If you came in late, like lots of people suddenly interested in the County’s budget mess, you might think that Mendo only recently discovered that it can’t find its assets with two finance departments.
Last Wednesday, KZYX host Karen Ottoboni asked Supervisor Ted Williams about his claims that he doesn’t know the County’s financial condition. The scattered discussion was hard to follow because Ottoboni didn’t get into specifics and Williams was slippery.
Nevertheless, here are a few selected excerpts from Williams:
“The Executive Office financial team tries to provide the reporting it can do based on the data it has. … Are we on track on the budget this year for a department? Are we spending according to our plan? I don’t know. At a mid-year report we might find out some departments went over or maybe we had a surplus at the end of the year. I don’t know. Special Districts have monthly spending reports. They know what they’re spending and it’s reported regularly. We are at a time where we owe it to the public to have those regular reports. … I don’t think the CEO has access to all the financial systems. So some of that reporting, estimates can be provided. You don’t know how much revenue you’re going to have. Property tax, sales tax, bed tax, cannabis tax, other state sources… My first year, nobody else thought this was a concern. I think we’ve been winging it as a county. We may even have a decrease in revenue. Can we afford to give raises? I don’t know. We need more accurate numbers. … All supervisors have asked for financial reports. We made do with what we could get [in the past]. … I think you should have the Auditor and CEO on the air and work out who’s going to do it live on KZYX. I asked the CEO [Darcie Antle] to generate it and she told me she doesn’t have access to the financial systems to do it. That’s the same answer I got from Carmel Angelo. I don’t doubt that. I don’t think the CEO has a way to get into that financial system. I don’t have a preference who does it. … The only reporting I’ve seen is far after the fact. … We have software that can’t generate a report.”
The most annoying statement here is Williams’ claim that “my first year nobody else thought this was a concern.”
Please. In Williams’s first year, the only budget subject he was interested in was his silly “zero based budgeting” proposal that obviously doesn’t apply to a county like Mendocino where most spending is mandated. John McCowen was the only supervisor who even brought up monthly budget reporting and it went nowhere because Williams and the rest of the Board didn’t support McCowen.
Apparently Williams and his current colleagues actually believe that their CEO is unable to produce a simple monthly budget vs. actual report for each department. Various pathetic excuses have been tossed out: they don’t have access, they don’t have software, they need state help, they don’t have timely info, they don’t know who should do it… And therefore they don’t know if they can give employees a raise or absorb other unplanned expenses.
Just last year CEO Angelo somehow found a way to produce a monthly budget vs actual report by department which she included in her May 2021 CEO report.
Of course there were obvious questions about why some departments were running over budget as the end of the fiscal year (July 2020-June 2021) approached. So we asked CEO Angelo about them at the time and the CEO replied. The CEO’s answers were incomplete and unconvincing (and dated now), but they were an opportunity to start monthly reviews.
Clearly the CEO is and always has been quite capable of producing a monthly departmental budget vs actual report. But, as CEO Angelo explained in her response: “The very nature of your questions is the reason the County budget team has been hesitant to present a ‘budget to actual’.”
Aha: The real reason they don’t do it: We don’t like having to answer questions about it.
Angelo continued: “County Government is dependent on State, Federal, and grant revenue funding, which typically is billed quarterly or annually, and reimbursement is not received until at least 30 days after billing. This cycle of billing and reimbursement causes a delay in posting revenue, which impacts ‘budget to actual’ reports produced on a monthly basis.”
Yes, but that applies to grant funded departments, not the general fund departments that CEO Angelo included in that first report. Nor do reimbursement delays have anything to do with budget vs. actual expense tracking. In fact, later in her explanation for individual departmental overruns, CEO Angelo never claimed that variations had anything to do with delayed reimbursements.
Nevertheless, the CEO’s response to our inquires, while dated now, is clear proof that the CEO not only has the information to produce it and can produce it, but she is fully responsible for it. Yet Williams and his ignorant Board colleagues and CEO Antle — Angelo’s budget point person until last March — continue to pretend that somehow if they all “get together” they can figure out a way to produce the ordinary reports that they can and should have been generating for years.
This kind of financial and managerial incompetence cannot be fixed by more “getting together.” They simply have to produce the reports and get on with it.
Actually, they need two reports (which just about every other organization in California routinely does): 1. budget vs. actual for revenue and the other budget vs. actual for expenses. The Auditor should and probably can produce the revenue report. The CEO can and should produce the expenses by department. This is all standard stuff.
In answering our ordinary questions back in May of 2021, CEO Angelo never claimed that there were problems accessing financial data or that software was inadequate to produce reports or that anyone had to get together with anyone else, or more discussions were necessary or whatever.
CEO Angelo was so proud of her responses to our questions that she even included our questions and her answers in her next CEO report for June of 2021. But she did not include another budget report for June. In fact, May of 2021 was the only and last month she did it. Did the Supervisors pay any attention? No. They prefer to feign ignorance and pretend that their CEO can’t do what she is highly paid to do and obviously can do. Instead she, like her long-serving predecessor, is “hesitant” because — horror of horrors — questions might arise.
Having failed to demand these ordinary financial reports for years, if the Supervisors don’t know these basic elements of what they need to know about County finances, they have no one to blame but themselves.
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ON LINE COMMENT regarding retired Treasurer-Tax Collector Shari Schapmire’s recent observation that the Supervisors cheap shots at the Auditor-Controller and their claims about not knowing the County’s financial status are “irresponsible and inaccurate”:
“Schapmire is 100 percent correct. The reality, as shown in the County’s independent third party financial reports, (all available online) is that the County is awash in discretionary cash. Angelo did not make up the $20m figure, if ANYTHING she understated it! Why is the County Board of Supervisors crying poor?
One reason is absolutely the incompetence of the Board, their CEO and Executive Office fiscal staff. It’s simply easier to cry poor than to try and deliver services. For whatever reason the fallout of the 2008 financial crisis resulted in the executive and Board to unquestioningly prioritize the stockpiling of excessive amounts of cash. Prudent reserves are a good thing, but the County also exists to provide services. They have thrown out the challenge of delivering services to focus almost exclusively on the ever growing reserves, as if the County were a private corporation trying to boost its outlook on paper. The reality is the County Board controls over $50m in undesignated and designated reserves.
The second reason is that pulling the “crisis” card grabs headlines. It gives the management and the Board the ability to delay or prevent increases to employee compensation. The Executive Office is good at crisis. I would even say addicted to it. The reason? Incompetence. They can’t proactively manage, because that would actually involve doing their real jobs. It’s easier to cry crisis and hunker down than it is to stand up, make a decision about where money goes and then deliver on that commitment.
I’ll give you an example. The jail cost overrun. The County is currently paying down $50m in debt for their portfolio of office buildings they bought and remodeled two decades ago, including the Board chambers they decided to prioritize remodeling yet again last year. Those payments are about $6m a year. If the jail’s $6m over budget (not a surprise) all they have to do is add another $6m in debt to pay for it, or use the reserves. This is not a crisis. It is unfortunate. But it's not the end of the world. It is very common to issue debt for a capital asset like a building. In fact, you can make a good business argument to do that very thing. But that would require a CEO and fiscal staff in the Executive Office who know what they’re doing. Who build good working relationships with the Auditor and Treasurer. Has anyone in that office issued debt, refinanced or done anything even remotely technical like that? My guess is no. Again, cry poor and hope someone else comes to the rescue.
If you had a dog as sick as this Board and Executive Office, it would be time to have a difficult discussion with your veterinarian.”