OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

San Diego Audit Committee Meeting Summary - April 23, 2025

Audit Committee — Wednesday, April 23, 2025
BodySan Diego, California
SessionAudit Committee
DateWednesday, April 23, 2025
StatusFILED
Video Record
0:00 / 3:05:52

Transcript — Verbatim
0:59

Okay.

0:59

Good morning and welcome to the audit committee meeting of April 23rd, 2025.

1:05

Our committee liaison, Natalie Kessler will go over instructions for today's meeting.

1:10

Thank you, Chair.

1:11

Well, members of the public are able to attend the meetings in person.

1:13

This meeting is being televised and live streamed on the city's website, and the council administration will continue to make arrangements for the public to comment using the Zoom webinar platform.

1:21

Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the virtual queue closes.

1:27

And the queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first.

1:33

This will allow for better meeting management between the two platforms and ensure the committee is able to manage and conduct city business.

1:39

We appreciate the public's cooperation.

1:41

Chair.

1:42

Thank you.

1:43

I will now call the audit committee meeting of April 23rd, 2025 to order.

1:48

Natalie, please call the role.

1:49

Vice Chair Whitburn.

1:51

Here.

1:51

Committee member Halpern.

1:53

Here.

1:54

Committee member Mafia.

1:55

Here.

1:56

Committee member Tap Shuri.

1:57

Here.

1:58

And Chair, Councilmember Moreno.

2:00

Present.

2:00

And also attending the meeting today is Andy Henell, the city auditor.

2:05

Christine Christiana Gauger, Chief Compliance Officer, Aaron Noel with the IBA, Kevin Smith, Committee Consultant, and Natalie Kessler, Committee Liaison.

2:16

Natalie, please continue with public comment instructions.

2:20

If you're in person, please complete a speaker slip located at the entrance of the committee room and place it on top of the box indicated at the in the at the speaker's box in the front of the room.

2:28

Please do so in a timely manner to ensure proper meeting management.

2:30

In-person testimony will conclude before virtual testimony begins.

2:33

Members of the public can join the webinar by computer, tablet, or smartphone by accessing the link, which is listed online in the preamble language of the agenda on the city's webpage.

2:41

If you need to participate by phone, email 1669-2545252.

2:45

The webinar ID is 1600337422 pound.

2:49

This information is also available on the agenda and will appear on the screen during the public comment period for each agenda item.

2:55

Please note that if you're watching via city TV 24 or online, there may be a delay.

2:59

Please participate via the audio on your phone and meet your TV or computer when it is your turn to speak.

3:03

And if you wish to speak on our on a particular item, wait for that item to be called and then raise your hand to speak by tapping the raise your hand icon.

3:10

Or if you're calling a call-in participant, press star nine on your phone.

3:14

If you raise your hand during a comment, excuse me, if you raise your hand during a non-comment period, your hand will be lowered.

3:20

Chair.

5:00

A recent article in the MJ Biz Daily, an industry financial publication reported that pot company cookies, with a store here in San Diego, have been sued by investors, claiming it's mismanaged 15.5 million through multi-million dollar kickbacks, benefiting company founders at investors' expense, according to the court documents.

5:20

It highlights suspicious industry financial dealings and why we should question the industry's economic viability.

5:30

A more troubling sign regarding marijuana business viability, and I quote the article stated its cookies has allegedly ran out of money.

5:39

Parents appreciate the increased tax on these businesses.

5:43

However, we wonder if the tax collected really compensates for the increase in marijuana-related poisonings and trips to the emergency room, mental health issues and addiction rates, especially for those between the ages of 18 and 30.

5:59

These health crises cost money to the city and its families.

6:04

Thank you for hearing my concerns this morning.

6:06

Thank you.

6:07

Our next speaker is Judy Strang.

6:09

Please unmute and begin.

6:12

Good morning, audit committee.

6:14

Thank you for this opportunity.

6:16

I have a high regard for those who have responsibility for financial concerns in any location, but especially our city.

6:24

And I appreciate that our city council person, Marino and Whitburn have served on this committee, but I'd like to especially thank the three community volunteers who do this.

6:36

I think it must be a personal passion of yours to see that city money is spent well.

6:41

And on behalf of the public, I thank you for that.

6:45

I often speak at City Council regarding my concern for marijuana businesses and its presence, indicating a sort of normalization or expectation of use to our young people.

6:58

And that's of grave concern.

6:59

But today, as it has to do with the audit.

7:03

I'd very much like to put at the forefront an audit on the fees and taxes that are related to our marijuana businesses.

