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A special series by Sarah Reith about the financial realities of Mendocino County governance.

"Crisis is a strong word;" but county's finances need a careful eye

A glass coin jar, with coins spilling out from the left.
A glass coin jar, with coins spilling out from the left.

CEO Darcie Antle reflects on the county's finances, from high debt rising interest rates, and missing reimbursements from FEMA, to the economic effects of COVID and the worldwide economic downturn.

August 10, 2022 — The new fiscal year is off to a rocky start, with miscommunication about the health plan deficit, uncertainty about federal disaster reimbursements, and the county’s main labor union filing a complaint with the state in the midst of contract negotiations.

Last week, the Board of Supervisors agreed to ask the state controller for help with its books after Supervisor Ted Williams declared that the county was in a financial crisis. Chamise Cubbison, the newly elected Treasurer-Tax Collector/Auditor-Controller, wrote a letter to the board saying the discussion was full of misinformation, while retired Treasurer-Tax Collector Shari Schapmire said the county is “absolutely not” in a financial crisis.

CEO Darcie Antle said crisis is a strong word to describe the county’s financial situation, but there are areas of concern, including close to $70 million in long term debt service and rising interest rates as the county contemplates refinancing bonds to fund the new jail. Eleven million dollars in disaster reimbursements from FEMA is still outstanding.

And Antle described the confluence of events that led up to the sudden news about last year’s $3.6 million shortfall in the county health plan. She recalled that just before COVID, and the high-dollar claims that followed, the county had a robust reserve in the health plan.

“The prior Auditor-Controller came forward in 16/17 and stated that our reserve for the health plan, the fund balance, was too high,” she recalled; “and that the State Controller was concerned about that, and recommended that we spend down that amount of money. I think we spent down roughly $6 million through a health holiday. That occurred in 17/18 and 18/19. In the quarter of October through December of each respective year, employees and the county did not pay the premium for those months. So those were health holidays, which equated to about a $6 million spend-down. In December of 2019, who would imagine we would be going into COVID…claims increased, acuities increased, over the last three years.”

In August of last year, Antle met with former Auditor-Controller Lloyd Weer to discuss a $1.1 million deficit in the health plan. She stated that in 2021, “that information was reported to the Board, a couple of times…At that time, the team, the HR team, and the Executive Office, did ask for an increase in the health plan, and that increase went into effect January 1 of 2022 at a 12% increase,” which Antle says was well within the amount allowed by the county’s contracts with its labor unions.

There was a delay in reporting the additional $2.5 million deficit to the board, and Antle said her team did report the inaccurate number. She said the $1.1 million deficit was on a cash basis, “which can be seen by any department running a month to actual report. That is what was obtained by the Executive Office, the HR office, and what was clearly understood by our outside actuary. The $2.5 million, which is the number that was missing from the original $3.6 million, that was on an accrual basis on the balance sheet, and the balance sheet is balanced once per year by the outside auditors. The balance sheet for 2021, because of the delay in the outside audit, was not completed and submitted to the auditor (because they complete and submit to the auditor), until the end of June, early July, of 2022. So we can clearly see that from the financial statement now. But that wasn’t what was reported. And again, the team reported twice, publicly, a $1.1 (million deficit). Nothing was brought forward to clarify those statements. So is this misdoing on anyone’s part, or is this part of a transition? We had our Auditor-Controller retire. Our Treasurer-Tax Collector retired. We have a new person stepping into a dual role that had never been filled here before. I’m stepping into my new role as well. So I think everybody needs to continue to work together, and come together as a tem, and make sure that there is transparency and communication to the Board, and to the public.”

The county is currently in negotiations with its labor unions, which also want more budget information. Last month, SEIU Local 1021 filed a complaint with the Public Employees Relations Board (PERB) about lengthy delays in fulfilling requests for detailed information, which Deputy CEO Cherie Johnson said she’s working to supply. The county has until August 18 to respond to PERB about the complaint, and is likely to face a number of deadlines to produce the rest of the information to the union negotiators.

The union is asking for a 5% Cost Of Living Adjustment, or COLA, and Antle said she is asking for a one-year pause on that part of the negotiation. “We really want to assess the financial stability of the county at this time,” she said. “Coming out of COVID, not receiving all our reimbursement from FEMA, going into a possible economic downturn. We really just want to understand the fiscal position. We are just asking for a one-year pause on the COLA…over the last three years, all bargaining units have received a 3% COLA each year…in that three-year period, they were also receiving classification study surveys to bring most if not all positions into market. So there were additional increases during that time.”

She hopes next year’s budget process will involve more collaboration, and more regular reports. “I would like to see the Auditor-Controller’s office, the Executive Office fiscal team, come together with the budget ad hoc on a regular basis,” she reflected. “Again, communication is both ways, so we need everybody to come to the table.”

Local News
Sarah Reith came to Mendocino County in 2008 and worked as a reporter and freelancer, joining KZYX as a community news reporter in 2017. She became the KZYX News Director in March, 2023.