First Amendment Suit Update
Modoc County Counsel John Kenny has responded to the First Amendment Coalition (FAC) saying once again the county does not possess the personnel documents related to Rick Rudmetkin’s hiring as CFO.
But FAC attorney Judy Alexander, not satisfied with Kenny’s response, has once again clarified for him what it is she is seeking and as of mid-day May 28 the matter was back with Kenny.
Friday, May 28, 2010
Bulletin
Audit Not Expected Until July
The outside audit ordered by the State Controller’s Office for ‘08-’09 will not be released until about July 5, according CFO Richard Arrow in an e-mail exchange with the Modoc Independent News on Friday, May 28.
This means the Modoc County Board of Supervisors will not be able to pursue the sale of revenue bonds to replace $15 million it misappropriated from the treasury until late July, Arrow said.
Various dates have been given for the release of the audit by VTD, but the dates have been set back repeatedly because of either inadequate or non-existent bookkeeping methods used in the county auditor’s office.
A timeline offered in April by Arrow called for the ‘08-’09 audit to be released between April 29 and May 10.
As of Friday afternoon the Board of Supervisors had not scheduled any items on its June 1 meeting agenda for the specific purpose of discussing the fiscal crisis it is facing, although Ken Hedrick Jr. of Finacorp Securities told the board at its May 25 meeting that he would ask the board to approve a stringent list of covenants at its June 1 meeting.
(For related story see posting below “Audit Status Uncertain”)
Audit Not Expected Until July
The outside audit ordered by the State Controller’s Office for ‘08-’09 will not be released until about July 5, according CFO Richard Arrow in an e-mail exchange with the Modoc Independent News on Friday, May 28.
This means the Modoc County Board of Supervisors will not be able to pursue the sale of revenue bonds to replace $15 million it misappropriated from the treasury until late July, Arrow said.
Various dates have been given for the release of the audit by VTD, but the dates have been set back repeatedly because of either inadequate or non-existent bookkeeping methods used in the county auditor’s office.
A timeline offered in April by Arrow called for the ‘08-’09 audit to be released between April 29 and May 10.
As of Friday afternoon the Board of Supervisors had not scheduled any items on its June 1 meeting agenda for the specific purpose of discussing the fiscal crisis it is facing, although Ken Hedrick Jr. of Finacorp Securities told the board at its May 25 meeting that he would ask the board to approve a stringent list of covenants at its June 1 meeting.
(For related story see posting below “Audit Status Uncertain”)
Thursday, May 27, 2010
Audit Status Uncertain
While no one in county government - although professing “transparency”- will state publicly the status of the long anticipated state ordered audits, it has been possible to piece together a picture that is not optimistic.
The release of the two audits, upon which the future of the county’s finances hinge, is overdue, a strong indication that not all is well in Modoc county government.
The audits are the vital documents the Modoc County Board of Supervisors needs if it is to pursue $15 million in bond revenue sales before June 30 -- the date state law requires municipal budgets to be balanced.
Finacorp Securities representative Ken Hedrick Jr. (pictured above) told the board May 25 that Fitch Rating Services, the firm being used to establish the county’s credit rating (the county does not have a credit rating at this time) is “particularly concerned after reading the draft audit findings about the problems with the lack of training of audit personnel and proper accounting procedures.”
Hedrick told the board that “the auditors running through problems indicates banks are not going to step up” and loan the county the money its needs to replace misappropriated funds to the treasury.
“We’ve had long, hair-raising discussions with the auditors,” Hedrick said. “What the auditors told us was pretty frightening, to be honest. There is an extensive list of corrections needed (by the county). This is financing at the point of a gun.”
Hedrick referred to "lots of holes," including documents still to be produced by the county auditor, namely quarterly reports for the current fiscal year and the 2010 - 2011 county budget.
In what Hedrick characterized as his “verbal report” from audit firm VTD, he said that the auditors investigating the county books told him the county has weak financial controls, there is no mechanism to make corrections, no training and general accounting standards are not followed.
