Unqualified is Better for Compton

Let them play!

The Los Angeles Dodgers Foundation Dodgers Dreamfields finally came to Compton twenty years later. In addition, Compton produced its latest audited financial statements for two consecutive fiscal years, 2017-18 and 2018-19. The good news ends there. However, champion teams work as one and find ways to win. I’m for Team Compton. What’s your team?

Full disclosure: I once lived on Gopher Hole Stadium’s left-field foul line as a child. That was in the Palm Lane Public Housing in Watts. Hard balls regularly bounced off our front door and crashed through our kitchen and living room windows. Instead of hating it, I learned to love baseball and got plenty of practice throwing errant baseballs from our concrete porch back toward home plate, 300 feet away.

Later I played on Gonzales Park baseball (aka Cressy Park) fields in the 60s. My three children played on the same fields in the late 90s, first with Little League and later Compton Baseball Academy Teams (CBATs). Since then, I’ve served on and off the CBATs board of directors, mainly because Gerald Pickens loves the game more than I do. In addition, he loves Compton’s youth.

The new Dreamfields at Gonzales Park are under construction and should complete in 2022. However, what should Compton’s youth do in the meantime? Given the city’s other unplayable fields, it’s easier to go to jail than play baseball/softball in Compton. For some, it may be easier to die as the number of playing-aged young people killed in and around Compton has spiked.

YearAge range# Killed*
Source Teen Intervention Program Homicide Report


* No arrests have been made by LASD

**Includes Andres Guardado killed by sheriff deputies

The idea of better baseball fields in Compton is not new. CBATs first approached Baseball Tomorrow Fund (BTF) to revitalize Compton fields at Gonzales Park 20 years ago. The BTF is a joint initiative of Major League Baseball and the Players Association. CBATs worked out a collaborative agreement with City Hall that would allow the organization to rehabilitate three existing fields. CBATs submitted a full proposal for consideration that the grantor seemed to take seriously.

Gwen Barnett was director of Parks and Recreation (P&R) and took an interest. She helped navigate the process. That was one of the rare times P&R staff took baseball and later softball seriously. Mostly, staff sat in air-conditioned offices and deferred field maintenance, team organizing, practice and play schedule, equipment and uniforms, and coordination to CBATs with few resources. Baseball Tomorrow ultimately backed out due to the politics of Compton at that time.

Pickens has pretty much been the face of Compton baseball and softball in the new millennium.

Baseball and now softball struggle to survive in Compton as the city, like its surface streets, allowed several playing fields to deteriorate. Compton’s adopted budget and 2018-19 audited financial statements point to the problem.

Compton accounts for its financial activities, revenues, and expenditures, using various funds (a segregated set of self-balancing financial records.) The General Fund (G.F.), the most prominent and flexible, accounts for all general revenues not restricted by law or agreement to a specific purpose. The G.F. accounts for all the assets and resources used to finance Compton’s public administration and traditional citizens’ services, such as police and Parks and Recreation. 

P&R takes a backseat to law enforcement. For example, the 2018-19 General Fund proposed budget totaled $68,185,177 including Measure P funds of $10,800,000. Of that $68 million, 37% went to Los Angeles County Sheriff’s Department (LASD) and Code Enforcement ($22,987,772 and $2,785,961 respectively). P&R received $2,430,874 or 4% of the General Fund. That’s if one can believe the budget. Audited financial statements are important, and if you want the truth, the auditor’s opinion on them is paramount.  

You might ask, what the hell does this have to do with baseball/softball in Compton? My answer is a great deal. Will we ever again produce the likes of my All Compton Team in a city that nurtured big leaguers Bennie Daniels, P, Carl Edward Nichols, C, Gary Ward, 1B, Bobby Henrich, SS, John Henry Scott, 3B, George Hinshaw, 2B, Lonnie Smith, OF, Dick Davis, OF, Ken Landreaux, OF, and Roy White DH?

Qualified Audit Opinion vs. Unqualified

The audit firm performed a limited audit and issued a Qualified Opinion on Compton’s financial statements prepared by the city controller and city manager. The city manager and controller are responsible for presenting financial statements following auditing standards generally accepted in the USA.

A limited audit has a more restricted scope than a full audit. In this type of audit, the audit team confines its operations to specific audit procedures or only examines certain functional areas of an organization. The auditors cannot produce a clean audit opinion when they have engaged in a limited audit.

