AT TUESDAY’S SUPERVISORS MEETING, several Board members, lead by Board Chair Ted Williams, took some very unfair and distorted shots at their newly elected Auditor-Controller, who was not in attendance, even though the person they should have blamed was their own CEO — and themselves.
A few selected quotes:
Williams: “I would like to ask my colleagues for support on direction to the CEO’s office to reach out to the state controller’s office to help us get our books in order. … I’m three and half years into a term. I worry, I’m coming up on the point where I can no longer use the excuse, I’m new here. And yet in the three and a half years, I haven’t been able to get a credible financial report. I understand we have three different sets of books. They all differ. Why?”
CEO Darcie Antle: “I would agree with you. I’m not quite sure. I think a lot of the reason we have asked for a pause in the labor negotiations is that we don’t know. We don’t have a clear vision on what the books are, and where the finances are. And those discussions need to continue with the new Auditor-Controller.”
Williams: “We have an outside audit that happens. When was the last time this board, you and I sitting on this board, voted to direct the auditor to incorporate the outside audit recommendations? I don’t think I’ve done it yet. I don’t know if past boards have done it. But it means we’re paying for an outside audit, we’re getting advice about changes we need to make to meet accounting principles. And then we’re ignoring the advice. So how much accumulated error is there, and over how many years is it? Ten years? Is it thirty years? Is that why we have different sets of books, with different numbers? Because we never incorporate the outside audit findings? I think we have a financial crisis here, and we just don’t know how bad it is. … Part of the reason that I supported the consolidation [of the Auditor-Controller-Treasurer-Tax Collector] is that I couldn’t get financials. And we had an auditor retire, and shortly after, I learned we have a $4.5 million hole in the health plan. Why didn’t this board know that we had a $4.5 million hole? We would have planned accordingly.
Right there our bullshit alarm went off. The CEO and her staff are responsible for oversight of the County’s self-insured Health Plan, not the Auditor or the finance team. They’re also supposed to maintain the backup insurance to cover unplanned overages to minimize and smooth out health claim spike costs.
Williams went on: “There’s an institutional problem here that this county doesn’t have a set of books that anybody believes. There’s nobody in this county today you could ask, how much money do we have to our name, and get a straight answer. How can I do my job, voting on a budget, if I don’t know how much money we have to spend?”
Another alarm bell. There’s pretty good info on revenues. That’s not the problem. The problem is tracking budgets and expenses by department which the CEO and her predecessor refuse to do.
Supervisor Glenn McGourty piled on: “You want to have people who really know finances, who are properly trained. That’s why I’ve supported a professional financial office, which is what most big organizations have, where you appoint people based on their skill set and a proven track record of handling money well. And if we look back through Mendocino County’s history at the auditor-controller and tax collector-treasurer, we don’t see that pattern. So I still think we’re going to need long-term structural change in county government on this. This will not go away until we do.”
NEITHER OF THESE SUPERVISORS has the “skill set” to be Supervisor, much less make these uncalled for public comments. And if they’re going to single out the newly elected Auditor Controller, wouldn’t it have been fair to at least ask her to respond before jumping to conclusions? And Ms. Antle, CEO Angelo’s long-time budget point person, claiming that “we don’t know” is an admission that she’s been asleep at the switch for years.
We were going to report on this bogus discussion yesterday until it quickly became obvious that the entire show was a transparent attempt to shift the blame for whatever the budget problem is from their ignorant selves and their CEO to the Auditor’s office. Reporting these glib statements without a response from the Auditor or the people in the departmental budget trenches, seems to border on fraud. So we didn’t report on it. Other local news outlets have trotted it out there as Thus Spaketh Williams & McGourty, self-proclaimed financial experts.
Remember, it was only a few months ago that this same Board unanimously signed a laudatory proclamation praising their retiring CEO, Carmel Angelo for her financial acumen: “…[CEO Angelo] worked to reorganize the Executive Office and provide fiscal stability while functioning as Chief Financial Officer; and… got the County on strong financial ground throughout the great recession.”
In January, Matt LaFever of the local MendoFever website ran an interview with CEO Angelo when she announced her retirement: “…Her work building a fiscally-responsible, stable county government grew county reserves from $1.9 million in 2007 to $20 million today.”
