CHICAGO — Standard & Poors Global Ratings placed its ‘A-‘ long-term rating on Brawley, California’s existing pension obligation bonds on CreditWatch with negative implications. The rating remains under criteria observation (UCO).
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“The CreditWatch placement reflects our view of the lack of timely and sufficient information to maintain the rating,” said S&P Global Ratings credit analyst Malcolm Simmons in a press release.
The CreditWatch placement further reflects a one-in-two chance that we could lower or withdraw the rating during a 90-day time frame, S&P said.
The agency warned the rating is at risk of being withdrawn, preceded by any change to the rating that we consider appropriate given available information, if we do not receive sufficient information within 30 days.
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“If the city provides us with requested information within 30 days, we will conduct a full review and take a rating action within 90 days of the CreditWatch placement,” S&P said.
“We looked into this matter and unfortunately there was some misscommunication which resulted in their latest request not being forwarded it to our finance department,” Brawley interim City Manager Jimmy Duran said in an email to the newsroom. “We are working with S&P to promptly provide the information they have requested.”
Brawley Mayor Gilbert Rebollar also commented on the matter.
“As Mayor during this transition of change within our city, I take full responsibility,” Rebollar said in a separate email. “I trust our hard-working administration and staff to engage with S&P, provide the necessary information, and maintain confidence in the City of Brawley’s financial footing.”
Back in October, the City Council acknowledged the reception of a clean financial audit.
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Back then, the City of Brawley announced its clean financial audit for the fiscal year ending June 30, 2023. The audit, conducted by an independent firm, confirms the City’s financial statements are accurate and comply with generally accepted accounting standards.
“This report serves the interests of our council, residents, investors, grantors, employees and other stakeholders,” said then-Mayor Ramon Castro. “The clean audit is a testament to our dedicated Finance Department and the City’s commitment to financial integrity. We remain focused on responsibly managing Brawley’s finances and ensuring a strong foundation for the City’s future growth and prosperity.”
The annual audit forms part of the City’s Annual Financial Report, which provides a comprehensive overview of the City’s finances, services, achievements and economic outlook. The independent auditor’s report gives the City a third-party opinion of the City’s finances. A clean audit is the highest level of assurance that can be given on financial statements, indicating that the City’s financial records accurately present its financial position, the city said two months ago.
The independent auditor made two key recommendations regarding City policies and procedures. First, the City must maintain adequate staffing levels to ensure the timely completion of a high-quality year-end financial report. Second, investment in staff training and enhanced tracking mechanisms is essential for accurate grant reporting. A review of staffing levels is also necessary to support effective grant management, the city said.
“Even with a clean audit, there is always room for improvement,” then-Mayor Castro continued. “Based on the auditor’s feedback, the City will prioritize staffing support and training in our finance department to ensure timely reporting and compliance with all Governmental Accounting Standards. Maintaining transparency and accuracy in our financial records is crucial for sustaining trust within our community.”