County secures funding for court security officer

Following Board of County Commissioner action Tuesday, the Archuleta County Courthouse will soon have an unprecedented addition to its corridors — security.

During Tuesday’s special meeting, the BoCC approved receipt of $46,525 in state grant funding that will pay for one full-time officer to perform court-related security duties through Dec. 31, 2008.

According to Archuleta County Special Projects Manager Karin Kohake, the grant is renewable annually, with state sources saying funding should continue through 2017.

“We think it’s monumental. This is brand new for the Archuleta County Courthouse,” said Detective Sgt. Carl Smith of the Archuleta County Sheriff’s Department.

Smith was part of an 11-member team that worked to secure the grant funding, and will serve as the direct supervisor for the officer once that person is hired.

“We’re one of the few jurisdictions in the state who don’t have security. In the past we’ve relied on a phone call or video monitoring,” Smith said. “We’ve been living on borrowed time.”

According to Smith, the court security officer will be stationed near the entry to the courtroom, along with a metal detector. In addition, the officer will also provide security for the probation office.

According to Kohake, court surcharges, paid by all who have business with Colorado’s courts, create the funding pool. She said, of the 46 counties that applied, Archuleta County received the largest grant.

“We’re really pleased we can provide this kind of security, and we’re pleased that we got the grant from the state,” Smith said.

Archuleta County Judge and District Court Magistrate Jim Denvir also worked on securing the grant. Denvir could not be reached for comment by press time.

County developing nuisance ordinance

Archuleta County staff and the county planning commission are working to hammer out a draft version of a nuisance ordinance, with staff anticipating adoption occurring as early as July.

Commonly referred to as a “junk ordinance,” the legislation — still in the draft stages — may ultimately regulate junk cars, rubbish, refuse and other items on people’s property that, Archuleta County Administrator Greg Schulte said, may threaten the community’s health, safety and welfare.

Some of those health, safety and welfare issues include: environmental hazards created when fluids leak from abandoned automobiles and appliances; standing water held in discarded tires which creates habitat for mosquitoes carrying West Nile Virus; abandoned cars creating habitat for snakes and certain rodents known to carry Bubonic Plague and Hantavirus; and general safety concerns such as a child becoming trapped inside an abandoned appliance or junk car.

“The goal of the ordinance is not to penalize or criminalize people. It’s really to identify the sources,” Schulte said. “The goal is to help ensure the health, safety and welfare of the community, while asking, ‘how can we help people succeed.’”

That success, said Schulte, may rely, in part, on the kinds of programs the county creates to facilitate compliance. Schulte said the county is exploring a variety of options and details will be provided as soon as they are available and as the adoption date nears.

Schulte said the ordinance has been a priority for the county and the Board of County Commissioners for some time, and added that it will go through a “very public process,” including work sessions and public hearings prior to adoption.

The Archuleta County Planning Commission hosted a work session on the draft ordinance April 16, and will revisit the draft again April 23 — the public is invited to attend.

On May 14, Schulte said he anticipated the planning commission will make a recommendation on the draft to the Board of County Commissioners for their final approval.

Before formal board adoption, however, Schulte said the Board of County Commissioners would host one or two public work sessions to solicit public comments. Adoption could occur July 1.

Schulte said a draft of the ordinance will be made available on the county’s Web site, and hard copies will be available at the planning office and the courthouse.

Beyond health, safety and welfare issues, Schulte said a secondary aim of the ordinance is to make Archuleta County more attractive to residents and visitors alike, and doing so would help economic development in the community.

“Archuleta County, given the economic times, will face increased competition for new residents and businesses. This (the ordinance) puts us in a position to better compete. We have the natural beauty let’s build on it,” said Schulte.

Thursday, April 24, 2008

County planning commission to consider wildlife overlays

The Archuleta County Planning Commission will hold a public workshop at 6 p.m. Wednesday, April 30 to discuss wildlife overlays. The session will include a presentation by the Colorado Division of Wildlife followed by general discussion.

The purpose of a wildlife overlay is to help identify and conserve critical habitat areas within the county. Preliminary discussions of wildlife, scenic and watershed overlays took place in 2006 when the county was developing its current land use code. In order to provide more opportunity for public input, the adoption of overlays was tabled with the intent of re-opening the process at a later time. This workshop will be the first in a series of workshops and public meetings to address the topic.

The overlays are intended to create incentives for landowners and developers to conserve critical habitat areas. They will also help the county implement existing programs including the rural land use process and conservation planned unit developments (PUDs), establish conservation priorities for open space acquisition and help promote grant funding. The overlays will not restrict the development of any property within the property’s current zoning designation. Instead, the overlays will provide the opportunity for density bonuses, participation in a transfer of development rights (TDR) program and a higher priority for purchased easements to those landowners willing to help protect critical habitat areas.

Transfer of development rights programs allow landowners to transfer the right to develop one parcel of land to a different parcel of land. Generally, TDR programs are established by local zoning ordinances and are used to shift development from an area the local government entity would like to protect — such as a critical wildlife habitat area — to growth zones with higher densities and greater proximity to municipal services.

