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The audits will be the focus of a special meeting on April 9 at the Lake Village Estates Clubhouse, 400 Sulphur Bank Road. The meeting starts at 6 p.m.
The water board directors approved the audits late last year in the face of the district's financial problems coming to a head.
District Board President Mike Benjamin said he and other board members can't comment on the specifics of the audits until the April 9 meeting.
The full audits can be downloaded at the district's Web site, www.clocwd.org/.
El Dorado Hills-based auditor Larry Bain, a certified public accountant, looked at fiscal years ending in June of 2006, 2007 and 2008, and issued findings that target internal controls and financial management.
District board members at the time of the first two audits were Pat Shaver, June Green, Glenn Rowe, Bob White and Harry Chase.
In November 2007, Green, Rowe and White were voted out of office in favor of Mike Anisman, Helen Locke and Frank Toney. Last August, Shaver resigned, to be followed the following month by Anisman and Locke. They have since been succeeded by Mike Benjamin, Judy Heeszel and Dena Barron.
Bain's report contained an “adverse opinion” on the district's financial procedures because they failed to follow Governmental Accounting Standards Board guidelines. The audit further identified numerous “significant deficiencies” in internal controls that prevent the district from being able to properly and reliably handle its financial data.
The district had not completed an audit since June 30, 2005. Bain's findings point out that government code requires the district to complete audits within one year of the end of a fiscal year.
New financial controls suggested
Among Bain's recommendations were a list of new financial controls, including putting measures in place “to segregate duties so that one employee cannot override controls, without being detected. We also recommend the District have controls in place to perform internal audit checks designed to detect irregularities.”
Bain's audit found that the district was not making all required payroll tax payment to the Internal Revenue Service, the Employment Development Department and the Public Employee Retirement System. The audit found that in June of 2007, $67,366 was owed to the IRS, $8,086 was owed to the EDD and $30,309 was owed to PERS.
In February of 2008, the IRS levied the district's bank account for $48,990, which included $2,081 in penalties and the $46,809 unpaid balance.
The audit also pointed to issues with missing statements for the Local Agency Investment Fund (LAIF) investment account from December 2005 to May 2006. During that time they noted the LAIF balance, was reduced by $165,000, funds which appeared to have been transferred to other district accounts.
Significant issues arose from the district's failure to reconcile its general ledger on a regular basis during the 2006-07 fiscal year. At one point, more than $254,000 in outstanding checks had not been reconciled. That resulted in the general ledger's cash balance being overstated by $121,951. Bain's recommendation is that the district reconcile its bank account on a monthly basis.
Bain's audit found that the district was making infrequent bank deposits in 2007, with staff holding more than $61,000 in the district safe. “Infrequent deposits increase the risk of kiting, theft or other types of fraud,” Bain noted, recommending the district make the deposits more frequently.
Other findings included a $1,500 interest-free loan in January of 2006 that was made to an employee, who was not identified. The district's records revealed no supporting loan agreement or purchase order for the loan.
Bain said a review of the books found the loan had been repaid, but he suggested the district not loan money to employees. “This could be construed as a misuse of public funds,” the audit stated.
The findings also showed that the district's investment pool funds plummeted from more than $350,000 at the end of fiscal year 2005-06 to just over $13,000 at the end of July 2008.
Other issues Bain found included: A check for more than $48,000 reported as outstanding was voided and had actually been written for half of that amount; a staffer was allowed to drive to deliver vendor checks, which resulted in mileage reimbursement; lack of inventory counts; no district board minutes prepared from January 2007 through to the date of the audit's field work; schedules of capital assets weren't maintained; numerous disbursement checks that had no documentation; and the district's water and sewer fund activities were not reported as separate major funds.
Bain's findings noted that the district's current auditor/bookkeeper, Jana Saccato, has begun the process of cleaning up employee files and organizing records. Because Saccato is new to governmental accounting, Bains suggests the district should provide her with training, and should cross-train employees so there is more than one employee knowledgeable in each of the districts accounting procedures.
The audit found that the district didn't have a written financial and accounting policy that included internal control procedures. It suggested the district needed to create such policies.
