Finance

South Pasadena faces budget delays amid mounting tensions and financial concerns

Published

2 years ago

July 27, 2024

South Pasadena faces budget delays amid mounting tensions and financial concerns

The meeting was only one-third of the way through, but the exasperation in the air was palpable.

“There’s a level of frustration that’s happening throughout the room, and I don’t mean just up here, I think it’s everybody,” said South Pasadena Councilmember Janet Braun, who serves as the City Council’s liaison to the city’s Finance Commission.

Braun’s comments at this week’s Finance Commission meeting came as tensions continue to mount over the proposed fiscal year ’24-’25 budget, which the South Pasadena City Council is set to adopt next Wednesday, July 31.

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South Pasadena City Hall is seen on Friday, July 26, 2024. The city is facing financial challenges after an analysis in the beginning of this year projected a $3.7 million deficit. (Photo by Sarah Reingewirtz, Los Angeles Daily News/SCNG)

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Despite efforts to finalize the financial document, its adoption has already been delayed by about a month after city officials expressed concerns about discrepancies on June 27.

While the Finance Commission meetings are meant to solve these issues, recent events suggest the budget may face further delays, adding to uncertainties about the city’s financial outlook after it narrowly avoided a $3.7 million deficit.

“Based on an impasse between the Finance Commission and the Finance Director during its two commission meetings on July 16th and July 23rd, I am not sure if the Finance Director can close the gap,” Mayor Evelyn Zneimer said in an email on Thursday, July 25.

Zneimer expressed concerns about the “true numbers of the revenues and expenditures,” noting that the Finance Department has not reconciled the city’s monthly bank statements since February 2024.

“If the Council is not satisfied with the explanation from the Finance Director and the Finance Commission does not recommend adoption, then we might have to postpone the July 31st meeting to the next regular council meeting,” she said.

South Pasadena Finance Director John Downs announced his retirement in April but was brought back on a temporary basis to finalize the FY 24-25 budget, city officials said.

When reached by the phone on Thursday, July 25, Downs, citing a busy schedule, declined the interview at the time. However, during the Tuesday, July 23, Finance Commission meeting, Downs defended his approach. He also said the staff will present an updated budget document to the City Council next week.

“That will be presented to both of you at the time,” he told the commissioners. “Everyone here has received a copy of the punch list, so everybody has a list of the punch list, those things will be incorporated into the document.”

But the commissioners expressed concerns that they won’t have a copy of the budget report before next week’s meeting.

“My assumption was that these working sessions last week and this week would be included in a revised document. John was working under a different set of assumptions. I’m glad it finally came out,” Finance Commission Chair Peter Giulioni Jr. said.

According to the proposed FY 24-25 budget, as of July 1, 2024, the general fund balance is estimated to be $22 million. For FY 24-25, the city expects to receive $41.2 million in revenue and spend $39.9 million.

South Pasadena has faced a tumultuous year, beginning with budgetary missteps that included a projected $3.7 million deficit.

During a joint City Council and Finance Commission meeting on Feb. 21, a third-party consultant, NHA Advisors, LLC, estimated that the city’s expenses would outpace its general fund revenues over the next five years, with deficits ranging from $1.8 million this fiscal year to $3.9 million in FY 28-29.

In response to this dire forecast, Braun recommended forming an ad hoc committee “to address the immediate financial and operational situation.”

According to her, the city’s financial problems began even earlier with the City Council’s adoption of the FY 23-24 budget in June 2023, which included a $2 million deficit.

That budget was approved on the condition that the Finance Commission would work with staff to understand the negative fund balances and provide a five-year projection, she said. The City Council received this projection on Feb. 21, along with a mid-year budget report.

“Accompanying that report was the mid-year budget report, which projects not the $2 million deficit originally approved and on which the five-year projections were built, but maybe that is incorrect, I’ve learned,” Braun said. “But an actual deficit for the current year of $3.7 million. We have been delivered a financial nuclear bomb.”

She also criticized what she described as “the staff’s resistance to work with the Finance Commission over the past several months, despite the direction from the City Council last June.”

Following Braun’s alarming assessment, the ad hoc committee was formed. It consisted of Zneimer, Braun, Giulioni, and Finance Commission Vice Chair Sheila Rossi.

However, this committee was nearly dissolved after complaints from former Finance Commissioner Ed Elsner, who argued that the committee violated Brown Act because its discussion and formation were not listed on the Feb. 21 meeting agenda.

