By: Libi Uremovic | Original Article at patch.com
Agencies must meet financial requirements to participate in a JPA.
ERMAC
Exclusive Risk Management Authority of California (ERMAC) is a Joint Powers Authority (JPA).
As the City of Beaumont Risk Manager Attorney and Insurance Agent; James Gregg knew or should have known that it was a violation of Cali Govt. Code 1090 and 87100, Cali Bar Rule 1.5, and Cali Insurance Code 750 to purchase the City’s Insurance from his own Insurance Company.
Agencies must meet financial requirements to participate in a JPA. ERMAC’s Certified Public Accountants, Moss Levy Hartzheim, prepared the City of Beaumont’s Financial Statements for 22 years, which have now been proven by the State Controller to contain material misstatements.
FINANCIAL REQUIREMENTS TO JOIN A JPA
$5 Million Shareholder Equity
Average Net Profits of $500,000 per year for the last five (5) years
Certified, Independent Audited Financial Statements
The City of Beaumont has no Reserves, no Equity, has operated with a General Fund Deficit for at least the past five (5) years, and has used ERMAC’s CPA firm to audit the Financial Statements for 20 years.
STATE CONTROLLERS’ INVESTIGATIVE REPORT DATED NOVEMBER 3, 2015
Finding 7 – Fund Balance and Cash Balance Deficit and Cash Impairment:
“Our review of the City’s General Fund year-end fund balances revealed that from FY 2009-10 through FY 2013-14, the balances ended in material deficits. The General Fund is the main operating fund for the City, and the end balance amounts were as follows:
Fiscal Year Ending Balance
2009-10 $(10,277,406)
2010-11 $(10,871,054)
2011-12 $ (4,162,063)
2012-13 $ (6,866,481)
2013-14 $ (6,354,884)
ERMAC CHARGES EXORBITANT FEES TO BEAUMONT:
ERMAC further violated State and Bar Association Laws by charging the City of Beaumont an exorbitant fees in comparison to the other three Cities covered by ERMAC.
ERMAC provides coverage to four (4) cities: Laguna Hills, Santa Maria, Hayward, and Beaumont. A review of the other cities’ policies reveal that the City of Beaumont pays over twice as much per population for their City’s insurance than the other three Cities. Based on the average payment of the other cities, the City of Beaumont should be paying about $160,000/yearly for their insurance coverage.
Below is a breakdown of each city’s insurance policy covered by ERMAC.
Laguna Hills: Population 30,951
Policy Cost: $125,000
Population/Cost: $4.04
Beaumont: Population 40,000
Policy Cost: $379,881
Population/Cost: $9.50
Santa Maria:
Population: 101,459
Policy Cost: $422,694.72
Population/Cost: $4.17
Hayward:
Population: 150,000
Policy Cost: $564,850
Population/Cost: $3.77