 pay types with payments of $100,000 or more during FY 2025 for accuracy and compliance with authoritative criteria. Pay accuracy was reviewed for a judgmentally selected sample of 100 employees (or 4.6% of total workforce) across all departments for the June 11, 2025 pay date. For details see Appendix A.11
• Performed detailed testwork on 44 employee-side deduction types with withholdings of $100,000 or more during FY 2025. Based on deduction type, risk, and materiality, the detailed testwork included either, verification of deduction set-up, withholding accuracy, and/or proper transmission of withholdings to external entities. Generally, deduction types were population-tested for withholding accuracy for the June 11, 2025 pay date.
For details, see Appendix A.12
• Performed detailed testwork for the June 11, 2025 pay date to validate that VTI timekeeping entries and adjustments had proper approvals and documentation, Munis pay and deduction changes were appropriately authorized, and overall payroll processing controls in Munis are functioning as intended. • Validated that appropriate segregation of duties exist for VTI timekeeping approval and for processing employee pay, deductions, and pay related benefit changes. 11 Internal Audit conducted full testing of bilingual pays for all recipients for the June 11, 2025 pay date. Workers’ Compensation, Council, and Executive Pays were excluded from pay type analysis. 12 Note, an employee-side, Employee Option Benefit Fund deduction, was included in scope, since $27 million was deducted in FY 2025 as a rebate, and deductions related to 457 employee deferred compensation were excluded.
20 City of Pasadena | Internal Audit
Payroll Audit
2026-03
G. Conformance Statement
This audit was conducted in accordance with the Global Internal Audit Standards promulgated by the Institute of Internal Auditors. These standards encompass such matters as independence, objectivity, proficiency of staff, due professional care, the scope and performance of work activities, and the management of the internal auditing function. We believe that our work provides a reasonable basis for the reported issues, conclusions, and recommendations.
21 City of Pasadena | Internal Audit
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Appendix A: Management Response from Human Resources
Observation Management Response Anticipated Completion Date #1: Overreporting of Imputed Income for Group Term Life (GTL) Insurance HR management should perform
the following:
a. Review and
correct, in
coordination with Finance’s
Payroll Services, the imputed
income errors for the affected
employees by recalculating
values per IRS guidelines and
updating W-2 forms, if
necessary. (Implemented)
b. Establis
h review procedures to
ensure compliance with IRS
rules and accurate application
of GTL deduction rates to
employees.
c. Review the feasibility of
implementing system controls to
ensure accurate data imports
during MOU updates or
configuration changes.
Concur: HR staff will correct the
deduction setup for Life Insurance
deductions for impacted employees
to ensure GTL calculations are
accurate.
HR staff
will review and correct the
imputed income value calculations in
accordance with IRS guidelines, and
W-2 forms for the 2025 tax year will
reflect the correct and verified
amounts.
HR staff
will add an additional review
step to the import process when
importing deductions that require
imputed income W-2 reporting.
Completed
Completed
Completed
#2: Incorrect Receipt of Concurrent Additional Pays
HR management perform the
following:
a. Remove the E
ducational Pay
from the employee’s Job Salary
Record to ensure compliance
with the PPOA MOU.
(Implemented)
b. In coordinat
ion with Payroll,
calculate and recover any
overpayments made to the
employee following the Manual
of Personnel and Administrative
Rules. (Implemented)
e. Review the feasibility of
implementing system validation
rules in Munis to prevent the
Number of impacted employees: (1)
Concur:
HR staff will remove the
additional Educational Pay from the
one impacted employee’s Job Salary
Record and calculate and recover
the overpayment made to the
employee.
HR staff will wo
rk with Department of
Information Technology to create a
“Duplicate Education Pay Audit”
custom report to be reviewed by HR
staff following approval of all
Personnel Actions on a bi-weekly
basis.
Completed
April 2026
22 City of Pasadena | Internal Audit
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Observation Management Response Anticipated Completion Date incorrect application of various
educational pays.
c. Establish a review process to
periodically review potential
conflicts in pay codes, either,
through manual review or
through system exception
reporting.
#3: Underpaid Medical Opt-Out Allowance
HR management perform the
following:
a. Calculat
e the difference
between the lower EOBF Opt-
Out Allowance paid and the
higher allowance the employee
was entitled to for the period
starting August 2024. Process
and issue the retroactive
payment to the affected
employee. (Implemented)
b. Ensure t
he employee’s current
EOBF Opt-Out Allowance rate
is updated to the correct, higher
amount associated with their
new Bargaining Unit’s criteria.
(Implemented)
c. Establi
sh a mandatory process
step requiring the HR Benefits
division to review and confirm
the employee’s EOBF Opt-Out
eligibility status and associated
cut-off dates whenever an
employee changes Bargaining
Units or non-represented
groups.
d. Update the B
enefit Entries for
Job Class Change Personnel
Actions checklist to ensure that
employee Opt-Out benefits are
adjusted based on any effective
date change for higher or lower
benefits.
Number of impacted employees: (1)
Concur: H
R staff will ensure the
EOBF opt-out allowance setup is
corrected for the one impacted
employee and will review and
calculate the retroactive payment
due to the one impacted employee.
HR staf
f will review and update
internal Personnel Action checklists
to ensure Bargaining Unit changes
are processed accurately.
HR staf
f will audit the EOBF and opt-
out amounts by February of each
year to ensure the EOBF and opt-out
amounts are correct and capture any
changes requested during Open
Enrollment and entered effective
January 1
st for the new plan year.
Completed
Completed
April 2026
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Observation Management Response Anticipated Completion Date #5: Risk of High-Level Munis Access
DoIT management, in coordination
with HR Management, should
perform the following:
a. As
sess the access rights of the
six Human Resources
employees with the
“ZHR_Admin” role and remove
any permissions that are not
essential to their job
responsibilities.
b. Rec
onfigure user roles to align
with the principle of least
privilege, ensuring that
employees only have access
necessary to perform their
assigned tasks.
c. Should an employee need
Admin access to make changes
or corrections, institute a
periodic review process for
those changes.
Concur: HR management will
conduct a review of the access rights
of HR staff with the “ZHR_Admin”
role and ensure the appropriate level
of access essential to their job
responsibilities is applied.
Based on the review of access, HR
management will work with DoIT to
remove any “ZHR_Admin”
permissions that are no longer
required and assign lower access
roles.
February 2026
#6: Usage of Administrative Leave is Not Formally Documented HR management perform the
following:
a. Es
tablish a documented policy
that defines Administrative
Leave that addresses:
• Definition of pay, specifying
whether employees are
entitled to full base pay,
and/or other pays,
• The circumstances under
which it may be granted,
such as investigations,
emergencies, etc.
b. Update the Manual of
Personnel & Administrative
Rules to include the definition,
criteria, and pay structure for
Administrative Leave to ensure
Concur: HR management will update
the Administrative Leave language in
the MPAR and the approval process
to address the recommendations
made by Internal Audit.
June 2026
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2026-03
Observation Management Response Anticipated Completion Date consistent application across
departments.
c. E
stablish a standardized and
doc
umented approval process
for granting paid Administrative
Leav
e, including justification,
duration, and applicable pay
rates.
d. E
stablish a periodic review
process of Administrative Leave
t
o ensure that only authorized
s
taff are receiving this pay and
t
hat the pay is timely
terminated.
e. Maintain centralized records of
all Administrative Leav
e
dec
isions to support
transparency, oversight, and
future audits.
#7: Lack of Policy for Payment of Medical Overage
HR management perform the
following:
a. R
eview the current practice of
covering the gap between City-
provided medical allowance and
ac
tual employee selected
m
edical plan and determine
w
hether this should be
c
ontinued. If it is determined to
be continued, then formally
document the practice.
b. B
ased on evaluation from part
(a), if the current practice will be
f
ormalized, evaluate and
document the rationale for
reducing the overage between
t
he medical allowance amount
and actual medical plan amount
to 65% when it is selected by
employee to be taken as cash.
c. For the impacted employee,
review their deferred
Concur: HR management
acknowledges the established
practice of treating the EOBF
overage amount in the same fashion
as “opt-out” dollars allowing
employees to place those overage
dollars into their deferred
compensation account or receive it
as a cash payment at 65% of the
amount
HR will f
ormalize this established
Benefits Administration practice by
adding language to document this
practice in the MPAR.
June 2026
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Observation Management Response Anticipated Completion Date compensation contributions of
the overage amount between
City provided medical allowance
and their selected medical plan
and make the necessary
adjustments to match the
formalized practice.
#9: Undocumented Practices for Vacation Accrual
HR management document the
current practice of calculating
employee vacation accrual based
on the calendar year ending
December 31 prior to the
employee’s hire date.
Concur: HR management
acknowledges the established
practice of providing employees’
vacation accrual using a calculation
that measures years of service using
12/31 of the year preceding an
employee’s hire date instead of an
employee’s actual hire date.
This was an option discussed and
implemented when the City moved
from annual allotments to per pay
period accruals for vacation leave.
This practice was reviewed again by
leadership and explicitly set up to
continue as part of the 2019
implementation of the new
HR/Payroll system and upgraded
timekeeping system.
HR management will update the
MPAR, Vacation Leave section to
memorialize the existing practice
applied to all bargaining units and
non-represented groups.
June 2026
#10: Supporting Documentation for FLSA Compliance Can Be Strengthened HR management perform the
following:
a. Establish and document an
FLSA compliance matrix that
maps each payroll pay code to
its inclusion or exclusion criteria
in the regular rate of pay, with
references to the applicable
statutory exclusions under
FLSA, or other criteria.
b. Document policies and
procedures for evaluating new
Concur: The City of Pasadena is in
full compliance with FLSA when it
comes to what pays are included in
the regular rate of pay (blended
overtime rate) calculation.
The FLSA doesn’t explicitly list out
every pay that is included in the
regular rate of pay calculation.
Instead, it lists out the few forms of
remuneration that are statutorily
excluded.
