Editor’s Note: “Why are the schools withdrawing their funds from the County Treasury?” This was a question recently posted to the Modoc County Daily News blog. We asked Modoc County Supt. of Schools Gary Jones to respond. The following is his statement:
When a school district or county office of education makes a statement about negative cash flow in their General Fund and the necessity to transfer “restricted” funds into the General Fund to meet their obligations, they are simply managing their available assets in a prudent manner.
A General Fund that will not have enough cash to cover expenses requires an infusion of cash. Since the school districts and county office of education have saved money, they have the ability to transfer cash from their savings to cover any cash shortfalls in their General Funds.
The schools’ cash reserves and investments are typically accounted for in separate funds (Fund 17 or Fund 40) that are designated as “restricted.” Restricted, in this case, means they are not used until there is a specific and approved need.
These fiscal activities, on the part of the schools, do not involve the county government’s budget or the county government’s cash. The school districts and county office of education have a separate bank account and separate investments within the county treasury, separate from the county government. Also, the schools have cash investments outside of the county treasury.
It is important to note that our schools are not receiving all the cash that is due to them from the state. The state will owe our local schools somewhere between 32%-46% of their State Aid next year for this current year of operation. Consequently, cash is a huge issue for school districts and county offices of education in California.
The state is using money owed to the schools to finance other departments of the state government. The state is “borrowing” restricted funds (school money) to fund their General Fund obligations. The state has no reserves—no savings. The state has increasingly large debts. So, they take what they can, from wherever they can, and promise to pay back the restricted funds (school money) in the future, when they can borrow more (pass a bond) or raise taxes.
The schools still have cash in reserve because well-managed agencies and businesses “squirrel away” (save) in good times and deficit spend in bad times from their savings. Obviously, some never learned the principle of saving for a rainy day or reducing spending when income is reduced. The level of savings and the difficulty in maintaining decent reserves on the part of the schools prior to and during such a difficult time was wise and highly commendable.
-- Not performing as expected: failing to perform an expected function
a dysfunctional bureaucracy. -- A consequence of a social practice or behavior pattern that undermines the stability of a social system. Hamstring -- To thwart somebody or something: to make somebody or something powerless or ineffective. Ineptness
-- Unable to handle job: lacking the competence or skill for a particular task. Lemon
-- Defective product: something that is defective or disappointing. Jungle
-- Complex matter: a frustratingly or impenetrably complex system. *Sources cited upon request
Take your pick. Any definition of the commonly used adjectives and nouns used in describing our Modoc County political system leads us to the same conclusion: The system is a lemon.
Who comes to mind in our narrow, local political arena when we read, for example, the meaning of the word “dysfunctional,” especially as it applies to the failure to meet our expectations therefore resulting in undermining the stability of our social system? (The italics are ours).
That’s easy, you say. And you are right.
Picture a governmental family tree. At the top is the Board of Supervisors and the threesome of Crabtree, Cantrall and Bullock.
Next in line and clinging to a limb tight to the trunk, so to speak, is the board’s talented and capable Chief Administrative Officer Chester Robertson.
Why is Robertson clinging to a limb? Because he is hamstrung by the ineptness of the board’s threesome.
No matter how intelligent and able a person may be, he is only as effective as the most ignorant incapable member of his political family because that branch of the family holds the “budget card.”
The budget card is used in the same way that our parents withheld our allowance if we didn’t toe the line. Another way to look at this is to picture the governmental family tree as a U.S. dollar sign.
Now, branch off to the right or left of the family tree trunk (it doesn’t matter which way you branch off). There you will find the cousins of our courts, the judges, district attorney and grand jury.
This is an interesting part of the family tree because it is here that the branches get thicker and entwined -- like a jungle -- as if all branches lead to all branches lead to all branches. Well, you get the point.
It is at this level in the family tree that decisions are tough to make, the relationships are that thick. Just ask our indecisive DA Christopher Brooke, who has been asked by the grand jury to conduct a formal investigation of the $20 million treasury raid.
In May of 2010 -- yes -- when Brooke was running for district attorney we asked him this question: “If elected, will you initiate your own investigation into the illegal misappropriation of county funds and seek prosecution if the investigation warrants it?"
This was Brooke’s answer, and we quote: “If, as district attorney, I become aware of meritorious allegations of misconduct by any public official, I will use all available resources to ensure that a thorough, fair and complete investigation is conducted. If such an investigation produces evidence of misconduct, all individuals involved will be prosecuted.”
This takes us to the grand jury who explicitly made Brooke aware that a criminal investigation of the misappropriation was warranted because, as it stated in a letter of last June to him, the grand jury had enough information to hold an investigation. Our last DA dodged this one saying the Board of Supervisors held the purse strings to his weekly allowance.
Hello. Anybody know where DA Brooke has been the last four months? Out to lunch, you snicker. Last year’s grand jury is still waiting for a reply to its letter of June 8. (See B1).
Covering itself, the grand jury also wrote letters to the California Attorney General and Superior Court Judge Francis Barclay. Only Barclay has replied saying his hands are tied.
So, we ask you, if there were fruit at the top of this governmental family tree, would you risk climbing it for fear that it may be a lemon?
Dear City of Montebello We’d Like
to Introduce You to the County of Modoc
Editor's Note: The following is a reprint of an article appearing in the October issue of the Modoc Independent News. There is also a link on the Modoc County Daily News blog to the original Los Angeles Times piece.
The city of Montebello misspent more than $31 million over five years through questionable expenditures, loans and fund transfers, according to two audits released by state Controller John Chiang, the Los Angeles Times recently reported.
The $31 million in misspent funds is a reminder of the estimated $20 million that Modoc County officials misappropriated from their treasury over a period of eight to ten years going back to about 2000.
Both the city of Montebello and Modoc County are under order of Controller Chiang to repay their depleted treasuries. Modoc County has failed to repay its treasury since the order was issued in late 2009.
In something of a confusing or contradictory statement Chiang announced that Montebello "at the expense of local job development, street repair and schools, made it a habit to tap legally restricted funds to cover its budget and cash shortfalls. It appears the city moved money wherever it wanted, whenever it wanted, regardless of the law."
Modoc County, as substantiated by recent grand jury findings illegally moved funds from the treasury to ostensibly cover ever-increasing debts at the Modoc Medical Center, which was a county-owned hospital until recently.
The controller’s office has tacitly approved Modoc County’s continued use of restricted treasury funds under the Auerbach vs. Los Angeles Board of Supervisors court decision although there is a questionable appeal section to that ruling.
Controller audits of Montebello come as city officials are frantically trying to seek a loan so the city won't run out of cash this fall, according the Los Angeles Times article. In the last year, the city has been investigated by the L.A. County district attorney's office and the federal government, the news article reported.
The last Modoc County grand jury asked the state attorney general’s office, county DA Christopher Brooke and Superior Court Judge Francis Barclay to initiate a criminal investigation of the treasury misappropriation.
Barclay declined to do so, Brooke has not responded to the grand jury’s request made four months ago, nor has the state attorney general.
The audits of Montebello’s redevelopment agency and use of gas tax funds from 2005 to 2010 also found that officials spent money intended for alleviating blight and promoting jobs on questionable expenses such as fancy dinners in Las Vegas for the city manager and embroidered polo shirts and golf tournament registrations.