District board member Frank Toney said the district will be able to discuss publicly at the April 9 meeting the measures it's taking to come into compliance with the audit's recommendations.
Questions over overtime, personal charges on credit cards
The audits covered a period of time during the tenure of previous general manager, Ellen Pearson, who was replaced by the district's current general manager, Darin McCosker, in January of 2008. She left the district in March of 2008, receiving severance pay of approximately $31,623.21, which she was entitled to under the district's personnel rules, according to McCosker.
Pearson's attorney, Tom Quinn, said Pearson was still reviewing the audits and was not prepared to comment on them.
During the 2007-08 fiscal year, Pearson collected nearly $30,000 in overtime, the audit reported. She billed 863 hours of overtime during that time frame, with nearly 75 overtime hours logged in September of 2007 alone.
“According to the personnel policy, the general manager position is an exempt position and should not be paid overtime,” the audit notes.
Rowe, however, said the board had allowed Pearson to draw overtime, and even bought her a computer so she could work at home.
When the district lost its bookkeeper, Pearson also took over those duties, said Rowe.
“She was doing too much, had too big a load and that became a real problem,” Rowe said.
Rowe said the previous boards had gotten along well with Pearson and supported her.
The audits found that while Pearson was general manager of the district she made thousands of dollars in personal charges – or charges without any supporting documentation to show they were for district supplies – on a district credit card.
The district's former auditor/bookkeeper, who was not named, also used the credit card for personal charges, according to the audit.
“We calculated the auditor/bookkeeper charged $5,769 in personal charges and the general manager charged $8,572 in personal charges,” the audit noted.
Both Pearson and the former auditor/bookkeeper were reimbursing the district for the expenses, according to the audit.
However, the audit found some expenditures for which the district didn't appear to have been reimbursed, including a $169 charge for a veterinarian in the 2006 fiscal year.
In several cases, Bain noted there were missing credit card statements and lack of supporting documentation on the specifics of the charges.
In July of 2007, Pearson charged $718.83, and Bain couldn't locate supporting documentation for $445.91 she spent at Cabela's Inc. No statement could be located for October of 2007, and no invoices supported November 2007 charges of $1,343.72. In December of 2007, Pearson charged $241.61 at Wal-Mart as a district expense, but Bain found no invoice to support the charge.
“We did not observe any credit card reimbursements for personal charges during the 2007/2008 fiscal year, nor could we determine if any of the charges were for personal use because of incomplete documentation,” Bain wrote.
Both Pearson and the former auditor/bookkeeper appeared to be the only employees using the credit cards for personal use, the audit found. “They also were the employees charged with monitoring compliance with the program,” the document stated.
The findings also included notations that many of Pearson's paychecks did not include state or federal income tax withholdings, including her final March 2008 check.
The audit found Pearson was allowed to sell back vacation and sick time to the district, despite the fact that she did not have the requisite amount of time in reserve, according to district protocols.
District's financial picture becoming better
Last year, the district's financial situation came to a head, with McCosker at one point in a public meeting estimating the district was in a $250,000 deficit. The precise numbers of how deep the district was in the hole are still not entirely clear.
He said when he started as general manager in early 2008 he was facing an uphill battle due to few rate increases having been implemented in recent years. From 1999 to 2004, rates were either frozen or rolled back. Then in 2005, there was a small increase that he said amounted to less than 3 percent.
“That's not enough,” he said. “It was too little, too late.”
Rowe agreed with that estimate, explaining that during his four years on the board only one rate increase went through. “We didn't increase the rate fast enough,” he said. “We ran into a hell of a problem.”
He said the government regulations on the district kept increasing and the result was that the district lost more money to government and was able to put less money toward its own needs.
Last fall, after making rate increase proposals that included one of nearly 40 percent – which resulted in significant community outcry last summer – the board went through resignations and new additions, and a small, more palatable rate increase went into effect in November, as Lake County News has reported.
“Things have turned around,” said Toney.
McCosker said the increase amounted to a total of 17.7 percent on sewer and water bills, or about $9.95 per customer per month.
They also dealt with major rate inequities, such as charges on mobile and manufactured homes and some sewer charges, which McCosker included among the district's major accomplishments.