A clean opinion is an unqualified auditor’s report regarding an entity’s financial statements. Such a report indicates the auditor‘s belief that the entity’s financial statements present its financial results, position, and cash flows fairly and truthfully. When an auditor does not believe that this is the case, she issues a qualified opinion, adverse opinion, or disclaimer of opinion. For example, the investment community, bondholders, and lenders are usually only willing to invest funds in a business accorded a clean opinion.

A Qualified Opinion is an audit report issued with reservations regarding the state of an audit client’s financial statements. In this opinion, the auditor follows a standard opinion format to state that the financial statements are fair, although incomplete, and maybe a bogus representation of a client’s financial results and condition, per the applicable accounting framework (such as GAAP).

Unreliable underlying accounting data makes for an obscure audit trail and leads to questionable decisions based on it (lies in effect). All business entities rely on creditors to finance day-to-day and long-term operations. It’s like credit checks when you apply for Visa, MasterCard, or Target. The rating or credit score determines how much, if anything, you can charge. The worse the credit rating, the higher the borrowing cost. While its true bonds may not necessarily raise taxes and provide money to pay for the construction or acquisition of capital facilities or any other purposes, they are repaid from revenue raised in subsequent years to service the debt.

Generally accepted audit standards require that auditors obtain reasonable assurance about whether the financial statements are free from material misstatement. Auditors get evidence about the amounts and disclosures in the financial statements and, using their judgment, assess the risks of material misstatements, whether due to fraud or error. The auditor reviews the internal controls (checks and balances) relevant to Compton’s preparation and fair presentation of the financial statements to design appropriate audit procedures. In a separate review of Compton’s internal controls, the auditors said, “…we did identify certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.” Auditors found 22 material weaknesses.

The independent auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management and evaluates the overall presentation of the financial statements. CPA firms are paid by the hour. The longer auditors spend asking and looking for information, the greater the cost.

Next, the auditor issues an opinion, which is the crux of their effort. Anything other than an Unqualified Opinion is terrible news and raises a red flag for anyone looking into the financial operations of the city of Compton. In other words, a faulty underlying accounting system makes the annual budget a work of fiction. It’s like the Little Pig building a house of straw.

The audit firm issued a Qualified Opinion for Compton’s accounting and financial presentation for 2017-18 and 2018-9. In other words, the auditor lacks confidence in the city’s financial accounting records, a function of the Controller hired by the city council. The city manager, also employed by the city council, prepared his budget based upon the underlying accounting data system. The accounting system should provide the basis for appropriate budgetary control. The city council approved the 2018-19 budgets as its operating plan.

Audit Results

Major 2018-19 sources of G.F. revenues included property taxes, Sales and Use Taxes, Electric Users, Parking Citations, Motor Vehicle License, Current Services Provided/Water, and Measure P (1% Sales Tax). Total G.F. actual revenue collected for the fiscal year amounted to $71,986,281.

Expenditures for 2018-19 included: Municipal Law ($958,007) and Sheriff ($22,726,129) totaling $23,684,136 or 33% of Compton’s $71,986,281 actual G.F. revenues. Interestingly, the sheriff shows in the Compton budget as a department. However, unlike Municipal Law that reports to the city manager, LASD doesn’t appear on the city’s organization chart. There are no apparent links to Compton other than budgetary. Is this why we see no oversight, no contract monitoring of LASD, and, essentially, no accountability? 

The 2018-19 expenditures for Parks and Recreation totaled $2,306,978 or 3% of the G.F.

Here’s the rub: some may say that Compton “balanced” its budget by showing an excess of collections over expenditures, $6,712,663. However, when we factor in the 2017-18 beginning $23,558,177 deficit and adjustments, $994,652, the 2018-19 G.F. is still deficient $16,432,628. Face it; a plug or fake number is all that’s needed to “balance” a budget. Annual audited financial statements are much more useful tools to assess city performance and should be the goal.

Any politician who doesn’t speak fluent annual audited financial statements is not on our team and deserves no playing time. City managers and controllers that can’t produce accounting records to support an Unqualified Opinion should be fired. A treasurer that doesn’t observe internal control requirements should be sent north on the Blue Line.

