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Cities do not give priority to having representation on the Board, which representation is an <br />important component to the oversight of the District operations <br />The Grand Jury recommends that the Board require its Manager to follow the Policies and <br />Procedures manual at all times and provide monthly financial reports to the Board. <br />The Grand Jury recommends that the Board emphasize the importance of its finance committee's <br />role in ensuring that internal financial controls and policies are in place and are being followed. <br />The Grand Jury recommends that the District hire a consultant to redesign the Manager's <br />evaluation process to better assess job performance and to provide clarity and goal setting. The <br />Grand Jury also recommends that the Board evaluate its policies and procedures on an annual <br />basis and study a restructuring of the Board to better fulfill its oversight role. <br />The Grand Jury recommends that LAFCo continue to study the possible dissolution of the <br />District and transfer of its services to the CEHD. <br />The Grand Jury recommends that cities give priority to having representation on the Board and, <br />if unsuccessful in recruiting appointees, comply with Health & Safety Code section 2021 and <br />appoint a council member in the interim. In addition, the Grand Jury recommends that cities <br />require representatives to give their city councils regular updates on District's operations. <br />BACKGROUND <br />The District's budget is approximately $6 million. It has an accumulated reserve of about $5 <br />million. Its funding comes from property taxes, parcel assessments, and a benefit assessment. It <br />is governed by a Board composed of one member from each of the County's 20 cities plus <br />County government. It employs a Manager to oversee its daily operations. Despite all of these <br />"overseers," only one Trustee recognized a problem with an overage in operational expenses in <br />2011, thereby leading to the discovery of the embezzlement. After the discovery, only one city <br />asked for a Grand Jury investigation. <br />The Grand Jury learned during interviews that the Manager did not follow normal employment <br />vetting procedures when hiring the finance director accused of the embezzlement. <br />The LAFCo executive officer performed a Municipal Service Review and Sphere of Influence <br />Review (Service Review) pursuant to Government Code Sections 56425 and 56430 following <br />the alleged embezzlement. The report addressed public accountability and broadly examined <br />district operations, fiscal health, opportunities for sharing resources, and governance alternatives. <br />The study was not a financial audit and only identified measures the District has taken or could <br />take to prevent such embezzlement events.' <br />Subsequent to the Service Review, the LAFCo executive officer recommended that the District <br />be dissolved and incorporated into the CEHD, which might result in a cost savings. However, the <br />LAFCo commissioners rejected the recommendation and deferred any further decision on the <br />subject to a later review after the Manager completed a Performance Improvement Plan as <br />2 <br />June I2, 2012, LAFCo Municipal Service Review. <br />2 <br />6 abed - .3. � V <br />