Areas designated as a high priority for conservation are called “sending” areas. Areas designated as appropriate for increased density are called “receiving” areas. When the rights are transferred from a sending parcel, the land is restricted with a permanent conservation easement. Typically, the landowner in the sending area sells his development rights to a purchaser seeking greater density within a designated receiving area. Buying these rights generally allows the purchaser to build at a higher density than ordinarily permitted by the base zoning.

TDR programs enable landowners to separate and sell the right to develop land from their other property rights. Much like a conservation easement, this allows landowners to benefit from the sale of the development rights while still retaining ownership and other uses of their property.

Although Archuleta County’s TDR program is still in the conceptual stage, the discussion of wildlife overlays is a critical part of the county’s long term planning process.

Thursday, April 24, 2008

County selects new airport manager

Following an unanticipated three-month vacancy, Archuleta County will soon have a new airport manager at Stevens Field.

County Administrator Greg Schulte formally announced the decision to hire Clarence (Bill) McKown to fill the post, at a monthly Archuleta County Airport Advisory Commission (AAC) meeting held last Thursday. Schulte said McKown was the top choice among four qualified candidates seeking the position.

The unexpected opening developed Jan. 10, as former airport manager George Barter suddenly resigned. At the time of his departure, Barter also oversaw the county public transportation department and information services. His tenure lasted just 17 months.

In the wake of Barter’s exit, acting assistant manager Chris Torres took over the airport reins until Schulte — himself a new hire — assumed the county administrator position in early February. Once on the job, Schulte added guidance of day-to-day airport operations to his list of duties, until a new airport manager could be found.

Meanwhile, the Archuleta County Board of County Commissioners appointed a three-person Airport Conservancy Team to assist and advise Schulte between AAC meetings.

At Thursday’s AAC get-together, Schulte expressed joy and relief with McKown’s hiring, who was apparently the unanimous choice among members of two panels charged with finding Barter’s replacement. The panels included members of the AAC and county staff. Beginning April 7, Schulte and the panels conducted a series of interviews, before finally settling on McKown. Schulte did not disclose McKown’s starting salary.

McKown is coming out of retirement. He is a senior leadership executive with more than 35 years experience in military and aviation operations, personnel management and multi-million dollar budgets. He served as commanding officer in the U.S. Navy at Yokosuka and Tokyo, Japan between 2004 and 2006. He also served as an Air Officer for the USS Kitty Hawk.

McKown holds a bachelor of science degree in industrial technology from Southern Illinois University and a master’s in national resource strategy from Industrial College of the Armed Forces. He is a life member of Noncommissioned Officers National Association and National Security Management.

He has an FAA Private Pilot’s License, Aircraft Carrier Aviation Command Pilot, Multi-engine Instrument Qualification, Special Instrument Rating and is a Flight Instructor for the Naval Air Training Command.

McKown will reportedly search for Pagosa Springs area housing this weekend and assume airport management duties sometime in early May.

County finances:
Are the numbers good?

Nearly one year ago, a dark financial juggernaut bore down and did its nasty work on Archuleta County. By summer, 38 employees had lost jobs, $1.7 million in road projects had been postponed and county administration made deep cuts to a variety of departments, programs and services.

In explaining the cause of the crisis, Archuleta County Commissioner Bob Moomaw said during Tuesday’s board meeting, “In hindsight, there was an equal problem between the finance and treasurer’s offices.”

Now, in April 2008, and based on statements Tuesday from Archuleta County Commissioner Ronnie Zaday and Citizens Financial Advisory Task Force member John Ranson, it remains unclear if the problem has been equally solved.

Following a regular briefing from the task force, Zaday expressed frustration with Treasurer Lois Baker’s reports and said she had difficulty making sense of Baker’s numbers.”

“There’s not enough detail and explanation and negative fund balances continue to grow. We’re supposed to be doing everything right, but the negative fund balances keep growing,” Zaday said.

Ranson said the task force also had difficulty with the treasurer’s numbers, but in a telephone interview Wednesday, said the issues deal largely with how the treasurer’s data is formatted — not that the numbers are necessarily erroneous.

Ranson said since the task force’s creation in June 2007, its members have worked diligently to understand the treasurer’s reports and now, after months dealing almost daily with the data, they have become more comfortable with the information. Nevertheless, and as a safeguard, the task force has created its own system to track the county’s cash flow.

Ranson and Archuleta County Finance Director Don Warn said two factors will contribute greatly to the treasurer’s ability to provide accurate, up-to-date, easily comprehensible reports — a new integrated software system that will link the treasurer’s, finance and assessor’s offices and adjusting journal entries that will deal with the negative fund balances.

In the meantime, Warn said he is confident in the numbers provided by the treasurer’s office, and the budget will remain balanced in 2008.

Warn acknowledged that reporting between his department and the treasurer’s office isn’t always ideal, but said the county is solvent and he has a handle on money coming and going.

“The system is not perfect, but we’re balancing. It’s largely a matter of technology,” Warn said.

In addition, Warn said he has worked closely with Baker to draft a cash handling policy, which Warn said is a critical and absolutely integral component of the county’s system of internal financial controls. Warn said he is also reconciling revenues as they enter the treasurer’s ledger.

Monthly reports, a number of policies in the draft stages and procurement of the integrated software package, Warn said, will help keep the county on track.

