(San Mateo) Grand jury: County misled public on finances; county manager calls its conclusion 'bizarre'

The Almanac Online -

The San Mateo County Civil Grand Jury issued a report Monday that says the county did not publicly report the true condition of its finances when tax measures were voted on in the June 5 and Nov. 6, 2012, elections.

The report, "An Inconvenient Truth About The County's Structural Deficit," says that contrary to public perception, the county does not have a "structural deficit" when it counts all revenues it receives annually.

The grand jury says the county Board of Supervisors excluded Education Revenue Augmentations Funds when it calculated the so-called "structural deficit."

Click here to read the full report (PDF).

In a 785-word response, County Manager John Maltbie said the grand jury "demonstrates an abysmal lack of understanding of the principles and practices of budgeting and financial management."

He said the grand jury's conclusion -- that the county is not fully accounting for its revenue -- is "bizarre."

"Either the grand jury was uninformed or misinformed regarding the County's use of this funding source," Mr. Maltbie said. "Of course we'll never know because we'll never learn about their deliberations."

Much of his response is a criticism of the secrecy of the grand jury, and the fact that its members are not required to submit financial disclosure statements, as public officials must, so the public can be aware of conflicts of interest.

At issue is the use of excess ERAF (Educational Revenue Augmentation Funds). Mr. Maltbie defines them this way: "In a nutshell, the County and local cities get back some of their property tax revenue that is used by the state to meet its obligations to fund local schools when these revenues are in excess of the amount needed by the schools."

He said the county takes a conservative approach to budgeting uncertain funding sources, such as excess ERAF. The county budgets about half of what it expects to receive in excess ERAF, he said. The other half is used for reserves or other one-time purposes.

Click here to see the text of Mr. Maltbie's response.