Balancing the County’s Budget Deficitson the Backs of Children
By Ray A. March
Jan. 28, 2002
Smith: Find a Way to Skirt State Law
In spite of red flags at full mast and obvious indications that negative balances in the treasury were not being managed properly, the Children and Families Commission was on a narrow, one-way path to fire Donna Michelson, its executive director.
In two days it would do just that.
But before the commission could axe Michelson, Phillip Smith had one final and puzzling request of Michelson.
At about the same time Treasurer Cheryl Knoch presented her Three Option Plan to the commission, Smith, the commission’s former chair, sent a hand written memo to Executive Director Donna Michelson with the following instructions:
“Please contact other counties for information on how they got around (his emphasis) the requirement that funds from the state go into the Trust Fund created in the county. The creation of that Trust Fund was a requirement of Prop. 10.”
There is no known correspondence documenting Michelson’s response at the time to Smith‘s blatant order to find a way to circumvent the state requirement that Prop. 10 funds were to be kept separate from the county treasury.
However, in a recent e-mail exchange with the Modoc Independent News Michelson had this to say:
“We were organized as an independent entity to handle Prop. 10, therefore, we were required to have an independent banking account,” she wrote. “If you initially set up your Prop. 10 through the Department of Education or Health, then the accounting department for those entities would handle the money. We did not do that, and you cannot merely change it midway by a simple vote of the board of directors. Papers would have to be filed notifying the Board of Supervisors and the State of California.
“It was a requirement that Modoc County just ignored. We checked. Even those counties that had set up Prop. 10 to be administered through their education or health departments, had a separate trust fund for the monies or a separate banking account. That's what I reported back to the commission, because that's what I was told by the counties that I inquired of.
“In any event, Prop. 10 aka Children and Families Commission aka Children's First 5, aka Children First is somewhat of a chameleon. With this last change of name statewide, they can hide a multitude of sins, namely, misuse of funds. Now they are not limited to children under the age of five, but all children, and we all know that goes on forever, especially if the children happen to have children while they are "children."
In late January of 2002 although she was apparently unaware of it, time was running out for Michelson and the “domino effect” was already in motion. At this stage -- although also unknown to Michelson -- only one final last-ditch attempt to thwart the commission’s stubborn intention of keeping Prop. 10 funds in the county treasury was made.
Next: Part 23
And that last-ditch effort was a bold and once again out-of-the-ordinary e-mail memo from CPA Kristin Domenichelli to Michelson in which Domenichelli wasted no words in what she thought of Knoch’s Three Option Plan.