Balancing the County’s Budget Deficits
on the Backs of Children By Ray A. March
Part 26
The Aftermath - Michelson Looks Back
“I sent letters and documents to anyone who would listen,” Michelson told the Modoc Independent News on the condition that her whereabouts would not be revealed. “My response was no response, and I guess the consensus was it was cheaper and easier to get rid of me than to remedy the problem.
“That way, millions of dollars of state Children and Families Commission funds could continue to be misappropriated from the state level on down to the 58 counties. In fact, Phil Smith, head of the department of health in Modoc County, told me the state wasn’t going to do anything, and unfortunately he was right.
“I warned the board of the Modoc County Children and Families Commission that they were co-mingling funds. This is the reason I was fired. I would not sign any checks for the commission because I didn’t know from one moment to the next in what bank account the funds were hidden.
“They refused to open an independent bank account, even though we were organized as an independent organization separate from the umbrella of the county -- at least it was organized that way up until my departure.”
Jan. 28, 2002
Michelson Goes to the State
Two days before her firing executive director Donna Michelson sent a personal letter to the state’s top Children and Families Commission officials with copies of documents suspecting that Modoc County officials were misappropriating Prop. 10 funds.
She suggested state officials “may wish, just to be on the safe side, (to) correct your annual report for the fiscal year 2000-2001 to read ‘material weaknesses’ rather than ‘no issues’ for Modoc County.”
This was a bold tip off to the state that not all was financially well with the Modoc County Children and Families Commission, and if the state followed her suggestion it could have resulted in a state audit of the commission’s books.
The result of a state audit would also have alerted the State Controller’s Office that something was seriously amiss in Modoc County.
Michelson’s letter was addressed to Jane I. Henderson, executive director of the California Children and Families Commission; Joe Munso, chief deputy director; and Lynne Roberts, fiscal analyst.
It is not known what their response was to Michelson’s advisory letter, but she recently told the Modoc Independent News that the state never followed up on any of her allegations of misappropriation of Modoc County treasury funds and the suggestion that audits findings of the Modoc County Children and Families Commission should be revised.
Next: Part 27
Michelson cleans out her desk and leaves Modoc County the next day, but in two weeks her departure is overshadowed by a seemingly routine remark by Treasurer Cheryl Knoch.
28 comments:
The politician's morning prayer.
Please God grant me the courage to right the wrongs that can be righted and the fortitude to accept the wrongs I cannot change and the wisdom to know the difference.
Commisioner Michelson did not know the difference. She may have done some good if she had quit being agressive after making her findings known and finding nobody to agree with her. Being right does not make you the winner unless you bring about needed change.
Proof, that in the whole scheme of things, Modoc County really does not matter at the state level. There are not enough votes in Modoc to influence ANYTHING, and no one wants to address all the issues because they are insignificant compared to the issues in larger counties.
Did Ms. Michelson approach the Modoc Record with her concerns? If so, what was their response? We all know now that they published nothing of these accounts as they happened - but if they were told and did nothing, what was their reasoning?
1:13 PM - Ms. Michelson had a fiduciary duty to ensure that those funds were used appropriately no matter where they were placed - in a separate account, in the county treasury, or stuffed into Dean and Carol Harbaughs garage on Josephine Street.
Do you honestly think we are $13+ million dollars in debt just because she wasn't a "team player?"
That whole money-laundering scheme involving the county treasury was a house of cards from the beginning, and it was going to crumble sooner or later because of dishonesty and underhanded dealings by our local elected and hired county officials.
If she had signed checks without knowing the funds were safe, Ms. Michelson would have been just as guilty of misappropriation as the rest of these folks are.
The fact of the matter is that Ms. Michelson did have the honesty and courage to know right from wrong, and none of these other folks wanted to be caught with their hands in the cookie jar.
To A Nony Mous:
It’s really sickening when dishonesty and fraud are being championed as the “wrongs that cannot be righted” in this sleazy corruption of the Serenity Prayer – all while those who ignored the truth get away with putting the county into debt for 20 years without the taxpayers knowledge or their say-so.