“We’re monitoring everything. We’re receiving everything on a monthly basis and we’re watching,” Warn said.

In the meantime, Moomaw said Tuesday, the district attorney’s office has audit reports necessary to investigate possible criminal activity as it relates to the development of the financial crisis.

“We do know state statute has been violated,” said Moomaw. “The documentation is with the DA’s office. That is the legal process and it needs to be given a chance to work.”

County says ‘no’ to Carothers settlement

A lawsuit filed after the mauling of Garrett Carothers, a child attacked by two dogs in the Vista Subdivision in 2002, will continue to wind its way through the courts, following a decision by the Board of County Commissioners after an executive session March 18.

According to County Attorney Teresa Williams, the board declined an opportunity to settle two remaining issues in the case — one involving allegations of the county’s breach of contract with the Pagosa Lakes Property Owners Association to provide a special level of animal control services and, second, allegations of “wanton and willful conduct” on the part of former Archuleta County Sheriff’s Deputy Tom Gaskins, who responded to the incident.

The settlement, according to Williams, would have totalled $300,000 — $150,000 per item.

The wanton and willful conduct charge stems from allegations that Gaskins failed to respond to a report of dangerous dogs in the subdivision made about 30 minutes before the attack.

The case goes back to Dec. 23, 2002, when two dogs attacked the then 8-year-old Carothers while he was standing on the porch of a friend’s house. According to sheriff’s department and SUN staff reports, the dogs dragged Carothers off the porch and into the street where they mauled him, inflicting bites over 80 percent of the boy’s body and severe lacerations to his head, ears and face.

Gaskins shot one of the dogs — a pit bull — after the mauling, when the animal lunged at him. The other dog, a Rottweiler-retriever mix, was captured and voluntarily euthanized by David Martinez, the dogs’ owner.

Charges against Martinez were dropped in 2003 after Deputy District Attorney Craig Westberg filed a motion to dismiss based on insufficient evidence, and after homeowner’s insurance paid the Carothers family $100,000.

Williams said the Archuleta County Sheriff’s Department and Gaskins are named in the two remaining elements of the suit.

Williams said discovery and depositions on both issues will begin in the coming months, with trial scheduled for next February.

Although settlement remains an option, Williams said previous Colorado Supreme Court decisions related to the case appear to bode well for the county.

“The county feels very confident in our chances of defending against the suit successfully.”

Williams said the 2008 budget has $50,000 earmarked for the Carothers case.

County wants memo investigated

Archuleta County’s former finance director and treasurer may soon become the principal subjects of a district attorney’s investigation, after research into a finance department memo indicates possible violations of state statute.

The memo, dated Aug. 18, 2006, from former Finance Director Bob Burchett, directs former Treasurer Traves Garrett to cash various certificates of deposit totalling $467,776 and to transfer $300,000 from the Road and Bridge LGIP (Colotrust) fund into the county’s general fund. According to the memo, Burchett directed Garrett to also transfer the proceeds from the cashed CDs into the general fund.

In a letter to District Attorney Craig Westberg, Archuleta County Administrator Greg Schulte writes, “Based upon our internal research, the CD liquidation and fund transfers did occur. However, upon review of the records of the County Clerk, we were not able to find appropriate authority from the Archuleta County Board of County Commissioners ... Consequently, we believe the actions undertaken pursuant to the Aug. 18, 2006 memorandum referenced above may be in violation of Colorado Revised Statute 29-1-109 (1)c ... We are requesting that the Office of the District Attorney investigate the actions as expediently as possible.”

In a telephone interview last week regarding the possibility of criminal activity and it’s link to Archuleta County’s financial demise, Westberg said his office is “discreetly but carefully looking into the matter because it is of great and grave importance to the people of Archuleta County.”

Westberg described the case as “exceedingly complex.

“We’re used to meat and potatoes kinds of cases. We’re not used to financial crime,” Westberg said.

Nevertheless, Westberg said investigators in his office are up to the task.

“I would be exceedingly reluctant to give a case of this magnitude to another jurisdiction,” Westberg said.

Westberg was unavailable for comment on Schulte’s letter requesting the investigation.

Thursday, March 20, 2008

But is it
‘real money?’

While many might agree that the worst of Archuleta County’s financial troubles are over, a recent assessment on the issue from Archuleta County Commissioner Bob Moomaw that went unexamined on a local Web site, might give the impression that things are better than they really are.

According to Moomaw’s statement, the commissioner is tired of the negative press surrounding the county’s financial troubles and would like to highlight a number of facts:

One: The county made it to the end of the 2007 without going bankrupt. True, yet, although the situation remained tenuous, cash flow projections in fall of 2007 indicated the county would make it through the year and there was never a report that the county had gone bankrupt.

Two: County staff and elected officials made deep staffing, program and budget cuts, instituted new hiring practices, hired key personnel and have begun developing internal policies and procedures in the finance and treasurer’s offices that should help the county avoid financial calamity in the future. Also true, and reported in The SUN in numerous stories including, most recently, a story on Feb. 21, 2008.

Three. The county finished 2007 with “$1.1 million in the bank.”

