Grand Jury Reveals Kern County Supervisors’ Cash Stash

By Patric Hedlund
FRAZIER  PARK (Thursday, March 4, 8:30 a.m.)—The Kern County Grand Jury has just released a report revealing the existence of a County Supervisors’ Discretionary Fund of about $2.1 million which is not subject to normal budgetary oversight considered proper for expending public tax money.

The report indicates that District 4 Supervisor Ray Watson has the largest stash, $792,000, which can be spent as he chooses, without report to the board or the public.

As one example, the Grand Jury mentioned disbursements to the Frazier Park-based Family Resource Center:

[Example 4.]—The Committee investigated disbursements to the El Tejon Unified School District for fiscal years 2004-2005 ($9,600), 2005-2006 ($9,600), 2006-2007 ($8,000), 2007-2008 ($9,600), 2008-2009 ($9,600) and 2009-2010 ($3,200 to date). The Committee was informed this was for the Family Resource Center to handle social services for the mountain communities.

The Grand Jury hastens to say they are not intending to cast doubt on any recipients of the funding. However, they point out that the existence of the fund can create an unhealthy atmosphere: "… the Committee believes the existing process is unwise and unhealthy. Whether real or perceived, alliances are created and favor curried by reason of such disbursements."

In this case, Watson appointed the director of the Family Resource Center—which benefited from allocations over six years from the fund— to the Mountain Communiites Municipal Advisory Council (McMAC). The question has been raised as to whether the director of the Family Resource Center can be expected to make independent decisions on behalf of the people she represents in the Mountain Communities if she knows her vote may displease the supervisor who has the power to grant discretionary funding to her organization.

That is an example of the ethical bind that the existence of a discretionary fund can create.

Here is the full, unedited report as released this morning by the Grand Jury:

KERN COUNTY
BOARD OF SUPERVISORS
SPECIAL SERVICES BUDGET
SUPERVISORS’ DISCRETIONARY FUND

SUMMARY:

The Administration and Audit Committee (Committee) of the 2009-2010 Kern County Grand Jury report addresses the operation of a funding source of the Kern County budget, under the discretion and control of the Board of Supervisors (BOS), which the Committee has identified as the “Supervisors’ Discretionary Fund” (SDF). For the fiscal year ending June 30, 2009, there was approximately $2.1 million of taxpayer dollars in the SDF which could be disbursed. The review of the SDF identified the following major concerns:

•the failure of the BOS to subject the anticipated disbursements from the SDF to the normal budgeting approval process;
•oversight and reporting of the disbursements from the SDF is non existent;
•there is no policy addressing the funding of the SDF and unused funds are carried over from year to year.

The Committee’s comments are not meant to detract from the fine work and reputation of the many organizations which were the recipients of the questioned disbursements. Nothing suggests participation was inconsistent with the procedures presumed to be in place at the County level.

The Committee has not determined if the SDF should exist at all or if the SDF is to exist in the future; however, through this report the Committee has attempted to suggest safeguards which should be put in place.

PURPOSE OF INQUIRY:

The Administration and Audit Committee of the 2009-2010 Kern County Grand Jury conducted an inquiry and investigation into the function of the Kern County Board of Supervisors pursuant to California Penal Code §925.

BACKGROUND:

During the investigation of the BOS, the Committee became aware the BOS was directing County funds to various governmental units, agencies and non-profit organizations within the County which appeared to be outside the normal budgetary approval process. Subsequent investigation indicated the size of the Fund (SDF) for the 2009-2010 fiscal year to be approximately $2.1 million. The accumulated amounts are not equally distributed among the Supervisors. At the beginning of the 2009-2010 fiscal year each Supervisor had accumulated approximately the following amounts in the Discretionary Fund: the First District Supervisor has $342,000, the Second District Supervisor $212,000, the Third District Supervisor $409,000, the Fourth District Supervisor $792,000 and the Fifth District Supervisor $291,000.

The official budget of the County of Kern contains no reference to any category of the type which the Committee has identified as the “Supervisor’s Discretionary Fund” (SDF). The Jury’s investigation indicated the amount of the SDF is included in a category titled Special Services Budget unit 1040 which contains appropriations for a variety of services and programs including Assessment Appeals Board expenses, contributions for employee group life insurance premium, expenses for special studies and projects, consulting and professional services expenses and general Board of Supervisors expenses not allocated to individual supervisorial districts. In addition, the County’s contributions to private non-profit agencies, the Kern Economic Development Corporation, Local Agency Formation Commission, Kern Council of Governments and obligations incurred under the County’s economic incentive program are also included in this budget unit.

PROCESS:

As stated above when it came to the attention of the Committee an SDF existed, an inquiry was made to the Auditor-Controller and to the County Administrative Office to confirm the existence of the Fund. An interview of each County Supervisor was conducted and the details of expenditures and the processes for disbursement were discussed. Further, discussions were conducted with the County Administrative Officer and County Counsel as to the operation of the SDF. Finally, the Committee reviewed various documents and records pertaining to disbursements from the SDF.