County officials, including CFO Richard Arrow and CAO Rick Rudometkin have only offered, at best, terse explanations as to when the overdue audits will be made public.
-- Ray A. March
Wednesday, May 26, 2010
BOS Creates New CFO Job
The Modoc County Board of Supervisors yesterday, May 25, voted 3 to 1 to create the position of county fiscal officer, but in doing so failed to say just what the candidate qualifications are for filling the job.
In a vote that saw Supervisor Shorty Crabtree opposed to a move to combine the position of county fiscal officer with assistant chief administrative officer -- now held by Darcy Locken -- the board effectively put its current CFO Richard Arrow on notice that they will no longer need him. His contract expires June 30.
“Arrow has been cut back,” Rick Rudometkin, chief administrative officer, told the board. He said the county has been saving an estimated $2,500 to $3,00 a week by not having Arrow in attendance at board meetings or participating last week in discussions with state officials.
Ironically, it was Rudometkin who brought the proposal for a county fiscal officer to the board. He is under pressure from the First Amendment Coalition to produce evidence of his qualifications for the CAO job.
(See “Suit Threatened Over Rudometkin Files,” May 25 posting.)
The new position, which does not include an additional pay increase, apparently comes at the direction of Finacorp Securities, which is fronting the county in its decision to seek $15 million in bond revenues.
At one point Ken Hedrick, head of the public finance division for Finacorp, told the board, “There has to be a management structure in place, or I walk away.”
County Auditor Alice Marrs, who previously had announced she would oppose the new position, changed her mind and revealed that she had not been included in any discussions with Rudometkin and did not know about the proposal until Monday, the day before the board meeting.
“It was slammed at us,” Marrs said at the board’s discussion. “Nobody told us about the covenants,” she said referring to the requirements set by the SEC and Finacorp that include the appointment of a county fiscal officer.
(See “Marrs Backs Off CFO Position,” May 26 posting.)
Marrs and Rudometkin briefly argued over just what had been discussed between them.
Supervisor Patricia Cantrall said she was not in favor of a county fiscal officer position but “if we have to have a CFO, so be it,” and then voted with the majority.
Also in favor was Supervisor Jeff Bullock, who said “we need to instill checks and balances. If we don’t put them in place, shame on us.” He said the county fiscal officer would strengthen the county’s position in seeking the bond revenues.
None of the supervisors addressed the matter of establishing credentials qualifying Locken or anyone for holding the position as the county’s lead financial officer. Crabtree did not comment on his “no” vote.
Absent when the vote was taken was Chair Dan Macsay who had earlier admitted himself to the emergency room at the Modoc Medical Center for an undisclosed illness.
In a vote that saw Supervisor Shorty Crabtree opposed to a move to combine the position of county fiscal officer with assistant chief administrative officer -- now held by Darcy Locken -- the board effectively put its current CFO Richard Arrow on notice that they will no longer need him. His contract expires June 30.
“Arrow has been cut back,” Rick Rudometkin, chief administrative officer, told the board. He said the county has been saving an estimated $2,500 to $3,00 a week by not having Arrow in attendance at board meetings or participating last week in discussions with state officials.
Ironically, it was Rudometkin who brought the proposal for a county fiscal officer to the board. He is under pressure from the First Amendment Coalition to produce evidence of his qualifications for the CAO job.
(See “Suit Threatened Over Rudometkin Files,” May 25 posting.)
The new position, which does not include an additional pay increase, apparently comes at the direction of Finacorp Securities, which is fronting the county in its decision to seek $15 million in bond revenues.
At one point Ken Hedrick, head of the public finance division for Finacorp, told the board, “There has to be a management structure in place, or I walk away.”
County Auditor Alice Marrs, who previously had announced she would oppose the new position, changed her mind and revealed that she had not been included in any discussions with Rudometkin and did not know about the proposal until Monday, the day before the board meeting.
