County must pay back misused road funds
by Joshua Sebold, Portola Reporter September 15, 2010
Plumas County Administrative Officer Jack Ingstad informed the Board of Supervisors that the county would probably have to pay nearly $320,000 in audit exceptions for "the payment of money to Frank Stewart that wasn't appropriate."
Frank Stewart was the county's Quincy Library Group Forester in the past and currently does work on county fire-safe projects as a contractor.
Ingstad said the particularly frustrating aspect of this event was that an audit had informed the county after the 2001 - 02 fiscal year that it had improperly used road department funds to pay the Quincy Library Group for projects for several years and the county continued the practice for two more years after it was told of the problem. That practice resulted in additional exceptions.
A recent audit said the funds were used to "reduce the risks of catastrophic wild fires and provide timber industry and consumer needs."
It also said, "These expenditures are not considered road or road-related purposes."
The CAO said the decision was made before he was in Plumas County.
It appears the audit exceptions require the county to pay back the state money it spent inappropriately.
Ingstad said County Auditor Shawn Montgomery also recommended the board pay back the $240,000 from the 1997 - 98 to 2001 - 02 fiscal years, the period of time before the county was informed its use of the funds wouldn't be approved.
"My understanding is if we don't pay back the money the state may withhold our money to the road department," Ingstad said.
He told the supervisors that would require using contingency funds. His impression was that Chairwoman Sherrie Thrall wanted him to keep the funds in contingency for now, rather than put them in a second line item specifically for audit exceptions.
Thrall said, "We had such a reduced contingency going into this budget that if we take this out of contingency this early in the fiscal year, we could be in lots of trouble later on in the fiscal year depending on what the state does or doesn't do to us with their budget procedure.
"So I'm just a little bit concerned about making a decision on one issue now and then leaving ourselves in a really bad position for something that could be more critical in the future."
Ingstad and other board members agreed that would be the best way to handle the situation.
Quincy Supervisor Lori Simpson said she and Eastern Plumas Supervisor Terry Swofford, who was absent from the meeting, "were a little bit upset to hear about this past action that happened by past boards that we have to pay for now when we're at tight budget time."
"If I could dock Frank Stewart's income now, I would do it, but he's getting paid out of federal funds and so we can't do that."
"I do want to make it clear that the current road department head and the current CAO had nothing to do with these decisions, these were all made before we came," Ingstad reiterated.
He also couldn't understand how the people in charge in the past could continue the practice after the first audit exception.
"We were told about it at the time and said, 'OK, we've got to stop this and pay it back,'" Indian Valley Supervisor Robert Meacher responded.
Public Works Director Bob Perreault said the board should remember "that the previous boards and director had formally submitted an appeal to the state and to date they haven't responded to that. That's a contribution to why things drag on."
"All the other counties that had the audit exception paid it back immediately. We were the only one that protested it," Ingstad added.
Thrall agreed with the two newest supervisors, "in that I was shocked to discover that we're in this position."
"Well, so was I, and I was there," Meacher chimed in.
"I wonder if maybe we ought to try and conduct a little bit of an investigation and see who or what, how this happened so we can be sure it never happens again if nothing else," Thrall suggested.
"I don't think we have any hope of recouping any of the funds but I think it would be beneficial."
Simpson strongly agreed, adding that she wanted to find a culprit.
"If I did it, I'd want my name in the paper; I'd want the auditor, I want the CAO, I want to see who was involved in this. I'm sorry, that's me. I go for the throat."
She ended her speech by motioning "We conduct an investigation on the misuse of restricted road funds and have the results brought back to the board."
The other board members agreed, and the motion passed after some changes in the formal language of the motion suggested by County Counsel Craig Settlemire.
Perreault told the supervisors they would have time to conduct their investigation because the newest audit report wouldn't be published until December.