During a meeting on March 20, Councilmember Jon Primuth argued that the committee “had a very strong political agenda.” Councimember Michael A. Cacciotti described the committee as “a duplicative body” and “a waste of time, a waste of our resources”.

The City Council subsequently voted 3-2 against reauthorizing the committee, with Primuth, Cacciotti and Councilmember Jack Donovan voting against reauthorizing, Zneimer and Braun voting in favor.

But public concern over the deficit projections grew, prompting the City Council to reinstate the committee on May 1. The panel decided that the committee would be resurrected after July 1, by which time the FY 24-25 would’ve been adopted.

Nevertheless, that plan also fell short.

While the City Council had hoped to adopt the FY 24-25 budget before the current fiscal year ends on June 30. However, during a June 27 meeting, the panel, citing discrepancies in the numbers in the financial report, voted to go with the Finance Commission’s recommendation to delay the budget adoption.

Instead, the panel approved a resolution of continuing appropriations, authorizing the city to use appropriations for ongoing projects for 60 days or until the adoption of the budget, whichever comes first.

Using continuing appropriations could lead to administrative inefficiencies, restricted financial management and uncertainty for long-term planning, according to a staff report. However, the pros of this method are that it could help avoid government shutdown, maintains the status quo and provides more time for budget negotiations.

According to a staff report, the proposed FY 24-25 budget is balanced and shows a projected surplus. In addition, the previously projected $3.7 million deficit was mitigated by the discovery of unused funds.

But there are several problems with the proposed budget, Rossi said in a recent interview.

“I don’t really have a lot of trust in the numbers that are in the budget, because we still haven’t received the third quarter financials,” she said. “They gave us the third quarter summary, but it turns out that they haven’t finished their bank reconciliations for February. “

Rossi also expressed concerns that the revenue projections in the proposed budget are overstated by $700,000 to $900,000 based on the projections from two third party consultants the city hired.

Meanwhile, the city has hired LSL finance consultants to help with back-office accounting and reconcile the bank statements, the mayor said.

“Hopefully LSL could clarify the true numbers so that by August 21, we might be able to adopt the budget subject to any conditions that the Council might impose,” she said. “But then I have the other four Councilmembers to weigh in on the situation and I don’t know where they stand. So everything will depend on how the meeting will go on July 31.”

The city has also been dealing with a string of staff departures, which culminated in the stepping down of former City Manager Arminé Chaparyan on June 24. She received a lump-sum severance benefit in the amount of $307,500, $1,727.10 of unused management leave and a cash payment for all properly accrued and unused vacation time.

On Friday, July 26, the City Council approved a resolution appointing Donald Penman to serve as interim manager. Penman previously served as city manager for the cites of Arcadia, San Fernando and Baldwin Park.

He will start on Monday, July 29.

Rossi said “nothing is at stake” if the City Council doesn’t passes the budget next week.

But one thing was expected: A long night.

“The best we can do is to create a punch list and that we all need to bring our pajamas and cots on the evening of the 31st, that it’s going to be an extraordinarily long evening, if we are going to ask the City Council to either reject or accept each line item that we’re discussing right now,” Giulioni said.

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Finance

Why Chime Financial Stock Surged Nearly 14% Higher Today | The Motley Fool

Published

11 hours ago

February 26, 2026

Press Room

Why Chime Financial Stock Surged Nearly 14% Higher Today | The Motley Fool

The up-and-coming fintech scored a pair of fourth-quarter beats.

Diversified fintech Chime Financial (CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.

Sweet music

Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.

Image source: Getty Images.

Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.

On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.

In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”

Today’s Change

(12.88%) $2.72

Current Price

$23.83

Key Data Points

Market Cap

$7.9B

Day’s Range

$22.30 – $24.63

52wk Range

$16.17 – $44.94

Volume

562K

Avg Vol

3.3M

Gross Margin

86.34%

Double-digit growth expected

Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.

It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.

Finance

How young athletes are learning to manage money from name, image, likeness deals

Published

23 hours ago

February 26, 2026

Press Room

How young athletes are learning to manage money from name, image, likeness deals

ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.

Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.

“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.

What You Need To Know

High school athletes with Division I prospects are learning to manage NIL money before they even reach college

Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources

Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era

Preston said the experience has already been eye-opening.

“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.

For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.

“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.

Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.

“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.

The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.

“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.

For these athletes, having the right support system makes all the difference.

“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.

Collins-Howard said the program has given him a broader perspective beyond just the game.

