Plumas County Grand Jury • 2012-2013

G R a N D J U R Y R E P O R T

Published: ∼ June 30, 2013 66 pages

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Findings and Recommendations 6 findings

The audit found four recurring deficiencies. These are repeats of prior year findings. a. Lack of Timely Processing: Disbursements were paid in excess of 30 days past the invoice date of the vendor billing. The Auditor staff was not able to perform this function in a timely manner due to the departments not submitting claims for payment to the Auditor’s office in a timely manner. b. Sheriff Inmate Welfare Reconciliation: Although the Inmate Trust bank account is being reconciled to the accounting records on a monthly basis, the balance held in the account does not appear to be reconciled to an open listing of balances held for each inmate. The County could not provide a listing of balances held for inmates that reconciled to the bank balance. c. Compensated Absences: For the close of FY 2011/2012, the audit exposed a negative balance of $25,202 in the County’s Compensated Absences Account. In simple terms, the County paid out over $25k to employees for vacation time, leave time, and comp time before the benefits were earned. d. Risk Management – Landfill: The County does not have adequate insurance coverage for the landfill.

Related Recommendations (1)

The Grand Jury recommends that the County immediately correct the deficiencies found during the audit. These are repeats of prior year findings. a. Modify procedures to ensure that County departments submit invoices to the Auditor for processing and payment in a timely manner. b. Reconcile the Inmate Trust bank account to an open listing of balances held by each inmate on a monthly basis. The detailed listing of inmate balances should be printed and maintained as an audit trail showing that this procedure was performed. c. Review balances of compensated leave on a regular basis to determine that employees are not being paid for more time than what has accrued. d. Maintain adequate insurance coverage for the landfill to minimize the risk of loss. e. Take steps to re-negotiate its employee retirement and sick leave policies to be more in line with other counties of similar size and population.

The audit found two new items requiring correction this year: a. Outside Bank Accounts: There is an inadequate review of all outside bank accounts. Various departments of the County hold bank accounts outside the County Treasury for which the purpose of these accounts is to collect credit card payments. There are several accounts that the County Auditor Controller’s office has not been obtaining monthly bank statements and reconciliations from the departments and the reconciled balance for one bank account had not been recorded on the general ledger of the County. Animal Control: There is a lack of controls within the Animal Control department and department employees are not following policies and procedures. Even though the Animal Control department is not authorized to accept cash, the department still accepts cash and an employee writes a personal check to cover the amount of cash received, deposits the personal check with department deposit, and takes the cash. Good internal control requires proper cash handling. The risk of errors or irregularities is increased when department employees are not following proper policies and procedures. Plumas County Audit Report

Related Recommendations (1)

The County needs to correct the deficiencies found during the audit. a. Record on the County general ledger all bank accounts in the County’s name, reconcile all outside bank accounts, and forward the information to the Auditor Controller monthly. b. All County departments must follow County policies and procedures for cash handling. c. All department employees must follow policies and procedures. Plumas County Audit Report CONCLUSION: Turning the Ship Around For the past several years, Plumas County has shown little interest in tackling the County’s financial problems and getting its fiscal house in order. It seemed the attitude that prevailed from the Board of Supervisors all the way down to every department was, “we just have to hang in there for a while, get by with less, and all will be right again.” This attitude resulted in the County spending more on public services and its own processes than it was taking in. During these years, Plumas County has shown a lack of cohesive teamwork with each department competing with other departments for the limited funding. In simple terms, not working together, but fighting together. This conflict was in fact the major reason the previous County Auditor Controller resigned in early 2012. The Grand Jury is pleased to report that there is a new attitude coming to the fore in Plumas County. It is an attitude of determination and self-responsibility. This is good to see. Perhaps last year’s stinging report from the Grand Jury had a positive effect. No one knows for sure, but there is definitely a new attitude in the halls of the County Courthouse these days. The transition from not taking responsibility to one of shared responsibility was not easy. This is to be expected when any type of positive change occurs. Positive and effective change is always met with resistance, from within and from without. However, to the County’s credit, it seems to have come thru this rough period intact, and is now on a new path of teamwork and constructive problem solving. This does not mean that all is well and no problems exist. Plumas County has monumental challenges that must be met in the coming years. The County must be determined to maintain conservative administrative practices regarding the County’s financial management in order to avoid further erosion of its economic base. This report is focused only on the audit report for FY 2011/2012, and does not show the positive changes that are taking place behind the scenes this year. The current fiscal year (FY 2012/2013) is the first year in recent memory in which the County is operating under a balanced budget. In August 2012 with the implementation of several budget workshops and the help of a sharp and strong local budget consultant; a balanced budget was hammered out. The Grand Jury has no audit report information that confirms this, but according to the Plumas County Auditor, the fiscal bleeding appears to have stopped and one can hope that next year’s Grand Jury report will show that the County has got its fiscal house in order. Although the County is still in poor financial shape, it seems the ship is turning around and heading in the right direction. Plumas County Audit Report

