Two-Year Anniversary

Dear Readers --


This month the Modoc County Daily News blog is two years old. Over the past two years we have regularly informed you on the latest developments surrounding the Modoc County financial scandal. Our coverage has been picked up by numerous publications including the Wall Street Journal and various newspapers some distance from Modoc County. 

In those two years our “unique visitor” numbers (that’s you, our loyal readers) has topped the 110,000 mark. Thanks for your support and for sharing your views on what matters in Modoc County. Please assist us in our continuing efforts by subscribing to the Modoc County Daily News blog.


                The Editors

Mendocino County Re-financing Woes

http://www.ukiahdailyjournal.com/ci_19308533?IADID=Search-www.ukiahdailyjournal.com-www.ukiahdailyjournal.com

Part 6 of a Series
Fiscal Restoration Plan continued

Continued Monitoring of Cash Flow:
  
The county has a cash flow projection from April 2011 that was based on preliminary budget projections. During the budget process key large cash flow needs were identified to ensure the budget has a satisfactory plan in place to expenditure deadlines. The county administrative officer has identified that the county needs to generate cash of a minimum of $2.8 million through some form such as sale of fixed assets or partial financing by the beginning of FY 12/13.
  
The county through assistance of the Treasurer's Office is now in process of developing a detailed cash flow analysis based on the adopted budget that has been put in place.

Engage in Long Term Revenue Enhancement and Cost Saving Measures:
 
A) Reduce Duplication of Services and Cross Staffing:

As revenue levels decline, a look back in history is a good indicator of how to generate cost savings to meet mandated service requirements. In past decades the county engaged in cross staffing between neighboring counties, city, and other agencies. Staffing levels were reduced dramatically in 2009, and many departments have few staff other than a department head or elected official. Many department heads already manage consolidated departments; however, the opportunity still exists to find efficiencies. The county will continue to pursue opportunities to cross staff or reduce duplication of services where applicable. Working towards this objective, the county has already cross staffed three general fund department heads between a neighboring city or county.
  
B) Evaluate Use and Participation in Cost Saving and Revenue Sharing JPAs (joint powers authority):
 
The county cannot rely on population growth to supply its needs to support services and the estimated debt service levels in coming years. The census bureau statistics show little growth projection for Modoc. Therefore, in upcoming years the county will have to find additional measures to support budgetary needs. A key area that has been identified is participation and use of cost saving and revenue sharing JPAs. The county currently is involved with a number of non-profits to set a foundation for participation in future projects in order to sustain itself while meeting the needs of the public through its contribution.

Q. Regarding cash flow: It’s not clear what you mean by the reference to $2.8 million. What is that amount needed for?

Robertson. The restricted departments have funds with particular fund expenditure deadlines and/or mandates that must provide a continuation of a specified level of services. This is what the funds are needed to be in place to accomplish. For example the road department has voter approved Proposition 1B funds that must be expended prior to the end of fiscal year 12/13. The road department will need summer season to lay down asphalt. So in this example we have taken the deadline, backed out ample time for the department to fulfill its obligations through project implementation, and then budgeted to have the funds in place in time.

Part 5 of a Series
Fiscal Restoration Plan continued

Performance Bond:
  
A fidelity bond claim has been filed by the county of Modoc. There was a period of little progress related to the claim, but the Board earlier this year chose to move forward with the filing. The claim was signed by the Chair of the Board of Supervisors on February 24, 2011. A loss has occurred, and processing of the claim continues to be ongoing. Lost interest, interest paid, and similar quantification of associated damages are yet to be documented and negotiated. This remedy is not incorporated into the budget, but it is anticipated that processing of the claim will play a role in restoration of the treasury.
   
Legal Remedy:
  
The county and its taxpayers have suffered a loss by having to pay to have re-audits conducted.These high costs had to be fronted by the county, and have played a significant role in reducing the ability of the county to move forward in restoration of the larger treasury issue. The county is in process of preparing to pursue legal remedy.
 
Negotiations for re-payment:
  
There is a possibility that the projected sale of fixed assets is not forthcoming at the full estimated levels and/or a partial financing is not feasible due to variables such as the larger investor market, interest rates, and the county's rating. The county is working to ensure that cash flow needs for mandated services and restricted fund expenditure deadlines are met.
 
There are funds that are restricted, but constitute local money rather than state, federal, or other outside creditor funds which do not have expenditure time lines. It may become necessary to enter into negotiations for repayment with regulators and creditors as part of the solution. In this regard the county has placed on retainer specialized legal counsel to provide sound advice and a plan to move forward. As of Oct. 25, 2011 a committee is in process of being appointed to work on this issue.

Q. Want can you tell me about the statement alluding to proceeding with legal measures to recoup outside auditor’s costs?

Robertson. At the last Board of Supervisors meeting at the end of closed session it was announced that action was taken directing the County Counsel to file notice with TCA partners.

Q. Can you be more specific on the section “negotiations for repayment?’ Just what does that paragraph mean?

Robertson. If debt service is not affordable, the county will have to enter into negotiations for extended repayment to the affected restricted departments. Many restricted funds have explicit time lines for expenditure under the government code. Additionally, there are various restricted funds that do not have expenditure time lines, but that are legally restricted under the government code.

Modoc Makes the Wall Street Journal

http://online.wsj.com/article/SB10001424052970203503204577035931801712666.html?mod=googlenews_wsj