The Hidden Costs of Measure V
Read the full Grand Jury report: Challenges in Managing Contracts
“A complaint to the California Attorney General’s office in June 2022 regarding the County’s contract-management processes and the findings of a related Grand Jury investigation (2021- 2022) initiated the Jury’s investigation.”
“The County does not have a centralized contract-management process or up-to-date software to support contract management. Some departments within the County have created their own contract-management approaches.”
“County contracts include language for oversight and audits, but the Auditor-Controller's office has not performed financial reviews and audits for several years.”
Measure V Initiative Lacked Proper Oversight
A perfect example of how contracts lacked oversight were those related to the Measure V tax initiative. The sales tax measure was a major project initiated by the CEO’s office, but not budgeted for. There was no separate line-item designation and expenses wound up in a catch-all Services and Supplies category. The Auditor-Controller was not advised of the special project and would not have caught this in an audit unless it was brought to her attention.
Normally, a special project is given direction by the Board and most contracts are approved during meetings in full view of the public. This was not the case with the sales tax measure project.
County Contracted with Lew Edwards Group without BOS Approval
The Lew Edwards Group (LEG) contract, the primary consultants for Measure V, did not come before the Board when signed on Sept. 22, 2021 by Steve Monaghan (Purchasing Department). The original goal of the $10,000 contract was to ‘prepare a public opinion survey’. Following the survey, the contract then morphed into a full-blown consulting contract to assist in all aspects of getting the Measure on the ballot.
Subsequently, two contract amendments, approved by Caleb Dardick, increased the scope of services and thus the contract price to $70,000 by Oct. 2022. LEG demanded payment by the end of the year.
At the recent meeting, approving the 2022-23 budget, Alison Lehman, referring to the LEG contract, stated, “Invoices over $50,000 were not paid until we received authorization from the Board of Supervisors.”
By Sept. 2022, however, most LEG invoices had been paid. In September, the contract had exceeded the $50,000 limit for approval. With the work completed and invoiced, the contract now needed to go ‘retroactively’ to the Board to correct this oversight. A Resolution to approve the contract, now $70,000, was unanimously approved, Jan. 24, 2023, on the consent calendar. The Board didn’t question how the contract price had gotten out of control.
Auditor Had No Idea How the CEO was Classifying Measure V Expenditures
How the contract escaped oversight is a question now being asked by Gina Wills, Auditor-Controller. All contracts and invoices having to do with the costs of putting Measure V on the ballot were monitored and approved by Caleb Dardick and other CEO staff, then shuffled over to the Office of Emergency Services (OES) for payment.
Needless to point out, the OES budget is designated each year for emergency services programs. How did the CEO’s Office and Office of Emergency Services justify using taxpayer funds, designated for emergency services, on a sales tax measure? There was nothing mentioned about budgeting for a sales tax measure in the 2021-22 or 2022-23 Adopted Budgets.
This is an example of how General Funds can be used in a discretionary way with no oversight, the very concern folks had about the sales tax going into the General Fund.
Other Contracts for Measure V Never Made it to the Board for Approval
On Sept, 22, 2021, the Godbe Research contract, ($41,200) ‘for County Voter Survey’, never came before the Board.
June 6, 2022, the additional Godbe Research contract, ‘for County Voter Survey’, never came before the Board, ($34,900). The contract ‘scope-of-services’ was completed and invoiced on June 24, 2022. Amazingly, the contract was signed later, on August 17, 2022. Normally isn’t a contract signed ‘prior’ to the work being completed and invoiced?
Board Circles the Wagons in Support of Measure V Expenditures without Public Knowledge
"I was aware of the LEG activity, particularly in District 5, because I was demanding outreach activity. I was aware of all the activity; I met with Godbe and Lew Edwards several times, and staff repeatedly briefed me as the contract progressed.” - Supervisor Hardy Bullock
“While Lew Edwards handled the Measure V education, large portions of the contract were simply stakeholder outreach for transparency’s sake, providing information for our community, the very issue that seems to plague this distrust loop we are in. The expenditures were focused on informing the community regarding our number one priority – wildfire.” – “I’m an advocate for transparency." - Supervisor Hardy Bullock
No, Hardy, the contract amendments added more to the ‘scope-of-services’ and thus the costs of the contract. None of this was brought before the Board or the public, so where was the transparency?
In his recent Op Ed, Supervisor Ed Scofield stated, “County resources were not spent on advocating for or against Measure V. Transparency and community engagement guided the development and public engagement about Measure V every step of the way—and on every step, our Board was fully informed.”
The Aug. 5, 2022 Op Ed by Supervisor Heidi Hall, ‘Let the People Decide’, stated: “That’s why I’m inclined to support putting the proposed “Wildfire Prevention, Emergency Services and Disaster Readiness” measure on the November 8th General Election ballot”. “Oversight, accountability, and transparency are essential for any governmental spending, but especially for a general sales tax.”
County Spent Nearly a Quarter Million Dollars in Support of Measure V without Informing the Public
Expenses related to Measure V have now totaled a whopping $236,143.04. For such an important project, spearheaded by the CEO’s Office, none of these expenses ever came before the Board or the Auditor. When questioned about how the costs were expensed, Ms. Wills explained they were in the catch-all, Services and Supplies, commingled with many other costs in that category. There was no way the Auditor would have known about a special project.
The point of all this being, expenses related to getting Measure V on the ballot were approved by the CEO’s office, ‘out of the purview of the public’. There was no transparency at all. The costs of Measure V were hidden from the public in the line item, Services and Supplies.
Apparently, there was no transparency or methodology in place for tracking Measure V contracts or expenses. It definitely appears the County has inadequate cost accounting for special projects. This prevents auditors from correctly auditing the books. When it comes to spending public funds, not having a way to identify special project expenses so the auditor can see them, is serious. Obviously, the County needs new accounting software and an updated chart of accounts with more sub-categories for tracking expenses. Ultimately, the CEO and CFO are responsible for budget controls and accurate accounting policies and procedures.
Suggestions for Future Transparency
All special projects have to be Board approved and included in the yearly adopted budget. Line items for special projects must be sub-categorized and flagged in each department’s budgets.
All contracts have to come before the Board of Supervisors, the Auditor, and the public. No more behind-the-scenes contracts.
All Resolutions for contracts, ‘including the contracts and invoices’, must be posted on the County website. Each department must post contracts and invoices so the public ‘and staff’ are spared multiple records requests trying to get information.
Staff time for a designated project needs to be tagged in each department so the true costs of a project can be analyzed by the Auditor and reported to the public.
There must be accounting consistency across all departments.