Discussion Breakdown — Share of Meeting
Audit Follow-up████████████████████████████████████████40%
Public Comment█████████9%
Parks and Recreation████████8%
Budget███████7%
Purchasing and Contracting█████5%
Cannabis Regulation████4%
Fire Safety███3%
Fraud Prevention███3%
Workplace Safety███3%
Summary of Proceedings

San Diego Audit Committee Meeting Summary - April 23, 2025

The San Diego City Audit Committee met on April 23, 2025, to discuss the Office of the City Auditor's recommendation follow-up report, the auditor's proposed FY2026 budget, the FY2024 single audit, and other informational items. The committee approved actions on two specific audit recommendations, passed a motion on the auditor's budget with a 4-1 vote, and received updates from multiple city departments on the status of outstanding audit recommendations.

Consent Calendar

  • Approval of March 12, 2025 Committee Minutes: Approved unanimously.

Public Comments & Testimony

  • Non-Agenda Public Comments: Several speakers addressed concerns about marijuana businesses in San Diego.
    • An unidentified speaker cited an MJ Biz Daily article reporting that Cookies (a marijuana company) was sued for alleged mismanagement of $15.5 million, expressing doubts about the industry's economic viability and questioning whether tax revenues compensate for health costs.
    • Judy Strang thanked the committee and requested an audit of marijuana business fees and taxes to ensure they cover the full costs, including enforcement and health impacts on youth.
    • Madison Rapp argued that illegal marijuana operations drain city resources, citing millions spent by police and code enforcement last year, and noted that enforcement costs often exceed tax revenue from legal operations.
    • Becky Rapp (public health educator) called for transparency and regular audits of marijuana tax revenue allocation, similar to practices in Colorado and Oregon, to ensure revenues cover public health impacts.
  • Item 3, Section A Public Comment: No speakers.
  • Item 3, Section B Public Comment: One in-person speaker, Cesar Javier, urged audits of corruption and mismanagement.
  • Item 2 Public Comment: Cesar Javier spoke about corruption and the need for audits.
  • Item 4 Public Comment: Cesar Javier questioned the trustworthiness of presented figures and called for audit of air purifier funds.
  • Item 5 Public Comment: Cesar Javier raised concerns about hotline report limitations and a specific claim.
  • Item 6 Public Comment: Cesar Javier spoke about accountability and crime.

Discussion Items

  • Item 3: Office of the City Auditor's Recommendation Follow-up Report
    • The committee considered two actions in Section A:
      • Recommendation 3 from the Performance Audit of Purchasing and Contracting's Small and Local Business Enterprise Program: The auditor recommended closing this recommendation as partially implemented with no further action, as the department conducted a disparity study but did not present it side-by-side as requested. The committee approved this closure.
      • Recommendation 7 from the Performance Audit of Building Acquisitions: Management had not implemented the recommended attestation solution. The committee approved Option 1 (keep open as in-process until items B and C are implemented, then close as partially implemented) with a request to explore alternative language for staff reports.
    • Section B (Informational): Committee member Tabshuri led discussion of outstanding recommendations across departments:
      • SDPD: Updates on body-worn cameras (near completion, meet-and-confer issues), towing audit (report errors, staff report rework needed), and overtime audit (civilianization study completed but costly; software RFP targeted for December 2025).
      • Fire-Rescue and Parks & Recreation: Brush management updates. Fire-Rescue needs five positions (requested in FY26 budget but not in draft); Parks & Rec completed acreage consolidation with multiple departments but funding for FY26 not requested.
      • Parks & Rec: Equity in recreation programming – 4 of 16 recommendations completed; community needs assessment underway; budget requests for FY26 included but many items stalled due to resource constraints.
      • Purchasing & Contracting: Progress on multiple reports including contract entry guides, training, municipal code updates.
      • Development Services: Moving away from deposit accounts to pay-as-you-go model; code enforcement division facing 12 reductions affecting implementation.
      • Compliance: Workplace safety updates delayed due to vacancies; unsafe driving hotline report – pilot project expected before year-end.
      • Stormwater: Reinspection fee program not funded in FY26 despite estimated cost recovery potential.
      • Public Utilities: Industrial wastewater control program negotiations nearly complete; agreement expected before council by end of calendar year 2025.
      • Economic Development: Lease management – 13 of 25 recommendations implemented; holdover rate remains at 25%; working on procedures and portfolio management plan.
  • Item 2: Office of the City Auditor's Fiscal Year 2026 Proposed Budget
    • The auditor presented two options to respond to the mayor's draft budget, which included $287,000 in ongoing cuts beyond the committee's February recommendation. The auditor highlighted that personnel make up 85% of the budget and all positions are filled. Option 1 (preferred) proposed $185,000 in one-time cuts, including $60,000 from independent legal counsel funding. Option 2 would accept the full mayor's cut but convert to one-time. The committee passed Option 1 with a 4-1 vote (Councilmember Whitburn opposed, citing preference for funding employees over speculative legal counsel).
  • Item 4: Fiscal Year 2024 Single Audit
    • Presented by Crow LLP. The city received an unmodified opinion on compliance for five major federal programs. One internal control finding (significant deficiency) was reported: the city did not timely file 31 sub-awards over $30,000 in the FSRS system and reported inaccurate obligation dates. Management has since corrected and provided a manual of procedures.
  • Item 5: Quarterly Fraud Hotline Report (FY2025 Q3)
    • A record 95 reports received; 41 assigned for investigation; 27 closed; 43 open. Seven substantiated allegations resulted in corrective action for issues including inappropriate language, leave abuse, and unsafe driving.
  • Item 6: City Auditor's Monthly Activity Report
    • Two reports issued since last meeting. Eight audits in progress, including four in report writing. Principal Auditor Carissa Nash received the Rising Star Award from the Association of Local Government Auditors. Public survey for FY26 work plan is live. Council approved municipal code amendments for Measure A independent legal counsel.

