Modoc-gate The Movie

Editorial

If ever the captain of the ship was blasé in face of disaster, other than the infamous skipper of the Titanic, it has to be Modoc County’s chief administrative officer.

During the last two meetings of the Modoc County Board of Supervisors, CAO Rick Rudometkin has been less than anxious in reporting on the status of the county’s appeal to the state for financial help.

Two weeks ago Rudometkin almost forgot to make his report to the board, and this week he had little to add to a standing recital that the state is still considering the county’s proposal that the State Treasurer’s Office either make an outright loan of $14 million or underwrite it as security for a loan from California Public Employees' Retirement System (CalPERS).

On the other hand, neither Rudometkin nor the board have publicly revealed exactly what they have proposed to the state. They even forgot to include the advisory ad hoc Monday Night Group in their last trip to Sacramento.

To his credit, Rudometkin did make one significant disclosure this week that went without comment by the supervisors or the public in attendance.

“The state is not allowing us to have any information,” he said. Which may be why Rudometkin has had little to report, but we doubt that statement considering the county is also in the habit of being less than open with the public when it comes to detailing its progress toward replacing $15 million of misappropriated funds to the treasury.

Examples to date:

In an attempt to elicit verifiable information about a variety of on-going fiscal subjects, the Modoc Independent News recently queried Chair Dan Macsay, out-going contract CFO Richard Arrow, freelance bond underwriter Ken Hedrick, financial consultant David Glasser and State Assemblyman Jim Nielsen -- without success.

Calls and e-mails were not immediately returned or, in the case of Hedrick and Macsay their responses were a rote “no comment.”

And when we filed a simple media query with Interim CAO and human resources director Pam Randall regarding the employment status of Glasser and Hedrick this was her reply:

“At this point in time, this is an ongoing process, all information will be brought out at the Board of Supervisors meetings.”

What the heck, we insist on remaining optimistic. Maybe when this fiscal fiasco is all over Hollywood will make a movie about it. We wonder, will Rudometkin play himself?

-- Ray A. March

County’s Credit Rating Set Back
Auditor Pinched to Make Payroll

Modoc County will not be getting a credit rating in order to sell bonds and bail itself out of its $15 million treasury debt for another six months to a year.

That unsettling disclosure comes from Darcy Locken, newly-seated county auditor.

“The rating is six months to year out from now,” Locken said.“That may be a minimum or it may be maximum. Maybe we are so awesome in the next three months that we get a rating. All we have, basically, is advice from Fitch to see if we are performing better for two or three months.”

(See Fitch article below.)

The county is under mandate from the State Controller’s Office to replace as soon as possible an estimated$15 million that was part of an illegal misappropriation of the treasury by the board. The Modoc County Board of Supervisors is looking for a long-term bond sale and a short-term loan as sources of funding -- both requiring an acceptable credit rating by Fitch Ratings.

Even if the county had a passable credit rating today and was able to sell off the $15 million bonds, the sale would not answer the impending cash flow deficit, meaning the county is carrying the added financial burden of meeting its payroll for July.

Locken told the Modoc Independent News that in order to have the money to cover employee pay checks for July she is withholding payments to vendors this month.

“We’re withholding general funds,” Locken explained. “No bills will be paid in July to make sure we can make payroll.”

Asked it there was merit in the inquiry last Tuesday by Jim Halverson of Cedarville that the county would not qualify for bond sales or a loan from the state, Locken was less specific, but more direct than Dan Macsay, chair of the board.

“There is always doubt, nothing is for sure until we have signed documents,” Locken said. “We are going to keep talking to Fitch.”

Macsay, on the other hand, told Halverson at the board session July 6, that he would not comment on Halverson’s questioning the status of the county’s search for outside funds, leaving the matter open to speculation.

* * *

Fitch Is Watching But Noncommittal

Fitch Ratings has not set criteria nor has it been asked for a bond rating from Modoc County, according to Amy Doppelt, managing director of Fitch’s San Francisco office.