As a reference document, HR
Management will document and
January 2027
26 City of Pasadena | Internal Audit
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2026-03
Observation Management Response Anticipated Completion Date or modified pay codes to ensure
FLSA compliance before
implementation.
c. Conduct periodic reviews and
updates of Blended Rate
Calculators and the FLSA
compliance matrix to reflect
changes in laws, regulations, or
bargaining agreements.
memorialize which pay codes are
excluded under the FLSA.
#11: Overpayment Recovery Procedures Lack Formal Criteria HR management perform the
following:
a. Clarify and reconcile conflicting
language in MPAR Section 3C
to clearly state whether
overpayment recovery is
mandatory or discretionary.
b. Define the authority and criteria
for waiving overpayment
recovery, and update the MPAR
accordingly, including approval
requirements for exceptions.
c. Implement a control mechanism
in Munis to prevent bilingual pay
from being used to employees
working fewer than 20 hours per
week, and/or establish a formal
review process for bilingual pay
eligibility during onboarding and
any changes to work schedules.
Number of impacted employees: (1)
Concur: HR staff will work with
Department of Information
Technology to create a “Less than 20
hours Bilingual Pay Audit” custom
report to be reviewed by HR staff
following approval of all Personnel
Actions on a bi-weekly basis.
HR management will review the
Overpayment Policy language in the
MPAR and consider the
recommendations made by Internal
Audit as part of general MPAR
updates taking place this year.
June 2026
27 City of Pasadena | Internal Audit
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Appendix B: Detail from Testwork
Figure 1: Munis Pay Types Tested
Ref No Pay Code Pay Code Description Ref No Pay Code Pay Code Description 1 100 REGULAR PAY 37 335 BEREAVEMENT LEAVE
2 101 56 HR REGULAR GUAR 38 337 FLOATING HOLIDAY
3 108 REGULAR PAY SAFETY 39 343 ADMIN LEAVE SAFETY
4 201 56 HR GUAR OT 40 348 FLOAT HOL SAFETY
5 206 SPECIAL EVENT FIRE 41 350 HOLIDAY CASH OPTION
6 210 OUTSIDE JOB 42 351 VACATION FINAL
7 212 CALLBACK PAY 1.5 43 352 VACATION CASH OUT
8 213 CALLBACK PAY 2.0 44 361 VAC CASHOUT SAFETY
9 217 ROSE BOWL POLICE 45 394 COMPED 1.5 PD NO PAY
10 218 MOVIE DETAIL POLICE 46 400 BILINGUAL 100
11 220 OT 1.5 47 430 AUTO ALLOWANCE
12 224 LT OT OUTSIDE JOB 48 433 PHONE/DATA ALLOW
13 225 POSITION COVER PPOA 49 442 ED PAY AA FIRE
14 226 OT 2.0 50 443 ED PAY BACH FIRE
15 227 OT 1.5 PPOA 51 449 FIRE STAFF PREMIUM
16 230 HOLIDAY PAY SAFETY 52 457 BILINGUAL 90
17 236 HOLIDAY CONT WRKD 53 459 BILINGUAL SAFETY
18 238 HOLIDAY OT WRKD-NP 54 460 BILINGUAL PAY
19 240 OT 1.5 EXEMPT 55 469 ED PAY BACH PPOA
20 241 HOLIDAY WORKED 1.0 56 476 ADVANCED POST PPOA
21 251 HOLIDAY WORKED 0.5 57 481 ACTING PAY 5% NP
22 256 OT FOOTBEAT 58 482 ACTING PAY $ PERS
23 262 POSITION COVER PFMA 59 632 STAND BY HOURS
24 263 POS COVER 40-56 1.0 60 634 STAND BY PPOA
25 300 COMP TIME LEAVE 61 635 IN LIEU OF MEAL @1.5
26 304 COMPED LEAVE SAFETY 62 636 IN LIEU OF MEAL @2.0
27 310 VACATION LEAVE 63 637 SENT HOME
28 311 VACATION SAFETY 64 645 OT SHIFT REGULAR
29 322 SICK LEAVE 65 700 OT 1.5 FIRE
30 323 SICK LEAVE SAFETY 66 703 POSITION COVER PREM
31 325 SICK KINCARE 67 763 POS COVER 40-56 0.5
32 327 SICK CA PSL 68 960 EOBF CASH IN LIEU
33 329 HOLIDAY LEAVE 69 961 FRINGE BENEFIT GTL
34 330 JURY DUTY LEAVE
35 333 ADMINISTRATIVE LEAVE
36 334 MANAGEMENT TIME OFF
28 City of Pasadena | Internal Audit
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Figure 2: Munis Deduction Types Tested
Ref No Deduction
Code Description Ref No Deduction
Code Description
1 1100 MEDICARE 38 8700 TRANSPORTATION-SOLO
DRIVER
2 2101 PERS NORMAL-IBEW CL EE NT 39 8800 AFSCME MEMBER DUES 3 2103 PERS NORMAL-LIUNA CL EE NT 40 8801 AFSCME AFLAC PREMIUM 4 2104 PERS NORMAL-PMA CL EE NT 41 8803 IBEW MEMBER DUES 5 2106 PERS NORMAL-EXEC MISC CL EE NT 42 8807 PMA MEMBER DUES 6 2107 PERS NORMAL-MGNR MISC CL EE NT 43 8810 PFFA MEMBER DUES 7 2109 PERS NORMAL-TCAD CL EE NT 44 8811 PPOA MEMBER DUES 8 2114 SPERS NORMAL-P LT CL EE NT
9 2115 SPERS NORMAL-PFFA CL EE NT
10 2116 SPERS NORMAL-PPOA CL EE NT
11 2117 SPERS NORMAL-PFMA CL EE NT
12 2119 SPERS NORMAL-MGNR SF CL EE NT
13 2136 SPERS SPECIAL-PPOA CL EE NT
14 2144 PERS REG CSHARE- PMA CL NT
15 2155 SPERS REG CSHARE-PFFA CL NT
16 2200 PERS NORMAL-AFSC PP EE NT
17 2201 PERS NORMAL-IBEW PP EE NT
18 2203 PERS NORMAL-LIUNA PP EE NT
19 2204 PERS NORMAL-PMA PP EE NT
20 2207 PERS NORMAL-MGNR MISC PP EE NT
21 2209 PERS NORMAL-TCAD PP EE NT
22 2215 SPERS NORMAL-PFFA PP EE NT
23 2216 SPERS NORMAL-PPOA PP EE NT
24 2235 SPERS SPECIAL-PFFA PP EE NT
25 2236 SPERS SPECIAL-PPOA PP EE NT
26 2300 PARS EE DEDUCTION NT
27 2400 MEDICAL PREMIUM EE NT
28 2401 MEDICAL EOBF REBATE
29 2600 VISION PREMIUM EE NT
30 2650 FSA HEALTH 125 NT
31 2651 FSA DEPENDENT CARE 125 NT
32 3000 FEDERAL TAX WH
33 4000 STATE TAX WH
34 6001 COURT ORDER SDU $ 1
35 7000 PERS REG- BER AFSCME CL EE
36 8300 STATE DISABILITY INS AND PFL
37 8654 VOLUNTARY LIFE EE PREMIUM
29 City of Pasadena | Internal Audit
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Figure 3: 100 Employee Sample for Pay Accuracy Testing13 Ref
No Department Number of Active
Employees Number in Sample
1 Police 357 17
2 Power (part of Water & Power) 299 14
3 Public Works 263 12
4 Parks, Recreation, &
Community Services
256 12
5 Fire 186 9
6 Library & Information Services 105 5
7 Public Health 101 5
8 Water (part of Water & Power) 101 5
9 Planning and Community
Development
82 4
10 Information Technology 81 4
11 Finance 68 3
12 City Manager 57 3
13 Transportation 57 3
14 Housing 38 2
15 Rent Stabilization 32 1
16 Human Resources 30 1
Total 2,113 100
13 This analysis is based on the Employee Inquiry report from Munis as of September 3, 2025.
30 City of Pasadena | Internal Audit
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Appendix C: Administrative Leave14
Figure 1: Total Administrative Leave Paid by Amount and Hours from FY 2021 to FY 2025 Figur
e 2: Total Administrative Leave Paid by Department from FY 2021 to FY 202515 14 The analysis is based on Detailed Check History Report from Munis from FY 2021 to FY 2025 for Pay Type 333 Administrative Leave and Pay Type 343 Administrative Leave Safety. 15 The Other category includes the departments of Housing, City Attorney, Transportation, DoIT, City Council, City Clerk, City Manager, Human Resources and Rent Stabilization.
Police
49%
Water &
Power
15%
Fire
8%
Planning
7% Public Works
5%
Library & Info
Svcs.
4%PRCS
4%
Other
4% Finance
2%
Public Health
2%
$549 $567
$217
$348
$794
11 12
5 7
18 0
5 10
15 20
$0
$250
$500
$750
$1,000
FY2021 FY2022 FY2023 FY2024 FY2025
Hours Thousands
Amount Thousands
Fiscal Year
Sum of Amount Sum of Hours
31 City of Pasadena | Internal Audit
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Appendix D: Risk Ranking Methodology
Category Priority
Level Definition
Required
Management
Action
Recommended
Completion
Timeline
Reasons/Examples
High Risk Priority 1
The observation
represents a severe
control weakness that has
or could immediately lead
to significant financial loss,
regulatory non-
compliance, material
misstatement of financial
reports, or a major
operational failure. It
typically involves a
breakdown of a key
process control.
Immediate action
is required.
Management
must develop and
approve a formal,
detailed
remediation plan
and begin
implementation
immediately.
Within 3 Months
of the final audit
report issuance
date.
• High-Impact SoD Conflict
(e.g., one person
manages the full cash-to-
receipt cycle).
• System Vulnerability
leading to unauthorized
data access.
• Compliance Failure that
exposes the organization
to large fines or loss of
license.