Key Outcomes

  • Approved Closure: Recommendation 3 from the Purchasing and Contracting SLBE audit closed as partially implemented, no further action.
  • Approved Option: Recommendation 7 from the Building Acquisitions audit: kept open as in-process, to be closed as partially implemented after items B and C are completed.
  • Budget Motion Passed: The committee recommended Option 1 for the OCA FY2026 budget (4-1 vote), which includes $185,000 in one-time reductions, including $60,000 from independent legal counsel.
  • Single Audit Accepted: The FY2024 single audit report was received as information.
  • Fraud Hotline Report & Activity Report: Received as information.
  • Next Meeting: Scheduled for Wednesday, June 11, 2025, at 9:00 a.m.

Meeting Transcript

Okay. Good morning and welcome to the audit committee meeting of April 23rd, 2025. Our committee liaison, Natalie Kessler will go over instructions for today's meeting. Thank you, Chair. Well, members of the public are able to attend the meetings in person. This meeting is being televised and live streamed on the city's website, and the council administration will continue to make arrangements for the public to comment using the Zoom webinar platform. Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the virtual queue closes. And the queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first. This will allow for better meeting management between the two platforms and ensure the committee is able to manage and conduct city business. We appreciate the public's cooperation. Chair. Thank you. I will now call the audit committee meeting of April 23rd, 2025 to order. Natalie, please call the role. Vice Chair Whitburn. Here. Committee member Halpern. Here. Committee member Mafia. Here. Committee member Tap Shuri. Here. And Chair, Councilmember Moreno. Present. And also attending the meeting today is Andy Henell, the city auditor. Christine Christiana Gauger, Chief Compliance Officer, Aaron Noel with the IBA, Kevin Smith, Committee Consultant, and Natalie Kessler, Committee Liaison. Natalie, please continue with public comment instructions. If you're in person, please complete a speaker slip located at the entrance of the committee room and place it on top of the box indicated at the in the at the speaker's box in the front of the room. Please do so in a timely manner to ensure proper meeting management. In-person testimony will conclude before virtual testimony begins. Members of the public can join the webinar by computer, tablet, or smartphone by accessing the link, which is listed online in the preamble language of the agenda on the city's webpage. If you need to participate by phone, email 1669-2545252. The webinar ID is 1600337422 pound. This information is also available on the agenda and will appear on the screen during the public comment period for each agenda item. Please note that if you're watching via city TV 24 or online, there may be a delay. Please participate via the audio on your phone and meet your TV or computer when it is your turn to speak. And if you wish to speak on our on a particular item, wait for that item to be called and then raise your hand to speak by tapping the raise your hand icon. Or if you're calling a call-in participant, press star nine on your phone. If you raise your hand during a comment, excuse me, if you raise your hand during a non-comment period, your hand will be lowered. Chair. A recent article in the MJ Biz Daily, an industry financial publication reported that pot company cookies, with a store here in San Diego, have been sued by investors, claiming it's mismanaged 15.5 million through multi-million dollar kickbacks, benefiting company founders at investors' expense, according to the court documents. It highlights suspicious industry financial dealings and why we should question the industry's economic viability. A more troubling sign regarding marijuana business viability, and I quote the article stated its cookies has allegedly ran out of money. Parents appreciate the increased tax on these businesses. However, we wonder if the tax collected really compensates for the increase in marijuana-related poisonings and trips to the emergency room, mental health issues and addiction rates, especially for those between the ages of 18 and 30. These health crises cost money to the city and its families. Thank you for hearing my concerns this morning. Thank you. Our next speaker is Judy Strang. Please unmute and begin.

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