That $20 million number that CEO Angelo fed to Mr. LaFever was never questioned by the Supervisors — until later when they couldn’t find it. Yet now Williams is saying the County is broke and that he hasn’t got any idea how much money the County has?
Fortunately, on Wednesday, Auditor-Controller Chamisse Cubbison corrected the record.
Date: August 2, 2022
To: Honorable Board of Supervisors
From: Chamise Cubbison, Auditor-Controller/Treasurer-Tax-Collector
Re: August 2, 2022 Board Discussions and Direction to Staff to Contact the State
It has been brought to my attention that the Board gave direction to staff to contact the State Controller’s Office about the County’s financial systems and that several false statements were made during today’s [Tuesday’s] meeting. I respectfully request that staff delay reaching out to the State until after a presentation is made to the Board on the FY 2020-21 Annual Comprehensive Financial Report (ACFR) and the FY 2020-21 Single Audit that is currently being finalized. Such presentation was already anticipated to be scheduled once the Single Audit is released.
There has been no request to discuss the relationships between the County finance system, the ACFR, and the Budget Schedules since I became Acting Auditor-Controller or Auditor- Controller/Treasurer Tax-Collector until this week. No specific questions were brought forward other than to request a discussion of those areas of the financial system and why they do not all present information in exactly the same way. It seems very premature to sound alarms and contact the State when it is likely that perhaps those raising concerns simply do not understand how things are presented, and when given the opportunity to hear from the audit firm may understand better.
In addition, there was a lot of misinformation discussed at today’s meeting, and no opportunity for rebuttal or open discussion. I would hope the Board would seek information directly before spreading rumors.
Health Plan Deficit:
The CEO’s office is responsible for managing the Health Plan, authorizing payment of all Health Plan payables, and reviewing various reports. It is unfortunate that the CEO’s office and the Health Plan consultants did not sound the alarm sooner on the growing deficit, but that is not because the information was not available.
[Former Auditor] Lloyd Weer and I met with then Assistant CEO Antle, Deputy CEO Cherie Johnson and Executive Office Fiscal staff in August 2021 before his retirement. We reviewed the year-to-date report, discussed the Health Plan projected deficit for 20/21, the concern that it appeared likely to continue to grow, and that the CEO’s office would be responsible for monitoring the fund going forward. Mr. Weer and I both believed that the CEO’s office would present the issue during the already scheduled future Board agenda item to go over the Health Plan. We were both surprised that a higher Health Plan contribution rate was not requested at that meeting.
Finance System Adjustments, Financial Statements and Audits:
The statements made that outside auditor recommendations are being ignored and not implemented is false. As I explained to Supervisor Williams and CEO staff yesterday [Monday], during a brief, unplanned discussion after another meeting, many of the “adjustments” made by the outside auditors are for financial statement presentation, not due to information being inaccurate in the finance system.
Depending on where the information is being reported (on Financial Statements, or to the State or Federal Government) it may require different presentation. If the outside audit firm found that there had been material misstatements or issues with how information is being maintained/reported in the finance system or other reports, they would be required to state those concerns. Adjustments are made in the finance system when required to correct misstatements. There are not years of required adjustments that have been ignored.
Property Tax Refunds:
Supervisor Williams has been in contact with me, and other the offices involved in the Property Tax System regarding refunds to property owners. Supervisor Williams is fully aware that the Property Tax System is not functioning properly in most areas and that staff has been working hard, forgoing vacations, and working overtime for the last two-plus years to try to bring the system into full functionality.
The suggestion that staff just issue manual checks to people, write information on post-it notes and account for them later is not realistic. Most property owners want an accounting of what the changes were that resulted in their refund. Staff is working hard to reach the point where the County can resume issuing refunds in batches and larger groups, while also spending countless hours working with the software vendor and trying to keep up with their other mandated tasks. Staff is working to process small batches when they can and is very aware that property owners have been waiting and need their refunds. Unfortunately, the current situation is not limited to Mendocino County. Other Counties that came before Mendocino in implementing the same software have experienced similar issues, also taking years to resolve.