Medium
Risk Priority 2
The observation
represents a significant
control weakness that,
while not immediately
critical, presents a high
probability of loss, error, or
inefficiency if left
uncorrected. It often
involves risks related to
process effectiveness or
data integrity.
Focused
management
attention is
required.
Management
must approve a
remediation plan
and assign
accountability for
implementation.
Within 4-6
Months of the
final audit report
issuance date.
• Lack of Timely
Reconciliations (leading
to detection risk).
• Insufficient
Documentation of key
decisions or procedures.
• Non-optimized System
Access (e.g., broad
access rights exceeding
job needs, but not leading
to an immediate SoD
conflict).
Low Risk Priority 3
The observation
represents an opportunity
for improvement related to
efficiency, best practice
adherence, or process
refinement. These are
usually minor control
deviations or
administrative
weaknesses that do not
pose a direct financial or
compliance threat.
Action is
recommended.
Management
should
incorporate the
recommendation
into future work
plans or process
updates.
Within 9-12
Months of the
final audit report
issuance date.
• Outdated Policies or
Procedures (but staff are
following the unwritten
process).
• Minor Inefficiency in
workflow or report
generation.
• Lack of Standardized
Templates or forms.
CITY MANAGER’S OFFICE
Payroll Audit
March 23, 2026
Finance/Audit Committee Meeting
Presented by: Ani Antanesyan, Internal Audit Manager
CITY MANAGER’S OFFICE
Background
• The objective of the audit was to:
> Evaluate the internal controls and processes for the City’s payroll
system
• Identified 11 issues
> 4 high risk, 5 medium risk, and 2 low risk
• Issued 11 recommendations
> Management agreed with all recommendations
> One recommendation has been fully implemented
2
CITY MANAGER’S OFFICE
Audit Results – Finding 1
3 1. Overreporting of Imputed Income for Group Term Life Insurance Priority 1
• Correct errors: recalculate imputed income and update W-2s • Strengthen reviews: establish procedures to ensure IRS-compliant GTL calculations
• Add controls: assess system safeguards to prevent incorrect data imports during MOU or configuration updates
Fully Implemented
Impact
This resulted in an estimated additional imputed (and IRS reported) taxable income between $72 and $1,524 per employee per year.
CITY MANAGER’S OFFICE
Audit Results – Finding 2
4 2. Incorrect Receipt of Concurrent Additional Pays
Priority 1
• Remove conflict: eliminate incorrect Educational Pay entries • Recover overpayments: calculate and recover excess pay • Add validations: assess system rules in Munis to prevent incorrect educational pay entries
• Review pay codes: implement periodic checks or exception reports to identify conflicting pay codes
Impact
The employee received an extra $254 per pay period, or a total of $15,739 from May 2023 through September 2025. Per the City’s two-year overpayment recovery policy the employee repaid the city $13,200.
CITY MANAGER’S OFFICE
Audit Results – Finding 3
5 3. Underpaid Medical Opt-Out Allowance
Priority 1
• Pay difference: calculate owed opt-out allowance and issue retro payment
• Update rate: ensure employee’s opt-out allowance reflects the correct higher rate
• Verify eligibility: require HR Benefits to confirm opt-out status and cut-off dates when employees change bargaining groups
• Align benefits: update Munis checklists to ensure opt-out amounts adjust correctly when effective dates change
Impact
Payroll Services validated that the City underpaid an employee over $12,000 in deferred compensation through the pay period ending October 19, 2025.
CITY MANAGER’S OFFICE
Audit Results – Finding 4
6 4. Risk of Privileged System Admin Access
Priority 1
• Refine access: adjust VTI and Munis roles to allow necessary work without full system-admin rights
• Limit vendors: replace generic vendor accounts with individual, restricted accounts or apply compensating controls
• Enable logging: determine whether VTI provides audit log and use it as a compensating control
Impact
Failure to implement stronger admin access controls increases security/operational risks by allowing overly broad permissions, shared accounts and insufficient segregation of duties to expose sensitive payroll and timekeeping data.
CITY MANAGER’S OFFICE
Audit Results – Finding 5-11
7 Audit Findings 5-9
Priority 2
• Tighten HR access: reduce broad HR permissions in Munis and align roles with least-privilege
• Define Admin Leave Policy: create and document a formal Admin Leave Policy
• Fix overages: review medical overage practices and align employee contributions with policy
• Clarify tax rules: cross-reference pay types with authoritative guidance to confirm tax and CalPERS status
• Document accruals: record and formalize current vacation-accrual practices
Audit Findings 10-11
Priority 3
• Improve FLSA documentation: strengthen FLSA compliance matrix and review pay-code compliance regularly
• Clarify overpayment recovery: update City guidance on overpayment recovery, waiver criteria and controls to prevent ineligible bilingual pay
CITY MANAGER’S OFFICE
Next Steps
Thank you!
8
INFORMATION ONLY
ITEM 5
5. FINAL REPORT ON STREET PAVEMENT MAINTENANCE
PROGRAM AUDIT
Office of the City Manager
1 TO Finance/Audit Committee
FROM Ani Antanesyan, Internal Audit Manager
SUBJECT Final Report on Street Pavement Maintenance Program Audit (City of Pasadena Street Maintenance and Paving: Efforts Underway Amidst Challenges)
DATE March 23, 2026
RECOMMENDATION This report is for information only. The Finance/Audit Committee may, however, take action relating to this item as it deems appropriate following consideration and discussion of the matter.
Background:
A
s part of our FY 2025/2026 Internal Audit Plan, the Internal Audit Division hired TAP International, Inc., a woman owned firm with an office in Pasadena to evaluate the following:
1. Are resources – funding, staffing, and management tools – adequate to maintain City streets?
2. Are clear policies and processes in place to guide maintenance and paving decisions?
3. What challenges hinder greater success in maintaining City streets? The City of Pasadena’s 357-mile street network is a critical public asset that directly affects residents’ safety, mobility, and quality of life. The Department of Public Works (Public Works) is responsible for maintaining and rehabilitating this infrastructure through preventive maintenance, resurfacing, reconstruction, and related curb, gutter, and American with Disabilities Act (ADA) improvements. Public Works’ primary goals are to maintain and improve Pasadena’s public street infrastructure, ensuring safe, accessible, and efficient travel for vehicles, cyclists, and pedestrians, while supporting mobility, accessibility, and quality of life citywide. Effective stewardship of the street network requires sufficient funding, staffing, tools, and management systems.
T
o support these goals, Public Works prepares an annual citywide street resurfacing and ADA Improvement Project Plan, which identifies the streets, sidewalks, and curbs to be improved.
The FY 2025 Plan, for instance, identified ten center-line miles across about 41 streets for improvement. Street improvement often includes resurfacing, new curb ramps for ADA compliance, sidewalk repairs, utility adjustments (manholes), pavement striping, and raised pavement markers, reflecting the City’s broader infrastructure and ADA objectives.
Fundi
ng for Pasadena’s street surfacing and maintenance activities comes from a variety of sources: State Transportation Gas Taxes, General Fund, Road Maintenance and Rehabilitation Account under the California Road Repair and Accountability Act of 2017 (SB1), and the Sewer Fund.
T
AP International Inc. utilized multiple methods of analysis and review to perform the audit, including:
Office of the City Manager
2 • Assessing the sufficiency of resources for street maintenance by reviewing program goals, policies and processes, financial data, staffing levels, equipment condition, and management systems and tools used to plan and monitor street maintenance activities, • Evaluating pavement condition data and the Pavement Management Plan, • Analyzing key performance metrics,
• Validating a sample of Pavement Condition Index (PCI) scores, and • Interviewing Public Works staff to identify operational and systemic challenges.
Audi
t Findings and Recommendations:
TAP
International Inc. identified 3 audit findings and 11 recommendations, which when implemented will enhance the street paving and maintenance program. Management agreed with all the recommendations. The management response and corrective actions are included in the audit report as Attachment B.
The fi
ndings recommend strengthening the City’s pavement management program by establishing a formal policy that defines goals, funding principles, equity standards, treatment strategies, and prioritization criteria; updating the 2020 pavement management plan; conducting a full PCI re-survey and creating written procedures for PCI collection, scoring, validation, and maintenance; and ensuring staff receive training in pavement evaluation and system use.
Additional improvements include implementing a proactive inspection schedule, developing succession and cross-training plans, enhancing asset management capabilities through Lucity or a dedicated pavement management system, creating a performance dashboard with key operational metrics, adopting service level agreements between departments to clarify roles and data-sharing expectations, and performing annual risk hotspot mapping.
Attac
hments (1):
At
tachment A – City of Pasadena Street Maintenance and Paving: Efforts Underway Amidst Challenges Audit
March 2, 2026 Final Report
City of Pasadena Street Maintenance
and Paving:
Efforts Underway Amidst Challenges
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Contents
RESULTS IN BRIEF................................ ................................ ................................ ............ 3 What We Recommend .............................................................................................................. 4 BACKGROUND ................................ ................................ ................................ ................ 7 Pasadena Street Maintenance and Paving................................................................................ 7 Street Maintenance and Paving Goals ...................................................................................... 7 Organizational Framework for Street Maintenance and Paving ............................................... 9 Funding Sources ...................................................................................................................... 10 Project Approach ................................ ................................ ................................ .......... 10 Audit Objectives ...................................................................................................................... 10 Scope ....................................................................................................................................... 10 Methodology ........................................................................................................................... 10 KEY RESULTS ................................ ................................ ................................ ................ 14 Finding 1: Sufficiency of Resources Vary by Need .................................................................. 14 Finding 2: Public Works’ Control Environment has Key Gaps and Related Risks .................... 20 Finding 3: Multiple Challenges Limit the Effectiveness of the City’s Street Maintenance and Paving Activities ................................................................................................................ 23 APPENDIX A: Street Observations ................................ ................................ ................... 30 APPENDIX B: Agency Corrective Action Plan ................................ ................................ ..... 35
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Results in Brief
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RESULTS IN BRIEF
Why the Audit Matters
The City of Pasadena’s 357 mile street network is a critical public asset that directly affects resident safety, mobility, and quality of life. The Department of Public Works (Public Works) is responsible for maintaining and rehabilitating this infrastructure through preventive maintenance, resurfacing, reconstruction, and related curb, gutter, and American with Disabilities Act (ADA) improvements. Effective stewardship of the street network requires sufficient funding, staffing, tools, and management systems. This audit assesses whether those conditions currently exist.
