Modoc County Superintendent of Schools Gary Jones has created a flow chart to graphically show how Modoc County misappropriated school district funds.
“It occurred electronically,” he said in a recent exclusive interview with the Modoc Independent Daily News. “The county has accounts set up with Plumas Bank that transfer funds automatically.” (See chart above.)
“As checks were cashed in either the County Checking Account, School Checking Account, or EBT Checking Account, (such as welfare payments which are paid through debit cards) the money would automatically be drawn out of the Plumas Bank Pass Through/ Cash Flow Account,” Jones continued.
“There had to be a minimum amount of around $700,000 in this account. If there was more, the funds would flow back to the short term investment account. If less, then the short-term investment account would make up the difference.
“These accounts fluctuate on a daily basis. They could be down a couple days, then would come back up,” he explained.
School monies were combined with county and special district funds in the Cash Flow Account. This system worked until last May when the funds flowing out exceeded the $700,000 minimum balance in the Pass-Through/ Cash Flow account. Electronic systems kicked in, according to Jones, and short-term school funds were tapped, sending up red flags.
“We never expected it to get so bad so fast,” Jones said. “It was brought to our attention by former CAO Mark Charlton and Treasurer Cheryl Knoch. General fund money that had been going to pay the hospital’s bills for the past several years finally drew the accounts down to the point where school funds were used to make up the difference. All along I thought the hospital had reserves to drawn on. Somebody should have dug deeper into the hospital debt. We were caught off guard.”
But yet, someone was making decisions to pay hospital debts knowing full well the money wasn’t there. Jones and school officials reacted by demanding that school funds be protected.
“Cheryl Knoch brought us three proposals which were more than we hoped for,” said Jones. “We’ve agreed on a ‘hard fence’ system whereby school funds are totally separated from county funds. Our Union Bank investment funds are still managed by the treasurer. There is a new Plumas bank Pass Through/Cash Flow Account specifically for the schools. Checks and revenue pass in and out of a dedicated school district account.”
These measures will protect school funds unless a new emergency looms on the horizon, in which case the treasurer may still legally have the option to tap school funds.
But not all the school’s eggs are in the county basket and Jones stated that a large percentage of school’s investments are held outside the county.
“I’m hoping trust builds over time,” Jones stressed. “There a possibility that more of the school district money will be reinvested in the county as trust builds up, which will help the county realize more income from interest.”
-- Barbara March
Thursday, January 21, 2010
Wednesday, January 20, 2010
Jones: Part of the Solution, Not the Problem
Q. In your statement you say, and we quote, “With the current economic conditions, strong and visionary leadership is needed throughout the state. This is exactly what we have in Modoc County.” Could you explain that further and is it accurate to interpret that you are referring to the school districts?
Jones: Yes, because we were so aggressive we were able to do our job in protecting the assets of the schools. Consequently, we were not hit as hard as the county road department, for example. Now, had we found out four years from now, it would have been worse.
Q. It doesn’t say specifically in your statement for reelection, but are you referring to the misappropriation of funds by the Modoc County Board of Supervisors?
Jones: "I refer to a failure of all governments in my statement, including Modoc County's."
Q. So, who do you think was responsible for the misappropriation? No one is coming forth and being accountable?
Jones: No one will address the issue openly and part of that is because they don’t understand it.
Q. Doesn’t the final responsibility fall to the board of supervisors?
Jones: The board of supervisors gets the brunt of the blame. They didn’t know things. They just didn’t know. The only way they know the truth is for somebody to tell them the truth. No one went out to be dishonest. In their heart they were trying to do the right thing in keeping the hospital open.
Q. But the supervisors have not come forward and been accountable for what is an illegal action.
Jones: They have hunkered down because they have been beaten up. It doesn’t do any good to put it all on one person or even a few people. But they should do it right and fix the problem.
Q. Should those supervisors who were responsible for the misappropriation of funds from the treasury seek reelection?
Jones: People who had knowledge of this, if they understood what was happening, they should not run for reelection. It was a systemic failure. I don’t know what happened. In the school system it would taken a lot of us not understanding for that to happen.
Q. As the county superintendent of schools you are responsible for the oversight of the school funds in the county treasury. How comfortable are you that those funds are actually secure?