“We have not been asked by Modoc County to give a rating under any time frame,” Doppelt told the Modoc Independent News. “No formal request has been made.”

She also stated that the covenants the Modoc County Board of Supervisors adopted as the new rules for managing the county’s finances were not a requirement set by Fitch, as commonly believed.

“They may have interpreted and used our criteria, which applies to all our bond sales, but we have not set specific criteria for Modoc County,” Doppelt said, referring to the fact that the county will have to abide by various other financial requirements including those set by the U.S. Securities and Exchange Commission (SEC).

This is not to say that Fitch is unaware of Modoc County’s financial predicament. Doppelt made it clear that Fitch knows Modoc County is behind schedule with its two state-ordered outside audits.

“Very aware,” she said. “We’re pretty clear on what we need. We’ve had discussions with Richard Arrow and David Glasser about the county’s financial operations. We must see that actions have been taken and systems put into place to insure controls. This is not a good time for them to apply.”

Asked if the six month turn-around time frame given by Auditor Darcy Locken may be related to the expiration of Board Chairman Dan Macsay’s term (Macsay was not re-elected and was in office during the period of misappropriation), Doppelt said, “Yes, it could be a consideration, but this goes beyond the board chair. We have to see that the county has implemented adequate financial controls.”

-- Ray A. March and Barbara March

Water Diversion Requirements 
Fines May Apply

In early May it was reported on this blog that anyone who diverts surface water will need to educate themselves about the new water diversion reporting fine structure, which is part of a comprehensive state-wide water package being administered by the California State Water Resources Control Board.

The July 1 reporting deadline has passed and Danny Merkley, director of water resources for the California Farm Bureau (CFB) urges members who have yet to file to do so as soon as possible.
   
“The State Water Resources Control Board has no flexibility for the July 1 reporting deadline,” Merkley said, adding that the requirement has come as a surprise to many, even though the law has been in effect since 1966. Until the passage of Senate Bill 8 there had been no penalty for failure to comply.
   
Senate Bill 8 requires that all surface water diversions be reported with few exceptions. Those who divert water after Jan. 1, 2009, are subject to new penalties for failure to report and reporting misstatements.
   
The new penalties include: Failure to report: $1,000 and $500 per day for failure to correct after 30 days. Accidental misstatements, including those caused by a broken water measuring device: $250 and $250 per day for failure to correct after 60 days.

Willful misstatements, including those caused by tampering with a water measuring device: $25,000 and $1,000 per day for failure to correct after 30 days. Other violations: $500 and $250 per day for failure to correct after 30 days.
   
The Farm Bureau is willing to conduct workshops throughout the state to assist those who have not met the July deadline. Contact your local Farm Bureau for more information.

Rebuffed, Citizen Files Complaint With AG
BOS Silent on Rumor Money Has Dried Up

After failing to convince the Modoc County Board of Supervisors today (July 6) that it should institute a system in which department heads make regular financial reports to the board, Jim Halverson of Cedarville responded with a letter of complaint to the State Attorney General’s Office.

Halverson recommended to the board that it set a policy with a three-pronged format in which department heads would submit reports prior to each board meeting. He also asked the board if it was true that the county would not be getting either a state loan or be eligible to sell bonds to replenish the treasury.

Chair Dan Macsay said he had no comment on the rumor that the county had run out of funding sources.

After the board failed to make a motion to act either way on Halverson’s proposal he immediately sent a letter to the AG stating:

“Over several years the Board of Supervisors has misappropriated approximately $20 million. The county is on the verge of bankruptcy and the board's only action has been to try to borrow more money.

“Given their record that seems a silly solution. They will not take advice from anyone outside their inner circle and the citizens of the county are very concerned. This situation requires immediate attention.”

Halverson’s letter is the second recent complaint to be filed with the AG. The Monday Night Group has asked that the AG re-open its investigation of Modoc County after suspending it when a portion of the treasury -- money belonging to the schools -- was returned.

There still remains an estimated balance of $15 million that the State Controller’s Office has mandated be returned to the treasury “as soon as possible.” That mandate is now one year old and the county has not returned any funds.

