Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 8

June 13, 2001
Michelson Now Fighting Two Fronts

 From her lone camp, Donna Michelson was now dealing with commission members on two fronts: one was her effort to get the commission to remove Prop. 10 Trust Funds from the control of Auditor Judi Stevens and Treasurer Cheryl Knoch; the second  front was to establish a “concept paper” that would act as a guideline for setting goals for the Children and Families Commission program.
   
The two fronts -- although unrelated -- paralleled each other when it came to the commission’s resistance to abide by state law and its irritation with Michelson’s forthright managing style and her progressive “concept paper.”

The dual aspect of Michelson’s delicate position is apparent in documents obtained either privately or through the California Public Records Act by the Modoc Independent News -- documents that record a traceable chain of events during Michelson’s tenure.
   
Although the commission was working with a year-old “concept paper,” or set of guidelines for preparing children from birth to five years of age for entering public school, Michelson told the commission the plan was “sorely lacking or non-existent” in readying the children’s parents or the children for a school environment.
   
In part, the program’s short-term goal was to see that “children be healthy and well” when they enter school. Healthy and well went far beyond the physical well-being of a young student entering the Modoc County school system. To quote from the “concept paper” it meant that:
   
“Children prior to entering school will be respectful towards all aspects of diversity (ethnicity, gender, sexual orientation, socio-economic class, linguistic difference, groups historically and currently under-represented, children with special disabilities and needs.)”
   
The concept paper was a blistering indictment of county agencies responsible for carrying out specific segments of the program, and it was not surprising that the agencies took offense during a public forum on June 13, 2001 that lasted three hours.
   
“The first hour consisted of members of TEACH and from health services interpreting the concept/discussion as a personal attack on their specific programs although no names were mentioned in the paper,” Michelson noted in the minutes of the meeting.
   
She also noted without specifics that “personal attacks were made upon the executive director, Donna Michelson.”But, the last two hours were productive, according to Michelson’s minutes, with the group working through the concept paper page by page and “correcting syntax.”
   
Michelson may have thought at the time that all went well at the public forum’s discussion of her concept paper, but that atmosphere was to quickly change. A closed session was immediately called by the commission for the next week, June 21, 2001, to discuss “the performance of  the executive director in regards to the ‘discussion/concept’paper.”
   
With each meeting, instance-by-recorded instance, item-by-documented item, Michelson was following her instincts and principles as the commission’s executive director, but in doing so she was quickly alienating the very people she was attempting to inform.
   
Item: She stood up to Carol Harbaugh who was trying to obstruct the transfer of Prop. 10 monies from county control to the local branch of the Bank of America.
   
Item: She challenged Harbaugh’s authority to unilaterally make her an employee under Harbaugh’s county office of education.
   
Item: She continually, and at times in frustration, told the commission the Prop. 10 funds were being kept illegally in the county treasury, yet the commission failed to act each time -- or disprove her.
   
Item: At every turn as she tried to convince the commission the Prop. 10 Trust Funds were being wrongly managed, she alienated not only members of the commission but elected officials.
   
Considering the “Modocian” cultural makeup of a commission that included rigid-minded elected officials and insiders who were reluctant to accept new ideas coming from outsiders, Michelson was rapidly adding up negative points.
   
What was being ignored was that Michelson’s principles and ethics were driving her to convince the commission -- against its collective will -- that it was illegal to keep the Prop. 10 Trust Funds in the county treasury.
   
The handling of the “concept paper” was an opportunity for the commission to put her on notice and it did so beginning June 21, 2001.
   
Next: Part 9
    Charges of Brown Act violation

Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 7

May 25, 2001
Prop. 10 Funds with County are Illegal

In the meantime, two days after her e-mail to Harbaugh, Michelson sent another e-mail to various members of the commission, including Supervisor Patricia Cantrall, informing them that she had met that morning with Walter Davis, branch manager of the Bank of America in Alturas.
   
The purpose of the meeting was to discuss the process of transferring the Prop. 10 Trust Fund from the control of the county auditor (Judi Stevens) and treasurer (Cheryl Knoch) to a commission-controlled trust fund account with the B of A.
   
“Davis explained to me that our money with the county is in a non liquid account and this is the reason the auditor (Judi Stevens) keeps telling us we can’t take our money out and the reason the county is earning 5.2 percent and we are only getting a proportionate share of that interest,” Michelson wrote the commissioners.
   
Wasting no words, Michelson informed the commissioners that it was illegal (she put “illegal” in bold face) “under the state commission’s guidelines for the Prop. 10 revenues and/or trust fund to be in a non liquid money market trust fund.”
   
“Prop. 10 revenues are to be in an interest bearing trust fund that is liquid, meaning that the commission has access to that fund at all times,” she wrote in the memo. “The state commission deposits the money with the county treasurer and once that money is recorded the commission has access to the total amount in that trust fund.” She described for the commissioners the simple procedure for making the transfer from the county to the Bank of America.
   