Jones: I have a great amount of trust in Cheryl Knoch. She has responded in every way and been open with us. The information we get from her has been timely and accurate. I am very comfortable. This question is asked every month because people are scared. Trust is not something the school districts have towards any government. Other districts are managing their cash flow very carefully. We’re already getting hit by the state, so we can’t suffer a hit from our own.
Q. Doesn’t it worry you to know that the same majority of the board of supervisors that misappropriated the money in the first place is still managing the county’s finances?
Jones: They made decisions to spend money on the hospital.
Q. But those decisions amounted to an illegal misappropriation.
Jones: I don’t know that.
Q. How many signatures are required to move funds from the schools’ treasury account?
Jones: I believe that the county treasurer has sole authority to move money in the county treasury. There is no second signature required under the law.
Q. That means money in the treasury is only as secure as…
Jones: That’s correct. Cheryl Knoch has a legal fiduciary responsibility to manage that money appropriately and I trust that she will.
Q. What about in an emergency?
Jones: To borrow money from treasury would require special legislation from the state, legislation that would provide for the schools to loan money to the county. It means “may” borrow money.
Q. What is your overall assessment of the financial crisis the county is facing?
Jones: The problem is we have county officials who have not answered their own problems. It’s not the problem of the schools, it’s a problem for the people who got us in this in the first place.
Q. Is there anything you would like to add?
Jones: Yes. I need to be part of the solution rather than create new problems. That’s the basis of my platform for reelection. To demonstrate leadership.
-- Ray A. March
Tuesday, January 19, 2010
School Money Returned, But Hopkins Keeps Vigil
One of the most vocal critics of the Modoc County Board of Supervisors, when the subject is misappropriation of nearly $20 million from the county treasury, is Alan Hopkins, currently president of the board of trustees of the Modoc Joint Unified School District.
The schools were the hardest hit financially, although money taken from their account has apparently been replaced, according to County Treasurer Cheryl Knoch.
We asked Hopkins to give his current assessment of the misappropriation. We also asked Knoch to give us a current status of the schools’ account in the treasury. Her response is printed at the end of this Q&A.
Q. Do you have any apprehensions about the protection of the schools’ money in the county treasury?
Hopkins: Of course I have apprehension, I would be foolish not to. I feel they have made an attempt to keep the funds segregated. However, we have made a move to get some funds away from the treasury.
Q. Has all the money belonging to the schools been replaced in the treasury?
Hopkins: All the school money was replaced. I think so, I’m almost sure it was. They just couldn’t spend it for other things.
Q. Isn’t there concern that the county could take the schools’ money from the treasury in an emergency?
Hopkins: I can’t imagine an emergency that would allow them to dip into it. The county office of education is the only one who can make a withdrawal.
Q. But isn’t it a matter of defining what an emergency is?
Hopkins: That’s part of the issue for sure. County Treasurer Cheryl Knoch is saying she would go to the school district before she would withdraw any money. She is pretty competent. Of course it’s all trust.
Q. Do you think Knoch was a party to the misappropriation of nearly $20 million from the treasury?
Hopkins: You could blame the auditor’s office, Judy Stevens and Alice Marrs, but I have no fingers to point.
Q. Do you think former CAO Mark Charlton, who exposed the misappropriation, posed a threat to the school funds and would have taken that money in an emergency?
Hopkins: I don’t know, he wasn’t here long enough.
Q. Do you think Interim CAO Rick Rudometkin is less of a threat, considering County Superintendent of Schools Gary Jones endorsed him as being capable of handling multi-million funds?
Hopkins: (Laughs).
Q. Why do you laugh?
Hopkins: He’s the only horse we have.
Q. Do you have any concern about the fact that the same majority of the Modoc County Board of Supervisors that was responsible for the illegal misappropriation of funds remains on the board managing the county’s finances?
Hopkins: That’s why I go to the board meetings. That’s exactly why I go.
Cheryl Knoch’s status report on school funds in the county treasury.
“The school's "hard fenced" funds are in a separate school investment account that is linked to their checking account. Only the Modoc County Office of Education can draw checks on that checking account. I have also dedicated any long-term investments to the school funds, which are held until maturity. I reviewed this with all of the school district superintendents and the county superintendent of schools and they approved. In an 'emergency' the county would need to borrow money from some entity with their approval.”
The schools were the hardest hit financially, although money taken from their account has apparently been replaced, according to County Treasurer Cheryl Knoch.