“It was slammed at us,” Marrs said at the board’s discussion. “Nobody told us about the covenants,” she said referring to the requirements set by the SEC and Finacorp that include the appointment of a county fiscal officer.
(See “Marrs Backs Off CFO Position,” May 26 posting.)
Marrs and Rudometkin briefly argued over just what had been discussed between them.
Supervisor Patricia Cantrall said she was not in favor of a county fiscal officer position but “if we have to have a CFO, so be it,” and then voted with the majority.
Also in favor was Supervisor Jeff Bullock, who said “we need to instill checks and balances. If we don’t put them in place, shame on us.” He said the county fiscal officer would strengthen the county’s position in seeking the bond revenues.
None of the supervisors addressed the matter of establishing credentials qualifying Locken or anyone for holding the position as the county’s lead financial officer. Crabtree did not comment on his “no” vote.
Absent when the vote was taken was Chair Dan Macsay who had earlier admitted himself to the emergency room at the Modoc Medical Center for an undisclosed illness.
Marrs Backs Off CFO Position
(See "BOS Creates New CFO Job")
County Auditor Alice Marrs said she would object to a proposal to name a county fiscal officer, but changed her mind yesterday (Tuesday, May 25) after hearing a report from financial consultants on requirements the county must meet to qualify for a $15 million bond revenue loan.
“I like the controls,” Marrs said at the end of a presentation before the Modoc County Board of Supervisors. “I can do it.”
She was referring to a stringent set of covenants the county must follow if it is to entice institutional investors to buy the bonds, and bail the supervisors out of debt, after they misappropriated millions of dollars from the treasury.
However, Marrs credited Darcy Locken, assistant chief administrative officer and her opponent in the race for county auditor, with helping with the current audits, but said she was uncertain how the county and her office would execute the legally binding agreements.
Included in a list of rules set by the Securities and Exchange Commission and by financial consultants Finacorp Securities of San Rafael, the auditor’s office must abide by the following special requirements:
-- The auditor will prepare monthly statements for review by the chief administrative officer, county fiscal officer and the Board of Supervisors to show both the county’s cash flow to date and for the year, and revenues and expenditures with projections showing “actual” against “budget.”
-- Within 30 days of the end of each fiscal quarter, the quarterly unaudited financials will be posted on the “Electronic Municipal Market Access” (EMMA)“ website (www.emma.msrb.org) with an auditor’s certification that the financials are prepared in accordance with the latest “Government Financial Rules” and the county is on track to end the year with a balanced budget.
-- The auditor must certify on an annual basis that any audit findings brought to the attention of the county have been corrected or will be corrected and posted to the EMMA website within 150 days of the end of the fiscal year.
-- And that all required certification must be posted on EMMA.
There are also a number of areas where the auditor and the county fiscal officer will be required to coordinate their work.
Marrs’ only reservation on the imposition of the covenants was how they will be actually implemented.
“I’m not sure how it should be done,” Marrs told the board. “It shouldn’t be decided today, but quickly.”
County Auditor Alice Marrs said she would object to a proposal to name a county fiscal officer, but changed her mind yesterday (Tuesday, May 25) after hearing a report from financial consultants on requirements the county must meet to qualify for a $15 million bond revenue loan.
“I like the controls,” Marrs said at the end of a presentation before the Modoc County Board of Supervisors. “I can do it.”
She was referring to a stringent set of covenants the county must follow if it is to entice institutional investors to buy the bonds, and bail the supervisors out of debt, after they misappropriated millions of dollars from the treasury.
However, Marrs credited Darcy Locken, assistant chief administrative officer and her opponent in the race for county auditor, with helping with the current audits, but said she was uncertain how the county and her office would execute the legally binding agreements.
Included in a list of rules set by the Securities and Exchange Commission and by financial consultants Finacorp Securities of San Rafael, the auditor’s office must abide by the following special requirements:
-- The auditor will prepare monthly statements for review by the chief administrative officer, county fiscal officer and the Board of Supervisors to show both the county’s cash flow to date and for the year, and revenues and expenditures with projections showing “actual” against “budget.”