She then contradicted commissioner Carol Harbaugh who had maintained that an unnamed source at Bank of America said the Prop. 10 Trust Fund would have to be managed through the commercial division at the bank’s headquarters in San Francisco.
  
“Davis said our trust fund would be managed locally at the Alturas branch because headquarters deals with formal trusts,” Michelson wrote. “Those accounts are usually for large businesses…and the fees would eat up our trust fund.
   
“I’m sending this information beforehand so that the point does not have to be belabored at our next meeting and also to demonstrate how simple the process is,” she concluded. “Regardless, the way our money is being handled now is illegal.”
   
Michelson was doing advance homework for the commission, preparing it for what should be a routine banking procedure -- moving Prop. 10 Trust Funds from the control of the treasurer and auditor to an account in the commission’s name.
   
Next: Part 8
    The Children and Families Commission finds an excuse to get rid of Michelson. The excuse is called a “concept paper.”

Letter to the Editor
Short-Changing Veterans

Dear Editor,

As I followed your blog through the bureaucratic maize, deliberately tangled here and there like spider webs in order to protect someone while exposing others to face live rounds without a flack jacket, I am reminded of a "Sopranos" episode, played by the Muppets. 

It would be great if there were a tracking device like your blog to follow money and other benefits allocated by Congress for crippled American veterans. Of the millions of dollars designated for homeless veterans, nothing gets to the veterans while bureaucrats take a vacation in Jamaica or Oaxaca and the office is being renovated in preparation for a favorite son to inherit. 

The veterans shiver wet and cold, often dying of exposure, while the bureaucrats hurry out and establish a Swiss or off-shore bank account.  Where does one file a complaint?  Everyone in government  wants to be in control of the money but nobody wants to be in charge of integrity. 

Darryl Babe Wilson
Santa Cruz 

Editor's Note: For those visitors who have told us they are having a problem posting a comment, we've implemented an adjustment which hopefully will make it easier. Click on "Comment" under the Post you wish to comment on, and a full page will pop up where you can leave your comment.

Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 6

May 11, 2001
Harbaugh-Michelson  Dispute

At Executive Director Donna Michelson’s request, apparently supported by the commission at its May 9 meeting, the state’s California Children and Families Commission agreed to discontinue a $5,816 monthly disbursement to the Modoc County Children and Families First Commission until advised to resume the payments, according to a letter signed by Joseph P. Munso, chief deputy director.
   
May 22, 2001

Sending copies to each member of  the commission, Donna Michelson wrote John D. Abreu, a certified public account in Alturas, requesting a vast array of documents that substantiated his audit of the commission in 2000. Most of the documents she requested included balance sheets from the county auditor’s office, deposit receipts covering payments from the state to the county treasury and requests to withdraw warrants on the Prop.10 Trust Fund.
   
Apparently the reason for her request was disclosed in an e-mail sent three days later to Dr. Edward Richert, vice chair, in which Michelson said the information was needed for an accountant of Price Waterhouse “who possibly may be the one reviewing and setting up our books from the TA center.” 
   
Michelson in an e-mail exchange later told the Modoc Independent News:
  
“Carol Harbaugh was having none of this. She unilaterally changed my employment contract and made me a county employee under her. Yet, she instructed Judi Stevens not to deduct the usual benefits for county employee’s health insurance and SDI (short term disability insurance).
  
“And she simultaneously told me I owed retroactively half of the deposits for social security, short term disability insurance and health care insurance that they failed to pay on my behalf. Then she filed her proposal with the auditor and the commission to be the agency that handles the trust fund for all incoming deposits for the commission while sitting as a member of the commission.”

May 23, 2001

Harbaugh’s move to reclassify Donna Michelson’s position as an employee of the Children and Families Commission to Harbaugh’s office was met with stiff resistance from Michelson.
   
In an e-mail addressed to Harbaugh at the Modoc County Office of Education, Michelson told Harbaugh a change in her status was inappropriate because she was not employed by a county department. And then she went straight to the point.
   
“It’s not entirely clear that you have authorization to issue a change of status since you alone are not my employer and there has been no authorization from the Prop. 10 commission to do,” Michelson informed Harbaugh.
  
Michelson acknowledged that, “The only problem I see at this point is reimbursing Mental Health for $5,200 for the month of January 2001.” Michelson was apparently an independent Mental Health contractor for one month.
  
“Judi Stevens paid me out of Mental Health’s professional fees account because Phil Smith was in Mexico for a month and he was the only authorized signature. Mike Maxwell said she (Stevens) should have come to him and he would have authorized writing the check from Prop. 10 account,” Michelson revealed in her e-mail to Harbaugh.
  
It’s not clear in the documents obtained by the Modoc Independent News that Harbaugh’s effort to reclassify
 Michelson as an employee under her supervision was successful at the time, but the issue was revisited in September of 2001.
   
Next: Part 7
    Donna Michelson pays a visit to B of A.