Controller sets disclosure deadline for 11 North Bay special districts

NORTH BAY -- Several North Bay special districts charged with tasks like fire protection and environmental conservation have fallen behind in the public reporting of their financial condition, with a public letter by California State Controller John Chiang warning that further delay could spur monetary penalties.

The letter, sent to nine cities and 117 special districts in California, set a deadline of Dec. 31 before penalties would be considered. Each governmental entity was more than one year overdue in its reporting, including 11 entities in the North Bay, according to the letter.

Those North Bay entities, by county and fiscal year in question:Bennett Valley Fire Protection District, Sonoma, FY 2011-2012Geyserville Fire Protection District, Sonoma, FY 2011-2012Marin City Community Services District, Marin, FY 2010-2011Mendocino-Little River Cemetery District, Mendocino, FY 2011-12Reclamation District No. 2070, Lake, FY 2011-2012Redbud Healthcare District, Lake, FY 2011-2012Redwood Coast Fire Protection District, Mendocino, FY 2011-2012Russian River Cemetery District, Mendocino, FY 2011-2012Sotoyome Resource Conservation District, Sonoma, FY 2011-2012Southern Sonoma County Resource Conservation District, Sonoma, FY 2011-2012Westport County Water District, Mendocino, FY 2011-2012

Those public disclosures have grown more rigorous after the 2010 scandal involving the misuse of public funds in the city of Bell, Calif., with filing instructions now including detailed reports of employee wages and benefits, according to the controller's office. The reporting also includes figures on revenues, expenditures and long-term debt, with filing required within 90 and 110 days of the end of the fiscal year.

While the additional disclosure required of each individual entity in the North Bay was not immediately available, those entities could be missing either portions of their data or the entirety of their filing for that fiscal year, said controller office spokesman Jacob Roper.

"Transparency in financial reporting -- including public salaries -- is necessary to protect communities against the misuse of taxpayer dollars and other abuses of public trust," said Mr. Chiang, in the announcement.

The information also helps to determine an organization's internal controls to limit fraud, including separation of powers between budgeting and check writing and various conflicts of interest. Those who fail to file by the deadline could be subject to an audit to obtain that data at the entity's expense and a fine of up to $5,000 for each missing year of data, according to Mr. Roper.

Public agencies that have "demonstrated a chronic inability to file their financial reports" could be subject to deeper audits of their internal practices, according to the announcement.

"My office's audits of Bell, Stockton and other fiscally-distressed public agencies have highlighted how weak accounting and reporting practices deny local leaders the opportunity to fix problems before they deteriorate into crisis and scandal," said Mr. Chiang, in the announcement. "The lack of transparency provides a breeding ground for unchecked spending, corruption, and fiscal mismanagement."

The controller's office sponsored a bill signed into law last month, AB 1248, that calls for his office to develop statewide internal control guidelines. The office currently maintains a dedicated employee compensation website, www.publicpay.ca.gov.

While so-called financial transaction reports have long been required of public entities, the controller's office has been taking a closer look in recent years amid concerns of mismanagement, Mr. Roper noted. The office has contacted entities by a number of methods including certified mail to remind them of the looming deadline, and has offered to assist in the accumulation of that data to ease the burden felt particularly by smaller, rural districts.

"The controller's main goal is not to penalize or audit, but to get this information in," he said.

There are 58 counties, 480 cities and around 3,000 special districts required to submit financial transaction reports in California, Mr. Roper said.

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