Think real hard about how you even know about the misappropriation of millions of dollars from the county treasury. It wasn’t in the Modoc Record. It wasn’t on the radio. It wasn’t because a local elected official or county employee had the guts to stand up and say the right thing at the right time.
It was because of more honest and talented outsiders like Ms. Michelson, who tried to tell us years (and millions of dollars ago) that something was wrong, but she was completely ignored and eventually fired for going against the status quo; and outsiders like CAO Charlton, who got fired for telling us that the money was really not there and had been squandered illegally for years.
An honest newspaper and honest public officials is what the taxpayers needed when this crap started, because there were way too many “team players” already.
A Nony Mous: what a sad commentary that doing the legal thing is seen as a losing proposition and to accept "wrongs I cannot change". It was Edmund Burke who said: "All that is necessary for the triumph of evil is for good men to do nothing." Just like not bucking the BOS with all of their rascally secret finance meetings. I find your attitude very sad and it is probably why we are where we are in this County. We all feel helpless, so just "learn" or decide not to even try. This is perfect "passive agressive" behavior and we who live here must learn to be better than just accepting wrongs we cannot change. Then it WILL change.
Remember people, this is all as reported by Donna Michelson. I am sure a 26+ part story from Phil Smith or Carol Harbaugh would read quite differently. It just seems that a one sided story is always up for debate and questioning.
Using tax dollars to purchase luxury automobiles for the CAO's mother-in-law is what happens when the budget committee meetings are held in secret and no published progress reports to the public or the BOS. This is exactly what we all feared would happen in secret meetings and it didn't take long. Thanks Geri, Dan, Shorty and Pat. Great job taking care of your friends.
12:07 AM - These articles about the illegal spending of funds are not "all as reported by Donna Michelson."
Trying to make believe this didn't happen by discrediting Ms. Michelson is simply naive.
The Modoc Independent News has contacted many individuals involved and received information from many people that knew about this story.
Also, many people in this community knew about this story (and others that were fired for asking about the county treasury) as it was happening ten years ago, all wondering why the Modoc Record didn't report on it like they should have.
In the end, there are over 13 million reasons confirming this account of how Modoc County got into debt by illegally spending money.
This taxpayer would love to hear Phil Smith, Carol Harbaugh, the Modoc Record,or any of the rest of the cronies accounts of how we got so far into debt - but they, like ex CAO Mike Maxwell - haven't had the guts to come forward, unlike Ms. Michelson.
This incident regarding overpriced cars could result in our county supervisors taking their jobs more seriously and maybe even visiting the county regulations regarding large purchases. Maybe even asking a few questions when a department head wants to make a large purchase.
Supervisor Byrne has indicated, to me, that she will try to be more informed about this type of purchase in the future. That seems a move in the right direction. Supervisor Byrne was the only one to respond to a "complaint" email from me about the cars.
Check out item #4 on this week's BOS agenda: $1,500.00 for a computer for Mental Health dept. Must be a hell of a computer to pay $1500 for it. I hope someone on the BOS will ask a question or two about the cost. A super gaming computer with all the bells and useless whistles and a huge monitor might cost that much but not a computer for data entry at a mental health clinic. They could be overspending to justify requests on the next budget. Hopefully someone will ask why this computer is needed. Is it a replacement or an addition? Someone will probably say it was already budgeted but then the question begs: Why so much?
Why has no one even questioned the millions of dollars of Prop 63 money the BOS have stolen from the mental health budget?? Just because the department doesn't have "protected funds" status doesn't mean that the money should have been diverted.
Hi Teresa, can you please be more specific about the Prop. 63 funds? It seems hard to believe that the statute enacted would allow for these funds to be used for purposes other than what the taxpayers intended.
