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SAN MATEO COUNTY SPECIAL DISTRICTS: <br />WHO IS REALLY IN CHARGE OF THE TAXPAYER'S MONEY? <br />The Mosquito District Embezzlement: Is it the Tip of the Iceberg? <br />SUMMARY <br />San Mateo County (County) has 22 independent special districts. Common in counties <br />throughout California, independent special districts are local governmental entities that are <br />legally separate from counties and cities.' They deliver special public services such as mosquito <br />abatement, water management, and health care, to name a few. Special districts receive a <br />significant amount of their operating funds from their portion of countywide property taxes <br />and/or special assessments. They wield considerable influence with little oversight other than <br />their own board of directors. In many cases, these boards are responsible for multi-million dollar <br />budgets. <br />The recent embezzlement case in the Mosquito and Vector Control Abatement District (District) <br />involving hundreds of thousands of dollars prompted the 2012-2013 San Mateo County Civil <br />Grand Jury (Grand Jury) to investigate what led to the embezzlement. Two employees, who <br />oversaw financial matters for the District pleaded no contest to embezzlement charges and will <br />be sentenced in the latter part of 2013. <br />The Grand Jury finds that the Board of Trustees (collectively, Board, and individually, Trustee) <br />and the District's District Manager (Manager) share in responsibility for the lack of oversight <br />that was instrumental in allowing the embezzlement to occur. The Grand Jury finds that the <br />Manager and the Board's finance committee did not recognize red flags in financial reports that <br />should have revealed the embezzlement far sooner. <br />The Grand Jury also finds that the insurance company's denial of the District's embezzlement <br />Ioss claim is further evidence that there were inadequate management practices, insufficient <br />accountability, and oversight of the District. <br />The Grand Jury finds that the District's internal financial controls were inadequate and that <br />important policies and procedures were not followed. The Grand Jury also finds that the Board <br />did an inadequate job of overseeing operations and that there were significant differences of <br />opinion regarding the Manager's ability to manage the District. <br />The Grand Jury finds that Trustees are confused about their responsibilities, some feeling their <br />only role is to make district policy, while others feeling they have more oversight <br />responsibilities. The Grand Jury also finds that the issue of the dissolution of the District and <br />transfer of its services to the County Environmental Health Department (CEHD) because of the <br />District's poor management and the need for more operational efficiency and cost savings, merits <br />further study even though the County's Local Agency Formation Commission (LAFCo) recently <br />rejected the recommendation of its executive officer to do so. The Grand Jury further finds that <br />For purposes of this report, the term "cities" includes "towns" and County government where the context so <br />requires. <br />gabed-.31V <br />