According to Moomaw, the $1.1 million figure was provided by Finance Director Don Warn after Moomaw said he inquired about county finances as of Jan. 1, 2008. And Warn explained the figure represented cash in the bank as of Dec. 31, 2007. However, although the figure may be an accurate depiction of county bank balances on the aforementioned date, Warn said the amount did not account for outstanding warrants, or other monies owed.

Thus, the following factors may provide a more comprehensive picture of the county’s financial status.

• In 2007, (according to a county press release dated June 20, 2007) the county suspended a number of road capital improvement projects, including a $430,000 project on Pinon Causeway, a $460,000 project on Trails Boulevard, a $375,000 project on Park Avenue, $130,000 for Port Avenue and $260,000 for Holiday Avenue, among others. Meanwhile, the $1.7 million collected from sales tax in 2007 for road capital improvement projects, such as those listed above, was used instead to cash flow the county during the year. According to Chris Tanner, interim public works director, the projects will be pursued during 2008.

• According to Citizens Advisory Task Force members, in November 2007 the county borrowed $390,000 from invested reserves in order to get through the remainder of 2007. Presumably, those dollars must be paid back.

• Due to a property tax freeze for the late 2006 audit and the county not receiving it’s annual disbursement of Highway User’s Tax Funds, the county borrowed from itself again — this time $200,000 against its TABOR reserves ($100,000 in January 2008, and $100,000 in February 2008), which it must now pay back. Warn said he is bringing a payback resolution to the Board of County Commissioners April 1.

• To date, and according to Warn, the county still owes $240,758 to La Plata County for district attorney’s services in 2007, and Warn said the county has made arrangements to pay the past due amount.

• Also due, according to Warn, is $162,000 owed to Clifton Gunderson LLP for audit work, although it remains unclear how that payment will shake out in light of the county’s claims the firm overcharged and failed to produce work as promised and per contract.

• Lastly, a number of county funds, such as fleet, nutrition, the airport and human services, still show deficit fund balances, and audit work remains to determine how much must be paid back.

Warn acknowledged that the county has made great strides in solving its financial problems, although he also acknowledged much work remains.

“Did we go bankrupt at the end of the year? No. That, in and of itself, was a major accomplishment,” Warn said.

Planner’s departure:
More to it than meets the eye?

By James Robinson

A reported felony conviction for fraudulent check writing, two convictions for driving while ability impaired, probation violations and disciplinary issues with the Colorado Supreme Court, including disbarment, indicate there may be more to the recent departure of Rodney Proffitt, the county’s former director of community development, than recent rumors of commissioner whimsy or employee dissatisfaction with his job or work environment have implied.

According to Colorado Supreme Court documents, Proffitt, once an attorney who was admitted to the bar of the Supreme Court of Colorado in 1976, has had a series of legal troubles, the first apparently beginning in July of 1985, when Proffitt was charged with fraud by check — a felony offense. By November 1985, Proffitt faced eight additional counts of fraud by check and ultimately pleaded guilty to the crime of fraud by check — a class four felony.

In Feb. 1987, and as a result of the offense, the State Supreme Court ruled that Proffitt should be suspended from the practice of law for one year and one day, and as a condition for reinstatement, he should successfully complete the conditions of his probation — Proffitt’s ability to practice was never reinstated.

According to Proffitt’s resume filed with the Archuleta County Human Resources Department, he stated that between 1976 and 1982, he was “no longer licensed to practice law in any state,” yet he omitted the Colorado Supreme Court’s disciplinary action in 1987 from the resume document.

And that appears to be the first significant omission in Proffitt’s resume and application materials.

According to Proffitt’s employment application with Archuleta County, the former planner admits to having been convicted of a misdemeanor or felony — he doesn’t specify which — and lists a driving under the influence (DUI) conviction in 1984 as the response to the “felony or misdemeanor” question.

However, according to Colorado State Supreme Court documents, Proffitt was not convicted of a DUI in 1984, but faced DUI charges in 1985 and 1986, both of which led to convictions for driving while ability impaired.

The two incidents precipitated further legal troubles, including failures to appear in court, probation violations and violations of other court-ordered requirements, another incident in 1987 of insufficient check writing and a finding of contempt of court in 1985 for failure to pay child support.

According to the state Supreme Court disbarment documents, “The respondent’s (Proffitt’s) contempt and disdain for the judicial system and the rule of law are demonstrated by the extensive misconduct recited above, and by his conduct in this proceeding itself ... The respondent’s contempt and disdain are utterly inconsistent with the duties of a member of the legal profession, and we therefore accept the hearing panel’s recommendation that the respondent be disbarred.”

According to Archuleta County Commissioner and Board Chair Bob Moomaw, “This caused us to make sure everyone has a background check. In the past, background checks were not done on all employees, and he (Proffitt) is one of the last who slipped through. Now background checks are done on every applicant before they are hired.”

Because Proffitt’s departure is a personnel matter, Archuleta County Administrator Greg Schulte would not say whether Proffitt was terminated or left on his own accord.

“He no longer works for Archuleta County,” Schulte said.

Schulte said new hires are undergoing thorough third-party background investigations including reviews of criminal histories and an employment check.

As a second tier of review, Schulte said the county has instituted a more comprehensive, or multi-panel interview process.