He estimates the district is now about $70,000 in the black.
“I'm ecstatic,” McCosker said of how the district has been able to resolve some of its problems.
The adjusted rates also are going to allow the district to start rebuilding its reserves, he said.
Those reserves – which the audits noted had been depleted from about $350,000 down to about $13,000 between 2006 and 2008 – were eaten away because the district's rates weren't sufficient to meet its financial needs, said McCosker.
Having strong reserves in the district's LAIF account will be necessary to carry out future capital projects, such as replacing the High Valley water tank. McCosker said that project is likely to cost about $600,000.
McCosker said he'll wait for the district board to discuss on April 9 how it's implementing Bain's recommendations. However, he did note some changes already in place, such as careful handling of the district's bank accounts to avoid overdraft charges. In 2007, he said the district paid almost $6,000 in overdraft charges, but they haven't had a single one since he took over.
He credits Benjamin's leadership and administrative experience – Benjamin has served on numerous councils and boards in other communities over the years – in helping put the district on a firmer footing and making sure meetings are run correctly.
With the audits now in hand, McCosker said he can craft a good budget. He said he intends to have a proposed budget for the 2009-2010 fiscal year by the middle of June.
It's been an exhausting process, but McCosker said the district has done everything it can to put things right. “I'm damn proud.”
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CLEARLAKE – Community members and officials gathered at Clearlake's Austin Park Thursday night to remember the victims of drunk driving crashes.
The evening vigil – where candles weren't possible due to windy conditions – was led by Larry Fanning, pastor of Clearlake's First Baptist Church and a member of Team DUI, the event's host.
Those speaking during the evening included Dr. Bill MacDougall, Chris Tyner, Lake County Sheriff's Capt. Russ Perdock, Wendy Jensen and Leslie Thomas.
It was an emotional evening as the speakers recalled situations where DUI had taken some lives and shattered others.
Perdock told a very emotional story about a crash 20 years ago on Dam Road that claimed the lives of three teens. He said the crash was forever burned into his memory, and affected not just him but the entire community.
Jensen shared a different perspective – she had been the drunk driver in a DUI crash, and almost killed a man when she ran into his car. She has since become an active member of Team DUI, and works to raise awareness of the consequences of drunk driving.
Leslie Thompson was hit by a drunk driver while coming home from a work-related reception with co-workers. She broke both of her legs, and watched the passenger of the drunk driver's vehicle die on the hood of her car.
The vigil ended with a moment of silence for all that have been lost or affected by drunk driving, with Fanning saying a prayer afterward. Local high schoolers also offered songs during the remembrance.
The district board conducted a budget workshop at its March 25 meeting to begin the development of the budget for the coming fiscal year, said Superintendent Korby Olson.
Olson presented the current state of the budget and a list of reductions that the board could consider.
He said the bottom line is $1,030,000 in cuts are needed due to reductions in state funding and declining enrollment.
On the list of possible reductions is bus transportation for students, which Olson said he wasn't recommending because it would be a very “drastic” step.
He reported to the board that it costs $275,000 to bus students from home to school.
The district's board has considered charging for busing in the past, including a discussion held last year, as Lake County News has reported. However, the district board has so far chosen not to pursue that step.
Olson said a charge of $1 per day would likely generate $45,000, and the board agreed that it is something to be considered.
Setting up a system to charge for bus ridership would require the district to create a specific infrastructure, Olson told Lake County News.
He suggested that charging for busing likely would need to be tied to benefiting a program, rather than just seeking district savings.
Other possible reductions to help the district meet its needed savings include reducing energy use. Olson said a 10-percent reduction in electrical use amounts to a savings of $20,000. Simple steps like removing classroom refrigerators, and turning computers and monitors completely off would also reduce costs, he said.
The district's current remodeling projects have energy savings included, Olson added.
Other items on the list of possible reductions include mailings, travel and conference expense, and reduced copying expense. The list of reductions totaled $153,000, Olson said.
Because of the March 15 deadline for notifying teachers, the board had already taken action to eliminate teaching and administrative positions totaling $730,000 in savings. These savings come at the expense of programs that have a positive impact on students.