The General Fund’s Unassigned Fund balance is down from $410,299 in 2011 to zero as of June 30, 2012.

Related Recommendations (1)

Schools establish regular system to inventory and restock Emergency Supplies.

The County’s Reserve Fund has been used to cover temporary shortfalls and to pay bills. GASB 54 (Governmental Accounting Standards Board) calls for a target balance of 8% of the previous year’s General Fund revenues, or a minimum of $2 million to be in the Reserve Fund account. The Reserve Fund balance was $454,253 as of June 30, 2012.

Related Recommendations (1)

Revise Gun/Weapon on Campus procedure to include more detail and ensure student and personnel safety.

Over the last 11 years, the County has spent on average $397,353 more per year from the General Fund than it is taking in.

Related Recommendations (1)

Plan in place to secure funding for automated alert system at each Elementary and Jr/Sr High Schools.

The County Auditor reported that the County has not been funding its Retiree Health Benefit Program. As such, the potential liability to the County as of this writing is approximately $5.4 million dollars.

Related Recommendations (1)

The District requires a timeline for establishing an Off-campus Evacuation Center.

Conclusions 26

CL1

The Deputy Probation Officer (DPO) compensation is lower than those counties of similar size and population of Plumas County.
CL2

Plumas County is losing experienced DPO’s to other counties, due to better opportunity, advancement possibilities and salary.
CL3

When the Probation Department lost a line supervisor, the Board of Supervisors would not authorize the funding to replace that staff member.
CL4

SB678, enacted in 2009, grant monies took a 94% decrease, and going from $400,000 to $24,000 in 2012, further exacerbating the department’s funding issues.
CL5

A BoS Member stated that “arming probation officers would place them in a higher cost retirement category, costing the County money”. It was suggested probation call a deputy if they got “in trouble.” Lack of adequate availability due to Sheriff’s Office personnel makes this an officer safety issue. The Plumas County Grand Jury found this comment to typify the County Board of Supervisor’s attitude towards both officer and public safety and was found to be short sighted.
CL6

The Board of Supervisors mandated the Probation Department move to the Courthouse Annex, while every staff member interviewed felt the move an ill-conceived and an unwarranted waste of time and resources.
CL7

In spite of the number of high risk offenders, there are no Deputy Probation Officers (DPO) authorized to carry firearms; this is due to the fact that there is no Policy and Procedure in place regarding “Use of Force” as well as the lack of funds for required training.
CL8

Probation Officers have personal safety concerns in dealing with increasing numbers high risk offenders, partially due to AB-109. 33 Plumas County Probation Department Report
CL9

There are varied perceptions by Probation Office Staff of overall Judicial oversight.
CL10

Due to the lack of personnel there is high case/workloads resulting in low morale. Currently there are approximately 275 adult probationers and 30 juvenile probationers.
CL11

There is no Line Probation Supervisor for the Probation Officers.
CL12

There are currently 9 vacant positions out of 21 full time positions.
CL13

Staff members use their own vehicles to come to the Court House from the Probation Department due to few County vehicles being available.
CL14

The Chief Probation Officer (CPO) has nearly 20 years of experience.
CL15

The Probation Department and the Sheriff Department have a cooperative working relationship.
CL16

The District Attorney and the Probation Department have a cordial working relationship.
CL17

Interaction between the Board of Supervisors and the Chief Probation Officer continues to be confrontational, demeaning, and unprofessional toward the CPO.
CL18

