Three weeks ago, Fullerton officials disclosed a $2.9 million accounting error that significantly weakened the City’s financial position. Since then, residents have received explanations about how the budget is structured, but not what actually happened.

The error itself is straightforward. In 2022, $2.9 million was transferred into the General Fund, the City’s primary discretionary fund, when it should have been allocated to the Successor Agency fund. That mistake went undetected until last year, meaning the City Council made policy decisions under the assumption that those funds were available when they were not. What remains unclear is how this happened in the first place, and why it wasn’t caught sooner.

At the same meeting, staff also explained that approximately $2.7 million previously considered “unassigned” is now classified as “assigned,” largely tied to the Downtown Parking Program and General Plan updates. Both programs have existed for years; the parking program since 2019, and General Plan requirements for decades, yet these costs appear in the current year’s budget in a way that was not reflected in prior projections.

In 2024-25, roughly $1.8 million was assigned to General Plan updates and about $800,000 to Downtown Parking. In the prior year, those amounts were zero. Residents have not been given a clear explanation for why these long-standing obligations were not anticipated earlier.

Staff did provide one important clarification: the City’s independent audits rely on sampling rather than reviewing every transaction. As a result, errors like the $2.9 million transfer can go undetected. But that explanation raises a broader concern: what safeguards are in place to ensure similar issues are identified in the future?

Three weeks later, key questions remain unanswered. Residents still do not know:

• Who initiated the $2.9 million transfer?
• When it occurred and why was it not identified sooner?
• Why were $2.7 million in previously unassigned funds not reflected in the earlier budget projections?
• What specific changes are being implemented to prevent similar errors?

Notably, there is no item on the upcoming City Council agenda addressing this issue. This matters because the City is now discussing budget cuts and potential sales tax measures. Residents are being asked to accept difficult financial decisions, but without a clear explanation of what went wrong, it is difficult to have confidence in the decisions that follow.

Transparency is not just about identifying an error—it’s about explaining it. Until that happens, residents are left with incomplete information at a time when clarity is most needed.