Other funds comprised of non-major funds include SPECIAL REVENUE FUNDS (a tax or other revenue source authorized by a legislative body used for a specified purpose only), REDEVELOPMENT FUNDS, ENTERPRISE FUNDS, INTERNAL SERVICES FUNDS, and in Compton’s case, a generous Retirement Fund. 

As of June 30, 2019, Compton had an approximate total negative net position of $113.3 million, a deficit fund balance in its G.F. of approximately $16.4 million, and deficit fund balances in 17 other funds totaling about $34.9 million. That means that liabilities are more significant than assets. If liabilities and assets are correctly measured, a negative net asset position means that future revenues will, at least in part, need to make up past revenue shortfalls. Also, note what the 2012-13 auditors said in their report, “As discussed in Note 13 to the basic financial statements, the City’s General Fund had a deficit fund balance of $36,381,141 and advances from other funds for $41,665,653 as of June 30, 2013. This indicated a significant liquidity problem at June 30, 2013.” Compton would be insolvent as a private business.

The 2018-19 auditors go on to say, “These deficits can be largely attributed to the net pension and OPEB liabilities.” (What is OPEB? Other Postemployment Benefits are benefits other than pensions that U.S. state and local governments provide to their retired employees. These benefits principally involve health care benefits and may include life insurance, disability, legal and other services). The auditors say, “Pension liabilities are funded by voter-approved special tax levies for retirement costs.” This cost seems secured to property taxes in Compton.

Concerning the deficit situation, the auditor’s Qualified Opinion holds like a called third strike.

The 2018-19 auditor list several other elements that led to their no-confidence opinion on Compton’s financial statements and supporting records:

  • The allocation of cash to the various funds has not been properly reconciled
  • The City has not maintained capital asset records or recorded capital asset activity, which is not in compliance with General Accepted Accounting Principles
  • The City has recorded land held for resale of approx. $16.1 million in the governmental activities and approximately $17.6 million in the Successor Agency Private-Purpose Trust Fund. The City was not able to provide a listing of land held for resale or any documentation to support the carrying value.
  • The City has not determined whether amounts recorded as unearned grant revenues of approximately $4.1 million have been earned as of June 30, 2019.                                        

Where’s the property list? What’s on the list? Where are the independent auditor’s reports for 2019-20 and 2020-21? Also, there are no independent auditor’s reports for 2014 through 2017. The next city manager will have her hand’s full sorting through this mess. Compton will likely pay a premium for a qualified person who both understands the importance of accurate financial records and has the skill to remediate historical dysfunction. Things will get worse at city hall before they get better.

What can the people of Compton do to make it better? What will be your contribution? Sometimes what you don’t do contributes to helping. The old cliché works here: If you are not part of the solution, you are the problem.

City of Compton Budget 2021-22

The city manager’s 2021-22 budget transmittals fail to mention incoming General Fund and other fund deficits. Instead, he paints a rosy picture and never addresses the underlying structural problem identified in independent audit reports attributable to poor governing, accounting practice, and policy. He fails to speak on public safety and to the issue of the auditor’s Unqualified Opinion. He does not make truth, a safer city, and obtaining Qualified Opinion city objectives. It’s like the other Little Pig who built his house with sticks.

The overall 2021-22 adopted budget equals $177,449,789:

Revenue                                  $56,188,961

Measure P                               $14,296,785

Total General Fund              $70,485,746

LASD                                                 $24,455,497

Community Improvement

Services Department               $4,505,557

Recreation                                  $870,936

LASD now sucks up 35% of the G.F. The old Municipal Law Department was reshuffled into something labeled Community Improvement Services (CIS) and is budgeted 7% of the G.F. Law enforcement activity takes 42% of Compton’s General Fund. In comparison, Recreation took a reduction hit to a measly 2%.

Why isn’t LASD placed within CIS organizationally where somebody can monitor and measure its benefit? Given LASD’s inability to remedy what residents ask for (e.g., eradicate illegal cannabis dispensaries, street doughnuts, illegal fireworks, sex trafficking, etc.) Compton greases the city jail-to-prison pipeline. What are the results of Compton and LASD’s investments in surveillance cameras throughout the city? Maybe to them, jail jumpsuits cost far less than a fully equipped baseball/softball player, which is about $500 each.