Report-in phone number
CL19

Student release procedure
CL20

Location of off-campus evacuation center(s)
CL21

Law enforcement’s protocol to immediately shoot without warning any armed adults on campus (no parent armed rescue attempts.) 11 Plumas County School Safety Report  Pandemic procedure added.  School closure procedure expanded to include direction to school administrators. (As related to weather, road, water and electric conditions.)  Procedure regarding Alternate Evacuation Site new to Evacuation Procedures. There was no change made to the Gun/Weapon on Campus procedure. Comprehensive Safe School Plan All school sites have a Comprehensive Safe School Plan (CSSP) in place and are submitted to the District annually. The plan indicates its purpose is to provide guidance and direction to Principals, faculty and staff who have Emergency Management Responsibilities (EMR). The Emergency Response Plan along with the School CSSP shall be used during an emergency incident involving a PUSD school facility. Furthermore, the plan states: The school site Safe School Leadership Team (SSLT) carries out the Field Response level of crisis and emergency management, the District School Safety Team functions at the Local Government level in this system. By organizing our crisis response plans according to Standardized Emergency Management System (SEMS), both school sites and the District are positioned to integrate services when an incident occurs on an area, regional or state level. By standardizing key elements of the emergency management system, SEMS is intended to:  Facilitate the flow of information within and between levels of the system.  Facilitate coordination among all responding agencies. Use of SEMS will improve the mobilization, deployment, utilization, tracking, and demobilization of needed mutual aid resources. Utilization of SEMS will reduce the incident of poor coordination and communications, and reduce resource-ordering duplication on multi- agency and multi-jurisdiction responses. SEMS is designed to be flexible and adaptable to varied disasters that occur in California, and to the needs of all emergency responders. The Grand Jury Investigation Found the Following at School Sites All school sites have Safe School Leadership Team (SSLT) flow chart in place, which includes names of staff persons and SSLT position titles. Phone trees are included to ensure communication with all staff personnel, if necessary. Teams of staff members are in place and trained in the areas of First Aid and CPR. Additionally, a team is established to coordinate Student Release, if needed. The plans specify that the Incident Commander for the SSLT ensure that teachers are trained to carry out responsibilities during disaster and drill procedures and encourage teachers to work in teams through a buddy system. During interviews the Grand Jury found that this requirement was not being implemented at all sites. Personnel were not able to demonstrate and/or articulate that there is training to carry out their responsibilities assigned to them as a member of the SSLT, or that a buddy system was in place. 12 Plumas County School Safety Report Although each school site has an Evacuation Plan in place, not all sites have secured an Off- Campus Evacuation Center. Without a location in place, items on the evacuation checklist cannot be completed. The Grand Jury found the same system for warning signals to be in place at each school site. All staff very clearly articulated the system in place, which utilizes each site’s bell system, to warn staff and students to an emergency. Personnel also brought up concerns with the manual bell systems and the amount of strength required sounding the bells. Members of the Grand Jury found this to be a great asset to the plans in place. For students and staff that may move throughout the District, having the same warning signals in place at each site is very valuable to each person’s safety. Events that may occur at school sites are categorized into Codes. Schools have demonstrated that code procedures are in place for different events that may occur, such as fire, chemical spill on campus, earthquake, fallen aircraft, possible explosion, tornado/severe storm, emergency medical care, armed intruder and hostage crisis. Personnel walked Grand Jury members through the procedures for each Code and the number of times drills for each Code were practiced at each school. Onsite communication radios are provided to each school site. The radios may be used to communicate with the District, which is an asset to the communication system between school sites and the District. Additional radios at each site would enhance the communication throughout the District. The District will find many of its greatest assets to be within. School personnel expressed many ideas to the Grand Jury to improve school safety unique to their individual school location. Round table discussions are occurring with personnel, law enforcement and pertinent agencies focusing on school safety. Unfortunately, these meetings are not occurring on a regular or frequent basis. However, this is a step in the right direction. FINDINGS: F1. The School Administration does not update the Emergency Action Plan on a regular basis. F2. School’s Emergency Supplies not inventoried on a regular schedule. F3. Members of the Safe School Leadership Team do not review their individual duties, at time of assignment. F4. Not all school locations have completed lockdown drills involving student participation. F5. Off-campus Evacuation Centers not secured for each school location. F6. Lockdown drills, which occur for armed intruder and hostage crisis events, have not occurred at all sites with school personnel and students. 13 Plumas County School Safety Report
CL22