With that said, as we've seen with the schools' investment funds and the Modoc First 5 (Prop 10) tobacco funds, there appears to have been no law that the BOS and other county officials haven't ignored - much to the local taxpayers grief.
I've been griping too much. At tomorrow's BOS meeting I will offer to assist any county department in finding the best deal on purchases and will do it for $1.00 per item as a contractor and no extra benefits. The high prices being paid for so many items needs to stop so I am offering to assist. I know I could have gotten a better deal on the two cars and the computer that have recently caught my attention. Last year it was a chain saw that was being purchased for 25% more than normal. These were just the items out in the open and noticed by myself without any research at all. There are probably many, many more items such as these being overpriced because department heads are so overworked they don’t have time to shop for the best deal.
4/8/12 11:36 am. The computer is not for Mental Health. And it says NOT TO EXCEED $1500.
Regarding the Prop 63 funds:
Prop 63 (also known as the Millionaire's Tax) was passed to provide counties with money to develop and staff knew programs for mental health patients. It also included provisions for capital improvements. How it was to work is as follows: first the state taxes anyone with income over a million dollars at 1% and holds the money at the state level, then the county submits a proposal that meets the guidelines of the program to get those funds. After the state reviews the proposal and it goes back and forth for corrections a couple times, the state approves the use of the funds and the check is sent to the county. The BOS has to sign off on the proposal before it goes to the state, to certify that they approve the proposed use of those funds.
In our county I personally put in countless volunteer hours on the mental health advisory board making sure that the new program proposals would meet our county needs and fit under the guidelines of Prop 63. At almost every meeting there was a BOS representative (first the young guy that didn't stay a supervisor long, something about an underage girl, then Pat Cantrell or Jeff Bullock). They sat there the whole time knowing that those funds were being diverted and the programs that were to be implemented were never going to happen.
**The director of the Health Dept, Karen Stockton, had duct tape over her mouth evidently because the people that were stealing the money were the people that could fire her.
**The people in our county that paid the 1% tax were in most cases probably the very ranchers that get their butts kissed by the BOS.
I struggled for 3 years trying to get a copy of the mental health dept budget to find out where the Prop. 63 money was being diverted and was told that there was nothing available because they were switching records over from one data base to another. I quit the advisory board and considered myself luck that I wasn't one of the people in this county in desperate need of care.
Re: the $1500 computer, yes that does seem to be a fairly hot computer, but once you add licenses for Microsoft Office and maybe a printer, there may be some specialized software required for the position, you sure get a lot closer to that amount of money. It also makes sense today to get as much memory as possible since every "improvement" down road seems to challenge space requirements on the drive. Just a thought or two. When getting a stripped down $200 model of computer, it will not take them into the future and is a total waste to money.
Regarding the Prop. 63 funds. When the projects were submitted, and approved, those budget modifications should have taken place immediately, and projects should have moved forward. Don't think for one minute that Karen Stockton didn't know what was going on. She was hired to be the Dept. head, manage her budget to include any program dollars that they received. Public Health didn't seem to have as many problems implementing their programs. So maybe the difference is the leadership. One, though not a Director, seems to be able to implement and spend funds for the projects in her Dept., while the other (Stockton) apparently can't direct her staff to perform their duties, and allowed the funds to be squandered because she never did the appropriate budget modifications and direct her staff to perform the functions required by the program funds.
Dear Anonymous (whichever one commented about Prop 63),
If I gave you the impression that Ms. Stockton didn't know what was going on with the Prop 63 funds I'm sorry. Of course she knew what was going on. However she was hired by the people that were stealing the money. She could hardly bring that issue up to the chair of the advisory board which is charged with oversight of the department (although the members of the board are appointed and serve at the pleasure of the BOS). There is a theme going here if you all haven't guessed. The mental health millions won't be going to their intended population and there is nothing anyone can do about it. I have to tell you I felt some anxiety when I realized the depths of the cover-up and finally figured out that "between-a-rock-and-a-hard-place" expression that Ms. Stockton wore for the last two of the three years I served.
