Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 2

Late 2000, early 2001
Prop. 10 Trust Fund Debate Heats Up

    In November and December of 2000, after Executive Director Donna Michelson had systematically established that Prop. 10 funds were legally for the exclusive use of the Children and Families Commission and independent of Modoc County, Judi Stevens, then the elected county auditor, surfaced with her own interpretation of the law.
    In a Jan. 8, 2001 memo to the commission Stevens said she “was not pleased with the information that Donna Michelson told the commission.” She made four points in her memo:
    1. All departments have to do their own accounting.
    2. The commission chose to have its money in the county treasury and had the Board of Supervisors establish a trust fund.
    3. “…that the funds could not be removed from the county treasury, but if the commission removed the funds from the treasury, Stevens would have to “direct charge” the commission for the services of the county, pointing out that commission chair Phil Smith supported her position.
    4. Recognizing that the commission was not under the direction of the Board of Supervisors, there would still be charges made to the commission “as long as the money is in the county treasury.”
    As for Item 1 it appears Stevens was attempting to completely absolve herself of all responsibility although the auditor’s office is responsible for internal controls and accounting procedures of all departments and agencies who use its services, according to sources knowledgeable of the auditor‘s office.
    The auditor’s office is also responsible to insure that each department knows how to reconcile its books with that of the auditor.
    In regards to Item 2 there is argument that Stevens was not accurate in reporting back from the conference she referred to. The commission had the authority to do whatever it wanted, whenever it wanted.
    Item 3 has to do with how the county calculates its overhead rates.  Most counties in California use the same process as Modoc County, according to sources.  It is complicated and convoluted.  It also sets the rates based on previous year’s levels of service.
    It was apparently up to the commission, which early on did not appear to agree with Michelson, to arrive at its own interpretation of Steven’s memo. Instead it stood firm and fell back on the politically-safe status quo -- no change is good change.

Next: Part 3
    A detailed look at the year 2001 and how the Children and Families Commission doggedly worked not only to ignore Michelson’s advisements but ultimately to find a way to get rid of her without ever addressing the issue of removing Prop. 10 Trust funds from the county treasury.

Letter to the Editor

In Defense of Libraries

Dear Editor,

I am concerned by the sad plight of the Modoc County Library reported in your columns and afraid that the chain of reactions they generated is harmful to the library at a time when it most needs our support. I also would like to make a correction in the article of January 5. As you stated, the predictions for the library’s running out of reserve funds at about this time were never a secret. While I was library director, 1993-1999, the Library Advisory Board and I made sure the Board of Supervisors and the community at large were aware of it, and we explored various solutions to a problem that is built in the Mello-Roos structure itself. This topic was never welcomed by the Supervisors nor the public but I did not lose my job because of it, I chose to relocate for personal reasons, several years into those discussions.

The solutions explored then to offset increased costs of operation, were no more palatable than they are today. Increase revenue? Nobody wants to hear about more taxes. Reduce costs? Nobody wants to see jobs lost, small branches’ hours cut, inter-library loans suspended, etc… We did our best to reduce expenses without hurting anyone. During my tenure and during Cheryl’s, a full-time position was cut when someone left it voluntarily. The remaining staff made do with less help and more volunteer contributions. We applied for grants to supplement the budget. The Friends of the Library chipped in with increasing devotion. And the Modoc County Library was consistently maintained as a top of the line operation and cultural center for the County. For its small size, it matches the service of any urban area and in some ways, surpasses it. It is run with great professionalism and is an asset for any prospective newcomer or investor in the area.

It is regrettable that an appeal was not made to the voters some years ago, before the general county debacle and the national economic crisis compounded the problem and made it a much bigger challenge. But would the voters have approved it then? Are they willing to put out just a few more dollars (perhaps as little as $25.00 instead of $18.00) to support an well-run institution that contributes to their community’s education and well-being, and does a great job with frugal means and the help of many generous volunteers? And isn’t it premature to post a referendum on Cheryl Baker’s resignation, before the informational meetings that will give her an opportunity to convey the facts to the public?