We asked Hopkins to give his current assessment of the misappropriation. We also asked Knoch to give us a current status of the schools’ account in the treasury. Her response is printed at the end of this Q&A.
Q. Do you have any apprehensions about the protection of the schools’ money in the county treasury?
Hopkins: Of course I have apprehension, I would be foolish not to. I feel they have made an attempt to keep the funds segregated. However, we have made a move to get some funds away from the treasury.
Q. Has all the money belonging to the schools been replaced in the treasury?
Hopkins: All the school money was replaced. I think so, I’m almost sure it was. They just couldn’t spend it for other things.
Q. Isn’t there concern that the county could take the schools’ money from the treasury in an emergency?
Hopkins: I can’t imagine an emergency that would allow them to dip into it. The county office of education is the only one who can make a withdrawal.
Q. But isn’t it a matter of defining what an emergency is?
Hopkins: That’s part of the issue for sure. County Treasurer Cheryl Knoch is saying she would go to the school district before she would withdraw any money. She is pretty competent. Of course it’s all trust.
Q. Do you think Knoch was a party to the misappropriation of nearly $20 million from the treasury?
Hopkins: You could blame the auditor’s office, Judy Stevens and Alice Marrs, but I have no fingers to point.
Q. Do you think former CAO Mark Charlton, who exposed the misappropriation, posed a threat to the school funds and would have taken that money in an emergency?
Hopkins: I don’t know, he wasn’t here long enough.
Q. Do you think Interim CAO Rick Rudometkin is less of a threat, considering County Superintendent of Schools Gary Jones endorsed him as being capable of handling multi-million funds?
Hopkins: (Laughs).
Q. Why do you laugh?
Hopkins: He’s the only horse we have.
Q. Do you have any concern about the fact that the same majority of the Modoc County Board of Supervisors that was responsible for the illegal misappropriation of funds remains on the board managing the county’s finances?
Hopkins: That’s why I go to the board meetings. That’s exactly why I go.
Cheryl Knoch’s status report on school funds in the county treasury.
“The school's "hard fenced" funds are in a separate school investment account that is linked to their checking account. Only the Modoc County Office of Education can draw checks on that checking account. I have also dedicated any long-term investments to the school funds, which are held until maturity. I reviewed this with all of the school district superintendents and the county superintendent of schools and they approved. In an 'emergency' the county would need to borrow money from some entity with their approval.”
Court Rules - Forest Service Plan Suspended
The Modoc National Forest Plan Revision effort has been suspended. This decision is based on several factors which include prohibiting the use of the 2008 Planning Rule by the United States District Court for the Northern District of California.
Based on this ruling the USFS reinstated the 2000 Planning Rule, which allows for the use of the 1982 Planning Rule procedures. Nationally, 17 forests were funded to proceed with their planning efforts under this temporary rule while a new planning rule is developed. The Modoc National Forest was not one of these 17 and will complete forest plan revision at a later date.
In addition, the Modoc’s ability to carry out a successful plan revision effort has been compromised by the retirement of five key staff members.
Any questions concerning this decision may be directed to Deputy Forest Supervisor, Robert Trujillo at (530) 233-5811 or rgtrujillo@fs.fed.us.
Based on this ruling the USFS reinstated the 2000 Planning Rule, which allows for the use of the 1982 Planning Rule procedures. Nationally, 17 forests were funded to proceed with their planning efforts under this temporary rule while a new planning rule is developed. The Modoc National Forest was not one of these 17 and will complete forest plan revision at a later date.
In addition, the Modoc’s ability to carry out a successful plan revision effort has been compromised by the retirement of five key staff members.
Any questions concerning this decision may be directed to Deputy Forest Supervisor, Robert Trujillo at (530) 233-5811 or rgtrujillo@fs.fed.us.
Interim Forest Supervisor Named
Tom Hudson has been appointed as the Interim Forest Supervisor for the Modoc National Forest. He will begin his assignment on January 18, 2010 and continue for four months.
Hudson's career includes extensive experience as sale administrator on the Ochoco National Forest, the Tongass National Forest, the Tahoe National Forest, the Mark Twain National Forest and the Pike and San Isabel National Forest. He has also been a fire fighter, assistant fire management officer and safety officer.
He will be joined by his wife Glenna for this assignment.Monday, January 18, 2010
Sunday, January 17, 2010
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