Baseball equipment is expensive. What are CBATs and the baseball/softball particular interest in Compton to do against dwindling resources? What we’ve always done—hustle to make something out of nothing like Judson Powell once did. We’ve learned to sew and silkscreen our uniforms to suit players and avoid alcohol and other drug sponsorship. We washed uniforms in cranky clothes washers installed beneath the bleachers in the Gonzales Park stadium. We’ve solicited used equipment from other programs and held raffles. We’ve dragged the fields, washed and repaired the bleachers, and cut the grass. Raytheon once donated banks of computers used by CBATs to help players study. We’ve used tournament fees to raise money even when some foolishly thought we “rented” Compton fields. Mr. Pickens puts on a chef’s hat, cooks and sells barbeque while coaching during games. We’ve begged and borrowed but never stole.

CBATs supporter Navaline Smith says, “It’s not about Gerald Pickens, it’s about the children of Compton’s opportunity to play baseball and softball. Let them play!”

Moreover—the results? CBATs gave Major League opportunities to Avante Rose, OF, Tyree Davis, CF/LF, Desmond Henry, OF, Masjid Khairy, OF, Chris Smith, OF, Drew Toussaint, OF/3B, and  Eunique Johnson, 3B, and many, many more.

CBATs alumni Johnny Washington, now a Major League hitting coach, says of his playing time with Pickens, “G made it fun–it was always about the kids. He put the kids first and himself last…it was never about him. He impacted my life, the guys that came before me and afterward.”

Pickens coordinates baseball skill-building, training, and development, coach selection, training, and supervision, forms teams, issues uniforms, and develops playing schedules for the benefit of Compton with a commitment that’s unmatched with funds and support from the municipality, even some parents of players. Washington goes on to say, “He helped us all become better men, better ballplayers, and kept us off the streets.”

Organized baseball and softball play are mainstays in surrounding cities such as Lynwood, Paramount, and Carson. I would put CBATs teams up against any of them even though we don’t have the support they do. We look forward to when Compton competes on the field with surrounding cities for the East South Bay Championship. WAIT, I forgot. Compton works with neighboring towns, as well as Crips work with Bloods.

Fortunately, Title 9 eventually brought softball playing fields to Centennial and Compton High Schools. However, unlike other cities, CUSD and City Hall operate from their respective silos. Add an untethered business community with more independent chambers of commerce than one can count, and we have an unmoored community adrift in hurricane winds. We can’t forget L.A. County with its massive resources. Inexplicably, no visible combined effort exists among those above to improve Compton.

To win this championship, Compton needs a whole team comprised of every inhabitant, including Facebook foes, hood-families, ethnicities, neighborhoods, political districts, school boards, businesses, and those drinkers and smokers camped in unstaffed parks. Team Compton needs all hands on deck to write our narrative. Team Compton will rebuild a house of brick like the third Little Pig.

If all 97,000 Comptonians did just one thing (or not) to make the city better, we’d win every game.

Mr. Pickens does his part daily. What is your contribution?

Need help? Try this: vax-up; don’t harm your Compton brothers and sisters; register and vote in every election; carefully vet and hold public servants accountable and monitor them like a lip canker; talk to and work with our young people—they are not made to socially-distance and live on digital screens which only leads to anxiety and depression; tutor and mentor the young; don’t buy from illegal cannabis dispensaries in Compton; work to mitigate homelessness; prepare academic decathlon teams; create quiet safe spaces (drug and drama free); sponsor community clean-ups; stop speeding and running red lights; take the donuts to nonresidential industrial areas; join Compton Elite Toastmasters; join Concerned Citizens of Compton; demand more from and have CUSD add or start a Governing Leadership Academy; build Boy’s and Girl’s Clubs in each political district; bring Southern California/Los Angeles Peacebuilders to Compton; support food banks; drag baseball fields; cut the grass; support CBATs…(fill the blank ___________________________________________________________________)

Do this and join Team Compton. Let them play!

A C.P.A. candidate, Ron L. Dowell, passed the Certified Public Accountant’s Examination in 1986. He worked at auditing contract programs for the Los Angeles County Department of Health Services for ten years. Ron also writes poetry and short stories. World Stage Press will publish his poetry collection, Watts UpRise, in 2022. For more on his stories, visit his website http://crookedoutofcompton.com