Sacramento [County] supervisors seek new investigation of Herald fire district

September 28, 2014

The Sacramento Bee

By Brad Brasnan

Sacramento County supervisors and a group of residents are asking the grand jury to once again investigate the Herald Fire Protection District, less than three months after the grand jury released a critical report.

In June, the grand jury released a report entitled “A Firestorm Is Raging in Herald,” detailing political and financial problems, including an “off the books” bank account used for revenue from district-owned rental property. But supervisors and Herald district critics say the grand jury didn’t capture the full extent of disarray.

County supervisors voted unanimously Tuesday to have County Executive Brad Hudson ask the grand jury to launch a new investigation after hearing a presentation from residents. The district provides fire and other emergency response in 96 square miles south of Elk Grove.

Residents have accused district leaders of nepotism, mismanagement and other wrongdoing, although they acknowledge they can’t prove the most serious claims. However, supervisors said the complaints are serious enough to warrant further review.

Problems cited by residents include an annual budget that calls for one-third more spending than the district is expected to raise in revenue, and turmoil on the district’s board of directors, which has seen three resignations in recent months.

“They are putting the district at a financial risk,” said Supervisor Don Nottoli, whose district includes Herald. “At some point they are going to imperil public safety.”

Supervisors expressed concern about the district’s delay in approving a budget for the year. The day before the district approved its budget Wednesday, county Finance Director Julie Valverde said she was one week away from cutting off the district’s funding because it was in danger of missing a state deadline for approving a budget.

Supervisor Susan Peters also said she believed public safety could be jeopardized by ongoing problems in the district, and suggested it could take years to remedy the issues. She pointed to political and financial problems at another special district, the Rio Linda/Elverta Community Water District, which was subject to numerous investigations but did not improve until recently, after new board members were elected.

Interim Fire Chief James Templeton said he agrees with the grand jury’s earlier findings but that the more recent complaints are off the mark. He said the district is taking steps to address the issues cited in the grand jury report.

“My job is to clean up this mess,” said Templeton, a former Galt fire chief who came out of retirement to temporarily run the district. He replaced Chris McGranahan, who was suspended after the grand jury report came out.

In its June report, the grand jury said the fire district had withheld information about the questionable bank account from its own auditor and did not fully respond to a grand jury subpoena requesting information about the account. The grand jury asked the county to audit the district.

On Tuesday, county staff told supervisors they can’t audit the district, because the county serves as its treasurer, holding and disbursing most of its revenue. They also said the type of audit requested by the grand jury might not fully examine the management and financial problems alleged by critics.

Templeton said the district already has responded to the grand jury report by hiring Richardson and Co. to conduct an audit. The company’s audits have been instrumental in uncovering deficiencies at the Rio Linda/Elverta Community Water District.

“We’ve got to know what happened to the money in the last four years,” he said.

The Sacramento Local Agency Formation Commission also is conducting a review. LAFCO Executive Director Peter Brundage said the review was prompted, in part, by a request from a Herald resident and will cover the issues raised by the grand jury, among other things. The review will include suggestions on how the Herald district can improve.

On Wednesday, Templeton submitted a budget to the district board that he said is intended to address past neglect, including the need for new equipment, supplies and delinquent payments to employee retirement funds. The board approved the budget on a 4-0 vote.

The budget calls for more than $900,000 in spending, but cites only $630,000 in revenue. The difference is to be bridged by drawing from the district’s $450,000 reserve budget.

“I know it looks terrible,” Templeton said. “But after this year, when we have paid these one-time expenses, we will be in better shape.”

Herald residents have raised concerns about turmoil on the district’s board of directors. The grand jury report included descriptions of heated disagreements among board members, as well as between residents and board members.

Since the report came out, three directors have resigned. One cited health reasons, while two others pointed to disagreements on the board, including some involving director Lance Newhall. Newhall has been a persistent critic of district operations, and last year the board voted to remove him. He was reinstated after questions were raised about the legality of his removal.