Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 11

July 25, 2001
Richert Counters Michelson

While the commission continued its debate over the concept paper and Michelson’s handling of it, a careful reading of the minutes of the July 25, 2001 meeting discloses an indelible record that the commission expressly mandated that Prop. 10 Trust Funds be kept in the county’s coffers -- regardless of Michelson’s advice that they be moved.
   
Michelson had gone on record in her rebuttal to Patricia Cantrall “that it may be in violation of the Brown Act to consider her position on moving the money from the treasury when discussing her job performance in closed executive session”-- an obvious allegation that the commission did discuss in closed session that Prop. 10 money be kept in the county treasury.
   
But, on page nine of the 12-page minutes buried in the middle of a paragraph, is this statement by Dr. Edward Richert, acting chair, who wanted to clarify that:
   
“…no decision regarding leaving money in the county treasury was made in closed session on July 10, 2001. That decision was made in a previous regularly scheduled meeting; that the money would remain in the county treasury until an audit/accounting had been completed; and the discussion in closed session was to direct Donna to not pursue putting the money other than where it was.”
   
Cantrall quickly backed up Richert by declaring, “That’s right. After the audit we can all say where we want the money to be if we want Part A here and Part B somewhere else. But right now let’s leave the money where it is in the county treasury.”
   
Clearly, the intent of the commission was to bank with the county even though the commission had been told by Michelson that it was illegal to do so.
   
When it came to approving the Cantrall-written option that Michelson responded to, Richert was again sensitive to the allegation that Prop. 10 funds were discussed in closed session.
   
“Can we modify that first paragraph of the draft proposal to reflect that we didn’t make any new pronouncement of where our money was going to be or not going to be; this was simple direction to the executive director that her focus was not to pursue alternative courses for the money; that the money remain in the county treasury for the time being,” the minutes quote Richert as saying.
   
“How much simpler do you want it to be,” asked Cantrall.
   
“The implication was this decision was made in closed session and we want to dispel that and make it clear it was decided in a previous regularly scheduled meeting,” Richert answered.
   
Carol Harbaugh suggested including the words “per previous meeting” and Richert agreed.
   
“This was done before the whole public,” Cantrall came back. “Whatever. Don’t say I wrote it. I think you better rewrite the whole thing.”
   
In one quick exchange Cantrall, who abstained from voting on Harbaugh’s motion to adopt what she called “Direction to the Executive Director,” disassociated herself with the wording of Michelson’s job description.
   
At the same time the commissioners gave Michelson a strong hint not to go any further in her efforts to move Prop. 10 Trust Funds from the control of County Treasurer Cheryl Knoch.
   
There was no discussion of Smith’s resignation as chair, nor was it even on the agenda.
   
Next: Part 12
    An outside CPA is hired to set up the Children and Families Commission’s books, leading to blunt criticism of the county’s handling of Prop. 10 funds.

Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 10

July 11, 2001
Cantrall: Keep Prop. 10 Funds in Treasury
At this meeting Phillip Smith, without explanation, announced that he was resigning as chair of the commission. His resignation was formally scheduled for the commission’s July 25 meeting.
   
Michelson’s efforts to move the money from the control of the county treasurer and auditor did not fall on deaf ears, but instead they fell on an obstinate commission bent on ignoring her warnings that Prop. 10 Trust Fund money kept in the county coffers was illegal.
   
This inflexible stance is reflected in the draft of a proposal written by Supervisor Patricia Cantrall following the July 10 commission meeting.
   
Cantrall, ever the populist politician, wrote the day following the July 10 meeting:
   
“That all monies of the commission remain within the county treasury, with all financial accountability available to the public at the regular meetings of the commission, i.e. balance of account, warrants paid, warrants outstanding, plus amount of funds placed in account from the state or other agencies.”
   
Cantrall added: “That commission will give direction and advice to the executive director (Donna Michelson).”
   
Struck from that line was a description of “direction” to include “as to projects, plans and implementations of projects and/or plans, shall conform to State of California regulations and to the contract of the director and shall include, if applicable, suggestions, proposals, concerns from the public at large.” Those lines were omitted.
Cantrall, typically appealing to public sentiment, went on to write that “all persons are welcome at meetings, and if we are to function correctly, their input as well as advice and proposals and concerns are needed.”
   
