The Humboldt County Civil Grand Jury is investigating allegations of "deficiencies" and "poor service" in the Auditor-Controller's Office, Fortuna Union High School District Superintendent Glen Senestraro told his Board of Trustees at its Nov. 10 meeting.
The board voted unanimously at its September meeting to send a complaint to the grand jury detailing allegations of how poor management in the Auditor-Controller's Office has financially impacted the district, potentially leading to hundreds of thousands of dollars in lost funds. While introducing a letter of no-confidence in Auditor-Controller Karen Paz Dominguez to the board Nov. 10, Senestraro said he's already been interviewed as a part of the grand jury's probe.
"I can't go into any more than that because I've been sworn to secrecy," Senestraro said, noting that the civil grand jury process is strictly confidential.
News of the grand jury investigation — and the school board's subsequent unanimous approval of a scathing letter of no confidence — add to a growing chorus of criticism of Paz Dominguez's office amid concerns over its ability to fulfill its various duties. It also adds to a growing body of evidence that the discord is spilling out of the halls of county government.
The Humboldt County Board of Supervisors met in closed session Nov. 9 to discuss potential exposure to litigation after receiving a letter purporting to be from an anonymous group of county employees — including two department heads — alleging "fiduciary shortfalls" and "financial missteps," and threatening a lawsuit. The same day, an item listed on the board's open session agenda as a progress report on the transition of county payroll services to the Auditor-Controller's Office drew a battery of comment from county department heads, employees and members of the public, much of it pointedly critical of the Auditor-Controller's Office. And this came days after the county's Workforce Development Board's Executive Committee voted unanimously, with Humboldt County Second District Supervisor Michelle Bushnell abstaining, to put a no-confidence vote in the office on the full board's agenda for its Nov. 19 meeting.
The most prominent issue for the Workforce Development Board is the county's single audit report for fiscal year 2019-2020, which has not been completed despite the county's having hired an outside firm to take on the task. This could pose a significant problem for the board, as the audit is now past due under federal law, which requires them of any non-federal entity that spends more than $750,000 in federal funds in a year, which the county's Economic Development Department does. Executive committee members and Economic Development Director Scott Adair expressed worry the outstanding audit could prompt the federal government to freeze funding of county programs.
"It's a huge deal and our county has historically completed these, as far as I understand, every year in the past because it is required," Adair told the committee.
Back in August, the outside firm hired to finish the single audit, CliftonLarsonAllen LLP, wrote the board of supervisors to notify the county it would be unable to finish its audit report by the Sept. 30 due date it had agreed to due to delays in receiving requested documents — namely the county's trial balance and related general ledger reports — from the Auditor-Controller's Office. The firm then followed up a few weeks later with another letter, saying its work had again been "delayed due to several key audit requests that have not been provided" and the firm was "therefore withdrawing" from the process, at least until February, "assuming the county is able to provide us all our open audit requests" that have currently been made by Dec. 31.
"We have reached out to the county through email and telephone and by submitting our requests and selections through the portal established for the Auditor-Controller's Office," the firm wrote. "As of Sept. 10, 2021, we still have not been able to formalize a plan with the county for completing the audit."
When contacted by the Lost Coast Outpost about the Workforce Development Board Executive Committee's meeting, Paz Dominguez seemed unaware the firm had withdrawn, at least temporarily from the single audit process, saying that while the process had been delayed by staff turnover, COVID-19 and other issues, she believed the firm had all it needed and expected the audit would "be published by our external auditors within the next three months."
Paz Dominguez has been a polarizing figure in county government since before her election in 2018, which came on the heels of her raising questions about the office's operations and whether it was providing sufficient oversight on spending of taxpayer monies. While she has billed herself as a reform agent working diligently to protect the county against fraud and waste in the face of lackadaisical safeguards, her tenure has been dogged by complaints from within county government that her office is unresponsive while missing numerous and vital deadlines, putting county reimbursements and funding streams at risk and leaving some county vendors unpaid. Paz Dominguez has maintained her office is understaffed and other county departments' accounting and documentation processes have often made it impossible to reconcile the county's books in a timely manner. Many of the frustrations, she has maintained, stem from her reforming the office from one that "rubber stamps" fiscal documents from other departments to one that truly protects the public interest.
The board of supervisors voted 4-1, with Fifth District Supervisor Steve Madrone dissenting, to hire an independent third-party to investigate allegations of workplace misconduct and delayed payments related to five complaints it had received regarding Paz Dominguez.
Since then, the discord — and dysfunction, some would charge — has only continued, with outside agencies now joining the chorus.
First 5 Humboldt Executive Director Mary Ann Hansen recently reported that her organization's annual audit missed a state deadline due to late reporting by the Auditor-Controller's Office. Because the organization is funded through tax revenue, it's dependent on the county to provide year-end fund balances and other accountings. Hansen also said the office had been nonresponsive for a couple of months, despite numerous attempts by First 5 to make contact and get answers. Hansen later told the Lost Coast Outpost First 5 had asked for a deadline extension from the state for the first time in 20 years.
In presenting the Fortuna Unified High School District Board of Trustees with a draft no-confidence letter in Paz-Dominguez to be sent to the board of supervisors, Senestraro said he tried to be "nice" and "brief" when drafting the letter, which charges the auditor-controller with a "dereliction of duty," while questioning her professionalism and the quality of her work.
The letter charges that the Auditor-Controller's Office has not yet closed the books for "any month" during the 2020-2021 fiscal year, failed to post interest and missed the statutory deadline for posting property taxes each of the last two years, all of which "has resulted in major fiscal implications for our small district."
Trustee Jeanne McClendon also noted the district had to take out a loan due to cash flow problems it blames on late disbursements from the Auditor-Controller's Office, while another trustee trusteesaid the district has not yet received any interest payments from the 2020-2021 fiscal year, which the district alleges total roughly $80,000. Countywide, some $2 million is owed to school districts, the Trustee Anita Gauge said. Senestraro lamented that other local districts have yet to raise a fuss, at least publicly.
"I don't think anyone has stepped up," he said. "It's unfortunate because I think our county office should be taking this on for the districts."
The Workforce Development Board will take up its possible no-confidence vote Nov. 19 and has reportedly invited to Paz-Dominguez to attend and respond to the allegations facing her office. The meeting's agenda — and a link to join via Zoom — can be found on the county's website, www.humboldtgov.org.
Thadeus Greenson (he/him) is the Journal’s news editor. Reach him at 442-1400, extension 321, or email@example.com. Follow him on Twitter @thadeusgreenson.