The value of uniforms was not reported
CL23

Holiday pay was not reported B) Under the risk category of payroll reports:
CL24

Special compensation per the Fair Labor Standards Act (FLSA) was included in regular earnings None of the five Directors interviewed had any knowledge of this audit or its findings. The Fire Chief/Manager received the audit notification and request for response and was obligated to report this to the Board. In 2012, the District did not receive payment from Medicare for ambulance service in the amount of approximately $180,000. The only staff member who had access to the Medicare account and who could ensure that all information was updated, as needed to receive Medicare reimbursement, was the Fire Chief/Manager. It is doubtful that the Board would ever have known about this until the Fire Chief/Manager was no longer in charge. The Director who was sitting as the acting Manager after the Fire Chief/Manager retired discovered that Medicare had not reimbursed the District because the District had not billed Medicare. Medicare had, at the time the CPUD and CFPD consolidated, requested a new provider identification number. The Fire Chief/Manger had not provided the requested information so Medicare could not be billed. The District’s CPA had notified the Fire Chief/Manager in writing that at least ten (10) or eleven (11) months of Medicare payments had not been collected and asked for an explanation. The CPA never received a response from the District. The Grand Jury concluded that the Board was never advised about the Medicare billing issue. This, too, is the kind of information the Fire Chief/Manager was obligated to share with the Board and the public. Contrary to Government Code Title 6, Division 3, Section 61045(f) and Section 61045(g) the District could not provide a copy of the By-laws or rules for its proceedings, and they do not have administrative, fiscal, and purchasing policies or procedures for the operation of the District. 44 Chester Public Utility District Report Ignoring good advice The audit firm of Haws, Theobald and Auman audited the District finances annually. The Grand Jury reviewed the last three audits performed (fiscal years 2010, 2011 and 2012). Each audit found the same material weaknesses as follows:  Lack of segregation of duties – (allowing for the possibility of financial statement misstatement and fraud) caused by the number of personnel assigned to duties that involve access to the general ledger and other accounting records and who also have custody of and responsibility for handling cash and other assets.  Financial reporting – the District does not have policies and procedures in place to ensure that complete and accurate financial statements, footnote disclosures and management’s discussion and analysis are prepared in accordance with GAAP (Generally Accepted Accounting Practices) prior to the annual audit. At the time of this report, the District had not yet approved the fiscal year 2012 financial audit, as required by law. The District must consider the audit findings as ‘draft’ findings until the auditor has received a signed confirmation that the data which was submitted by the District to the auditor is correct and true. The auditor then submits their findings for Board approval. The draft 2012 audit contains the same two material weaknesses noted in previous years as well as an additional three (3) material weakness findings as follows:
CL25