A job search for a replacement for Proffitt has not begun, and the process was discussed Wednesday morning during the weekly county management meeting.

Thursday, March 13, 2008

County and town to hold planning work session

The Archuleta County Planning Commission will hold a work session at 6 p.m. March 19 in the Board of County Commissioners’ Meeting Room, in the Archuleta County Courthouse.
Public comment is welcome and encouraged.
The agenda includes:

• Call to order.
Work session:

• Joint work session with the Town of Pagosa Springs — discussion of Intergovernmental Agreements between town and county.

County tax freeze thaws

Archuleta County finance staff marked another milestone toward financial recovery with the successful completion and submission of the 2006 state mandated, government audit last week.

According to Archuleta County Finance Director Don Warn, county staff submitted the audit to the state auditor’s office Feb. 27, and the county’s property taxes were released Feb. 29.

The state froze Archuleta County’s property tax revenue Dec. 10, 2007, after the county failed to submit the audit by the July 31, 2007, deadline. The missed 2006 audit deadline marked the county’s fourth consecutive failure to meet the state’s audit submittal timetable, and the cycle has forced the county into an ongoing game of catch-up — trying to balance ledgers rife with errors, cryptic entries and erroneous fund balances months after the fact, while simultaneously trying to manage the organization’s day to day financial affairs.

Warn said although the submittal comes about a month after his department’s target completion date, the county is just now entering the peak property tax collection period, thus the revenue release comes at the ideal time and the delay hasn’t had a significant impact on the county’s financial health. Nevertheless, Warn also acknowledged that eliminating future audit delays is crucial to ensuring the county remains solvent, and he asked the Board of County Commissioners Tuesday to approve hiring a temporary finance department employee to help prepare for the 2007 audit.

Warn’s request follows recommendations from the Citizen’s Financial Advisory Task Force and from the 2006 auditing firm Wall, Smith, Bateman & Associates Inc. that the county hire staff to prepare for the 2007 audit, thus allowing Warn to manage the 2008 budget and day-to-day finances, while drafting policies and procedures that will help the county avoid another financial crisis in the future.

Audit reports between 2003 and 2006 state that poor or nonexistent internal controls (policies and procedures) have been a persistent problem and ultimately played a major role in the county’s financial demise.

In the 2006 audit report, Karla Willschau of Wall, Smith, Bateman & Associates writes, “The reconstruction and correction of 2007 is a major undertaking and will be very time consuming.”
After hearing Warn’s request, the board approved hiring the temporary employee via a request for proposals (RFP). Funding for the position will occur through utilization of unused Department of Local Affairs (DOLA) grant dollars originally earmarked for the forensic audit.

Warn said with DOLA and board approval secured, the project could begin as early as April 1, with Warn anticipating a three-month completion timetable for the 2007 audit prep work. Warn said the scope of work also includes researching various county accounts, performing reconciliations and other tasks necessary to clean up county ledgers.

During the discussion, commissioners Bob Moomaw and Ronnie Zaday both advocated funding a long-term staffer for the finance department.

“We’re past the financial crisis, but we still have financial issues we need to deal with,” Moomaw said.

Warn responded that DOLA will only fund projects, not hiring employees, and he advocated tapping into DOLA grant dollars for the 2007 work first, then assessing the county’s finances and finance department staffing needs before committing to funding a long-term staff position.

County audit a
‘dramatic report’

Government auditors presented a preliminary draft of the county’s 2006 financial statements to the Board of County Commissioners Monday, and the findings indicate the financial train wreck revealed in the 2005 audit report persisted through the following year — although key players connected to the audit process said they weren’t surprised.

Al Bledsoe, a member of the Citizen’s Financial Advisory Task Force who has followed the county’s forensic and government audits closely said, “It’s not surprising that you have these results. The numbers were bad in 2005, and nothing had been done since then.”

Karla Willschau of the auditing firm Wall, Smith, Bateman & Associates presented the preliminary report to the board — Willschau anticipated that a final audit report would be ready for submission to the state by Wednesday — and said the 2005 audit had revealed, that virtually “everything was wrong” with the county’s finances and financial practices, while 2006 audit results showed that those conditions remained the same.

For example, the 2005 audit listed a number of significant problems, such as overspending, a lack of internal controls, difficulties managing internal service funds, and a failure to reconcile accounts and fund balances between the treasurer’s office and the accounting general ledger. To compound the county’s financial problems, many of the same issues were raised in the 2003 and 2004 audit reports, although apparently little, if anything, was done to correct the organization’s errant financial course.

In the 2006 report, the document details a litany of financial horrors that had continued unchecked since 2005, and which resulted in a 2006 “disclaimed audit report,” and “no opinion on county financials.” (Willschau made the same statements during last year’s 2005 audit.)

For example, as a result of poor or nonexistent internal controls, “at Dec. 31, 2006, all of the county’s fund general ledgers were incorrect and required the attention of an outside accounting firm to reconcile the balance sheet accounts which resulted in numerous material adjustments.” Many of which Willschau said, balanced the books, yet contained visible errors and unclassified revenue and expenditure balances, which will require further work and cleanup.

