By Lillian Boyd and Collin Breaux

Sen. John Moorlach released his report assessing the financial soundness of each of California’s cities, ranking San Juan Capistrano in 18th place out of Orange County’s 34 cities—or 239th out of California’s 482 cities.

As Moorlach states in his report, all government entities in California must send the state audited financial statements so public officials, private watchdog groups, journalists and private citizens can review them.

Moorlach analyzed California cities’ financial statements by dividing the city’s unrestricted net position (UNP) by the municipality’s population. The UNP includes both a municipality’s assets and liabilities, which can be either a positive number or a deficit number.

The current report from Moorlach includes only information from 2017 and 2018 Comprehensive Annual Financial Reports (CAFR) from cities. With the numbers from those years, San Juan Capistrano’s UNP per capita came out to $165 in the red. The overall 2018 UNP was $6,050 in the red.

A response statement from the City of San Juan Capistrano said they adhere to the highest standards of financial transparency and accountability. “As demonstrated by the City’s audited financial reports, the City of San Juan Capistrano consistently produces a balanced budget that puts the City’s limited financial resources to work providing valuable community services, while responsibly accumulating reserves (currently at 60% of the General Fund budget) to fund unexpected financial needs,” the statement said. “This assessment of the City’s financial strength provides a more balanced perspective that considers all of the objectives of financial management, rather than the sole goal of maximizing unrestricted net position.”

The statement from San Juan Capistrano also said it can be challenging to try to reduce a city’s financial strength to a single metric.

“In his ranking of cities, Sen. Moorlach focuses on ‘unrestricted net position,'” the statement said. “This metric can be distorted by a number of factors (e.g., age of the city, community property values, amount of private development in the city, etc.) and may not necessarily reflect a city’s exercise of sound financial management.”

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