The dye was cast, the commissioners, led by Cantrall and Harbaugh, would not follow Michelson’s recommendation to transfer Prop. 10 funds from the county treasury to the Bank of America. The commissioners would stay with the county treasury.
   
About this time Michelson in an undated memo responded to Cantrall’s proposal to keep Prop. 10 money in the treasury and to curb Michelson’s job description.
   
“My opinion on this issue remains consistent in that for purposes of accountability (and image) to ourselves, the citizens and taxpayers of Modoc and the state commission, we should put the Prop. 10 funds in an outside bank trust fund or in the alternative, at the very least, have an outside operational accounts and program accounts with the bulk of our money in those accounts,” she stated in typed response.
   
Michelson wrote, “It is my understanding that it is not the job/obligation of the commission to design/implement the programs/plans that will determine how their policies are to be effectuated. It is my understanding that it is the commission’s job/obligation to support (underlined) the strategic directions -- each with related programs -- created by extensive input from diverse groups of parents and professionals to help the commission achieve its overall objects and long term desired outcomes.”
   
She went on to tell the commission that it may be in violation of the Brown Act to consider her position on moving the money from the treasury when discussing her job performance in closed executive session.
   
She did state that she had no control over how the commission voted and that she would abide by its decisions.
   
It is apparent in public documents such as the e-mails sent by Michelson to the commission, and by Cantrall’s draft proposal ignoring Michelson’s advice to move Prop. 10 funds from the treasury, that at this juncture -- May 2001 through July 2001 -- Michelson was becoming a “difficult” and “hard-to-work-with” director of the Children and Families Commission -- an unearned reputation that exists to this day among various county officials and their appointees who remember the era that led to the county’s financial demise.
   
Next: Part 11
    The Children and Families Commission makes a concerted effort to reverse a perception that it acted illegally in closed session.

Editorial

Modocian Mentality


Elusive as a definition of “Modocian Mentality” may be, we are going to give it a try.
   
Modocian Mentality, simply put, is a mental process that is adverse to analysis. What does that mean?
   
It means that in trying times when new solutions are necessary to fix old problems (such as the mismanagement of money at the Modoc County Library and the illegal taking of money from the county treasury), instead of analyzing the cause and then fixing the problem so it doesn’t occur again, Modocian Mentality relies on its throwback ancestral days and simply puts the shoulder to the wheel.
   
A glaring example of this is the inability of the Modoc County Board of Supervisors and District Attorney Christopher Brooke to resolve -- and bring to accountability those responsible for -- the $20 million misappropriation of the treasury.
   
Another example is the same Board of Supervisors turning its blinders away from the revelation that over the years Head Librarian Cheryl Baker has mismanaged funds so badly that library services are under threat of being seriously cut.
   
The Board of Supervisors’ answer to both issues is basically to pass the buck back to the taxpayer by suggesting the only solution is more taxes, and forget about accountability.
    
So, everyone moans and groans as they shoulder in on the “problem” with a goal of just getting through to the next day.
   
The sly, sneaky ones (please fill in the blank) know what they can get away with because everyone else is too busy putting the shoulder to the problem instead of applying a critical analytical brain. They don’t want to do their homework because they don’t know how and it’s not in their character to learn.
   
Obviously, someone else is supposed to do the thinking. That may be acceptable when “everything is equal,” but everything is not equal in Modoc County when it comes to the taxpayers’ treasury and its illegal use by the sly and sneaky ones.
   
When the illegal use of the treasury was disclosed the sly and sneaky covered up their misdeeds or fell into complete denial and the others -- those who can’t figure out what caused these scandalous misdeeds -- just say, “Well, let’s just get it fixed.”
   
And the sly and sneaky ones see immediately they are home free and they answer, “We’re working on it.”
   
And everyone lives happily ever after without thinking analytically that maybe they can get a new librarian who is better at math, for example, or a straightforward treasurer instead of the one who ran unopposed in the last election. Or, a district attorney willing to represent the interests of the people who elected him.
   
(Of course, when this Modocian Mentality inability to solve problems is pointed out for the world to examine, the sly and sneaky and the non-analytical with their shoulders to the wheel unite as one against anyone who has the audacity to expose their shortcomings -- even when it is well intentioned).
   
So, here are our predictions for 2012:
   
Nothing, absolutely nothing, will come of the $20 million misappropriation scandal -- and it is scandalous. No one will be held accountable -- even those who have been and will be exposed with the illegal treasury goods in their hands.
   