In addition, the county violated state statute on at least two occasions. According to the audit, the first violation occurred when the county ran a $3 million dollar deficit fund balance or net asset condition across a variety of funds. And second, expenditures, also across a variety of funds, exceeded revenues by $3.37 million. Worse, the approved 2006 budget already showed expenditures outstripping revenues by nearly $2 million from day one, however the final 2006 analysis indicates spending went far beyond the budgeted overspending, and hindsight shows many of the numbers found in the 2006 budget are likely far from accurate.

Willschau said another key issue with the county’s financial troubles in 2006 was the improper management of internal service funds, which Willschau said should be a “break even proposition.”

Not so in 2006.

According to the report, internal service funds such as fleet, nutrition and the county’s self insurance fund contributed $1.9 million to the $3 million dollar deficit.

“That $1.9 million has accrued here to the great disservice of the county. Internal service funds have made accounting here unduly complex. Get rid of them.” Willschau said.

The airport also produced its own share of questions with the preliminary audit report indicating that there was $1.7 million in excess spending at the airport. Although it is unclear if the overage was truly the result of overspending or the mis-classification of funds, Archuleta County Finance Director Don Warn said additional audit work and staff research would help solve the airport, and other deficit fund balance, puzzles.

In summarizing the county’s financial statement to the board, Willschau said, “All I can say is there are a lot of strange numbers in these financial statements. You have to take them with a grain of salt. They are not correct. They are the best we could come up with.”

Through the county’s recent financial history, a failure to reconcile accounts appears to have played a major role in the organization’s financial demise. However, Willschau said, “Although there are some things that have gone wrong, there are some things that have gone very right. The treasurer’s office has always reconciled cash. It’s the only place in the county where cash has been reconciled,” but Willschau said that alone was not enough.

Although Bledsoe’s comment might make it sound as though the county has done nothing to rectify problems since it’s abysmal financial state was revealed in the 2005 audit report, it is critical to note the timetable required for audits, and the county’s adherence, or lack thereof to that timetable and key factors related to the escalation of the crisis.

In the case of the county’s annual, state mandated audit, the report is due July 31 — seven months after the close of the county’s budget year. State auditors typically provide a 60-day grace period after the July 31 deadline, yet, beginning in 2003 the county has failed to meet audit deadlines with grace periods for each consecutive year since.

For example, the county missed the 2003 audit deadline of July 31, 2004, and did not submit the audit until Feb. 9, 2005. The delay forced the state to freeze the county’s use of its property taxes and delayed awareness of financial problems looming on the horizon.

Then, for the 2004 audit, the county missed the July 31, 2005 deadline again, and the state did not receive the audit until Feb. 23 2006. Again, the delay resulted in a property tax freeze and furthered delays in recognizing growing financial problems.

For the 2005 audit, the trend continued. July 31, 2006 came and went, and the state did not receive the report until April 20, 2007, and again Archuleta County’s property taxes were frozen.

By that time, a financial juggernaut was bearing down on the county and the pressure forced the organization to cash its last $1.2 million held in certificates of deposit to pay special districts. In addition, fluid reserves had been vaporized, and the county was forced to tap into a $500,000 line of credit. At the time, finance staff estimated cash flow shortfalls of $1 million.

By May, county staff were focused on damage control in an attempt to survive the year without going bankrupt. The task included a series of deep staff, program and budget cuts. To exacerbate the situation, the county lacked a finance director — former finance manager Bob Burchett was fired in mid-May — and former Archuleta County Administrator Bob Campbell, key department heads staff and members of the Citizen’s Financial Advisory Task Force struggled to nail down mercurial fund balances and an ephemeral cash flow situation.

And now, although the 2006 audit is near completion, it too comes months behind schedule, leaving finance staff playing a frantic game of catch-up and tasked with managing day to day affairs while stitching together bits of evidence that will help future auditors understand the county’s cryptic financial past. In fact, only with the November arrival of finance director Don Warn has the county been able to begin addressing many of the organization’s long term financial issues outlined in four years of audit reports.

For example, Warn presented the first “budget-to-actual variance report” to the Board of County Commissioners during their regular meeting Feb. 19, and Warn intends to provide reports detailing the county’s financial health on a monthly basis. In addition, Warn and finance staff have begun drafting a cash handling policy, an internal controls policy and a purchasing and procurement policy, all of which are unprecedented in the annals of Archuleta County’s financial history. (Warn has said he intends to bring the policies to the board in the coming months for adoption and implementation.)

But Warn is just one staffer, and Willschau warned that limited county finance staff, high departmental turnover, the inherent difficulties of balancing the county’s books after years of mismanagement and audit delays, including the delayed completion of 2006 report, will likely create a new series of challenges to timely completion of the 2007 audit.

To that end, Willschau said her firm will not be able to return for the 2007 audit until late 2008, and in light of the challenges related to auditing Archuleta County, her firm may opt not to return for a third audit at all.

“There’s no way we could get back here by July 31, 2008 to do the 2007 government audit,” Willschau said, and added that the county will not be ready for the undertaking, nor will her firm.

Although Willschau and staff from Wall, Smith, Bateman & Associates have made headway in unraveling the financial troubles found in the county’s ledgers, she warned that many of the conditions discovered in the 2006 audit will have likely persisted through 2007. Thus she offered the following recommendation.