When I asked Supervisor Williams if he would be willing to accept that redirecting staff to manually process more refunds (which takes a significant amount of time) could result in delayed property tax payments to Special Districts, Fire Districts, Schools and Cities, delays in reporting to the State, and likely delay the fiscal year end close, he said no. Unfortunately, it is not as simple as reaching out to the State or hiring temporary help. Property Tax is a specialized area that requires years of on-the-job training and there is limited staff in the Auditor-Controller’s side and Treasurer Tax- Collector’s side working with the system. Some of those with years of institutional knowledge and additional staff hours to help perform related tasks left the County or retired early due to the conversion project or due to the Consolidation. You cannot simply demand that current staff just work harder and longer than they already are, or we will lose even more staff.
In closing, I respectfully request that there be a discussion and further education about the financial systems before the County reaches out to the State to request help in these areas.
* * *
NORM THURSTON long-time senior auditor staffer and after that was Sheriff Tom Allman’s budget manager (now retired) added: “A message to the Board of Supervisors: If you want to get some factual information on the County's financial systems, you should talk to the one person who knows the most about those systems — Chamise Cubbison. Whoever is providing you with financial information now is not doing a very good job of it. To Chamise, I suggest you wander down to the Board chambers when they are discussing fiscal matters. Your presence may motivate our 5 supervisors to be more thoughtful before making unsubstantiated comments.”
* * *
Has Supervisor McGourty Abandoned His Cheap Water Mafia Pals?
After discussing a nebulous grant from the state Department of water resources that is “coming to the Sonoma County water agency” with some tenuous connection to Mendocino County in the near future, Supervisor/wine industry representative Glenn McGourty appeared to throw his Cheap Water Mafia pals under the bus.
“This contract will create and ag water users forum that will address specifically how to monetize water,” said McGourty, admitting, in essence, that they’ve been paying little to nothing for grape water. “It's clear we've had this funny situation where water from the Eel River watershed has been basically abandoned by PG&E as they have finished generating electrical water that this infrastructure was built on for 100 years.”
“Funny”? Yeah. Hilarious. Millions of gallons of free ag water from the Eel for grapes is “funny.”
“We can see now that that is coming to an end,” continued McGourty. “The ag community is intensely aware of that and is trying to find a way to [mumbling] make with that approval. [sic — we have no idea what he actually said.] That will address the issue that Supervisor Gjerde is concerned about.”
Supervisor Dan Gjerde has repeatedly pointed out that the Ukiah Valley/Russian River ag water users pay nearly nothing for their ag water and that they don’t deserve any help or subsidy from the County until they raise their rates to market levels.
“It will take a little bit of time,” McGourty went on. “It will probably take a year or two before everything is clear. But we are moving forward in that. That's my message to ag: you are not going to have free water anymore.”
Then McGourty admitted to personally benefiting from the “funny” situation, in his private vineyard on the Russian River — a clear conflict of interest that he should remove himself from but refuses to.
“It's kind of like my situation where I can pump out of the Russian River. I don't pay anybody other than PG&E to pump. That's really kind of an anomaly.”
It’s more than an “anomaly.” It’s a subsidy to well off grape growers like McGourty.
Nevertheless, McGourty concluded, “It's not realistic to expect that we can move forward forever and ever with that kind of costs for water.”
But Supervisor McGourty hedged his comment with, “It will take a bit of time,” which sounds a lot to us like the tried and true “talk and pump” strategy derived the timber industry in the 90s when they delayed even the most modest timber practice reforms by talking about and obstructing them for years while continuing their drastic over cuts. Nevertheless, McGourty’s admission that his pals in the wine industry are “not going to have free water anymore,” is a startling statement coming from him.
Later in the meeting local Farm Bureau representative Devon Boer (nee Jones) made a feeble attempt to soften the blow by inviting Supervisor Gjerde to a future meeting of the cheap water mafia so that they can pressure him to back off his insistence that the inland water districts pay the going rate for their ag water.
Gjerde ignored the invitation and later declared that “some water districts” (i.e., them) were not showing enough leadership and foresight on the water subject and that he did not want to support a consultant driven water agency in the county only to have it become a subsidy to those districts.