Financial crisis? "Absolutely not."
August 9, 2022 — The Mendocino County Board of Supervisors is facing fierce criticism after its unanimous decision last week to send a letter to the state controller, asking for help with the county’s books. “I think we have a financial crisis here, and we just don’t know how bad it is,” said Supervisor Ted Williams, during a discussion about projected cost overruns at the project to build a new jail. But the county’s own financial experts say the real problems are miscommunication, misinformation, and a lack of financial understanding at the leadership level.
On Tuesday afternoon, after last week’s Board of Supervisors meeting, Chamise Cubbison, the newly elected Treasurer-Tax Collector/Auditor-Controller, wrote a letter to the Board, complaining that “there was a lot of misinformation discussed at today’s meeting and no opportunity for rebuttal or open discussion. I would hope the Board would seek information directly before spreading rumors.” She took on Williams’ assertion that he hasn’t been able to get a credible financial report the whole time he’s been in office, writing that the statement that “outside auditor recommendations are being ignored and not implemented is false.” She claims that she had already explained to Williams that the outside auditor makes adjustments to the information depending on where it’s being reported, whether on a financial statement or to the state or federal government.
And in an interview, Retired Treasurer Tax-Collector Shari Schapmire said that she believes “the majority of this board is ill-equipped to comprehend the financial complexities that are inherent in the operation of the county.” She added that overall, communication deteriorated during COVID, but she thinks most of the board members “also lack the communication skills to have any dialogue with any staff outside the CEO’s office that may be able to assist them. Right out of the chute, I want to say I do not believe the state controller’s office needs to access the records or clean anything up.”
Asked if she thinks there is a financial crisis, Schapmire said, “Absolutely not…I do not believe there is a financial crisis. I’ve been through a financial crisis. I know what a financial crisis is. And I cannot imagine that we would be there, less than five months after I have retired.”
She took umbrage at Board comments about a lack of skill in the financial offices, particularly Supervisor Glenn McGourty’s assertion that he supports “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.”
Schapmire drew on history to refute the claim, saying, “If you go back a decade ago and look at the financial meltdown, there was an unbelievable effort in place by the CEO, Auditor, Treasurer-Tax Collector, and the sitting Board of Supervisors, all working together to address several financial issues that the county was facing. And despite these claims, this group was extremely qualified to address those catastrophic issues and they were addressed. And I think there absolutely was a proven track record of those individuals that were there at the time, me being one of them. We handled this during the most dire of times. And I think if Supervisor McGourty hasn’t seen this, he wasn’t paying attention the last decade…It almost feels like they have some inadequacies at the Board, and it’s almost like they’re publicly airing irresponsible and inaccurate information because they’re trying to deflect from those inadequacies.”
Cubbison emphasized the theme that financial information is available, and laid out some details about a breakdown in communication. She wrote that shortly before his retirement last year, she and former Auditor-Controller Lloyd Weer met with members of the Executive Office fiscal team to discuss the projected deficits in the health plan, which they expected would keep growing. The shortfall in the health plan for fiscal year 2020/2021 was $3.6 million. The projected shortfall this year is another $4 million.
“It is unfortunate that the CEO’s office and the Health Plan consultants did not sound the alarm sooner on the growing deficit, but that is not because the information was not available,” she wrote. “Mr. Weer and I both believed that the CEO’s office would present the issue during the already scheduled future Board agenda item to go over the Health Plan. We were both surprised that a higher Health Plan contribution rate was not requested at that meeting.”
Schapmire thinks the Board should have allowed the auditor’s office to replace Weer as soon as possible. Leaving the top position vacant for months, and then consolidating the offices of Treasurer-Tax Collector and Auditor-Controller were two decisions that leave her with “very deep concerns.” She also does not have confidence in the fiscal team at the county’s Executive Office. “There is a lot of stuff this financial team doesn’t know anything about, and all those things are going to come up,” she predicted. “Nobody knew what these offices did before they consolidated the positions, and nobody really cared to find out.”
Looking to the future, Schapmire thinks last week’s public stumble could affect the county’s credit rating. At its meeting next week, the Board will discuss how much money it wants to leverage through new bonds to pay for the new jail. “Anytime that you want to issue new debt, a rating agency is going to review the county’s credit rating,” she explained. “And in order to maintain a positive credit rating and receive the best rate, they need to see that there is a stable government. You know, the governing body and the financial leadership team. And I think by saying these kinds of things, and acting like this county doesn’t have a clue what’s going on, I don’t think they understand the consequences of their actions,” she concluded.