How the Audit Was Conducted
The audit addressed three questions:
1. Are resources—funding, staffing, and management tools—adequate to maintain City streets?
2. Are clear policies and processes in place to guide maintenance and paving decisions?
3. What challenges hinder greater success in maintaining City streets? We evaluated Public Works’s financial resources, staffing levels, equipment, and management systems; reviewed policies, documentation, and decision-making processes; and examined internal controls and interdepartmental coordination. The audit also assessed systemic, organizational, and external factors affecting the Department’s efficiency and effectiveness.
What the Audit Found
While Public Works has taken meaningful steps to improve its street maintenance program, including replacing equipment and broadening available paving treatments, the sufficiency of resources depends on the type of departmental need. For example, despite the City’s efforts to supplement state revenue with General Fund revenue, funding levels remained below the 2019 consultant recommendation of about $13.6 million annually, increasing the risk of accelerated street deterioration. In another area, staffing levels are generally sufficient for current operations, but additional staff would be needed temporarily if the City expands its street rehabilitation efforts.
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Further, management tools, such as a comprehensive pavement plan and a reliable Pavement Condition Index that measure street conditions, require updating. The City needs formal policies to guide project selection, prioritization, and maintenance strategies.
These conditions as well as other constraints, such as the need for better data integration and policies to guide street selection for resurfacing risk prevention of safety risks. Between Fiscal Year (FY) 2023 and FY 2025, the City received 164 property and bodily injury claims resulting in over $7.5 million in total paid and estimated future payments and expenses related to deteriorated roadway and sidewalk conditions. Resulting financial settlements likely divert scarce city funds from preventive maintenance programs.
What We Recommend
The Director of Public Works should:
1. Adopt a written pavement management policy defining program goals, funding principles, treatment strategies, equity standards, and prioritization criteria, incorporating the Pavement Condition Index, traffic volumes, risk/claims data, ADA hazards, utility coordination, and equity considerations.
2. Update the 2020 pavement management plan that identifies target Pavement Condition Index levels, backlog reduction goals, annual treatment mileage, and resource needs.
3. Conduct a full Pavement Condition Index re-survey of all City-maintained roadways using a standardized methodology or a qualified consultant.
4. Develop written procedures for Pavement Condition Index collection, scoring, validation, update frequency, and database management.
5. Train assigned staff in technical pavement evaluation, distress scoring, and Pavement Condition Index software use to ensure ongoing data integrity.
6. Implement a proactive roadway inspection and monitoring schedule.
7. Develop a succession plan and structured training program for field personnel, including cross-training to preserve institutional knowledge.
8. Examine the feasibility of activating Lucity’s asset management and forecasting features and integrate it with the City’s GIS and Pavement Condition Index database, or a. Acquire or implement a dedicated Pavement Management System (PMS) capable of modeling treatment strategies and long-term budget scenarios.
9. Develop a formal performance dashboard with metrics such as:
• Cost per lane-mile resurfaced
• Cost per work order by type
• Proactive vs. reactive work percentages
• Average response time
• Backlog of streets in poor condition
• Material waste rates
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10. Adopt service level agreements (SLAs) clarifying roles, responsibilities, data-sharing requirements, and quality assurance expectations.
11. Conduct annual risk hotspot mapping and use results to guide preventive maintenance and capital improvements.
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Background
Project Approach
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BACKGROUND
Pasadena Street Maintenance and Paving
Public Works maintains approximately 357 centerline miles of paved streets within its jurisdiction. The street network is organized into functional classifications based on traffic volume, connectivity, and roadway characteristics, as described below:
• Principal Arterial (PART): These are the City’s primary cross-city corridors, typically two or four lanes in width and spaced at roughly one-mile intervals. Principal arterials carry more than 20,000 vehicles per day. They serve as the backbone of the City’s high-volume travel network.
• Minor Arterial (MnART): These streets provide cross-city or inter-district connectivity and are generally two to four lanes wide with centerline striping or designated bus routes. Daily traffic volumes typically range from 10,000 to 20,000 vehicles per day.
Minor arterials are commonly located on ½- or ¼-mile section lines and may include short non-landscaped medians.
• Collector (COL): Collector streets link local roads to the arterial network. They carry 1,000 to 10,000 vehicles per day and may contain centerline striping, bus routes, or limited landscaped medians. Major collector segments also serve areas adjacent to significant traffic generators, such as regional commercial centers. • Major Bus Routes: Arterial streets formally designated as primary transit corridors. • Minor Bus Routes: Collector streets designated to support transit service. • Local (LOC): Predominantly residential streets that make up the majority of the network and are not classified as arterial, collector, or industrial/commercial corridors.
This functional classification system provides the foundation for planning, prioritizing, and managing street maintenance and rehabilitation activities.
Street Maintenance and Paving Goals
Public Works’ primary goals are to maintain and improve Pasadena’s public street infrastructure, ensuring safe, accessible, and efficient travel for vehicles, cyclists, and pedestrians, while supporting mobility, accessibility, and quality of life citywide. The newly appointed Public Works Director established another goal to improve the condition of the City’s streets to about 80 (on a scale of one to 100).
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To support these goals, Public Works prepares an
annual citywide street resurfacing and Americans
with Disabilities Act (ADA) Improvement Project
Plan, which identifies the streets, sidewalks, and
curbs to be improved. For example, the FY 2024
Annual Citywide Street Resurfacing and ADA
Improvement Project Plan proposed to resurface up
to 44 streets totaling about ten center-line miles of
asphalt, including overlay, reconstruction, and spot
preventive maintenance (micro surfacing)1. The FY
2025 program likewise identified ten center-line
miles across about 41 streets for improvement, as
illustrated in Figure 2 below. We later describe in
this report that Public Works re-surfaced 11.5 miles.
Street improvement often includes resurfacing, new curb ramps for ADA compliance, sidewalk repairs, utility adjustments (manholes), pavement striping, and raised pavement markers, reflecting the City’s broader infrastructure and ADA objectives.
1 Micro-Surfacing. Micro-surfacing uses a similar mixture but incorporates chemical additives that allow it to harden more quickly, including under cooler or shaded conditions. It is often administered for streets with higher traffic volumes or limited sun exposure.
Figure 1: City Street Repair Activities
Figure 2: 2025 Pavement Resurfacing Plan
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Organizational Framework for Street Maintenance and Paving As shown in Figure 3, two of the five divisions within Public Works–Street Maintenance Division (Street Maintenance) and Engineering—are responsible for streets. Eighteen of the 75 Street Maintenance employees handle day-to-day operational tasks related to pavement and sidewalk repairs, such as pothole repairs, asphalt patching, sidewalk temporary patches2, and weed abatement.
Pavement and sidewalk maintenance tasks are linked to citizen service requests (via City Service Center’s online portal) for issues such as potholes or damaged sidewalks.
With a staff of two at the time of our review, the Engineering Division identified streets for resurfacing, maintained the Pavement Condition Index, contracted with street paving contractors, and performed project management.
Source: Public Works Engineering as of 01/05/2026
2 Permanent sidewalk repair is generally the property owner’s responsibility under municipal code.
Total FTE: 282
Capital Improvement Facilities Maintenance Civil
Program Budget Housekeeping Engineering Services
Department Operating Security Services Facilities
Budget Fleet Maintenance Street Lights &
Personnel Actions/Payroll Vehicle Replacement Traffic Signals Purchasing Inspections
Legislation Storm Water
Revenue & Expenditure Oversight
Grant Management
Internal Compliance
Citizens Service Center
Franchise Hauler Oversight Storm Drain & Sewer
Residential & Commercial Solid Waste Collection Street Light &Traffic Signal Maint.
Street Cleaning Traffic Sign Maintenance
Abandoned Items Traffic Signal Maintenance
Recycling Paving Markings
Code Enforcement - Public Right of Way Weed Abatement
Graffitti Abatement
Roadway Maintenance
PW Director
(1.00)
Administrative Services Division
(17.00)
Engineering
(51.00)
Building Systems & Fleet Management
(74.00)
Resources Recovery and Recycling
(64.00)
Street Maintenance Division
(75.00)
Figure 3: Public Works’ Organizational Chart
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Funding Sources
Funding for Pasadena’s Street Surfacing and Maintenance activities comes from the following funding sources.
• State Transportation Gas Taxes,
• General Fund, if funds are available
• Road Maintenance and Rehabilitation Account under the California Road Repair and Accountability Act of 2017 (SB1), and
• Sewer Fund. The City Council approves the capital improvement program for streets and streetscapes, providing for systematic annual rehabilitation of streets throughout the City. Figure 4 below shows a timeline of the City’s street rehabilitation activities. The timeline is illustrative (not exhaustive) and describes recent years and the scope of the work.
PROJECT APPROACH
Audit Objectives
The audit was designed to address three questions:
1. Are there sufficient resources—funding, staffing, and management tools—for maintaining City streets?
2. Are there clear policies and processes to guide street maintenance decisions?
3. What challenges, if any, prevent greater success in maintaining City streets? Scope
The audit covers the City of Pasadena’s street maintenance and rehabilitation activities for the four-year period from FY 2022 through FY 2025.
The scope addresses street/sidewalk/curb maintenance and paving only and does not extend to privately maintained roadways, state highways under the California Department of Transportation, or purely decorative or streetscape enhancement projects.