In other action the board considered a first reading of the school calendar. The proposed calendars both included a school start date prior to Labor Day. The first version has school beginning on Aug. 25, with two student holidays on the Thursday and Friday Prior to Labor Day to accommodate student participation in the Lake County Fair.
This calendar includes a week off at Thanksgiving, two weeks at winter break in December and one week at spring break in April. School would let out on June 11. The second version begins one week later and ends one week later. The board will gather additional input from parents and select a calendar at its next meeting.
The board also approved a master plan for the high school stadium area. The design was created by the district’s architectural firm TLCD. The plans include a complete complex for football, track and tennis in the existing space.
Olson said the master plan includes everything that might be included, but the current budget for the project will only support the replacement of the bleachers, a snack bar and restroom facility and improvements to the parking and entrance areas.
The designs for this first phase are currently being prepared for submission to the Division of the State Architect for approval. The construction is slated to begin following the football season in December.
The next board meeting is scheduled for 7 p.m. Wednesday, April 22, in the Cobb Mountain Elementary School multi-use building, 15895 Highway 175, Cobb.
“Mainly, it boils down to budget issues,” said DOJ spokesperson Dana Simas.
Simas said “extreme budget constraints” caused the agency to pull out of the two-decade-old task force. “We hope it's temporary.”
Sheriff Rod Mitchell said he received a letter from the state in January announcing the DOJ's intentions to pull out of two task forces – Lake's being one – citing “unprecedented budget reductions.”
He said the letter noted the agency was undergoing a $12 million budget reduction and the loss of 80 staff members.
“They're committed to coming back as soon as their staffing and funding permits,” he said.
Mitchell said he's seen the agency pull out of task forces before.
But just because the DOJ is pulling out doesn't mean that the task force – which is an agreement, not an entity – is going away. Mitchell guaranteed that it isn't, saying they'll continue to combat narcotics “with great fervor.”
He added that the change shouldn't cause any alarm for the public, nor should criminals start to relax.
With DOJ's withdrawal, Mitchell and other area law enforcement leaders – among them Clearlake Police Chief Allan McClain, Lakeport Police Chief Kevin Burke, California Highway Patrol Commander Lt. Mark Loveless and the Narcotic Task Force Steering Committee – have been working out the details of what the task force will look like going forward and how it will be managed.
“We're going to be working in partnership with each other, as closely as we can,” Mitchell said.
Mitchell emphasized that there's no way to do this kind of work without the agencies working closely together. That's particularly important when it comes to running operations smoothly and ensuring “deconfliction” – which essentially means making sure they're not interfering with another agency's undercover work.
Under the DOJ's leadership, the task force had seven members – one supervising DOJ agent, one officer each from Clearlake Police, Lakeport Police and CHP, two sheriff's deputies and a sheriff's secretary, half of whose salary Mitchell paid.
“The number of law enforcement officers in Lake County combating the drug problem and problems associated with drugs will not be reduced,” Mitchell said, adding that the number of dedicated law enforcement officers may even increase.
“We may have to redirect resources,” he said. “We're not going to let this thing get away from us.”
He said each of the local agencies have experienced narcotic investigators who they had considered co-locating in the sheriff's administrative offices, but that hasn't worked out, said Mitchell, so the agencies will continue to work out of their separate offices.
Mitchell said having the DOJ run the task force has advantages, including having money available for undercover work and assistance coordinating activities and investigations.
Staffing and building leads will be important issues going forward, said Mitchell.
He said the DOJ will continue to make technical assistance available to counties. “We're always helping each other, we have to.”
They'll also make staff and resources – such as some kinds of operational equipment – available during operations when needed, said Mitchell, so in that way things won't change.
The task force's steering committee also will remain in place, said Mitchell. The DOJ's Bureau of Narcotic Enforcement will remain a part of the committee.
Cases continue to be worked, Mitchell added, with several investigations under way, as before.
A brief history of the task force
The task force deals with a broad range of narcotics, said Mitchell, such as methamphetamine and marijuana.
However, he said his office primarily handles pot eradication in the Mendocino National Forest because they have a contract for that work.