-- Within 30 days of the end of each fiscal quarter, the quarterly unaudited financials will be posted on the “Electronic Municipal Market Access” (EMMA)“ website (www.emma.msrb.org) with an auditor’s certification that the financials are prepared in accordance with the latest “Government Financial Rules” and the county is on track to end the year with a balanced budget.
-- The auditor must certify on an annual basis that any audit findings brought to the attention of the county have been corrected or will be corrected and posted to the EMMA website within 150 days of the end of the fiscal year.
-- And that all required certification must be posted on EMMA.
There are also a number of areas where the auditor and the county fiscal officer will be required to coordinate their work.
Marrs’ only reservation on the imposition of the covenants was how they will be actually implemented.
“I’m not sure how it should be done,” Marrs told the board. “It shouldn’t be decided today, but quickly.”
Tuesday, May 25, 2010
Suit Threatened Over Rudometkin Files
The First Amendment Coalition (FAC) has notified Modoc County that it must produce the personnel records and related documents of Rick Rudometkin, chief administrative officer, by Thursday or it will file legal action.
In an e-letter addressed to John Kenny, county legal counsel, FAC attorney Judy Alexander wrote that she has been seeking the files of Rudometkin and documents related to the Board of Supervisors’ methods for hiring since April 6 without success.
“I sent a records request to Modoc County on behalf of the First Amendment Coalition (FAC) on April 6, 2010,” Alexander wrote Kenny. “When I did not receive a response, I called you on April 26, 2010. You asked me to resend the request and I did so. I still have not received a response to the request.”
Alexander pointed out that under the California Public Records Act the county had 10 days to respond to the FAC’s request.
“It has now been seven weeks,” Alexander told Kenny. “If I do not receive the records sought by FAC’s request by close of business on Thursday, May 27, 2010, I will prepare and file legal action to enforce FAC’s rights under the California Public Records Act.”
The purpose of the documents request, according to the FAC’s initial request of April 6, is to “obtain copies of records that outline, reflect and/or describe the procedures followed, factors considered, and documents considered by the Board in hiring Mark Charlton as CAO, Rick Rudometkin as Director of Transportation and Public Works for the County, Mr. Rudometkin as interim CAO, and Mr. Rudometkin as permanent CAO.”
-- Ray A. March
In an e-letter addressed to John Kenny, county legal counsel, FAC attorney Judy Alexander wrote that she has been seeking the files of Rudometkin and documents related to the Board of Supervisors’ methods for hiring since April 6 without success.
“I sent a records request to Modoc County on behalf of the First Amendment Coalition (FAC) on April 6, 2010,” Alexander wrote Kenny. “When I did not receive a response, I called you on April 26, 2010. You asked me to resend the request and I did so. I still have not received a response to the request.”
Alexander pointed out that under the California Public Records Act the county had 10 days to respond to the FAC’s request.
“It has now been seven weeks,” Alexander told Kenny. “If I do not receive the records sought by FAC’s request by close of business on Thursday, May 27, 2010, I will prepare and file legal action to enforce FAC’s rights under the California Public Records Act.”
The purpose of the documents request, according to the FAC’s initial request of April 6, is to “obtain copies of records that outline, reflect and/or describe the procedures followed, factors considered, and documents considered by the Board in hiring Mark Charlton as CAO, Rick Rudometkin as Director of Transportation and Public Works for the County, Mr. Rudometkin as interim CAO, and Mr. Rudometkin as permanent CAO.”
-- Ray A. March
Macsay Admitted to ER
Dan Macsay, chair of the Modoc County Board of Supervisors, was admitted to the emergency room at the Modoc Medical Center Tuesday morning with an undisclosed illness.
