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One Set Of Books Too Many

By now most folks are probably aware that at the most recent Board of Supervisors meeting on August 2, Board Chairman Ted Williams made what appeared to be an astonishing statement about the County keeping “three different sets of books.”

That’s at least one set of books too many.

Here’s the gist of Williams comments, “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? … 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.”

On the different sets of books issue, I can tell you in my working career — which is roughly divided between the first half when I was international president of an airline industry union, and now as the head of a rural public water utility — I’ve always kept two sets of books, i.e., two systems of accounting: the cash basis and the accrual basis. For financial reporting purposes to state and federal agencies, my organizations always used the accrual basis as the official method or format, but the cash basis was a handy tool to quickly determine real-time income and expenses.

But that’s not what Williams was talking about.

Darcie Antle, recently promoted to CEO from the acting CEO position, responded to Williams, “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.” 

Third District Supervisor John Haschak’s take was the most on-point as he explained, “The County Budget has been the center of most discussions. People have asked me many questions. Are we really as broke as reported? How did this happen when we were supposedly flush with reserves? Why can’t the County hire more staff or at least pay the current staff decently? How did we end up with a $7 million deficit for the health care plan? What is happening with the combined Treasurer/Tax Collector/Auditor Controller position? What is the Board of Supervisors doing about this mess? … According to the money people, the budget is bleak. There is little spare money … The County’s health plan is self-funded. Costs rise due to the experiences and expenses of our employees. Medical costs in Mendocino County are high. The health plan had deficits of $3.6 and $4.0 million dollars in the last two years. This was not fully reported until a few months ago … The combined positions of Auditor/Controller/Treasurer/Tax Collector (ACTTC) was not recommended by the people in those offices. I voted against it but the BOS passed it. So the question is how do we make it work now that that is the plan. The Board appointed Chamise Cubbison to the position since she was elected in the June election though normally she wouldn’t take charge until January. There have been staffing issues, problems with technology, loss of institutional knowledge, and lack of time for a complete review of how to structure the combined offices … I am proposing that we have a special Board meeting to work out these issues of communication and differing books. If we all aren’t on the same page, then we have real problems and the public deserves better. The Board needs to sit down with the Executive Office staff and ACTTC to figure out where we are financially, how we got here, and what is the path forward.” 

Joining with Haschak’s commonsense approach to dealing with this quasi-alarming development, Norm Thurston, an auditor and former-Sheriff Tom Allman’s budget manager, offered this online advice:

“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.”

Finally, the one person who should have been contacted first but was never given the courtesy of addressing the BOS at the August 2nd meeting, is Chamise Cubbison, Auditor-Controller/Treasurer-Tax-Collector. By the way, it was a monumental blunder for the Supervisors (with the exception of Haschak) to consolidate the previously independent offices of Auditor-Controller and Treasurer-Tax-Collector. One of the cardinal rules of financial management is you never eliminate internal financial controls, which is what happened when the Board combined the two offices. You weaken financial checks and balances when you do. As I said, it was a monumental blunder by the BOS that contributed to the creation of the current financial mess they’re in.

Here are excerpts from Cubbison’s memo to the BOS:

“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 … 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 … 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.”

I learned a long time ago that problems just don’t happen, people make them happen.

And since people make them happen, people can make them un-happen.

Haschak, Thurston, and Cubbison are all saying the same thing. It’s time for everybody to get in the same room and get this problem solved.

(Jim Shields is the Mendocino County Observer’s editor and publisher, observer@pacific.net, the long-time district manager of the Laytonville County Water District, and is also chairman of the Laytonville Area Municipal Advisory Council. Listen to his radio program “This and That” every Saturday at 12 noon on KPFN 105.1 FM, also streamed live: http://www.kpfn.org)

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