“The reconstruction and correction of 2007 accounting records is a major undertaking and will be very time consuming. In order to prevent 2008 accounting records from repeating this cycle, we recommend that the current finance director’s attention be focused on the 2008 fiscal year and the county should consider hiring an accountant to assist in the reconstruction of the 2007 accounting records.

“Give Don what he needs to keep him here and keep him happy,” Willschau said.

With just $38,587 separating revenues from expenditures in the 2008 budget, the county may be hard pressed to find the cash necessary to secure additional finance department staff.

According to Warn, grant funding may be available to help fund the position, although he said the grant contract and scope of work are not finalized and must ultimately receive board and Department of Local Affairs (DOLA) approval. Warn said the aforementioned grant is separate from other DOLA funding used pay Clifton Gunderson LLP for their audit work.

But beyond approving or denying grant requests and with a tight budget, the board faces a number of key financial questions from a variety of competing issues such as roads, the airport, parks and recreation and planning, the outcome of which could, or not, set the foundation for rectifying years of debilitating financial mismanagement.

“In my professional experience, this is a pretty dramatic report,” said Archuleta County Administrator Greg Schulte. “We have our work cut out for us.”

Document could
shed light on
depleted funds

An interdepartmental memo between the former heads of the Archuleta County Finance Department and Treasurer’s Office, may soon shed light on how a number of county fund balances were steadily depleted, and may be the most telling example of what county finance officers considered “business as usual” for many years.

The memo, dated Aug. 18, 2006, (released Wednesday following a SUN document request) from former finance director Bob Burchett to former Treasurer Traves Garrett, details $767,776 worth of fund transfers and cashed certificates of deposit from a variety of county “designated funds,” with the dollars to be transferred into the county general fund.

The memo was discovered in a box of loose documents by members of the county finance staff as they searched the finance department office for information necessary to complete the 2006 government audit. The discovery was made approximately two weeks ago.

According to the memo, Burchett writes, “Per our conversation earlier this week, please cash the following CD’s and deposit into the County checking account.”

Burchett then lists the CDs: $100,000 from “Capital Improvement;” $177,016 from the “Road and Bridge Fund;” $148,651, also from the “Road and Bridge Fund;” and $42,108 from “Nutrition.”

Burchett then writes, “In addition to the above, please transfer from the Road & Bridge LGIP (Colotrust) into the general county checking account $300,000.”

Current Finance Director Don Warn said the funds listed in the Burchett memo are not considered “restricted” funds in the statutory sense, but are considered “designated.”

Warn said designated funds are not restricted by statute or bond covenants, although the government agency, in this case Archuleta County, imposed spending limitations on the funds.

Archuleta County Administrator Greg Schulte said he learned of the memo Tuesday, and has begun a series of inquiries.

First, Schulte said county staff would verify that the liquidation of the CDs and the transfer of the road and bridge funds did, in fact, occur. Second, Schulte said he would research the record to ascertain whether Burchett had board authority to effect the transfers. And third, he indicated he would determine if outside auditors, namely Clifton Gunderson and Wall, Smith, Bateman & Associates are, or were, aware of the memo.

“The biggest issue is whether or not there was board authority to make the transfers,” Schulte said.

Warn added that, although the funds were not restricted in the statutory sense, “best practices would dictate that you don’t move money from one fund to another without authorization.”

The memo bears an uncanny resemblance to the recently-released Clifton Gunderson forensic audit in that it asks more questions than it answers. For example, apart from Schulte’s line of inquiry, another question remains: Who was at the helm of the treasurer’s office when the request was made?

Former Treasurer Traves Garrett was involved in a serious automobile accident in February 2006, and Deputy Treasurer Lois Baker took the helm during Garrett’s convalescence, serving as acting treasurer until she secured the post in January 2007 following a successful election bid.

Kelly Evans, the current deputy treasurer, disputes the assertion that Baker was in charge, and says payroll records prove Garrett, not Baker, was in the office and serving as the county’s treasurer until the changing of the guard following the election.

Despite the fact that members of the current administration find the information in the memo to be new, there are indications previous administrators were aware of the situation.

During a May 31, 2007, meeting with the Pagosa Springs Rotary Club on the county’s financial crisis, former administrator Bob Campbell referenced an agreement between Burchett and Garrett that enabled the pair to move money between funds without Board of County Commissioner approval. The memo released Wednesday may provide hard evidence that such a relationship did in fact exist.

Schulte said he has provided a copy of the memorandum to George Daniels, the investigator with the District Attorney’s office.

County seeks to complete forensic audit

The fate of the county’s incomplete forensic audit hangs in limbo, as county staff struggle to find an accounting firm able to undertake the project, particularly with tax season underway and many firms saddled with clients and already running on hyperdrive.

“We’re going to have a hard time finding a CPA firm,” said Finance Director Don Warn.

Warn and Archuleta County Commissioner and Board Chair Bob Moomaw said hiring Wall, Smith, Bateman & Associates — the county’s 2006 government auditors — had been one of the primary options. However the firm is already engaged in completing the county’s 2006 government audit and is poised to begin a busy tax season. Hence, Warn said, the firm does not have the time.