There will be no performance bond pay off to help the county slide through on its thin cash flow because that would make someone the guilty party.
   
The culpable will go scot-free because DA Christopher Brooke will not prosecute them.
   
Head Librarian Cheryl Baker will not in the slightest be reprimanded for her poor fiscal management decisions.
   
Supervisor Patricia Cantrall, who is fully aware of instances of misappropriation, will run for re-election -- and win because shamefully no one will oppose her.
   
The liars will continue to lie.
   
The gullible will continue to be gullible.
   
We make these reluctant predictions because we want to be proven wrong, but don’t bet any of the misappropriated treasury funds on it.
                            -- Ray A. March
   

Balancing the County’s Budget Deficits

on the Backs of Children

By Ray A. March

Part 9

June 21, 2001
Commission Jumps on Michelson

The anticipated closed session on June 21, 2001 began at 5:05 p.m. and in less than an hour the commission’s deliberations ground to stop -- not behind closed doors as it planned, but in open session.

Not only had the commission  failed in its responsibility to legally inform Donna Michelson as to what charges were being made against her prior to holding the meeting -- which was a violation of the Brown Act -- it had failed to properly serve her notice.

It should not be overlooked that Michelson holds a graduate degree in law. Exposing that Chair Phillip Smith wanted to “denounce” the “concept paper” in closed session and away from the public view,  she requested the meeting be open -- and not closed.

Michelson’s handling of the “concept paper” was rescheduled for July 10 on the motion of commissioner Patricia Cantrall and seconded by vice chair Dr. Edward Richert. More would be heard from Smith and Richert, and eventually Cantrall.

July 10, 2001

Once again all members of the commission were present. Donna Michelson was legally served to appear at the July 10 meeting by Sheriff Bruce Mix. Once again the commission was ready to meet behind closed doors when once again Michelson detoured them.

Quoting a section of the Brown Act, Michelson told commissioners she was entitled to an open meeting because as acting secretary she had to take the minutes of the executive session and besides there had already been an open forum on June 13 and the “public had a stake in the outcome.”
   
The previous month three of the six-member commission submitted written opinions of her handling the “concept paper” meeting. The written opinions were at Michelson’s request. Complying were Richert, Smith and Harbaugh.
   
Richert and Smith’s reports were among documents made public by the current First 5 office under provisions of  the California Public Records Act. There was no explanation for the absence of Harbaugh’s report.
   
In his report, Richert expressed “disappointment” in Michelson, telling her that “in recent weeks I feel you have taken on a consistently adversarial role that has promoted a spirit of ‘us against them.’” He was apparently referring to the “concept paper” meeting only and did not mention Michelson’s other role of insisting on the legal management of the Prop. 10 Trust Fund.
   
Smith also withheld any mention of the treasurer and auditor’s misuse of treasury funds, but instead wrote that Michelson had:
  
“Failed to obtain authorization from the commission to publish the Strategic Plan Concept Paper in the name of the commission and, failed to pass to the commission correspondence addressed to the commission for review and before generating a common response, and then you responded in the name of the commission without advising the commission.”
   
Curiously, Smith made no written mention of his intention to “denounce” the “concept paper.”
   
But, Smith insisted on discussing Michelson’s handling of the concept paper at the June 13 public forum in closed session. Cantrall expressed concern over the legality of a closed session because she felt Smith was not acting on the advice of an attorney -- but instead had consulted CAO Mike Maxwell. Michelson stood firm in her right to an open session.
   
It is not known what Maxwell’s advice was to Smith.
   
An eventual compromise was made with Smith allowing members of the audience to give their opinions before the commission went into closed session -- and one by one Nancy Braman, Arlene Johnson, Cheryl Maxson, Betty Holloway and Gannette Mirlohi spoke both in support of the concept paper and of Michelson.
   
“Change always brings about a little discomfort,” Mirlohi told commission members.
   
The legal notice served on Michelson and signed by Smith stated the purpose of the personnel session was to discuss complaints about her “performance as executive director.” Apparently the only source of complaint was the commission itself and not the public. No one from the public sector came forward to complain about Michelson’s job performance.
   