The 2012/2013 Plumas County Civil Grand Jury (Grand Jury) recognizes the sometimes overwhelming burden of governance and sincerely appreciates the CPUD Directors who volunteer their time and energy to help make a difference in their community. Each and every one of the five Directors of the CPUD volunteered for the position as a way to make a contribution and to make a difference in the community. This commitment often requires Directors to make the District a priority over work, recreation and even over family. The citizens of the District also assume some responsibility for the success of the District and should embrace that responsibility equally with dedication and energy. The Board of Directors of the CPUD ignored their fiduciary responsibility by placing unwavering trust in the Fire Chief/Manager of the District, allowing him to operate completely independently and totally unsupervised. The Fire Chief/Manager was allowed to pay himself his own wages and was not expected to track or even report his time off. The Fire Chief/Manager and the Board did not report to the staff or the public when the Fire Chief/Manager first ‘retired’ yet continued to work for the District. The Fire Chief/Manager wrote and signed vendor checks for amounts above the $5,000 limit allowed for one signer with no apparent consequences. The Grand Jury determined that the Board did not even routinely inspect the finances to ensure that the public’s money was being spent appropriately. Governance is not just a “fire watch.” It is not enough to rely on information from the Fire Chief/Manager alone regarding the operations of the District. It is not enough to address only issues defined singularly by the Fire Chief/Manager. The Board not only has the power to govern, it has the responsibility to govern. The CPUD Board should have held the Fire Chief/Manager accountable to the Board and themselves accountable to the public. The CPUD Board of Directors needs to reevaluate their mission, and focus on educating themselves about what their roles should be and what it means to lead a special district to success. This will involve a more ‘hands on’ approach, especially with regard the finances of the District. REQUEST FOR RESPONSES: Pursuant to Penal code section 933.05, the grand jury requests responses as follows: From the following governing bodies: The Chester Public Utility District Board of Directors  The governing bodies indicated above should be aware that the comment or response of the governing body must be conducted subject to the notice, agenda and open meeting requirements of the Brown Act. 49 Chester Public Utility District Report BIBLIOGRAPHY: www.CALPERS.ca.gov Updates to Retiree Hiring Laws Sinclair & Associates, Local Government Consulting Services, Chester Fire Protection District/Chester Public Utility District – District Consolidation Financial Feasibility Analysis and Report, December 26, 2008 www.sacbee.com/2012/07/06/v-wireless/4612822/citizens-seek-recall-of-chester.html Bee State News Citizens seek recall of Chester Public Utility District members http://ballotpedia.org/widi/index.php/Chester_Public_Utility_District_recall,_California_(20 12)&oldid=1491844 Chester Public Utility District recall, California (2012) http://sgf.senate.ca.gov/thefireprotectiondistrictlawof1987 The Fire Protection District Law of 1987 California Government Code, Division 3 Community Services Districts www.sen.ca.gov/locgov Integrity & Accountability: Exploring Special Districts’ Governance, 11/24/2003 California Government Code, Division 7 Public Utility Law www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0051-0100/ab_97_cfa_20110316_20470... AB 97 Assembly Bill – Bill Analysis www.yourparliamentarian.com/Summary.htm Rules-of-Order Summary www.robertsrules.org/indexprint.html RobertsRules.org/Robert’s Rules of Order - Summary Version The State of California, The Little Hoover Commission, May 3, 2000, Special Districts: Relics of the Past or Resources for the Future? http://en.wikipedia.org/wiki/Board_of_directors Board of Directors from Wikipedia Senate Bill No. 135, Chapter 249, Kehoe, 9/22/2005, Community Services District Law http://leginfo.legislature.ca.gov/faces/codes_displayexpandedbranch.xhtml Title 6, Division 3, Community Services Districts, Part 2 Internal Organization, Chapter 3, Board of Directors California Government Code Section 54950 – 54963, the Ralph M. Brown Act www.leginfo.ca.gov/cgi-bin/displaycode?section=pcc&groupo=20001-21000&file=2... Public Contract Code Section 20100-20103.7 50 Chester Public Utility District Report http://codes.lp.findlaw.com/cacode/GOV/1/5/d3/1/2/s56044 California Government Code Section 56044 “Independent Special District” http://codes.lp.findlaw.com/cacode/PCC/1/d2/3/1.5/104/s21391 California Government Code Section 21391 “Special District Contracting” www.csda.net California Special Districts Association, Fact Sheet: Public Records Act www.csda.net California Special Districts Association, Fact Sheet: The “Right” Number of Special Districts www.csda.net California Special Districts Association, Fact Sheet: Local Government Reorganizations www.csda.net California Special Districts Association, Comprehensive Overview of Types of Special Districts www.csda.net California Special Districts Association, Special District Board Member/Trustee HANDBOOK www.csda.net California Special Districts Association, Special District: Compensation for Directors and