Methodology
To address the sufficiency of resources for street maintenance and paving activities, we conducted a myriad of activities, including:
• Assessment of the City’s financial, staffing, and management resources supporting street maintenance operations, including gathering and analyzing street inventory data, pavement management plans, and program goals obtained from the Public Works Department. This analysis compared budgeted allocations with actual expenditures and identified deferred maintenance backlogs.
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• Examination of the staffing sufficiency and organizational capacity by reviewing the workload distribution and roles and responsibilities of street paving personnel. We collected information on hiring challenges, staff turnover, and the impact of staffing levels on service delivery.
• Assessment of equipment to determine whether aging vehicles and tools constrained operational efficiency.
• Finally, the team assessed the adequacy of management systems and tools used to plan and monitor street maintenance activities. This included identifying and evaluating pavement management and work order systems, such as the Pavement Condition Index and Lucity, and determining whether these systems could link financial, street condition, and performance data.
To assess whether clear policies and processes guide street maintenance decisions, we examined how Public Works determines street paving and maintenance priorities. When documentation was unavailable, we relied on interviews with engineers, maintenance supervisors, and program managers to document existing informal practices.
A detailed review of condition assessment procedures was also conducted. The team examined how the Pavement Condition Index is calculated, updated, and used in decision-making. This included reviewing pavement survey documentation, evaluating data entry controls, and assessing the frequency of Pavement Condition Index updates. For a sample of streets (21), we coordinated with Public Works’ Engineers to assess the accuracy of pavement condition scores by reviewing underlying survey data or comparing selected scores with available field documentation.
The audit further included:
• Review of the City’s Pavement Management Plan (PMP) to determine whether it contains measurable goals and targets, including desired Pavement Condition Index levels, maintenance schedules by treatment type, and equity-based prioritization across neighborhoods.
• Analysis of reported metrics such as total lane miles treated, average Pavement Condition Index scores, and budget utilization.
• Computation of performance measures related to the timeliness of street maintenance work orders, including reviewing how work orders were scheduled, executed, and closed in the City’s maintenance management system.
To identify challenges that prevent greater success in maintaining City streets, we conducted interviews with Public Works staff responsible for street maintenance and paving to identify systemic, operational, and interdepartmental barriers that limit program performance. We evaluated the broader community impact of the street maintenance program by analyzing
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claims and injury data over time to determine whether trends in trip-and-fall incidents or property damage correlated with deteriorating pavement conditions.
We conducted this performance audit in accordance with The Institute of Internal Auditor guidance (Red Book). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our examination objectives. A draft report was provided to Public Works management and Risk Management for review and comment. The Public Works Corrective Action Plan is included in Appendix B.
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o
Key Results
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KEY RESULTS
Finding 1: Resources Vary by Need
Funding Levels Are Below Recommended Levels
Public Works reported that of the City’s 357 miles of streets, 216 miles require paving and an additional 75 miles require maintenance. These figures indicate that nearly two‑thirds of the City’s street system needs significant repair or upkeep. Figure 4 illustrates the progress made by Public Works in resurfacing streets between FY 2023 and FY 2025. In FY 2025, Public Works spent $671,307 per mile to resurface 11.5 centerline miles of road, primarily with using one type of surface treatment: asphalt overlay.
Public Works’ progress in improving City streets largely depends on the funding available for resurfacing projects.
In 2020, the City’s consultant examining street pavement conditions provided multiple funding options for City consideration and to address the condition of streets.
These options ranged from not providing any budget, which would have increased the backlog of streets needing resurfacing, to fixing all the streets to accomplish a “very good rating” of 80 at a cost of $148.6 million, or in 2025 dollars, approximately $185.9 million. The Pavement Condition Index is measured on a scale of 0-100.
The City’s consultant ultimately recommended annual budget of $13.6 million, or $17.03 million in 2025 dollars, for five years to improve the City's Pavement Condition Index to 66 from the 0 2
4 6
8 10
12 14
16 18
FY 2023 FY 2024 FY 2025
Miles Paved
Fiscal Year
Figure 4: Miles of Streets Rehabilitated
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2019 average of 58 and to reduce the
backlog of streets needing resurfacing to 10
percent of total street miles. (See
Figure 5).
Based on the City’s Capital
Improvement Program (CIP), the City
variously approved funds for its Annual
Citywide Street Resurfacing and ADA
Improvement Program between FY
2022 and FY 2025, ranging from about
$3.75 million to about $11.0 million.
(See Figure 6). In FY 2026, the CIP had
included an initial recommended
budget of $5.9 million although Public
Works requested up to $11 million to
$15 million. The City Council later
approved the budget for $11,024,714.3
It is important to note that budget
information in the City’s financial
system, Tyler Munis, shows funding for
street resurfacing by project versus
fiscal year, and thus funding levels
could vary. For project year 2023, the City transferred in an additional $395,391 to the existing adopted CIP budget of $4.8 million (totaling $5,195,391). See Figure 7.
3 This amount included City Council action to allocate $4.3 million from the General Fund to the Capital Improvement Project as well as $775,000 of Road Maintenance Funds and $49,714 of remaining funds available from other completed CIPs.
Figure 5: Various Budget Levels Recommended by
2010 Consultant
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Source: City Tyler Munis Street Resurfacing Project Reports
With the current level of funding, the overall Pavement Condition Index rating of City streets equals the FY 2019 rating level of 58, according to the Public Works Director.
While we caution against direct comparisons with other agencies due to differences in rating systems and data reliability, other cities have similar or higher average Pavement Condition Index scores for their street networks, as shown in Figure 8. The continued progress made by Public Works for street rehabilitation increases the risk of street and sidewalk deterioration and increases the backlog of streets in poor condition.
3,750,000
4,800,000
11,000,000
10,200,000
5,900,000
0 2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
FY 2022 FY 2023 FY 2024 FY 2025 FY2026
Amount ($)
Fiscal Year
3,750,000
5,195,391
11,000,000
10,200,000
11,024,714
0 2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2022 (CIP 73933) 2023 (CIP 73938) 2024 (CIP 73938) 2025 (CIP 73944) 2026 (CIP 74948) Amount ($)
Street Resurfacing Project
Figure 6: Capital Improvement Program Adopted Funding Levels for Citywide Street Resurfacing and ADA Improvement Program
Figure 7: Funding by Street Resurfacing Project
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City Pavement Condition Score Effective Date
Riverside 48 2024
Santa Ana 76.3 2024
Long Beach 61 2025
Anaheim 71 2023
Placentia 79.7
$35.5 M in funding for FY 25-
26 2025
San Gabriel 85 2024
Sierra Madre 76 2023-24
Glendale 72 2021
Arcadia 53-61 2025
Pasadena 58 (reported) 2025
Source: Various City reports and publicly available information. Glendale is in the process of updating their PCI score and expects their current index to be below 72.
The Public Works Director, hired in December 2024, established a new goal to improve the overall pavement condition of streets to 80 by 2030 with an estimated cost of $25 million to $30 million annually. To generate funding to improve City streets, Public Works, in coordination with the Fire Department, is researching the potential of a future bond measure.
The Public Works Director aims to leverage current and future funding to implement a preventive strategy that prolongs pavement life and reduces the cost of full reconstruction by applying an array of cost-effective surface treatments. For example, the Public Works Director reported that introducing fiber-reinforced rubberized asphalt lowers the cost of concrete pavement restoration. The new strategy is to keep more miles of streets in good condition by using these less expensive treatments.
A 2023 California Statewide Local Streets and Roads Needs Assessment report reinforces the importance of the new approach by the Public Works Director, stating that “as roadway pavement conditions deteriorate, the cost to repair them increases exponentially. For example, it costs 14 times as much to reconstruct a pavement as to preserve it when it is in good condition. Even modest resurfacing is four times as expensive as maintaining pavement under moderate conditions. To put it another way, 14 miles of roadway can be maintained in a moderate condition for the same cost as reconstructing 1 mile of failed pavement”.
Public Works is Addressing Equipment Needs
Street maintenance generally requires specialized equipment to complete repairs, such as pothole patchers, excavators, cold planers, and motor graders. At the time of our review, Street Maintenance crews relied on manual tools such as shovels, jackhammers, picks, and a 28-year- Figure 8: Peer City Average Network
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old backhoe to remove and repair damaged pavement. A crew supervisor explained that using manual tools has led to employee injuries, reducing the availability of staff to perform street maintenance. Between January 2024 and March 2025, the City paid $428,122 for 33 workers’ compensation claims filed since 2015 by Street Maintenance employees for injuries sustained on the job.
Street Maintenance also needs a hot-box asphalt truck—an essential piece of equipment – that would allow crews to keep asphalt at the proper temperature for extended periods. Currently, with Public Works’ existing vehicle, large portions of asphalt are purchased for patching, which cools and hardens before use, resulting in significant material waste. In one year, we estimate the City discarded 153 tons (based on available disposal tickets) of asphalt costing about $39,443 based on available Public Works purchase estimates per ton. However, the financial impact of discarding unused asphalt is higher, including personnel costs (about $160 daily), transport costs (about $5,760 annually), and disposal fees (about $4,000 annually).
In addition, there is a resulting community impact leaving potholes unfilled. Under our own assumptions for a typical pothole – about 3 feet in diameter and 3 inches deep and discarding 180 tons of asphalt – the City with better equipment could avoid discarding unused material, filling an additional 1,190 to 1,400 potholes with the discarded asphalt.
In FY 2026, Public Works took steps to resolve this issue by purchasing a 2-ton hot box truck to be delivered in December 2026 that will prevent the asphalt from cooling and reduce waste, as well as an open cab bobcat with a water spray to help protect employees from silica dust resulting from excavation work, and a new concrete grinder. The Public Works Director also has plans to purchase a horizontal saw to help cut clean edges for street maintenance and repair non-working street-related equipment stored by the City.