FINDINGS:

1.Each Supervisor has an amount of appropriations set aside in an SDF over which the Supervisor has sole authority in spending. Although the discretionary spending is approved by the entire Board during public session it is usually a Consent Agenda item and generally not publicly discussed.

2.The Grand Jury County Services and Special Districts Committee and the Audit and Administrative Committee investigated a disbursement from the SDF to Sand Canyon Volunteer Fire Department. The inquiry indicated $41,160 was disbursed to the Sand Canyon Volunteer Fire Department (contract obligation between Kern County and Sand Canyon Volunteer Fire Department) for the construction of a 100 x 100 foot prefabricated metal building to house fire equipment. During the Grand Jury’s investigation it was disclosed the land for the building had not been secured, the agreement with the fabricator specified a building 60 x 100 feet, the Sand Canyon Volunteer Fire Department was not certified by the Kern County Fire Department and the Department, through internal fighting, had two Boards of Directors, each claiming to be the Certified Board (See Grand Jury report Sand Canyon Volunteer Fire Department). The County has been made a party to a Workers Compensation suit as a result of this involvement with Sand Canyon Volunteer Fire Department.

3.The Committee investigated a disbursement of $9,000 from the SDF to the Catholic Diocese of Fresno for school uniforms. The investigation indicated that $10,080 was spent by Catholic Charities to secure the uniforms.

4.The Committee investigated disbursements to the El Tejon Unified School District for fiscal years 2004-2005 ($9,600), 2005-2006 ($9,600), 2006-2007 ($8,000), 2007-2008 ($9,600), 2008-2009 ($9,600) and 2009-2010 ($3,200 to date). The Committee was informed this was for the Family Resource Center to handle social services for the mountain communities.

5.The Sheriff’s Department, Mental Health Department, Kern Medical Center, several Kern County Cities and numerous other organizations received disbursements from the SDF over the five year period investigated.

6.Funding for the SDF has been sporadic. In some years $200,000 per Supervisor has been allocated into the Fund. In other years the Fund has not had any allocations.

7.The Committee observed the SDF has been used to balance Supervisor’s budget overdrafts.

COMMENTS:

The Committee believes there is little, if any, general public knowledge concerning the existence or size of the SDF. It appears selective/aggressive organizations or departments, through word of mouth or past practices, have learned about the existence of the SDF and informally asked or applied to a particular Supervisor for funding.

It should be noted no instances of obvious political abuse came to the attention of the Committee during the investigation. However, the Committee believes the existing process is unwise and unhealthy. Whether real or perceived, alliances are created and favor curried by reason of such disbursements.

The Committee’s inquiries indicated that many County Departments, Special Districts and other organizations have received various amounts over the five years of the SDF investigated. Many of the disbursements should have gone through the normal budgetary process as many of the monies went to Departments which have budgets.

Oversight exercised over the SDF is lax or non existent. As noted in the findings, agreements which were secured were poorly drafted and the facts of the request were not well researched. In addition, no follow up was performed to insure the funds were spent in the manner intended.

The Committee recognizes the Supervisors will be reluctant to discontinue the use of the SDF. The Committee believes the controls over the disbursement of the funds should be strengthened. The funding of the SDF should be limited. Carryover of the SDF from year to year and from Supervisor to succeeding Supervisor should be discontinued.

RECOMMENDATIONS:

1.The oversight of funds disbursed from the SDF should be strengthened and there should be a written agreement as to how the funds are to be spent and a report prepared for review by all members of the BOS.

2.The SDF funding amount should be limited to $100,000 per year per each Supervisor with no carryover of unused funds.

3.County Departments should not be allowed to use the SDF to circumvent the budgeting process.

4.SDF should not be used to adjust for budget overdrafts.

The Committee reviewed and used excerpts from the Marin County 2000-2001 Grand Jury report on the Supervisors’ Discretionary Fund in preparing this report.

The Kern County Board of Supervisors should post a copy of the report where it will be available for public review.

Note: Present and past Kern County Grand Jury Final Reports and Responses can be accessed through the Kern County Law Library and on the Kern County Grand Jury website: www.co.ca.us/grandjury

RESPONSE REQUIRED WITHIN 60 DAYS TO:

PRESIDING JUDGE
KERN COUNTY SUPERIOR COURT
1415 TRUXTUN AVENUE 2ND FLOOR
BAKERSFIELD, CA 93301

cc:FOREMAN
KERN COUNTY GRAND JURY
1415 TRUXTUN AVENUE, SUITE 600
BAKERSFIELD, CA 93301

 

 

 

 

This is part of the February 26, 2010 online edition of The Mountain Enterprise.

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