E-readers are nowhere near replacing libraries and librarians need an array of professional skills much wider than they used to. Your current library staff has those skills, acquired over many years of work and training. Modoc County residents, be proud of your library and whatever measure is agreed on to save it, preferably without any lay-off, please support it or you will lose one of your best treasures.

Godelieve Uyttenhove

Lakeview, Or.

Balancing the County’s Budget Deficits

on the Backs of Children 

by Ray A. March

Part 1


Adopting Ordinance 321-A

    Jan. 5, 1999 

 The Modoc County Board of Supervisors, chaired by Patricia Cantrall, unanimously adopted Ordinance 321-A formally organizing the Children and Families First Commission provided by law under California’s Prop. 10 Trust Fund.
    The ordinance authorized a seven-member commission board, later amended to nine members to include one member of the Board of Supervisors, the director of health services and the county superintendent of schools, or their designees, and six members appointed by the Board of Supervisors.
    The ordinance also specifically stated “the commission shall be a public entity separate and distinct from the county of Modoc. The county of Modoc shall have no responsibility whatsoever for any financial obligation or other liability of the commission.”
    The clause, clearly outlining the separateness between the county and the state-funded Children and Families First Commission, would eventually lead to the revelation that high-ranking county officials apparently had no intention of abiding by state law, or at the very least did not understand the law, especially when it came to funneling Prop. 10 Trust Fund  money -- destined for the Children and Families First Commission -- through the county treasury and auditor’s office.
    As background to the issue of Modoc County’s misuse of Prop. 10 Trust Funds the state law governing Prop. 10 requires that “the moneys allocated and appropriated to county commission shall be deposited in each local Children and Families First Trust fund administered by each county commission, and shall be expended only for purpose authorized by this act and in accordance with the county strategic plan approved by each county commission.”
    The law also mandates that “no money in the California Children and Families First Trust Fund shall be used to supplant state or local general fund money for any purpose.”
    In effect, under law Prop. 10 funds are regularly provided to the county by the state.  Once received by Modoc County the funds are required to be transferred and held in a separate account specifically and solely for the Children and Families Commission.
   For the last fiscal year 2010-11 the total Prop. 10 funds revenue received by the county and deposited in the treasury  amounted to $434,458.91, according to Treasurer Cheryl Knoch. These Prop. 10 Trust Funds are at the center of the treasury misappropriation issue.
    This series will illustrate that contrary to law, Modoc County officials co-mingled these funds with the county's general fund -- as argued unsuccessfully by then-Executive Director Donna Michelson.

March 17, 2000

    More than a year after adoption of Ordinance 321-A the slow-grinding process of bureaucratic paperwork results in Donna Geldreich, commission member and director of Resource and Referral, a division of TEACH, Inc., sending a fax memo to Patti Houston, governmental affairs, California Children and Families Commission in Sacramento, affirming that language in the state law is acceptable.
     Geldreich also stated the commission was “a legal public entity separate from the county.”
    The stipulation that the Children and Families First Commission was to exist outside the authority -- and potential meddling of the county -- would remain at the center of arguments over where Prop. 10 money should be deposited -- either with the county or an outside independent bank.

Oct. 27, 2000

    Continuing with the establishment of the Children and Families First Commission as a legal entity, Executive Director Donna Michelson routinely filed a “statement of facts” with Bill Jones, Secretary of State, establishing Modoc County Children and Families Commission (the “First” in Children and Families First Commission had been deleted) as the legal name of a public agency and listed seven people as members of the commissions’ board.
    They were: Phillip J. Smith, chair;  Dr. Edward P. Richert, vice chair; Patricia Cantrall, Kate Crosby, Carol J. Harbaugh, Alice Lybarger and Donna Geldreich.
    Nearly two years after its formation, the commission was still two members short of its state-mandated membership of nine.
 
Next: Part 2
    Debate over the placement of Prop. 10 Trust Funds begins to heat up.