Balancing the County’s Budget Deficits
on the Backs of Children
By Ray A. March
Part 28
Feb. 13, 2002
Smoking Gun: Treasury Helps Pay MMC Debt
Less than two weeks after the Children and Families Commission fired Donna Michelson, Modoc County Treasurer Cheryl Knoch openly informed the commission that the treasury helps pay the balance of funds that run in the negative. Such as the hospital.
This disclosure by the county’s elected official responsible for deposits to the treasury was exactly what the embattled Michelson had been saying for more than a year -- that Prop. 10 Trust Funds were being misappropriated.
Incredibly, Knoch was saying the treasury not only covered Modoc Medical Center debts but apparently other county departments as well. The commission’s minutes of the Feb. 13, 2002 meeting state:
“Ms. Knoch provided an explanation of how the county currently manages the incoming funds, explaining that every fund currently in the county treasury helps to pay the balance of funds that run negative, such as the hospital.” (Boldface emphasis added).
Eight years later on March 30, 2010 during a workshop session conducted by the Monday Night Group in an effort to investigate how the county managed to misappropriate an estimated $20 million from the treasury, Knoch was feeling pressure.
“This money needs to be replaced in the county treasury,” she said from a seat in the audience. “I’m the one who is going to prison and be behind bars.”
Remarkably, at the Feb. 13, 2002 meeting of the commission, Phillip Smith said he was satisfied with keeping the Prop. 10 funds in the care of the county treasury, according to the minutes.
Commissioner Rosemary Nelson, Michelson’s only ally and apparently appalled at Smith’s blatant position, countered that the children under the Prop. 10 program come first and the hospital debt was not the responsibility of the Children and Families Commission.
“…children need to be the commission’s priority and to satisfy the hospital’s debt is not these children’s nor the commission’s responsibility,” Nelson retorted, according to the minutes.
Unmoved with Nelson’s argument, Smith said, “he feels just as strongly that the hospital needs to be available to those same children…in the community.”
Undaunted, Nelson pointed out that the commission does not receive regular fiscal reports from the county nor does it have a memorandum of agreement with the county for services.
Attending this meeting in addition to Nelson and Smith, according to the minutes, were Tracey Cochran, chair; Dr. Edward Richert, Donna Geldreich, Alice Lybarger and Carol Callaghan as Carol Harbaugh’s alternate. Commissioners Patricia Cantrall and Rusty DuVall were noted as absent.
The difference of opinion between Nelson and Smith in 2002 personifies much of the debate in 2012 with one faction arguing there was justification in the misappropriation because treasury money was going to support the hospital while another faction argues that the misappropriation was illegal and those responsible should be held accountable.
No action was taken by the commissioners following Knoch’s oral presentation. The minutes do not reflect who recorded them.
(However, on Feb. 22, 2011, nine years after Knoch made her admission to the Children and Families Commission the Modoc County Board of Supervisors unanimously voted to pursue a $12.5 million claim naming Knoch and former auditor Judi Stevens as the two officials who “most likely” violated state law in the misappropriation of the treasury.)
In a manner that appears to be political tradition, the commission could not rest under the criticisms of CPA Kristin Domenichelli when she wrote that Knoch’s three-point memo was a jaded and misleading scare tactic, but instead the commissioners were ready to strike back at Domenichelli with criticisms of her “behavior.”
Cochran brought an item to the agenda that was intended to discuss “Ms. Domenichelli‘s unprofessional behavior at the last meeting and regarding her communication with Ms. Michelson,” but the matter was tabled.
Next: Part 29
Wrapping it up
