Sierra Joint Community College District Post Retirement Medical Fund Complaints 00a-22, 00a-26, 00a-29, and 00a-32

$165,000 was removed from the Post Retirement Medical Fund by Sierra College administrators: $93,000 in 1995-96 and $72,000 in 1998-99.

The Post Retirement Medical Fund was created by collective bargaining Agreement(s) between the College and its two employee organizations, the Sierra College Faculty Association (SCFA) and the Federation of United School Employees (FUSE), in 1990.

There is no authority granted in the collective bargaining agreements between the College and the employee organizations (SCFA and FUSE) for anyone or any entity to remove funds from the Post Retirement Medical Fund, other than in conformance with collective bargaining agreement provisions regarding resigning or noncontributing employees.

Removal of $165,000 from the Post Retirement Medical Fund by College administrators was inappropriate and a breach of the collective bargaining agreement(s) terms and conditions between the College and its employees, as well as a violation of Government Code §3540 et seq. The College administration had an obligation to obey the terms and conditions of its own contractual agreements with its employees. Instead of acting in a forthright and ethical manner as a trustee of employee funds, they took it upon themselves to covertly and unilaterally invade an employee benefit fund to cover budget shortages. The College, had they chosen to follow the contract terms, would have notified their employees of their intentions to divert the monies in the Post Retirement Medical Fund to other uses. According to the statements of John DeLury, Finance administrator, on March 14, 2000, they were obligated to return to the table to negotiate new and different contract provisions as required by Government Code §3540 et seq.

Union representatives of the faculty and classified employees participating in the Post Retirement Medical Fund were derelict in their duty to safeguard the funds of their constituents.

The Post Retirement Medical Fund was and is identified on Sierra College audits from 1991 to 2000 as a “fiduciary” account. The Grand Jury concluded that the Post Retirement Medical Fund was in fact a “fiduciary account” identified variously on fiscal records of the College, the Placer County Office of Education, and the Placer County Treasurer as an “expendable trust account” and/or an “agency account.”

The Post Retirement Medical Fund originally and through 1996 was identified on College financial records as a “trust account” as defined by the Budget and Accounting Manual for California community colleges.

The Post Retirement Medical Fund from about 1996 on has been identified as an “agency” account as defined by the Budget and Accounting Manual for California community colleges.

The funds contributed to the Post Retirement Medical Fund are “employee benefits” as defined by the Budget and Accounting Manual for California community colleges.

The funds taken from the Post Retirement Medical Fund by College administrators were used to balance the College’s budgets of 1995-96 and 1998- 99.

There is no evidence that funds taken from the Post Retirement Medical Fund by College administrators were used to pay “retiree’s health insurance premiums.”

College administrators and several trustees were well aware of the nature and purpose of the Post Retirement Medical Fund before, during, and after the taking of $165,000 from the fund.

The rationale for removal of funds from the Post Retirement Medical Fund presented to the Board of Trustees by a College administrator on September 22, 1998, was disingenuous. Such a taking of funds was clearly a violation of collective bargaining contract provisions regarding withdrawals of employer contributions.

Sierra College has used the same contract audit firm for at least ten years.

The $165,000 unilaterally removed from the Post Retirement Medical Fund ($93,000 in 1995-96 and $72,000 in 1998-99) by Sierra College was returned to that fund on December 29, 2000, along with $32,444 to compensate for estimated interest losses due to its removal. The result of the administration’s inappropriate use of the $165,000 from the Post Retirement Medical Fund is that the taxpayers paid the $32,444 from the Sierra College General Fund for estimated interest lost in its removal.

In December 2000, the College Financial Officer and other administrators informed the Board of Trustees and Insurance Committee members that the College faces a shortfall of some $700,000 for the 2000 – 2001 budget year due to falling student enrollment. They have proposed several alternatives to deal with this budgetary deficit, one of them being to take more money from the Post Retirement Medical Fund.