Just in time for Labor Day, State Controller Malia Cohen confirmed yesterday that her office has authorized an audit of Mendocino County’s finances, according to the Lake County News. Both the Board of Supervisors and the leadership of SEIU Local 1021, the county government’s largest labor union, have requested an audit, in light of the fact that last year’s financial reports have still not been completed.
Julie Beardsley, an epidemiologist with the county’s public health department and president of the county’s chapter of SEIU Local 1021, said, “I think it’s a good thing. Look, the single-year audit that was due last year still isn’t completed. We have to provide those single-year audits when we apply for grants, for example.” And that’s not the only consequence of the late reports. “We really can’t negotiate for our new contract unless we know how much money is there,” she pointed out. “The Board of Supervisors can’t realistically make a budget if they don’t know how much money is there. It’s turned into kind of a circular firing squad, with everybody pointing fingers at each other.”
Supervisor Ted Williams, who regularly wrangles with Mendocino County Treasurer Tax Collector Auditor Controller Chamise Cubbison in open session, was pleased about the state controller’s audit. “Oh, it’s the best news,” he said. “We’ve been begging for an audit for quite some time. There’s a lot of open questions about the county’s record-keeping and inability to report. Taxpayers deserve to know how their money is being spent, and I’m here to help support the state in any way possible.”
Cubbison did not respond to a request for comment this morning. Cohen’s office also did not get back to us today. And Williams has more questions than details. He doesn’t know exactly when the audit started or how long it will take. But he is sure that it is in addition to the routine audits, saying, “We’re a county that can’t produce a balance sheet. And there are a lot of open questions about what happened with the health plan. Was there a reserve? Maybe now there was never a reserve. We’ve heard that the state contacted us and said to spend down our health fund. I haven’t been able to confirm that the state made any such communication. The more the CEO and Board have dug into the accounting procedures, the more questions have developed.”
All three major rating agencies are also waiting on the reports. In emails obtained through a public records request, analysts from Fitch, Moody’s, and S&P Global have been requesting full or partial financial information for months. Cubbison has told them that the outside auditors are still not finished preparing the documents. In May of this year, a Moody’s analyst told Cubbison that if the company did not receive the requested 2022 audited financial statements by May 24, it may review the rating. The analyst wrote that if “the information is still not forthcoming, a Moody’s rating committee will then review the situation and take an appropriate action.” This could include lowering the rating or withdrawing the rating assigned to the county’s bonds.
Cubbison told a Fitch analyst that last year’s carry-forward was $3.9 million, all of which was applied to the health plan deficit. Williams said yesterday morning that that was just one of several numbers he’s heard. “We have negotiations underway with the unions, and one of the most important numbers is the carryforward,” he said. “How much was left in the previous budget, unspent? Typically the county’s fiscal year would end June 30, and by September there would be a report. This last time, September came. No report. October, November, December, the county’s worried, we get into the new year, we’re hearing $2 million, $2.2, $5.7, $3.3, $3.9, and we still don’t have a final report. I don’t know if any of those numbers are ultimately accurate.”
Last month, Williams and Supervisor Glenn McGourty brought forward an item asking staff to look into creating a contingency plan to create a department of finance. County Counsel Christian Curtis said the voters would have to answer two questions about this on a future ballot: whether or not to create the department, and whether the top position would be elected or appointed. Williams said he has confidence that the county could attract someone to head such a department. “You may not be able to convince someone here to run for that office,” he acknowledged. “It may be possible to recruit that sort of talent.”
Beardsley is ready for a solution, “Whatever it is,” she said. “Whether the assessor and the auditor need more staff, let’s get them more staff. If it’s a question of competence, then maybe the Board of Supervisors should have a vote of no confidence and maybe we should start a recall and get somebody into the auditor’s office who actually knows what they’re doing.” Asked if she had any candidates in mind, Beardsley laughed and said, “I do not.”