Trustees www.csda.net California Special Districts Association, CSDA’s Guide to Special District Laws and Related Codes www.csda.net California Special Districts Association, WHAT’S SO SPECIAL ABOUT SPECIAL DISTRICTS? A Citizen’s Guide to Special Districts in California, fourth edition, October, 2010 www.csda.net Special District Reserve Guidelines, 9/24/2007 http://senweb03.senate.ca.gov/committee/standing/GOVERNANCE/SPECIALDISTRICTIN FORMATIONSOURCES Special District Information Sources, General Information California Debt & Investment Advisory Commission, Local Agency Investment Guidelines, 2011 California Research Bureau, California State Library, CRB-98-002, Local Government Ethics Ordinances in California, March, 1998 Special District Leadership Foundation, Guidelines for Conduct: A Primer for Special District Officials www.sen.ca.gov/locgov The Quick List, An Annotated Glossary of Local Government Statutes, Second Edition, February, 2009 http://law.onecle.com/california/government/21221.html Retiree hiring laws 51 ATTACHMENT A CFPD/CPUD CONSOLIDATION ANALYSIS DECEMBER 26, 2008 SEPARATE DISTRICTS CONSOLIDATED DISTRICTS COST INCREASE (DECREASE) PERSONNEL COSTS: CFPD CPUD TOTAL CFPD CPUD TOTAL CFPD CPUD TOTAL Consolidate Fire Chief/ PUD Manager Positions $119,285 $110,558 $229,843 $71,507 $71,507 $143,014 ($47,778) ($39,051) ($86,829) Reduced Clerical Staff (20 hrs/week) $20,298 $44,640 $64,938 $10,833 $35,174 $46,007 ($9,466) ($9,466) ($18,931) Equalize Clerical Hourly Rate $20,298 $44,640 $64,938 $20,298 $48,542 $68,841 ‐ $3,902 $3,902 Modify CalPERS Benefit Formula $38,000 $42,000 $80,000 $97,805 $42,000 $139,805 $59,805 ‐ $59,805 Equalize Employee Medical Benefits $40,000 $60,000 $100,000 $83,368 $60,000 $143,368 $43,368 ‐ $43,368 Worker’s Compensation Insurance $40,000 $11,000 $51,000 $40,000 $5,755 $45,755 ‐ ($5,245) ($5,245) NON‐PERSONNEL COSTS: Rent $ ‐ $5,600 $5,600 ‐ ‐ ‐ ‐ $5,600 $5,600 Custodial and Maintenance $20,000 $1,600 $21,600 $19,200 $800 $20,000 ($800) ($800) ($1,600) Telephone Service $5,000 $4,400 $9,400 $3,400 $2,800 $6,200 ($1,600) ($1,600) ($3,200) Utilities $10,000 $3,800 $13,800 $8,100 $1,900 $10,000 ($1,900) ($1,900) ($3,800) Elections $2,500 $2,500 $5,000 $1,250 $1,250 $2,500 ($1,250) ($1,250) ($2,500) Audit $6,500 $5,600 $12,100 $5,500 $4,600 $10,100 ($1,000) ($1,000) ($2,000) Total Cost Increase (Decrease) $39,379 ($62,009) ($22,630) 25 Grizzly Lake CSD Report A Small Town with Big Problems Grizzly Lake CSD Report EXECUTIVE SUMMARY: In July of 2012, the Plumas County Grand Jury received a complaint alleging a possible conflict of interest between a Grizzly Lake Community Service District employee and a local equipment supplier. The complaint alleged that the employee was steering business to this local supplier because the business was owned and operated by the employee’s spouse. The complainant also filed a complaint with the California Fair Political Practices Commission, which was subsequently settled in February of 2013 by applying a substantial fine to the employee. Although the complaint had been resolved, the Grand Jury decided to publish the results of its seven-month investigation in an abbreviated format, and is the subject of this report. BACKGROUND: Delleker – a brief history Delleker is a delightful small town with a population of a little over 700 nestled in the hills that form Humbug Creek just two miles west of Portola. Delleker has its roots deep in the timber industry. From the Gold Rush days on into the first half of the 20th Century, the demand for wood products was unprecedented. Lumber mills popped up all over Northern California to fill the demand and Plumas County was no exception. Feather River Lumber Company filed Articles of Incorporation with California on January 25, 1905 and quickly bought three existing lumber mills in the local area. Their first mill was located at Willow Creek, near present day Maybe, CA; the second was at Clairville, an extinct town located above Clio, and a third was located along Humbug Creek in Delleker. Small towns grew quickly in the proximity of the lumber mills in those days primarily to house the mill’s employees. Other supporting business took hold too like grocery stores, livery stables, saloons, and Post Offices. Delleker grew to be a bustling town of nearly 400 residents with over 200 men working in the mill. The Company Store provided most of the essentials at that time and Portola was an easy commute for other goods and services. Delleker was named after William H. Delleker, one of the three directors and a shareholder in the Feather River Lumber Company, which owned the mill. The lumber company’s millpond still exists to this day, located just north of Hwy 70 off Delleker Road. One can still see the concrete embankment on the northeast side of the pond where small gauge railroad cars would unload their cargo of freshly cut timber into the pond. The mill was located where J’s Feather River Rental building is today. 