He immediately underwent blood testing routinely performed to determine if a heart attack had occurred, according to a source who asked to remain anonymous because she was not authorized to comment on Macsay’s condition.
Macsay had moved from his seat at the board table to the rear of the room in the Sheriff’s Annex during a power point presentation by Finacorp Securities of San Francisco concerning the county’s pursuit of selling $15 million in bonds, when he left the meeting sometime between 11 a.m. and 11:30 a.m. and drove himself to the hospital.
By 3 p.m. Macsay had not returned to the board meeting. Hospital officials would not say what time he was admitted to emergency or when he left.
Monday, May 24, 2010
Analysis
County Debt Highest In State
If the Board of Supervisors eventually votes to seek bond sales in order to repay the treasury at least $12.5 million, Modoc County will become one of the most indebted counties in the state based on its per capita income.
Assuming the $12.million figure balloons to a $15 million loan, which is entirely possible, payable over 15 years at eight percent interest the annual principal and interest will total $1.7 million.
Based on 2000 census figures, there are 2,550 families in Modoc County, and using a 2007 state estimate that family income in Modoc County is $27,522, that means each family will be indebted $673 per year to pay off the loan.
This means that the percent of annual income required to pay the annual principal and interest on a $15 million loan at eight percent will be 2.4 percent for each family.
It should be pointed out that according to the state’s estimate of family income, Modoc County is ranked 58 out of 58 counties, the lowest in the state.
Modoc County is financially hampered further by such a long-term loan because the county does not have a strong economic base which would reduce the need to pay the principal and interest out of general fund monies.
To place this in perspective with counties in the Sacramento area, there is an informative article in the Sunday, May 23, edition of the Sacramento Bee. We include the Internet link here for readers interested in more information on the issue of municipalities’ reliance on different types of bond revenue sales.
http://www.sacbee.com/2010/05/23/2770314/regions-officials-in-debt-headlock.html
County Debt Highest In State
If the Board of Supervisors eventually votes to seek bond sales in order to repay the treasury at least $12.5 million, Modoc County will become one of the most indebted counties in the state based on its per capita income.
Assuming the $12.million figure balloons to a $15 million loan, which is entirely possible, payable over 15 years at eight percent interest the annual principal and interest will total $1.7 million.
Based on 2000 census figures, there are 2,550 families in Modoc County, and using a 2007 state estimate that family income in Modoc County is $27,522, that means each family will be indebted $673 per year to pay off the loan.
This means that the percent of annual income required to pay the annual principal and interest on a $15 million loan at eight percent will be 2.4 percent for each family.
It should be pointed out that according to the state’s estimate of family income, Modoc County is ranked 58 out of 58 counties, the lowest in the state.
Modoc County is financially hampered further by such a long-term loan because the county does not have a strong economic base which would reduce the need to pay the principal and interest out of general fund monies.
To place this in perspective with counties in the Sacramento area, there is an informative article in the Sunday, May 23, edition of the Sacramento Bee. We include the Internet link here for readers interested in more information on the issue of municipalities’ reliance on different types of bond revenue sales.
http://www.sacbee.com/2010/05/23/2770314/regions-officials-in-debt-headlock.html
Editorial
Bankruptcy: Now Is The Time
As we read the many comments posted to the Modoc Daily News Blog we hear a cry for help.
The plea comes mostly from county employees who are helpless in carrying their voice to the Modoc County Board of Supervisors beyond their anonymous exchanges between each other and their internal debates on this blog. They fear for their jobs.
In this frustration we hear their cry for help.
They need the help of all our average citizens, our average taxpayers.
Our county employees are thoroughly aware of the financial disaster we are all witnessing. If you read their back and forth comments you, too, will become aware of their plight, and the uncertain but delicate balance they face each day.
That is their cry for help. The message they are sending every day is this:
Come to the aid of the county, face down the Modoc County Board of Supervisors. Join the too few who are already doing this, the Monday Night Group, for example. Tell the board enough is enough.
