The Irvine City Council has voted to seek an audit of some elements of city spending.
A previous audit of city finances took place in 2013/14; the results took down a veteran city council member while refocusing efforts to build the Great Park, the subject of the audit.
The 2013/14 audit was ordered after a new city council majority swept into office following years of allegations that the previous council troika had mismanaged park design and construction. As explained in my new book on the history of planning and development on the Irvine Ranch, the transition from the closure of El Toro Marine Corps Air Station to the development of both the Great Park and Great Park Communities started in a positive manner but became considerably more controversial.
It is difficult to adequately summarize all the actions, maneuvering and policy decisions that accumulated to stimulate the Great Park audit, but there were four key factors:
- The 2008 national financial meltdown that left developer Heritage Fields financially wounded.
- Governor Jerry Brown’s dissolution of redevelopment agencies, the entity the Great Park had counted on to fund future planning and construction.
- Tension between park staff and the newly assembled park design team, most of whom had never worked together before
- Relentless press criticism of no-bid contracts, questionable design initiatives and months of delay that left hundreds of acres of the former military base unimproved while city council members repeatedly promised that results were “coming soon.” In the end, the voters read the audit results and assigned political blame. It took $170 million in spending from Five Point Communities, the successor to Heritage Fields, to speed up delivery of initial improvements to the park, including sports fields, the Bosque, playgrounds and a wildlife corridor (Five Point got an increase of 4,000 homes in return). The audit currently proposed for Irvine has a different focus and history than the one at the Great Park. Calls for the proposed audit started this Spring after the surprising news that the city faced a budget deficit in its current fiscal year, and that larger deficits were likely in the future. This was big news in Irvine, which for decades has enjoyed strong financial success while providing ever-increasing levels of service to citizens. But the numbers were clear: a $6.338 million deficit for 2025-26, and just over $9 million anticipated in 2026-27.
A look at the June 9 city council agenda report on the budget gives a hint at possible causes. One item that caught my eye was staffing levels. From 2017/18 to 2021/22 the city’s employee count went up by just 63 persons; from 2021/22 to 2024/25, the number went up by 218, more than triple. And in terms of General Fund Revenues versus city spending, from 2021 to 2025 annual general fund revenue went from $200 million to $340 million; spending went from $216 million to $300 million.
To be fair, like most cities, Irvine has a multiplicity of funding sources on an ongoing, one-time or restricted basis. Understanding the complex subtleties of municipal finance requires specialized knowledge and years of experience.
But for city council members, hearing “deficit” set off alarm bells, and in a tense meeting on May 12, at the instigation of three members, the entire council instructed its staff to prepare a plan to hire an audit firm to examine nine past spending projects, including COVID spending, City Hall renovations, two separate Great Park expenditures, the establishment of the city’s own library system and “the failed purchase” of two properties that resulted in the city losing a $1 million.
Councilmembers took pains to say what they meant by an audit. What was NOT meant, they said, was a forensic audit, which in accounting terms means a specialized examination of financial records to uncover fraud or misconduct. Councilwoman Melinda Liu said she wanted a “process audit” that would help her and her colleagues “know what happened” and “focus on how to fix it structurally.”
I think what the city really needs is a management audit–an evaluation of an organization’s management processes, policies and leadership effectiveness. Indeed, in their memo to the city manager, Councilmembers Liu, William Go and Kathleen Treseder raised questions about bid processing, sole-source justifications, change orders and a variety of accounting processes . Moreover, the audit needs to examine Irvine’s vast array of city services and evaluate the need for continuing them.
The issue will return to the council on August 3, when the staff will present options for an audit, cost and potential firms to conduct it. In the meantime, on June 9 the council balanced the 2025-26 budget with a one-time allocation of $6.338 million from two of its reserve funds, which together are close to $200 million.
Left for future meetings is the question of how to deal with the predicted $9 million shortfall in 2026-27 (the city uses a two year budget).For those desiring more details, the proposed Irvine City budget is included in the agenda report for the June 9 meeting. It is more than 200 pages in length.
The budget and audit discussions will be among the last duties of Interim City Manager Sean Crumby, who has resigned his position effective August 14 after less than a year in that position.
Michael Stockstill is retired. He has lived in Irvine for 50 years. Information on his book on Irvine Ranch history is available at www.thebigplanbooks.com
