Financial crisis: "We don't know how bad it is."
August 3, 2022 — A Board of Supervisors discussion about cost overruns for the new jail construction project veered into a cry for help from the state, as county leadership admitted that it does not have a clear idea what its financial situation is.
“I would like to ask my colleagues for support on direction to the CEO’s office to reach out to the state controller’s office to help us get our books in order,” Supervisor Ted Williams announced, about a half hour into the meeting.
A few minutes after hearing that state review of construction documents is causing months-long delays and that cost estimates for the new jail are now $7-8 million over budget, Williams told his colleagues how frustrated he is by the lack of financial information, even after a budgeting process that started months ago.
“I’m three and half years into a term,” he said. “I worry, I'm coming up on the point where I can no longer use the excuse, I’m new here. And yet in the three and a half years, I haven’t been able to get a credible financial report. I understand we have three different sets of books. They all differ. Why?”
CEO Darcie Antle corroborated the main point. “I would agree with you. I’m not quite sure,” she acknowledged. “I think a lot of the reason we have asked for a pause in the labor negotiations is that we don’t know. We don’t have a clear vision on what the books are, and where the finances are. And those discussions need to continue with the new auditor-controller.”
It doesn’t seem like anyone has a clear idea, and that’s a problem for rank and file workers and the public as well as the leadership. SEIU Local 1021, the union that represents the bulk of the county’s employees, filed a complaint with the Public Employees Relations Board last month, detailing the information they’ve requested as they negotiate their contract. The union wants a 5% Cost of Living Adjustment, which Field Representative Patrick Hickey estimates would cost the county $3.2 million. The county released some information to the public a few days after the union filed its complaint, but Hickey said that he, too, is frustrated by missing details. He’s still looking for specific information about differential pay and temporary and part-time workers that will help the union understand the impact their proposals will have on the county’s budget. “That’s something we submitted all the way back in November,” he said last week. “So we’ve been trying to keep track as the county has parsed out little bits of information to us as the negotiations have progressed.”
Though it seems no one has the information anyone wants about the budget, the county has had an unprecedented amount of money to work with in the past year and a half. Local agencies are still receiving their allotments from the county’s $22 million settlement from PG&E. And the county was awarded almost $17 million from the American Rescue Plan Act, or ARPA. Maria Avalos of UVA, a Latino advocacy group, requested more details about how those funds will be spent, and how the decisions will be made. She noted that over $4 million of the ARPA funds has been allocated for core county services and infrastructure. “So I’m just wondering, where is the breakdown of where that money will go?” she asked during public comment. “Will it be able to be found by the public? And how is the local government making the decision to use the funds? And will there be public input?”
Williams counts himself among those agitating for financial transparency. But he told his colleagues yesterday that he doesn’t think anyone is able to provide detailed financial information about the county. “We do have an outside audit that happens,” he said. “When was the last time this board, you and I sitting on this board, voted to direct the auditor to incorporate the outside audit recommendations? I don’t think I’ve done it yet. I don’t know if past boards have done it. But it means we’re paying for an outside audit, we’re getting advice about changes we need to make to meet accounting principles. And then we’re ignoring the advice. So how much accumulated error is there, and over how many years is it? Ten years, is it thirty years? Is that why we have different sets of books, with different numbers? Because we never incorporate the outside audit findings? I think we have a financial crisis here, and we just don’t know how bad it is.”
Supervisor John Haschak pointed to a recent shakeup in the county’s main financial offices. But Williams thinks the problem goes back much further than the decision to consolidate the offices of auditor-controller and treasurer-tax collector.
“It’s just really ironic that this board voted to consolidate the two positions when those people in those positions said don’t do it, and that consolidation would not help, and now we’re in the position where we’re asking the state to step in to help out this position that in part we created as a board,” Haschak said.
“So I want to respond to that. A part of the reason that I supported the consolidation is that I couldn’t get financials,” Williams replied. “And we had an auditor retire, and shortly after, I learned we have a $4.5 million hole in the health plan. Why didn’t this board know that we had a $4.5 million hole? We would have planned accordingly. There’s an institutional problem here that this county doesn’t have a set of books that anybody believes. There’s nobody in this county today you could ask, how much money do we have to our name, and get a straight answer. How can I do my job, voting on a budget, if I don’t know how much money we have to spend?”
Supervisor Glenn McGourty called for structural change. “You want to have people who really know finances, who are properly trained,” he said. “That’s why I’ve supported a professional financial office, which is what most big organizations have, where you appoint people based on their skill set and a proven track record of handling money well. And if we look back through Mendocino County’s history at the auditor-controller and tax collector-treasurer, we don’t see that pattern. So I still think we’re going to need long-term structural change in county government on this. This will not go away until we do.”
The board voted unanimously to ask the state for more money for the new jail, and to ask the state controller for help with the county’s fiscal issues.