Tell the board you don’t want to pay for its moral and fiscal crime against the taxpayers when they misappropriated millions of dollars from the treasury.
Tell the supervisors they are hypocrites and that they should let the state take over because they can’t do the job.
Tell them to quit wasting your time and our money.
Tell them, on behalf of all county employees, that they should declare municipal bankruptcy and start over with a clean slate.
Tell them to step down and let others do the right thing.
-- Ray A. March
Bankruptcy: Now Is The Time
As we read the many comments posted to the Modoc Daily News Blog we hear a cry for help.
The plea comes mostly from county employees who are helpless in carrying their voice to the Modoc County Board of Supervisors beyond their anonymous exchanges between each other and their internal debates on this blog. They fear for their jobs.
In this frustration we hear their cry for help.
They need the help of all our average citizens, our average taxpayers.
Our county employees are thoroughly aware of the financial disaster we are all witnessing. If you read their back and forth comments you, too, will become aware of their plight, and the uncertain but delicate balance they face each day.
That is their cry for help. The message they are sending every day is this:
Come to the aid of the county, face down the Modoc County Board of Supervisors. Join the too few who are already doing this, the Monday Night Group, for example. Tell the board enough is enough.
Tell the board you don’t want to pay for its moral and fiscal crime against the taxpayers when they misappropriated millions of dollars from the treasury.
Tell the supervisors they are hypocrites and that they should let the state take over because they can’t do the job.
Tell them to quit wasting your time and our money.
Tell them, on behalf of all county employees, that they should declare municipal bankruptcy and start over with a clean slate.
Tell them to step down and let others do the right thing.
-- Ray A. March
Sunday, May 23, 2010
Marrs Objects To Proposed CFO Position
Modoc County Auditor Alice Marrs has reacted strongly to a proposal that the position of a county fiscal officer be created at Tuesday’s meeting of the Board of Supervisors.
Chief Administrative Officer Rick Rudometkin, in bringing the recommendation for a county fiscal officer to the board, reasons that it is to “make structural changes, to improve internal controls and financial monitoring, and to decrease our dependency on outside consultants, which provides cost savings.”
Marrs disagrees.
“I am giving you advance notice that at Tuesdays board meeting I will object to this position,” Marrs wrote in a May 21 e-memo to Rudometkin, Asst. CAO Darcy Locken, the board and various department heads. “This is the county auditor's job description.”
The county fiscal officer, if approved by the board, would be combined with the duties of the county’s assistant chief administrative officer, a position currently held by Locken who is running against Marrs for county auditor.
“Since Assistant CAO Darcy Locken admitted in a meeting that ‘there is practically nothing for her to do after the budget is complete,’ if there a need for a financial/reporting analyst position, then perhaps we need to add that position to the auditor's office and omit or make the assistant CAO a 50 percent position,” Marrs wrote in her memo to Rudometkin.
“The auditor is an elected official, and the county’s chief financial officer. It’s vitally important that the auditor maintain internal controls,” Marrs explained in an interview with the Modoc Independent News. “Now that the budget is completed I will not grant access privileges to anyone outside of the auditor’s office.”
That “lock-out” includes Locken, Marrs said.
While it is fairly certain that Marrs’ objections will escalate into a power struggle with Rudometkin and the Board of Supervisors, it is not clear she will emerge the winner, according to a source with knowledge of the board’s authority in creating department positions such as county fiscal officer.
“The board can do whatever it wants to in terms of organizational structure,” the source told the Modoc Independent News. “Basically the fact that the auditor and treasurer are elected is meaningless. By changing ordinances the board can gut those jobs of responsibilities. There is no legal requirement in the state to have these be elected positions. They could be staff positions.
“Internal controls can be developed around any organizational structure provided the basic functions are being done,” the source explained. “It’s within the purview of the board to combine the auditor and treasurer, as many counties do, to eliminate the elected auditor and treasurer and appoint a county fiscal officer.”
-- Barbara March
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