Not only did Braman, Johnson and Maxson support Michelson, they also told the commission they were against its practice of keeping the Prop. 10 Trust funds in the county treasury. While Michelson’s Prop. 10 message was not getting through to the commission, it was being heard by members of the general public who attended the commission’s meetings.
   
In fact, there is no mention in the minutes that the commission recognized or responded to the issue of the Prop. 10 Trust Funds. Instead, the commission went into closed session for 56 minutes and emerged with two options for Michelson’s consideration.
   
The first option, drafted by Cantrall was to “devise guidelines” governing Michelson’s contract, bylaws and job description and “to give direction to those areas that are unexpected or new.”
   
Under the second option, Smith wanted to take a tougher and more punitive approach where either the commission or Michelson could “exercise their option under the employment agreement to give the required 15 days notice to quit the contract.”
   
Michelson reminded Smith that her contract required the commission to find “cause” to fire her and asked Smith if he had cause to do that. With that, Smith dropped his effort to amend the contract agreement and Michelson agreed to Cantrall’s proposal, according to the minutes.
   
Smith went further and also withdrew an earlier motion to “denounce” and “renounce” the concept paper, saying in answer to a question from Michelson that he did not intend to bring the matter up at the commission’s regular meeting the next day, July 11, 2001.
   
Clearly, the commission was uneasy and dissatisfied with Michelson’s aggressive management style. The commission, as records will reveal, was becoming more resolute in stonewalling both the issue of the Prop. 10 funds and dealing openly and directly with the “concept paper” issue.
    
Next: Part 10
    Supervisor Patricia Cantrall ordains that “that all monies of the commission remain within the county treasury.”

Citizens Dig in to Help Library
Overlook Major Reason for Debt

   
Citizen interest in the future of the Modoc County Library came together in various communities recently to discuss -- and in some rare instances -- debate how the library system went broke and what can be done to salvage it.
   
An agenda overseen by Librarian Cheryl Baker was followed prompting the public to deal more with how to salvage the library rather than examine how Baker managed it to the point of insolvency.
   
Speaking in support of the library branch in Cedarville, and particularly how to keep it open without losing a staff member, Jim Laacke, president of the Surprise Valley Rotary, announced he was facilitating a $13,000 donation to be used for an employee salary.
   
Another Surprise Valley resident, Ann Young, asked if volunteers could help keep the library open. Baker said they could but added that librarian work is complicated and would require extensive and costly training.
   
Skirting the issue of mismanagement, Baker read from a prepared statement that was in boldface and underlined for emphasis: “Modoc County Library does not receive any funds from the county’s general fund.”
   
But when an audience member asked if the county used library funds for other than library-designated costs Baker made a revealing answer.
   
“I have come under budget to help out other departments,” she said, “and the county always pays the library’s bills.”
   
Implied is that like other county departments, library funds have been used to off-set debts elsewhere. Baker did not elaborate on her willingness to help other departments with their debts, and did not explain how the library is over budget by an estimated $113,000 this fiscal year if -- as she said -- she had been “under budget.”
   
At issue, and largely omitted from public discussion, was Baker’s handling the last ten years or more of the library budget, an issue brought to light in CAO Chester Robertson’s Fiscal Restoration Plan.
   
“The library has been running chronic deficits for many years, utilizing the fund balance available that had accumulated from a fixed assessment from 1987. Historically the library relied on interest from the fund balance available, but declining interest rates and deficit spending has decimated such revenue,” Robertson wrote in the plan.
   
Neither the public sessions nor the Modoc County Board of Supervisors have addressed Robertson’s findings or asked Baker to account for her role in the chronic deficits.
   
Instead, Baker in her prepared statement pointed to a “combination of inflation and rising costs, declining revenues (and) the steep rise in property tax delinquency” among the causes of the library’s financial failure.
   
There was also a vague reference to “Modoc County’s fiscal crisis” which could be interpreted as a fiscal crisis caused by the $20 million misappropriation of the treasury, largely attributed to the on-going practice of using general funds from other departments such as the library to pay down still other department debts.
   
It was also revealed at the Cedarville session that the library is subject to a county-imposed “cost plan” which means all departments, including the library, are charged a fee by the county for services such as payroll and accounting. The library‘s annual fee is $24,000.
   
It is not known what that accumulated fee is used for by the county.

Editor’s Note: Barbara March, publisher of the Modoc Independent News, continued to this report.  This article first appeared in the Modoc Independent News, p. A1.

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