The decision to hire a different accounting firm, other than Clifton Gunderson to complete the project, comes after the commissioners learned the forensic audit, raised “more questions than it answered.” And Moomaw said the incomplete and unprofessional nature of the report is characteristic of Clifton Gunderson’s dealings with Archuleta County.

In a prepared statement issued Jan. 30 with the forensic audit, Moomaw wrote, “Given the difficulties experienced with Clifton Gunderson during the audit, the county feels it is prudent to use a different accounting firm and compensate them from the remaining DOLA (Department of Local Affairs) funds for work required to finish the forensic audit such that the information is received by the county in a timely fashion and the necessary changes to policies and procedures can be made.”

Moomaw’s and the board’s recent frustration marks the second time county staff, elected officials, members of the Citizen’s Financial Advisory Task and Clifton Gunderson have come to loggerheads over allegations the firm has under-produced, over-charged and failed to meet its contractual obligations; yet, rather than battle with Clifton Gunderson executives, Moomaw and Archuleta County Commissioner Ronnie Zaday are prepared to spend grant money allocated for the project elsewhere.

Archuleta County has received a total of $262,000 in DOLA grant funding to undertake audit work, with just over $100,000 spent thus far.

“Their management of this entire project is ridiculous. There’s no way I’m spending another dime with Clifton Gunderson,” Zaday said.
But although Moomaw and Zaday are poised — with DOLA’s blessing — to use $20,000 from the grant pool, Archuleta County Commissioner Robin Schiro was opposed.

Schiro said the county had not fully engaged DOLA to intervene on the county’s behalf, and said the county may ultimately be forced to pay the entire $262,000 project cost, plus another $20,000 for the outside firm’s work.

“We keep throwing good money after bad,” Schiro said, and suggested the board sit with DOLA representatives and Clifton Gunderson executives to resolve the problem.

But Zaday said she, Moomaw and task force members had already brought their concerns to DOLA and sought satisfaction by airing their concerns with top-tier Clifton Gunderson management — including Anita Ford, Clifton Gunderson’s director of assurance services — but all to no avail.

As for litigation, Warn countered with a list of Clifton Gunderson shortcomings — missed product delivery deadlines, missing and incomplete data, incomplete reports and Archuleta County’s frozen property taxes — that may not bode well for Clifton Gunderson in court.
After the discussion, the board remained split in their opinions with Schiro voting against contracting with a firm, and Moomaw and Zaday in favor.

According to the board decision, interim Archuleta County Administrator Greg Schulte will work with Warn to locate a firm, and if one is found before the Feb. 19 board meeting, Schulte will begin contract negotiations, with the stipulation that the cost will not exceed $20,000. In addition, Schulte said, he will clear the expenditure with DOLA.

During their work on the 2006 government audit, Warn said Wall, Smith, Bateman & Associates will address some of the forensic audit’s fraud concerns, and that information will be passed on to whichever firm takes the project in order to avoid a duplication of efforts.

In addition, following a question from John Bozek, the board agreed to have a statement of work written identifying exactly what in the forensic audit requires completion.

Forensic audit released, many questions remain

Internet pornography, online gambling, poorly documented wire transfers and a financial management system seemingly devoid of internal controls and rife with deviations from generally accepted accounting principles were the hallmarks of the county’s financial practices between 2003 and April 2007, according to the Clifton Gunderson forensic audit report released Wednesday.

The county commissioned the audit in May 2007 when key county staff and members of the Board of County Commissioners learned they faced a multi-million dollar deficit after it was revealed many county funds had vaporized and former finance director Bob Burchett described $2.87 million in the Road Capital Improvement fund as “not real money.”

Facing an unprecedented fiscal shortfall, county staff sought assistance from the Department of Local Affairs, and the audit began in earnest to identify if fraud or other illegal activity had led to the county’s financial demise.

According to the document, key county staff — including former Archuleta County Administrator Bob Campbell — have been in possession of the report since November 2007, however Archuleta County Commissioner and Board Chair Bob Moomaw said he had not seen the document until Jan. 18, when Clifton Gunderson presented a “first draft” for the board’s review.

Despite public requests to release the report, Moomaw said questions regarding attorney client privilege, personnel issues and concerns over whether the report should be sent first to the district attorney, had squelched the board’s desire to release the document. And those concerns apparently persisted through an executive session Tuesday, when the board again decided to withhold the report.

Following the executive session, The SUN filed a request through the Colorado Open Records Act asking for the report’s immediate release, or to provide the legal basis for the continued withholding of the document. Following the request, the county released the report Wednesday.

Consistent with previous comments from former administrator Campbell and members of the Citizen’s Financial Advisory Task Force at an Oct. 30, 2007, “Town Hall” style meeting, the report reveals no conclusive evidence of overt criminal activity; however, auditors from the firm acknowledge that further analysis of county financial documents, electronic transactions and hard drive data is needed before criminal activity can be ruled out.

But, while criminal activity remains a question mark, it appears clear that poor financial management, coupled with incompetence and overspending were the culprits behind the county’s financial unraveling.

In the report, Clifton Gunderson outlines 10 main areas of investigation, including an analysis of Burchett’s computer hard drive, the county server, wire transfers, bank account activity, charitable donations, possibilities