Balancing the County’s Budget Deficits
on the Backs of Children By Ray A. March
Part 22
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.
8 comments:
How did the Modoc Record not know about these illegal run-rounds that were going on for well over a year?!?
In what way was Smith's request "puzzling"? Why hadn't Michelson checked with other small First 5 commissions long before? Or perhaps she did but never made it clear (or that report has not been mentioned by MIN).
And why was Smith's request a "blatant order", it sounded polite to me. And his request was to find if other counties had established funds separate from the County, not the other way around.
The law requires that the First 5 funds not be used for county purposes other than in compliance with an approved First 5 plan. There is no requirement that the funds be kept separate from the county treasury. Let's stop repeating what we know to be false.
Unfortunately Michelson's comments shows she is still confused about the law. Too bad she did not say what counties she talked to and report their arrangements because we needed to know what small counties such as Lassen and Alpine did, not LA or Sacramento, because of the cost of the accounting requirement. Also naming names and reporting details would help confirm that she actually did ask.
Greg Small
Fort Bidwell
Greg, please read the article. It is clearly stated that "“We were organized as an independent entity to handle Prop. 10, therefore, we were required to have an independent banking account.”
CAO Maxwell confirmed this independent and separate status himself; please search the previous posts, it is not that confusing.
Regarding your claim that "There is no requirement that the funds be kept separate from the county treasury. Let's stop repeating what we know to be false." This is not correct in Modoc's case. Please re-read the first paragraph.
"Because Modoc First 5 was organized as an independent entity to handle Prop. 10,... we were required to have an independent banking account."
That is what is being talked about. Not where the money is, per se, but whether it complies with how the commission was originally set up, and ensuring that those funds will not be borrowed or used illegally, which we now know they were.
It is stunning that after all of this time, and after many completely unqualified audits, and after it has already been confirmed and reconfirmed by many sources that the county had no accounting trail whatsoever to reconcile its transactions for over 15 years, that you, Mr. Small, simply cannot see the forest for the trees.
While you continue to argue the semantics of what has been said, the actual and factual reasoning behind these arguments and expositions escape you.
This is as simple as it gets:
1.) The county deficit spent and concurrently illegally “borrowed” and “loaned” money from amongst its various accounts and did not pay it all back. Hint: Borrowing and not paying it back is theft.
2.) It did this “borrowing” and “lending” without the knowledge or the consent of the taxpayers, and without any traceable accounting method to show when that money was “borrowed,” from which account it was “borrowed” from, or into which account the funds were used and for how long.
3.) The hospital was not the only, or even the major beneficiary of this ongoing, illegal, inter-fund “borrowing.” The library admitted that it had benefited as well as participated in this illegal “borrowing” and “lending” scheme.
4.) The county employee and elected officials salaries, benefits, and retirement plans have become one of the largest benefactors of this illegal “borrowing” and “lending” scheme simply because the county, rather than cutting costs, gave raises and benefit increases instead.
5.) Calculations show that if the county had not given these employee and elected official compensation package increases for each employee and elected official for the past 12-15 years, then the county would essentially be solvent right now, albeit with more (but less well compensated) county employees and elected officials.
6.) The illegally given raises and benefit increases have not been returned to the taxpayers.
7.) A perfect example of this is the county librarian, Cheryl Baker, who decided to give herself and other, more senior employees raises and benefit increases, without the actual funding to pay for them. Translation: Other employees lost their jobs (unnecessarily) and taxpayer services were cut (unnecessarily) because of the illegal “borrowing” and “lending” that the librarian and others did to give themselves raises and benefit increases.
8.) Choices are supposed to have consequences – but those suffering the consequences of these illegal and ill-advised “borrowing” and “lending” schemes are the employees that have lost their jobs through no fault of their own, the employees who tried to warn about the illegal “borrowing” and “lending” scheme (First 5 Director Michelson, for one), and the taxpayers who have had their public services reduced because of these job losses.
9.) The higher paid employees, the board of supervisor members, and the cronies who went along with this illegal “borrowing” and “lending” scheme still have their jobs and/or have already retired at the taxpayers’ expense.
10.) The county taxpayers (not the employees or elected officials who still have those raises) are being asked even now to bear the brunt of the illegal “borrowing” and “lending” scheme by borrowing even more money to bail-out the illegal “borrowers” and “lenders.”
This may sound an awful lot like Wall Street…but it all happened on Court Street.
6:05 PM. I don't know that your entirely correct in your assessment of these high salaries for employees. The Treasurer and Auditor are not on the high end of the pay scale for the County, both are in the 70K range for full time plus hours. The highest priced employee may be CAO Robertson, part-time, 80K plus benefits. However his assistant who works full time only makes about half of what he does. She does the majority of the work, and will tell you that she has to as he's never there.
The County employees don't actually get paid all that well. The cost that gets the County is the benefits. The County paying for 100% of employee benefits is where the problem really is. There are actually employee's who's salaries are less than what the benefit costs are.
But per typical blanket opinion of the rampant Modoc Mentality, having more low paid incompetent County employee's is more desirable than a higher level of competency with wages that are competitive.
8:58 PM, you miss the points that the poster at 6:05 PM is making entirely, and attempt to throw red-herring arguments out to confuse what are otherwise rather straightforward issues:
A) Nobody said elected or hired county folks are highly compensated (or underpaid, for that matter). What they have been saying is that because the county deficit spent and illegally borrowed money to give raises instead of cutting costs for years, these folks got raises and benefit increases that they otherwise would not have received, because in reality the county could not afford it.
B) The quality of the employees or elected officials depends very little on their compensation package, but instead on the individual’s integrity, and the knowledge, skills, and abilities that each bring to the job.
C) Ensuring that we have quality employees and elected officials depends, respectively, on the integrity and the knowledge, skills, and abilities of the employee’s supervisors, and the voters who elect the public officials.
Regarding the salaries mentioned, they seem to be incorrect per the California site which lists reported wages for government employees for the calendar year 2010.
For example, under the column “Total Wages Subject to Medicare,” Modoc County shows the following wages:
Mental Health - Psychiatric Nurse Practitioner — $95,382
Mental Health - Staff Psychologist — $103,144
Public Health - Deputy Director — $100,834
Public Health – Director — $100,424
Public Health - Director of Enviro Health — $94,019
Public Health - Supervising Public Health Nurse — $77,305
Substance Abuse - Deputy Director — $99,746
Sheriff - Sheriff Sergeant — $81,808
District Attorney — $93,394
Chief Probation Officer — $79,755
Planning Director — $74,304
IT Department Head — $73,508
Librarian — $60,906
Please note: These are wages, and do not include health benefits or retirement benefits, so you must add around $10,000 to $20,000+ to each of these figures to determine what each employee actually costs the Modoc County taxpayers each year.
The website for this information is here: http://lgcr.sco.ca.gov/CompensationDetail.aspx?entity=County&id=10992500000&year=2010&GetCsu=False
The actual benefit costs for these employees is quite a bit more than you realize.
PERS costs for law enforcement is in the neighborhood of 35%.
County Health benefit costs alone are in the neighborhood of $15,000 per year for an employee with family.
10:39 AM. Eight of the thirteen positions that you listed are non general fund departments. Departments that were being robbed, and the County general fund is indebted to.
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