Lindsay Council approves corrective action plan after state audit flags repeated financial problems

Lindsay City Council unanimously approved a corrective action plan intended to address recurring audit findings that auditors and the state identified in a report dated Dec. 19, 2024.

Lacey, who presented the corrective action plan, told the council that auditors found repeated problems dating back to 2015, including deficit spending, weak internal controls, lack of governmental accounting knowledge among staff and noncompliance with grant and statutory requirements. “The city of Lindsay has had several audit findings from their external auditors over the past several years, which has led to the state auditor coming in to audit the city of Lindsay,” Lacey said during the presentation.

The plan highlights several steps the city will take: freeze or eliminate 22 positions instead of backfilling them; move toward 0‑based budgeting to eliminate the general-fund deficit; strengthen internal control procedures including centralized fiscal oversight and segregation of duties; and require monthly or biannual financial reporting to the council. Lacey told the council the city has adjusted certain intra‑fund transfers for the current year and expects the water and wastewater rate adjustments adopted under Proposition 218 to help enterprise funds become self‑sustaining.

Council members pressed staff on feasibility and timing. The plan sets specific milestones: an initial status update to the state auditor is due by June 19, 2025, the city intends to show a first-year reduction in the deficit by that date, and to build at least a three‑month operating reserve over the next two years. Lacey said staff is implementing controls now and that two high-risk items previously flagged—planning for federal assistance funds and public safety training/equipment—have been resolved.

Council member Soria moved to approve the plan, Mayor Pro Tem Flores seconded, and the motion carried on a 5–0 roll call. Council did not adopt additional changes at the meeting but directed management to monitor progress closely and report back according to the schedule in the packet.

What happens next: staff will begin implementing the changes outlined in the corrective action plan, monitor progress internally, and deliver a status update to the state auditor by June 19, 2025. The council retained oversight authority and requested regular financial reporting in council packets.