Halverson recommended a policy in which department heads -- with some objecting -- report to the board when there have been extraordinary events that have occurred in the department since the last board meeting, give the board an update on whether they are over or under their budgets and report on personnel status.

Supervisor Patricia Cantrall withdrew her initial motion to approve Halverson’s suggestion and when none of the other supervisors made a subsequent motion, the matter died.

Chair Dan Macsay, who has been the object of continued criticisms for his handling of board meetings and the county‘s fiscal crisis, called Halverson’s proposal “micro management,” saying “I can’t agree with anything you’ve said here.”

Halverson countered, “If this had started 20 years ago, you would not be where you are today. Do you know where 'the Modoc Way' got you? It got you $20 million in debt."

How Can You Help Support the Daily News Blog?

• Subscribe
• Advertise on the Daily News blog
• Advertise in the Modoc Independent News
• Pass it on. Tell a friend

Questions? 

Call us at 530/ 279-2099 or e-mail bmarch@frontiernet.net

BOS Blasted for Misappropriation “Crime”
Cantrall Botches An Idiom

A typically impassive Modoc County Board of Supervisors today heard an Alturas resident issue some of the strongest criticisms to date for its role in illegally misappropriating nearly $20 million from the treasury.

Ron Rutledge, a regular at board meetings,  spoke for close to his allotted time of three minutes during the opening pubic comment session telling the supervisors, “Misdirecting of restricted county funds by county supervisors is a crime.”

Referring to the recent Modoc County Grand Jury report which only modestly reprimanded the board for the misuse of treasury funds, Rutledge said the county’s checks and balances failed because no one was honest.

“If anyone of the five county supervisors or the treasurer or the county auditor had spoken up like they were elected to do, we would not be in this mess,” Rutledge said in his prepared statement.

“The county treasurer is so unashamed of her part that she ran for re-election,” he continued, referring to Treasurer Cheryl Knoch who was unopposed. “All she had to do was stand up and say no like she was supposed to and this would not have happened.”

The supervisors were not to escape Rutledge’s pointed accusations.

“It is known that one of the dishonest supervisors has even tried to intimidate ordinary citizens to be dishonest or face arrest on trumped up charges,” he said. “The elected officials that perpetrated these crimes demonstrated that they have no respect for the law, the citizens or themselves.”

He said the Attorney General should step in and “do something about the ‘good old boy’ system that has allowed the supervisors and elected officials to “go unpunished and undeterred.” He added that he did not think the state should lend any money to the county in order to bail it out of its financial hole.

In looking for money to replace the depleted treasury the county has asked the State Treasurer’s Office to loan the county money or underwrite an outside loan.

“I request that all officials holding office that were part of this conspiracy resign and never seek public office again,” Rutledge said.” You have demonstrated that you cannot be trusted with other people’s money. Get out of the way and let honest people straighten out your mess.”

None of the supervisors responded to Rutledge’s accusations, but outside the board‘s meeting room at the Sheriff’s Annex Supervisor Patricia Cantrall confronted Rutledge, arguing that the board did not know the misappropriation was taking place.

“No one came to the board and told us anything,” she told Rutledge heatedly. “You‘re calling the kettle black,” she said in a botched attempt at the idiom implying that Rutledge may have had something to do with the misappropriation

 If either Measure "Q" OR "R" fails, then the entire District formation will fail.  In that case, MMC will be at the mercy of the Board of Supervisors and will probably close soon thereafter. 

 If  MMC closes, then so will Warnerview and the Clinic because they are licensed together.

Save Our Hospital Committee

(Advertisement)

America

  by Walt Whitman

Centre of equal daughters, equal sons,
All, all alike endear'd, grown, ungrown, young or old,
Strong, ample, fair, enduring, capable, rich,
Perennial with the Earth, with Freedom, Law and Love,
A grand, sane, towering, seated Mother,
Chair'd in the adamant of Time.

Happy Fourth of July from the Editors