53 Grizzly Lake CSD Report Feather River Lumber Mill – Delleker, CA Circa 1910 The Feather River Lumber Company constructed Delleker’s sewer and water system in the early 1900’s. In 1975, the system was incorporated as a private utility with the name Grizzly Lake Resort Improvement District. In 2011, it was restructured as a Community Service District. The Grizzly Lake Community Service District (GLCSD) provides water and sewer service to sixty-eight customers in the Crocker Mountain area and three hundred thirty two in Delleker. APPROACH: The Grand Jury interviewed members of the GLCSD Board, several former Board members, current and previous GLCSD employees, and a number of its customers. The Grand Jury requested and received documents from the California Division of the Federal Occupational Safety and Health Administration (Cal OSHA) and the California State Water Resources Control Board. The Grand Jury also reviewed purchase orders dating back to 2008 plus four years of financial reports. 54 Grizzly Lake CSD Report DISCUSSION: Present day Delleker has a water supply system comprised of two wells located at the edge of Humbug Creek and Hwy 70, and a large 310 thousand gallon steel storage tank located at the end of Colina Ct., high above the town. The wells pump clean untreated fresh water uphill to the storage tank where it is then distributed with ample pressure to the residents of Delleker. Although the two water wells are within 50 feet of each other, one has a uranium concentration above the State’s acceptable safety standards of 20 ppb (parts per billion), and the other well is within the State’s acceptable standards. By combining water from these two wells, the GLCSD is able to provide clean and safe water to its customers within the States acceptable safety standards. In addition, Delleker has its own sewage treatment system consisting of five holding ponds, a pumping station and a small treatment plant, all located on the south side of Hwy 70 just east of Longfellow’s Lumber. The system is in good working condition and currently meets all State sewage treatment standards. Due to the age of the sewer and water system, much the infrastructure was not mapped or recorded, and when failures occur, they are both difficult and costly to locate and repair. The sewer and water systems are maintained by two experienced and knowledgeable technicians, who with their resourceful ingenuity have kept the systems operating on an exceedingly limited budget with a minimum of interruptions. The GLCSD Board of Directors is comprised of five elected members who receive no compensation. The GLCSD employs two State certified maintenance technicians, a part time bookkeeper and a part time office worker. The GLCSD does not have a General Manager as of this report. THE CONFLICT OF INTEREST: The conflict of interest charge arose when the GLCSD staff would rent needed equipment and tools from a local rental company, which is owned by the spouse of an employee. The fact that the rental company was the only equipment rental agency in a 50-mile radius capable of supplying these tools and at a reasonable cost did not mitigate the impression that the GLCSD was giving business to, or getting favored treatment from the rental company. Even though this procedure was the most cost effective and prudent method, it constituted a “conflict of interest” as defined by the California Fair Political Practices Commission. The proper procedures for these types of transactions are not spelled out in the GLCSD operations manual and are only referenced in a consequential letter written dated February 2011. In February of 2013, the California Fair Political Practices Commission settled the Conflict of Interest charge with a $4,000 fine levied against the GLCSD employee. 55 Grizzly Lake CSD Report MAJOR ISSUES: Mismanagement has resulted in fines from the Internal Revenue Service, California Occupational Safety and Health Agency, California Fair Political Practices Commission and an unnecessary lawsuit.  Since 2009, the GLCSD has been fined $39,000 by the State Water Resources Control Board for a number of violations at the Delleker sewage treatment facility. The GLCSD opted to use “compliance projects” to mitigate the fines. The State Water Resources Board allows Community Service Districts (CSD) to submit a plan to update facilities and spend the amount of the fine to make the necessary improvements rather than pay the fine to the State.  In 2012, the IRS seized $9,000 from the GLCSD bank account to cover the lack of payment of employee withholding taxes from 2009 to 2012. The total needed to bring the account current exceeded $30,000. The current management has negotiated a payment program for the remainder of the funds.  A 2012 lawsuit with a local sewage service company was settled out of court at a cost to the GLCSD of $20,000 in attorney’s fees.  Approximately 10% of current GLCSD customers are delinquent and have had liens placed on their property amounting to $33,496 as of this report.  Improper safety procedures in 2012 resulted in a $6,005 fine by OSHA for the following violations: a. On July 18 2012, OSHA found that GLCSD did not have a required written Code of Safe Practices manual and management was not aware of any written safety rules or written code of safe practices. b. It was also observed on that date that the GLCSD project lacked a safe access and egress from an excavation greater than 4’ deep and employees were not wearing proper safety gear. c. The GLCSD was cited for not providing effective training for heat illness prevention and awareness. d. The excavation project did not have adequate protection from cave-ins. Reports issued by the Civil Grand Jury do not identify individuals interviewed. Penal Code Section 929 requires that reports of the Grand Jury not contain the name of any person or facts leading to the identity of any person who provides