Changes in Scope of Work Would Impact the Sufficiency of Staffing Levels Street Maintenance supervisors reported that staffing levels are generally sufficient for their current level of responsibilities, primarily due to the seasonal nature of their work, such as pothole repair during winter months. If responsibilities expand, such as assisting with larger- scale road rehabilitation projects, additional staffing would be required to sustain current performance levels. Similarly, one of Public Works’ two engineers responsible for street rehabilitation at the time of our review reported that staffing is sufficient for their current scope of annual street rehabilitation (about 10 centerline miles), but if Public Works significantly increased available funding for this work, additional staff would be needed temporarily to assist with efforts. The Public Works Director reported no plans to request permanent staff increases; instead, the Director intends to leverage existing staffing through team development and operational improvements.
Sufficient staffing is critical for public agencies to deliver services effectively, comply with statutory requirements, and mitigate operational risks. When resources are inadequate,
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agencies typically experience delays and reductions in service quality. The recent and former manager of Street Maintenance, with its 18-member crew, established informal goals to repair 5,000 potholes annually and complete pothole repair within one working day. As illustrated in Figure 9, the average estimated time to complete potholes was about 33 days in FY 2025, with a median of 10 days, and sidewalk repairs consistently required the longest completion time at an average 58 days, or a median of 19 days in FY 2025.4
Source: TAP International analysis of Public Works’ Work Order system data 4 Pages 21-22 describes accuracy concerns with the data. 5 17
4 9
7 20
6 8
6 19
5 10
0 5 10 15 20 25
Overall Service Time
Sidewalk Repair
Debris and Litter
Pothole Repair
Days
Service
Street Maintenance Division - Median Days to Complete Street/Sidewalk Related Activities, FY 23 to FY 25
FY 2025 FY 2024 FY 2023
Figure 9: Street Maintenance Street and Sidewalk Repair Timeliness
17.0 57.4
5.9 20.2
16.5 35.6
8.9 21.3
23.4 58.4
9.2 32.9
- 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Overall Service Time
Sidewalk Repair
Debris and Litter
Pothole Repair
Days
Service
Street Maintenance Division - Average Days to Complete Street/Sidewalk Related Activities, FY 23 to FY 25
FY 2025 FY 2024 FY 2023
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Timeliness may improve as the Division fully deploys newly acquired equipment.
Staffing challenges are further compounded by the aging workforce. Crew supervisors noted that many field employees are approaching retirement eligibility. These staff bring significant institutional knowledge, yet the City lacks a formal succession plan or structured training program to ensure that their expertise is transferred to newer employees. Without such planning, the risk of knowledge loss and service disruption increases.
Finding 2: Public Works’ Control Environment has Key Gaps and Related Risks Central to an effective pavement management system is the establishment of policies, procedures, and governance documents, such as a pavement management plan, standard operating procedures to ensure data quality, and clear roles and responsibilities. Such a formal framework ensures that street maintenance activities are planned, executed, and monitored consistently to achieve the City’s performance and service goals.
As shown in Figure 10, Public Works’ pavement management activities could better align with best practices in roadway management. Without an enhanced framework, current activities raise various internal control risks. For example, the absence of policies and procedures, including data quality controls, means Public Works cannot demonstrate sufficient accountability or may experience challenges defending its decisions.
Pasadena Public Works Department Status Gap/ Risk
No pavement management policies or procedures
are in place, but efforts are underway for their
development.
Major gap. Absence of documented
policies undermines consistency and
accountability.
Defined relationships between Engineering and
Street Maintenance, but unclear between Water and
Power, Transportation and Parks and Recreation
Departments.
Partial compliance.
Interdepartmental gaps create risk
of duplication or neglect.
No formal procedures for ensuring data quality for
the Pavement Condition Index or work order system.
Severe gap. Without data quality
controls, PMS outputs are
unreliable.
In two of the three areas – governance and roles and responsibilities – the Public Works Director has steps to address the gaps and deficiencies by assigning senior-level engineers to develop policies and procedures.
For the remaining area, formal procedures directly related to ensuring data quality in the Pavement Condition Index and the work order system continue to constitute an internal control gap. There is a sufficient level of data variances and other anomalies that would affect the overall integrity and accuracy of any subsequent reporting, potentially adversely impacting decision-making information.
Figure 10: Comparison of Pasadena vs. Three Best Practices in Pavement Management
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This lack of policy documentation has led to variability in how maintenance requests are processed, with most handled reactively. Work orders in the Lucity system are also sometimes grouped and closed in batches with or without full documentation or photographic evidence of completion or supervisory review. Field crews occasionally rely on paper records for proactive work not captured in the system5. While some operational routines — such as pothole repair — are well understood among field personnel, how these needs are prioritized are not codified in formal written procedures.
The Pavement Condition Index is a widely used tool that records the condition of roadway segments on a scale of 0 to 100, ranging from very poor to excellent. Although the Pavement Condition Index is intended to serve as the City’s primary decision-support tool for prioritizing street maintenance, there is no documented procedure that defines how the index should be maintained, validated, or updated. Without database management guidance, there is a moderate/high risk that Pavement Condition Index values are not reflective of actual pavement conditions in the field, and at least 11 segments in the Pavement Condition Index were missed in the original analysis. Public Works staff identified a total 20.8 miles missing from the Pavement Condition Index. In our review of 21 street segments, some observed pavement conditions and corresponding Pavement Condition Index scores did not visually align, although formal reassignment and testing are required for verification. See Appendix A. As shown in Figure 11 below, Public Works qualitatively assessed five of the 21 streets and verified that their scores needed updating.
Figure 11: Current Street Conditions
Segment
Pavement
Condition
Index
score,
1/3/2020
Over ride
Pavement
Condition
Index
score*
Current
Pavement
Condition
Index ** Photo Evaluation
Westbridge
to South
Arroyo Blvd 72 none 62
Score may need
re-assessment
Mercury
Street from
Alameda 53 None 41
Score may need
re-assessment
5 Public Works plans to have repair crew use mobile devices to upload information and photos into Lucity.
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Palo Verde
from Loma
Vista to E.
Mountain
St. 37 None 25
Score may need
re-assessment
Nelson Aly
at N Sierra
Bonita 61 None 49
Score may need
re-assessment
* Override Pavement Condition Index Score. An estimated update to the Pavement Condition Index score from 1/3/2020 if repair or resurfacing work had been done on the street. ** Current Pavement Condition Index Score. An estimated Pavement Condition Index score to account for normal aging of the streets condition.
Several factors contributed to reliability concerns with the Pavement Condition Index:
• Recently resurfaced streets were not fully updated in the Pavement Condition Index to reflect improvements in all structural factors, such as subgrade strength or layer thickness.
• The Pavement Condition Index was updated in 2024 to reflect the condition of resurfaced streets since 2020, representing 640 of 3,498 street segments. Aging streets that have deteriorated since 2020 were not formally re-assessed to fully capture recent declines in surface or structural conditions.
• Absence of standardized testing procedures or specialized equipment needed to evaluate structural adequacy.
• During the time frame of our review, a Public Works Engineer now updates the Pavement Condition Index when pavement resurfacing occurs but reported difficulty in updating the average network score as new street segment scores are entered (due to lack of database knowledge), and noted other issues, such as the City streets currently absent from the database.
In the absence of formally established policies, resurfacing priorities are determined largely through informal practices, staff discretion, guidance established by an external consultant, and City Council or community requests. For the last two years, a different approach was used to identify streets planned for resurfacing of roadway under its Annual Citywide Street Resurfacing and ADA Improvement Program. Within the ten-mile plan, approximately half of the resurfacing—about five miles—was dedicated to City Council requests and customer complaints, and the other half was based on streets identified through the Pavement Condition Index report. In 2025, Public Works staff continued to set aside miles of street for City council
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requests and streets identified through the Pavement Condition Index, and added consideration of injury or vehicle claims, traffic volume, customer service requests, and management input. At the time of our review, the balance between reactive and preventive resurfacing work remained inherently weighted toward complaint-driven projects rather than a formalized system of pavement preservation. In contrast, the City of Los Angeles prohibits on-demand surfacing requests for individual streets and uses only a data-driven system to determine the street resurfacing schedule.
Finally, while Public Works includes equity considerations in sidewalk rehabilitation funded by Community Development Block Grants (CDBG), Public Works needs to develop formal policies that address how to incorporate equity considerations when selecting streets for resurfacing.
However, equity considerations are inherently addressed because Public Works responds to the needs of each City Council district, which collectively encompass all areas of the City.
Other cities have established formal frameworks for incorporating “equity” into their street selection decision-making. For instance, the City of San Diego considers locations within a census tract that is deemed eligible for CDBG, in a Promise Zone, or located in a Community of Concern identified per the climate equity index (very low, low, or moderate access to opportunity, per Council Policy).
Finding 3: Multiple Challenges Limit the Effectiveness of the City’s Street Maintenance and Paving Activities
Best practices in pavement management state that agencies need adequate funding, properly maintained equipment, and a trained workforce to implement pavement management plans effectively, including using a consistent, data-driven process to plan, prioritize, and fund pavement rehabilitation work. These guidelines are reinforced by the GAO’s Standards for Internal Control that call for clearly defined roles and responsibilities, reliable information systems, and adequate resources to achieve program objectives.
The City’s street paving program has multiple operational, resource, and coordination challenges, that if not addressed, could hinder its progress in improving the street network.
Key challenges include:
Insufficient Funding: As described earlier in this report, Public Works would require additional funding to improve the City’s overall Pavement Condition Index score to 80.
Need for Data Integration
Public Works relies on multiple disconnected systems for planning, tracking, and reporting street maintenance work. These systems include the Lucity information system, GIS, and MS Excel-based databases for the Pavement Condition Index. The Lucity information system can be used to perform budget and maintenance forecasting, integrating pavement condition data to
24 | P a g e
help determine when and where to perform pavement rehabilitation, which rehabilitation techniques to use, and the ideal budget needed to accomplish maintenance goals. The department currently uses Lucity to record work orders and service requests, and staff explained that the Lucity system lacks the features the department needs, such as Pavement Condition Index management and full integration with the City’s GIS database.