Mitchell said the narcotic task force began in 1988, when he was working locally as a deputy sheriff. “Meth labs were running rampant at the time.”
Since then, they don't see meth labs like they used to, he said, with a reduction in the numbers becoming notable several years ago. Street-level sales and use remain a big issue.
Methamphetamine, however, is linked to illegal marijuana, said Mitchell.
“There is a connection between the illegal marijuana trade and the profits going toward boosting up the methamphetamine trade,” he said.
Mitchell said the “grotesque” profits made by illegal marijuana are used to acquire methamphetamine and distribute it. Meth, comparatively, is very cheap, he said.
He said certain Mexican and outlaw motorcycle gangs now control major meth production. “It's more of a criminal enterprise than it used to be.”
McClain believes the task force has made a dent in the local production of methamphetamine. “They really had a heavy impact on their ability to produce locally.”
While there are still small labs here, the bigger ones now appear to have moved south, into Mexico, McClain said, because the profits were getting cut into by the task force's work.
McClain, who worked for many years in law enforcement in Kings County – where he also was sheriff – said he saw the same things with meth labs there as he's seen here. They were moving out of the area, he said, which is happening up and down the state.
Interstate 5 runs through Kings County, and officers saw meth increasingly being transported up and down the state, McClain said.
McClain said marijuana is more prevalent in Lake County. “It's a little harder to track here because it's a mountainous area,” he said, noting Kings is fairly flat.
Kings, he added, did see an increase in indoor marijuana grows and people leasing large agricultural orchards to cover their marijuana growing operations.
Mitchell said there has been an increase in illicit marijuana growing in Lake County, especially on public lands such as the Mendocino National Forest. He attributes most of that activity to Mexican nationals paid to come here to grow the drug.
“It doesn't stop there,” he said, explaining that the money from the pot gardens goes to smuggling meth into the United States.
“The drug problem is multifaceted,” he said. “It is more interconnected than it used to be.”
The argument over decriminalizing marijuana growing doesn't address what Mitchell calls the “immediate, present realities” facing law enforcement as it deals with criminal profiteers destroying public lands and threatening public safety.
“We have real problems that are not going to be resolved by pretending it's not a problem,” he said.
He added that he plans to continue fighting illegal marijuana in the county.
Other agencies plan to continue involvement
The county's other law enforcement leaders have indicated that they'll continue their involvement in the narcotic task force.
McClain said his department has added more resources to the effort, going from one committed officer to two.
For McClain, the main changes that he sees is the state's departure. DOJ paid for an office for the task force and a supervising agent, who had oversight duties, along with conducting audits of evidence and money.
“The sheriff's office and the county are taking on those responsibilities,” said McClain.
Overall, supervision and the executive board will remain the same, he said.
“The way I look at it is, the task force is still in place, it's still running,” said McClain.
He said some aspects will be done differently, and the task force will be more case-based. “We're just looking at overall results.”
Loveless said CHP will continue working closely with all of the task force's allied agencies.
He said the task force will remain strong, with Lake County Probation also now contributing an officer. CHP will have multiple officers assigned to the task force as cases develop.
Loveless said the CHP's statewide commander, Joe Farrow, has taken a stance that he supports the DOJ's Bureau of Narcotic Enforcement's efforts in drug enforcement.
He said CHP also has committed five officers statewide to work with the DOJ's Campaign Against Marijuana Planting – known more commonly as CAMP.
McClain thinks the task force has done a good job.
“The hard thing with the task force and what they do is when you work with the public, a lot of what they do people don't see,” he said.
McClain said he would like to see the task force's work be more visible so the public can better understand its functions.
Mitchell said local law enforcement is putting together a “full court press” to get the DOJ back into the local task force.
“The sooner the better,” he said.
E-mail Elizabeth Larson at
Dr. Kelly Arthur, 41, was arrested Jan. 13 in Middletown after a California Highway Patrol officer saw her drive through a crosswalk where a pedestrian was walking, as Lake County News has reported.
After conducting a field sobriety test, the officer arrested Arthur for driving under the influence. She also was found to be in possession of a small amount of marijuana and a single Vicodin pill.
