One set of books too many – The Ukiah Daily Journal

By now most people are probably aware that at the last meeting of the Board of Supervisors on August 2, Chairman of the Board, Ted Williams, made what sounded like a startling statement that the county was holding “three different sets of books”.

That’s at least one book series too many.

Here are the gist of Williams’ comments: “I would like to ask my colleagues to help direct the CEO’s office to contact the State Comptroller’s office to help us get our books in order. … I have three and a half years in office. I worry I’m getting to the point where I can’t use the “I’m new here” excuse anymore. And yet, in three and a half years, I have not been able to obtain a credible financial report. I understand that we have three different sets of books. They all differ. Why? … So, how many accumulated errors are there, and over how many years? Ten years? It’s thirty years? Is that why we have different sets of books, with different numbers? Because we never integrate the conclusions of external audits? I think we have a financial crisis here, and we just don’t know how bad it is.

On the issue of different sets of books, I can tell you in my professional career – which is roughly split between the first half when I was international president of an airline industry union, and now as as head of a rural water utility – I’ve always kept two sets of books, that is to say two accounting systems: cash accounting and accrual accounting. For financial reporting to state and federal agencies, my organizations have always used accrual accounting as the official method or format, but cash accounting was a handy tool for quickly determining income and expenses in real time.

But that’s not what Williams was talking about.

Darcie Antle, recently promoted to CEO from the interim CEO position, replied to Williams, “I agree with you. I am not sure. I think that if we asked for a pause in collective bargaining, it is largely because we do not know it. We don’t have a clear view of what the books are and where the finances are. And these discussions must continue with the new auditor-controller.

Third District Supervisor John Haschak’s perspective was most relevant, as he explained, “The county budget has been at the center of much of the discussion. People asked me a lot of questions. Are we really as broke as they say? How did this happen when we were supposedly full of reservations? Why can’t the county hire more staff or at least pay the current staff decently? How did we end up with a deficit of $7 million for the health care system? What about the combined position of treasurer/tax collector/audit controller? What is the Supervisory Board doing about this mess? … According to the money people, the budget is grim. There is little money available… The county health plan is self-funded. Costs increase due to the experiences and expenses of our employees. Medical costs in Mendocino County are high. The health plan has recorded deficits of $3.6 and $4.0 million over the past two years. This was only fully reported a few months ago… The Combined Auditor/Comptroller/Treasurer/Tax Collector (ACTTC) positions were not recommended by people in these offices. I voted against but the BOS adopted it. So the question is how to make it work now that that’s the plan. The board has appointed Chamise Cubbison to the post since she was elected in the June election, although normally she would not take charge until January. There have been staffing issues, technology issues, loss of institutional knowledge and lack of time for a full review of how to structure the combined offices… I propose that we have a special Board meeting to resolve these communication issues and book discrepancies. If we’re not all on the same page, then we have real problems and the public deserves better. The Board needs to sit down with the Executive Office staff and the ACTTC to determine where we are financially, how we got here, and what the way forward is.

Agreeing with Haschak’s common-sense approach to dealing with this near-alarming development, Norm Thurston, auditor and former Sheriff’s Budget Officer Tom Allman, offered this advice online:

“A message to the Board of Supervisors: If you want factual information about the county’s financial systems, you should go to the person who knows those systems best: Chamise Cubbison. Whoever is currently providing you with financial information is not doing it very well. In Chamise, I suggest you walk around the boardrooms when they are discussing tax matters. Your presence can motivate our 5 supervisors to be more thoughtful before making unfounded comments.

Finally, the only person who should have been contacted first, but who never had the courtesy to address the BOS at the August 2 meeting, was Chamise Cubbison, auditor-comptroller/treasurer-collector of taxes. By the way, it was a monumental mistake for the supervisors (with the exception of Haschak) to consolidate the previously independent functions of auditor-controller and treasurer-tax collector. One of the cardinal rules of financial management is never to eliminate internal financial controls, which happened when the Council merged the two offices. You weaken the financial checks and balances when you do. As I said, it was a monumental BOS blunder that contributed to the creation of the current financial mess they find themselves in.

Here are excerpts from Cubbison’s memo to the BOS:

“It has come to my attention that the board has instructed staff to contact the state comptroller’s office regarding the county’s financial systems and that several false statements were made during the day today. . [Tuesday’s] Meet. I respectfully request that staff delay engagement with the Crown until a presentation is made to the Board of Directors on the 2020-21 Comprehensive Annual Financial Report (ACFR) and audit unique for the 2020-21 financial year which is currently being finalized. Such a presentation was already scheduled once the Single Audit is released…There have been no requests to discuss the relationship between the county financial system, ACFR and budget schedules since I became an auditor- Acting Comptroller or Auditor-Comptroller/Treasurer Collector until this week. No specific questions were raised other than to ask for a discussion of these parts of the financial system and why they do not all present information in exactly the same way. It seems very premature to sound the alarm and contact the State when it is likely that those raising concerns simply do not understand how things are presented, and when given the opportunity to hear from the auditing firm, they might understand better… Also, there was a lot of misinformation discussed in today’s meeting, and no opportunity for rebuttal or open discussion. I hope the board will seek information directly before spreading rumours… The CEO’s office is responsible for managing the health plan, authorizing payment of all health plan payables, and reviewing various reports. It’s unfortunate that the CEO’s office and health plan consultants didn’t sound the alarm earlier about the growing deficit, but that’s not because the information wasn’t available… In In closing, I respectfully request that there be further discussion and education on the financial systems before the county approaches the state for assistance in these areas.

I learned a long time ago that problems don’t happen, people make them happen.

And since people make them happen, people can stop them from happening.

Haschak, Thurston and Cubbison all say the same thing. It’s time for everyone to get in the same room and solve this problem.

Jim Shields is the editor and publisher of the Mendocino County Observer, [email protected], the longtime district manager of the Laytonville County Water District, and is also chairman of the City Area Advisory Board of Laytonville. Listen to his radio show “This and That” every Saturday at noon on KPFN 105.1 FM, also broadcast live:

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