Without a dedicated Pavement Management System to model the most cost-effective repair strategies, the department must rely on a manual process that considers pavement condition data, work order history, and risk indicators—such as complaints or claim-prone areas— in decision-making. Integrating this type of system with the City’s existing work order system (Lucity) would allow managers to track asset conditions, schedule maintenance, and monitor progress toward performance goals. Such integration would enhance transparency, enable data-driven decision-making, and provide a foundation for justifying future funding requests.
System Processes Need Development to Become More Proactive in Street Repair and Rehabilitation
Roadways are vulnerable to structural degradation due to multiple factors, including material wear from heavy traffic loads, extreme weather conditions, and insufficient maintenance.
Regular inspection and maintenance are essential for extending pavement life.
The Street Maintenance Division lacks a formal, systematic process for identifying roadway and sidewalk maintenance needs. Instead of conducting formal, data-driven assessments, maintenance activities are largely reactive—triggered by public complaints or service requests, maintenance supervisors reported that they will send a crew out to known “hot spots” when all work orders have been completed. This absence of proactive monitoring delays the identification of pavement defects and increases the risk of accelerated roadway deterioration.
Presently, the Engineering Unit does not formally monitor pavement condition quality in the City’s street network, which would provide updated data on pavement wear, traffic loads, and environmental impacts, enabling prioritization of repairs and better resource allocation. Adding these responsibilities, however, would require specialized engineering knowledge, technical equipment operation skills, and strong data analysis abilities. Each of the two engineers responsible for street rehabilitation identified a need to increase their knowledge about pavement management and assessment of street conditions.
25 | P a g e
Performance Monitoring Systems are Needed
Performance measurement
systems provide a systematic
method for agencies to track
progress toward goals, assess
outcomes, and inform
decision-making. Such systems
are based on defining goals,
collecting and assessing data,
and communicating the results
to inform decision-making, as
depicted in Figure 12.
For street maintenance
activities, a performance
measurement framework has
not yet been developed, and
metrics are not generally
tracked other than the number
of potholes completed
annually. Although Public Works has a work order system that provides the data needed to compute multiple performance measures, staff have not formally used this information to monitor their performance.
In contrast, Public Works has developed performance metrics for street rehabilitation activities.
These metrics include, for example:
• Average Pavement Condition Index score citywide
• Miles of roadways resurfaced annually
• Annual and 5-year total, % of systemwide surface area resurfaced • Reduction in resident complaints and claims related to street conditions • % complete – new ramps constructed vs. locations with no ramps.
Other metrics that could benefit Public Works include
• Unit cost per lane-mile surfaced by type of surface treatment • Average work order completion time
• % change of street miles backlogged
• % change of waste material percentage
Figure 12: Key Practices to Help Effectively Implement
Performance Management Activities
26 | P a g e
These metrics could provide management and policymakers with clear evidence of program efficiency and outcomes over time. The Public Works Director ultimately plans to develop a dashboard to track performance measures by district.
Political Pressures
Street paving can be influenced by the community. Council requests to respond to constituency needs and resident complaints can alter annual paving schedules (resulting in changes that deviate from data-driven priorities). Although these adjustments are well-intentioned, they reduce the consistency of project selection and diminish the program's overall efficiency by fragmenting work across locations rather than focusing on data-driven decision-making.
Need for Better Interagency Coordination
Coordination challenges further hamper program planning that Public Works has worked to resolve. Although coordination among departments—such as Public Works, the Water and Power Department, Transportation, and Parks—is improving through interdepartmental meetings, the City does not maintain service-level agreements between departments that outline roles and responsibilities for information sharing and project coordination. The absence of these types of agreements has led other agencies to not perform information sharing to Public Works regarding testing of trench restoration compaction so that Engineering can assess the quality of work for future street rehabilitation planning. Without better coordination, Public Works could face additional costs to restore pavement quality following trenching.
Outdated Street Maintenance Processes
The lack of key management tools has affected the City’s ability to plan and manage work strategically, largely due to the absence of proactive planning mechanisms that would enable preventive maintenance rather than reactive responses to street maintenance. Public Works does not maintain a formal preventive maintenance schedule tied to pavement condition data.
Instead, maintenance crews operate in a “first in, first out” or “worst first” environment, which perpetuates a cycle of short-term fixes rather than long-term pavement preservation.
Street Maintenance Challenges Influence Ongoing Community Safety Impacts The number of claims submitted to the City for vehicle damage or bodily injury from poor pavement or sidewalk/curb conditions has declined from FY 2024, as shown in Figure 13, returning to FY 2023 levels. Between FY 2023 and FY 2025, the City received 164 claims related to street and sidewalk disrepair, which represented between 13 to 25 percent of all claims filed against the City for these years.
27 | P a g e
Figure 13: Number of Public Works Claims by Type (Bodily Injury or Property Damage) and Cause
FY 2023 FY 2024 FY 2025 Total
Property Damage 31 39 26 96
Improper Road Design - Bike Lane
1 1
Improper Road Design - Signage
1 1
Improper Road Design Or Dangerous Cond 4 2 2 8
Improper Road Maintenance -
Construction Zone
5 2 7
Improper Road Maintenance - Pothole 25 18 17 60
Premises Liability - Other 2 5
7 Premises Liability - Sidewalk - Other
6 2 8
Premises Liability - Trees
1 2 3
Property Damage Only (Non-Auto)
1 1
Bodily Injury 14 40 14 68
Improper Road Design - Crosswalk
2 2
Improper Road Design Or Dangerous Cond 4 2 1 7
Improper Road Maintenance -
Construction Zone
2 2
Improper Road Maintenance - Lighting
1 1
Improper Road Maintenance - Pothole 1 1 2 4
Premises Liability - Other 1 2
3 Premises Liability - Sidewalk - Other 8 30 11 49
Grand Total 45 79 40 164
Sidewalk/curbside incidents account for 35 percent of all Public Works claims received (164) by the City, while potholes are the primary cause of claims received for property damage to vehicles, accounting for about 37 percent of claims received. The remaining claims received are related to improper road design, other sidewalk issues, and street-related conditions.
The cost of bodily injury and vehicle claims arising from street and infrastructure conditions have tangible community impacts. Of 164 claims, 48 of them will likely cost the City up to $7.5 million. This includes amount for actual payments and expenses and estimated future losses and expenses. The resulting financial settlements divert scarce funds from preventive maintenance programs to liability payments.
The financial costs could increase when claims are reopened. As shown in Figure 14 below, the number of reopened claims for improper road maintenance and sidewalks peaked in FY 2024, representing 40 percent of closed claims (22/56), before falling to 14 percent in FY 2025 (5/35).
Re-opening claims suggest that the claimant has elected to pursue recovery for their loss through litigation.
28 | P a g e
Presently, Public Works has not fully integrated risk data—such as claims, ADA trip hazards, or accident locations—into its prioritization process in identifying and selecting streets for resurfacing. As a result, high-risk locations are not systematically included in pavement resurfacing planning, such as Pasadena Avenue (Figure 15), which had three vehicle claims filed in FY 2025 despite having some pavement resurfaced.
0 1 0
40 56
35 5
22 5
0 10
20 30
40 50
60 FY 2023 FY 2024 FY 2025
Number of Claims
Fiscal Year
Open Claims Closed Claims Reopened Claims
Figure 15: Pasadena Avenue
Pavement Condition
Figure 14: Number of Claims by Status
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Appendix A – Street Observations
Appendix B – Agency Corrective Action
Plan
30 | P a g e
APPENDIX A: STREET OBSERVATIONS
Street
Segment
Pavement
Condition
Index Score,
1/3/2020
Over ride
Pavement
Condition
Index Score*
Current
Pavement
Condition
Index Score
**
Photo Evaluation
Alameda
from Mercury
Lane to
Sierra Madre
Villa 86 none 79
Leeds Alley
from E Villa
St to Del Rey 38 57 55
Score may
need re-
assessment
Adelaid
Drive, from
Loma Vista
Street to E.
Mountain
Street 48 none 35
Score may
need re-
assessment
31 | P a g e
Street
Segment
Pavement
Condition
Index Score,
1/3/2020
Over ride
Pavement
Condition
Index Score*
Current
Pavement
Condition
Index Score
**
Photo
Evaluation
Santa Paula
Street to
Alameda 54 none 42
Arden Road
from S.
Mentor to
Oak Grove 46 96 93
E. Glen Arm
from Barker
Aly to S.
Oakland Ave 50 92 91
Score may
need re-
assessment
N. Arroyo
from
Rosemont to
210 EB 48 96 96
Score may
need re-
assessment
32 | P a g e
Street
Segment
Pavement
Condition
Index Score,
1/3/2020
Over ride
Pavement
Condition
Index Score*
Current
Pavement
Condition
Index Score
**
Photo Evaluation
S. Arroyo
from Arbor to
Westbridge
Pl 50 88 84
S. Arroyo
from
Westbridge
to
Westminster 50 88 84
Westminster
to Arroyo 47 none 35
33 | P a g e
Street
Segment
Pavement
Condition
Index Score,
1/3/2020
Over ride
Pavement
Condition
Index Score*
Current
Pavement
Condition
Index Score
**
Photo
Evaluation
Arden Rd
from S.
Wilson to
Rosalind 51 88 86
Birch Ln from
Elm Ln to
North End 49 88 86
E. Glenarm
Street from
Madison to
S. El Molino 55 92 92
El Nido
Avenue from
Millicent to
E. Del Mar
Blvd 35 100 97
34 | P a g e
Street
Segment
Pavement
Condition
Index Score,
1/3/2020
Over ride
Pavement
Condition
Index Score*
Current
Pavement
Condition
Index Score
**
Photo
Evaluation
El Nido to
Oneida to
Millicent
Way 45 100 97
* Override Pavement Condition Score. An estimated update to the score from 1/3/2020 if repair or resurfacing work had been done on the street.