Answer to 9:14 AM: The BOS meeting clarified the $1500.00 computer to be more than a computer. Inclusive is a U.P.S., production and specialty software required by government agencies, and a monitor. Had It been listed that way I would not have questioned the price.
It is good to go to meetings and ask questions and get answers.
Ron, thanks for asking about the computer.
A lot of this lack of information could be answered quite simply if the board clerk followed through on her promise to us taxpayers to have the agenda request items spell out more specifically the what and the why of the agenda items.
Honestly, two more minutes typing into the agenda item form that the computer also included "a U.P.S., production and specialty software required by government agencies, and a monitor" really cannot be that difficult.
This has already been asked for several times, now all we need is consistent follow-through.
Teresa, are you saying that Stockton, as a Department Head, allowed the illegal borrowing and therefore was able to keep her job; while Donna Michelson lost her job because she spoke up?
"Teresa, are you saying that Stockton, as a Department Head, allowed the illegal borrowing and therefore was able to keep her job; while Donna Michelson lost her job because she spoke up?" -- really?? now how would I know? I don't know Donna Michelson so how would I know why she lost her job? I only know rumors. So making up rumors about what Ms. Stockton did or did not know or allow is just plain reckless and irresponsible. I can only guess and I thought my post made it clear that it was my impression. If not, then I apologize. I don't know what kind of printed budgets are given to the department heads. All I know is what I stated, that Ms. Stockton had a look of someone between a rock and a hard place.
BTW I can't stand when people won't use their real names. It's like trying to communicate with a mime. Really hard to take you seriously.
My earlier post was in fact reckless because I should have said "in my opinion Ms. Stockton knew what was going on". I apologize.
Again, if Karen wrote the projects, she was obligated to provide the service. She should have never taken the funding if she knew she couldn't use it. Basically what your saying is that she was willing to fraudulently submit projects for funding, received the funds, but didn't perform the duties mandated by the funding. One time is one thing, but over time.........that's a problem that rests on her shoulders. Obviously she has issues following County Code, look at the purchase of the vehicles. She didn't follow code in regards to those. Not sure that Karen Stockton's Departments is a victim, but possibly co-conspirators?
Could it be that the reward for financial cooperation is being allowed to purchase luxury cars for her department. This is a great way to show other department heads the rewards available to those that cooperate. The flip side: lose your job and be badmouthed. I haven't heard one supervisor offer any excuse for the luxury cars.
Anonymous April 6 5:12 pm,
"If she had signed checks without knowing the funds were safe, Ms. Michelson would have been just as guilty of misappropriation as the rest of these folks are."
The logic of this escapes me. Signing checks against funds deposited in good faith with the County Treasury is an ordinary practice used by most special districts. Just how does that make her or myself culpable of misappropriation? Are you responsible from crimes committed by your bank?
Greg Small
Fort Bidwell
Greg, what part of the idea that the county was mismanaging (illegally spending) the Prop. 10 and other restricted funds have you missed?
The fact that neither Ms. Michelson or the auditor that the commission hired was able to determine the financial condition of the First 5 account was proof that the moneys were not "deposited in good faith with the County Treasury" at the time, and the questioning was rightfully done by Michelson and the auditor, but to no avail.
It really cannot be made any clearer - Ms. Michelson, irrespective of into which "bank" or "treasury" the funds which she had a responsibility over were finally deposited - was legally responsible for doing her due diligence in this matter.
And when you are a public servant, you are, in fact, responsible for the safety of the funds in your care - which includes ensuring that the bank into which they are deposited is following the laws - which we now know that Modoc wasn't.
So whether it is misappropriation (for those that knew the funds were being used inappropriately, i.e., the commissioners, CAO, Auditor, Treasurer, the Modoc Record, and some county staff) or lack of due diligence (which Michelson would be guilty of had she not asked questions) the point remains that Michelson was the one doing her job in the public's best interests, while the others involved were not.
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