“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.

“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.

NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.

Finance

How states can help finance business transitions to employee ownership

Published

1 day ago

February 25, 2026

Press Room

How states can help finance business transitions to employee ownership

With the introduction of the Employee Ownership Development Act , Illinois is poised to create the largest dedicated public investment vehicle for employee ownership in the country.

State Rep. Will Guzzardi’s bill, HB4955, would authorize the Illinois Treasury to deploy a portion of the state’s non-pension investment portfolio into employee ownership-focused investment funds.

That would represent a substantial investment of institutional capital in building wealth for Illinois workers and seed a capital market for employee ownership in the process. And because the fund is carved out of the state investment pool, it doesn’t require a single dollar of appropriations from the legislature.

Silver tsunami

The timing of the Employee Ownership Development Fund could not be more urgent. More than half of Illinois business owners are over 55 years old and are set to retire in the coming decade. When these owners sell their firms, financial buyers and competitors are often the default exit – if owners don’t simply close the business for lack of a buyer.

Each of these traditional paths risks consolidation, job loss and offshoring of investment and production. These are major disruptions to the communities that have long sustained these businesses. Without a concerted strategy, business succession is an economic development risk hiding in plain sight, and one that threatens local employment, supply chain resilience, and the tax base of communities across the country.

Employee ownership offers another path. Decades of empirical research show that employee-owned firms grow faster, weather economic downturns better (with fewer layoffs and lower rates of closure), and provide better pay and retirement benefits.

The average employee owner with an employee stock ownership plan, or ESOP, has nearly 2.5 times the retirement wealth of non-ESOP participants. That comes at no cost to the employee and is generally in addition to a diversified 401(k) retirement account.

Because businesses are selling to local employees, employee ownership transitions keep businesses rooted in their communities. This approach can support a place-based retention strategy for state economic policymakers.

Capital gap

Despite the remarkable benefits of employee ownership and bipartisan support from policymakers, a lack of private capital has impeded the growth of employee ownership: In the past decade, new ESOP formation has averaged just 269 firms per year.

Most ESOP transactions ask the seller to be the bank, relying heavily on sellers to finance a significant portion of the sale themselves, often waiting five to 10 years to fully realize their proceeds. Compared to financial and strategic buyers who offer sellers their liquidity upfront, employee ownership sales are structurally uncompetitive in the M&A market.

A small but growing ecosystem of specialized fund managers has begun to fill this gap. They deploy subordinated debt and equity-like capital to provide sellers the liquidity they need, while supporting newly employee-owned businesses with expertise and growth capital (see for example, “Apis & Heritage helps thousands of B and B Maintenance workers become owners”).

This approach is a recipe for scale, but the market remains nascent and undercapitalized relative to the generational pipeline of businesses approaching succession. To mature, the market needs anchor institutional investors willing to commit capital at scale.

State treasurers and other public investment officers could be those institutional investors. Collectively managing trillions of dollars in state assets, they have the portfolio scale, time horizons and fiduciary obligation to earn market returns while advancing state economic development.

Illinois’ blueprint

Just as federal credit programs helped catalyze the home mortgage and venture capital industries in the 20^th century, state treasurers and comptrollers now have the opportunity to help build the employee ownership capital market in the 21^st.

Illinois shows us how. The state’s Employee Ownership Development Act is modeled on proven investment strategies previously authorized by the legislature and pioneered by State Treasurer Michael Frerichs. The Illinois Growth and Innovation Fund and the FIRST Fund each ring-fence 5% of the state investment portfolio for investments in private markets and infrastructure, respectively, deployed through professional fund managers. Both have generated competitive returns while catalyzing billions of dollars in private co-investment in Illinois.

The Employee Ownership Development Fund would apply that same architecture to employee ownership. The Treasurer would invest indirectly by capitalizing private investment funds deploying a range of credit and equity. The funds, in turn, would invest a multiple of the state’s commitment in employee ownership transactions.

The employee ownership field has matured to a point that is ready for institutional capital. The evidence base is robust. The fund management ecosystem is growing. And the business succession pipeline is larger than it will be for generations.

Yet the field still lacks the publicly enabled financing interventions that have historically built new markets in this country. State treasurers, city comptrollers and other public investment officers have the tools and resources at their disposal to provide that catalytic, market-rate investment to enable the employee ownership market to scale.

Julien Rosenbloom is a senior associate at the Lafayette Square Institute.

Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.