** Current Pavement Condition Index Score. An estimated score to account for normal aging of the streets condition.
35 | P a g e
APPENDIX B: Agency Corrective Action Plan
Ci
ty of Pasadena Street Maintenance and Paving
Correcve Acon Plan
Audit Recommendaon Proposed Acon Target Compleon
Date
1. Adopt a wrien pavement management
policy defining program goals, funding
principles, treatment strategies, equity
standards, and priorizaon criteria,
incorporang the Pavement Condion
Index, traffic volumes, risk/claims dat
a,
AD
A hazards, ulity coordinaon, and
equity consideraons.
The Department of Public Works, Engineering
Division is in the process of development the
policies and procedures for citywide street
management.
December
2026
2. Update the 2020 pavement management
plan that idenfies target Pavement
Condion Index levels, backlog reducon
goals, annual treatment mileage, and
resource needs.
The Department of Public Works, Engineering
Division is in the process of procuring an updated
proposal from LA County to resurvey the enre
City and provide an updated database. From the
updated database, a new pavement management
plan will be generated to address goals, resource
needs, etc.
Fall 2027
3. Conduct a full Pavement Condion Index
re-survey of all City-maintained roadways
using a standardized methodology or
a
q
ualified consultant.
The Department of Public Works, Engineering
Division is in the process of procuring an updated
proposal from LA County to resurvey the enre
City and provide an updated database. LA County
has indicated that it will take them 12 months to
complete the City survey and provide a report.
April 2027
4. Develop wrien procedures for Pavement
Condion Index collecon, scoring,
validaon, update frequency, and
database management.
The Department of Public Works, Engineering
Division is in the process of developing the
policies and procedures for citywide street
management.
December
2026
5. Train assigned staff in technical pavement
evaluaon, distress scoring, and Pavement
Condion Index so8ware use to ensure
ongoing data integrity.
The Department of Public Works, Engineering
Division is in the process of developing the
policies and procedures for citywide street
management which will include training
guidelines and technical resources.
December
2026
6. Implement a proacve roadway inspecon
and monitoring schedule.
This inspecon would be implemented
approximately one year a8er LA County has
completed their re-assessement. Presumably
then, we would start to noce if there are any
differences in the street condion.
April 2028
7. Develop a succession plan and structured
training program for field personnel,
including cross-training to preserve
instuonal knowledge.
The Department of Public Works, Street
Maintenance Division will work on cross-training
and developing training resources for succession
planning.
December
2026
8. Examine the feasibility of acvang
Lucity’s asset management and
forecasng features and integrate it with
the City’s GIS and Pavement Condion
Index database, or
The Department of Public Works, Engineering
Division is currently working with the assigned
DoIT representave for Central Square, Enterprise
Asset Management (they acquired Lucity) to
develop a work order system to more effecvely
communicate repair needs to City crews and log
the repairs and histroy
June 2027
a. Acquire or implement a dedicated
Pavement Management System
(PMS) capable of modeling
treatment strategies and long-term
budget scenarios.
The Department of Public Works,
Engineering Division has met with
potenal vendors that offer modeling
capabilies for treatment strategies and
long-term budget scenarios. A proposal
June
2027
has been requested to determine
feasibility of acquiring the so8ware
9. Develop a formal performance dashboard
with metrics such as:
As menoned in 8 and 8a. June 2027
• Cost per lane-mile resurfaced
• Cost per work order by type
• Proacve vs. reacve work
perc
entages
• Average response me
• Backlog of streets in poor
cond
ion
• Material waste rates
10. Adopt service level agreements (SLAs)
clarifying roles, responsibilies, data-
sharing requirements, and quality
assurance expectaons.
Execuve management of the various
departments to discuss and develop a
memorandum of understanding of each
departments responsibilies.
June 2027
11. Conduct annual risk hotspot mapping and
use results to guide prevenve
maintenance and capital improvements.
The City already has a HeatMap so8ware
(Origami) which tracks this informaon. Public
Works, Engineering Division has been given
access to the so8ware and will proacvely be
ulizing the data to determine high risk areas
On-going
City of Pasadena Street Maintenance and
Rehabilitation Performance Audit
Audit Committee Meeting
March 23, 2026
2 Background
• 357 center line miles of streets.
• Stree
t Maintenance and Paving Goals - Maintain and improve
Pasadena’s public street infrastructure, ensuring safe, accessible, and efficient travel for vehicles, cyclists and pedestrians, while supporting mobility, accessibility and quality of life city-wide. • Accomplish an overall pavement condition score of 80 (Scale: 0 - 100)
3 Audit Objectives
1. Are resources—funding, staffing, and management tools—adequate to maintain City streets?
2. Are clear policies and processes in place to guide maintenance and paving decisions?
3. What challenges hinder greater success in maintaining City streets?
4 Finding 1: Resources Vary by Need
Area
Funding
Staffing
Management Tools
5 Finding 1: Resources Vary By Need
Funding levels for street resurfacing
remain below recommended levels.
Recognizing this, past city council
action have used General Fund
revenue to support street resurfacing
projects.
A 2019 hired consultant previously
estimated that Pasadena would need
about $13.6 million annually, or
roughly $17 million in today’s dollars,
to improve the City’s pavement
condition and reduce the backlog of
deteriorating streets.
3,750,000
5,195,391
11,000,000
10,200,000
11,024,714
0 2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2022 (CIP 73933) 2023 (CIP 73938) 2024 (CIP 73938) 2025 (CIP 73944) 2026 (CIP 74948) Amount ($)
Street Resurfacing Project
Funding by Street Resurfacing Project
6 Finding 1: Resources Vary By Need
Current staffing is reported as being adequate for existing workloads for both street maintenance and engineers responsible for overseeing street resurfacings under their current scope of responsibilities.
Timeliness of street maintenance varies by the type of work.
17.0 57.4
5.9 20.2
16.5 35.6
8.9 21.3
23.4 58.4
9.2 32.9
- 10 .0 20.0 30.0 40.0 50.0 60.0 70.0
Overall Service Time
Sidewalk Repair
Debris and Litter
Pothole Repair
Days
Service
Street Maintenance Division - Average Days to Complete
Street/Sidewalk Related Activities, FY 23 to FY 25
FY 2025 FY 2024 FY 2023
5 17
4 9
7 20
6 8
6 19
5 10
0 5 10 15 20 25
Overall Service Time
Sidewalk Repair
Debris and Litter
Pothole Repair
Days
Service
Street Maintenance Division - Median Days to Complete
Street/Sidewalk Related Activities, FY 23 to FY 25
FY 2025 FY 2024 FY 2023
7 Finding 1: Resources Vary By Need
Equipment constraints have affected operational efficiency. • For example, crews lacked a hot-box asphalt truck, causing asphalt to cool and be discarded before use.
• In one year, about 153 tons of asphalt were discarded, representing both financial waste and lost opportunities to repair potholes.
• Public Works has purchased a hot box truck for repairing potholes this year that could translate to repairing over 1000 additional potholes through preventing having to discard unused asphalt.
8 Finding 2: Public Works' Control Environment Has Key Gaps and Related Risks
Pasadena Public Works
Department Status
Gap/ Risk
Need for pavement management
policies or procedures are in
place, but efforts are underway
for their development.
Absence of a formal
pavement management
plan
Defined relationships between
Engineering and Street
Maintenance, but unclear
between Water and Power,
Transportation and Parks and
Recreation Departments.
Interdepartmental gaps
create risk of
duplication or neglect.
Need for database management
procedures.
Without data quality
controls, PMS outputs
are unreliable.
The DPW Director has
taken responsibility or
has delegated staff to
address the gaps and
deficiencies related to
street maintenance and
rehabilitation.
9 Finding 3: Multiple Challenges Limit the Effectiveness of the City’s Street Maintenance and Paving Activities
Challenges:
Funding
Dat
a integration between information
s
ystems
Reactive versus proactive street
m
aintenance
Program performance monitoring
Well-intended political pressures
Interagency coordination
S
treet maintenance processes
Effect:
The number of claims
submitted to the City for
vehicle damage or bodily
injury from poor pavement
or sidewalk/curb conditions
has declined from FY 2024,
the City received 164 claims
related to street and
sidewalk disrepair, which
represented between 13 to
25 percent of all claims filed
against the City between FY
2023 and FY 2025.
10 Recommendations
1. Adopt a written pavement management policy defining program goals, funding princip
les, treatment strategies, equity standards, and prioritization criteria, incorporating the Pavement Condition Index, traffic volumes, risk/claims data, ADA hazards, utility coordination, and equity considerations.
2. Update the 2020 pavement management plan that identifies target Pavement Conditio n
I
ndex levels, backlog reduction goals, annual treatment mileage, and resource needs.
3. Conduct a full Pavement Condition Index re-survey of all City-maintained roadways using a standardized methodology or a qualified consultant.
4. Develop written procedures for Pavement Condition Index collection, scoring, validation, update frequency, and database management.
5. Train assigned staff in technical pavement evaluation, distress scoring, and Pavem ent
C
ondition Index software use to ensure ongoing data integrity.
6. Implement a proactive roadway inspection and monitoring schedule.
11 Recommendations
7. Develop a succession plan and structured training program for field personnel, including c
ros
s-training to preserve institutional knowledge.
8. Examine the feasibility of activating Lucity’s asset management and forecasting features and integrate it with the City’s GIS and Pavement Condition Index database, or a. Acquire or implement a dedicated Pavement Management System (PMS) capable of modeling treatment strategies and long-term budget scenarios.
9. Develop a formal performance dashboard with metrics such as:
• Cost per lane-mile resurfaced
• Cost per work order by type
• Proactive vs. reactive work percentages
• Average response time
• Backlog of streets in poor condition
• Material waste rates
12 Recommendations
10. Adopt service level agreements (SLAs) clarifying roles, responsibilities, data-sharing r
equirements, and quality assurance expectations.
11. Conduct annual risk hotspot mapping and use results to guide preventive maintenance and c
apital improvements.
13