California Attorney General's Office spokesman Abraham Arredondo said the Attorney General's Office filed a criminal complaint on March 27 charging Arthur with the two misdemeanors, driving under the influence of alcohol or drugs and possession of Vicodin without a prescription.
Because Arthur is often called as an expert witness in criminal cases, Lake County District Attorney Jon Hopkins asked the state Attorney General's Office to handle the case to avoid a potential conflict of interest.
Arredondo said a prosecutor out of the attorney general's San Francisco office is handling the case.
The Attorney General's Office can step in, said Arredondo, in cases where someone who works closely with a law enforcement agency is facing prosecution.
“It's not frequent but it does happen in all areas of the state,” said Arredondo.
On the day of her arrest Arthur, a medical examiner with Fairfield-based Forensic Medical Group Inc., was in Lake County at the time to give testimony in the murder trial of David Deason. She had conducted the autopsy on Marie Parlet, who Deason was convicted of murdering.
Santa Rosa attorney Jonathan B. Steele said he appeared in court on March 27 on behalf of Arthur, who was arraigned and pleaded not guilty to both charges.
Initially, Arthur was arrested on felony counts but wasn't charged with felonies, which Steele said had been his initial concern.
He called the potential for felony charges in the case “absurd.” After discussing the case with the Attorney General's Office, “They came to the same conclusion, fortunately,” he said.
Steele said his office is having toxicology tests done to show that Arthur was below the legal blood alcohol limit of .08 at the time of her arrest. He said people who are impaired while driving can still be prosecuted even if they're below the limit, but it's his contention that Arthur wasn't impaired.
Regarding the charge relating to possession the Vicodin, Steele said Arthur does have a prescription for the drug.
Steele said they got a “good start” on the case last week. He said he'll continue conferring with the Attorney General's Office as he seeks a resolution in the case.
“At least we know we got rid of the two most serious charges,” he said.
The case will return to Lake County Superior Court for a settlement conference on April 20, said Steele.
Steele said he's not sure of how long it will take to resolve the case, as both private and government labs that do the kind of toxicology testing he wants for Arthur's defense are very busy right now.
The DUI charge against Arthur carries a maximum sentence of six months in county jail, a fine and a first offender's school, the latter to satisfy Department of Motor Vehicle requirements, Steele explained.
However, he said, no one gets the maximum sentence. If there are further reductions in the charges the penalties will change, too.
Steele said Arthur continues working as a medical examiner.
“It's just an unfortunate incident for someone who has an amazing reputation and career,” he said.
Steele added that it's a reminder that everyone is susceptible to these kinds of cases. “Anybody can make a mistake.”
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On Wednesday the Santa Clara Sheriff's Office reported that they had identified the body of the man, found Monday on Hillsdale Avenue in the unincorporated area of San Jose, as that of James Edward Heeszel, 33, of San Jose.
Heeszel formerly lived in Clearlake Oaks where his parents reside. They could not be reached for comment on Wednesday.
Sgt. Don Morrissey of the Santa Clara County Sheriff's Office said Heeszel had been reported missing about a month prior to the discovery of his body.
Morrissey said San Jose Police officers responded on Monday to the report of a dead body at a quarry, located at 55 Hillsdale Avenue. That address is listed as belonging to Raisch Products, which produces aggregate products and receives concrete and asphalt for recycling.
Shortly after the officers arrived, they located Heeszel and determined that he was deceased, according to Morrissey. After isolating the scene, police learned the area was in the sheriff's jurisdiction and sheriff's deputies were called.
Morrissey said Heeszel's body was located in a pile of large boulders on the quarry property.
He said it took several hours and heavy equipment to remove the large boulders and allow access for investigators to get to the body.
An autopsy was conducted on Heeszel's body Wednesday, said Morrissey, but no cause of death has been released.
Santa Clara Sheriff’s Office homicide detectives are actively investigating the case, Morrissey said.
Anyone with information regarding this incident is urged to call Sgt. Leon or Sgt. Baker of the Santa Clara Sheriff's Office Investigations Division at 408-808-4500.
Those wishing to remain anonymous can contact the Anonymous Tip Line at 408-808-4431.
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