information to the Civil Grand Jury. 56 Grizzly Lake CSD Report FINDINGS: F1. The GLCSD does not have sufficient management to properly run the District. F2. The GLCSD Operations Manual is not a current and complete document. F3. The current purchasing procedure lends itself to another conflict of interest charge. F4. The misfeasance of past management resulted in an unnecessary financial burden on the GLCSD adversely affecting the viability of the District. RECOMMENDATIONS: R1. The Grand Jury recommends the GLCSD fill the vacant General Managers position immediately as required in California Government Code 61050-61053l. R2. Until the General Manager is hired, the Grand Jury recommends that a member of the GLCSD Board fill in as General Manager, removing any further conflict of interest concerns. R3. The Grand Jury recommends a complete and thorough Operations Manual rewrite to be completed within 180 days. R4. The Grand Jury recommends all employees and future employees are trained in the content and use of the Operations Manual. CONCLUSION: On the surface, it seems like Delleker’s big problem is simply financial, but if you dig down to the underlying source of the problem you will find gross mismanagement. Maintaining an antiquated sewer and water system is a big expense and a legitimate reason for the District’s lack of funds; but upon investigation, many of their financial problems are self-induced. Mismanagement has cost the District thousands of dollars that could have been used for more productive endeavors like system repairs and improvements. Bungling management has resulted in fines from the Internal Revenue Service (IRS) Cal Occupational Safety and Health Agency (OSHA), California Fair Political Practices Commission (FPPC) and a lawsuit by a local sanitation business. Proper management is the key: Proper management will reduce delinquent customer payments. Proper management will put money aside for taxes or other obligations and will not allow dipping into those funds to pay for everyday expenses. Proper management will see to it that no rules or regulations are broken saving the District thousands of dollars in fines or unnecessary fees being imposed on the District. 57 Grizzly Lake CSD Report The Grand Jury was pleased to see that most of the Districts management problems have been or are being corrected and the results are positive. The income from delinquent customers is up and expenditures for unnecessary fines and fees are down. Although the GLCSD is facing a major challenge in supporting itself, the Grand Jury feels the District, barring any major catastrophe, is now on the right path to financial solvency. REQUEST FOR RESPONSES: Pursuant to Penal code section 933.05, the Grand Jury requests responses as follows: From the following governing bodies: Delleker GLCSD Board of Directors  The governing bodies indicated above should be aware that the comment or response of the governing body must be conducted subject to the notice, agenda and open meeting requirements of the Brown Act. GLOSSARY OR TERMS: GLCSD: Grizzly Lake Community Service District FPPC: Fair Political Practices Commission OSHA: Occupational Safety and Health Agency 58 this page intentionally left blank
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On the surface, it seems like Delleker’s big problem is simply financial, but if you dig down to the underlying source of the problem you will find gross mismanagement. Maintaining an antiquated sewer and water system is a big expense and a legitimate reason for the District’s lack of funds; but upon investigation, many of their financial problems are self-induced. Mismanagement has cost the District thousands of dollars that could have been used for more productive endeavors like system repairs and improvements. Bungling management has resulted in fines from the Internal Revenue Service (IRS) Cal Occupational Safety and Health Agency (OSHA), California Fair Political Practices Commission (FPPC) and a lawsuit by a local sanitation business. Proper management is the key: Proper management will reduce delinquent customer payments. Proper management will put money aside for taxes or other obligations and will not allow dipping into those funds to pay for everyday expenses. Proper management will see to it that no rules or regulations are broken saving the District thousands of dollars in fines or unnecessary fees being imposed on the District. 57 Grizzly Lake CSD Report The Grand Jury was pleased to see that most of the Districts management problems have been or are being corrected and the results are positive. The income from delinquent customers is up and expenditures for unnecessary fines and fees are down. Although the GLCSD is facing a major challenge in supporting itself, the Grand Jury feels the District, barring any major catastrophe, is now on the right path to financial solvency. REQUEST FOR RESPONSES: Pursuant to Penal code section 933.05, the Grand Jury requests responses as follows: From the following governing bodies: Delleker GLCSD Board of Directors  The governing bodies indicated above should be aware that the comment or response of the governing body must be conducted subject to the notice, agenda and open meeting requirements of the Brown Act. GLOSSARY OR TERMS: GLCSD: Grizzly Lake Community Service District FPPC: Fair Political Practices Commission OSHA: Occupational Safety and Health Agency 58 this page intentionally left blank