GM Pay Raise, Overdue Audits Are CSD Meeting Topics
Nov 27, 2024 10:09AM ● By Gail Bullen River Valley Times Reporter
Jim Farrell, an audience member, speaks about a proposed pay raise for the general manager, a contentious issue discussed at the Rancho Murieta Community Services District Board meeting on Nov. 20. Photo by Gail Bullen
RANCHO MURIETA, CA (MPG) - A proposed pay raise for the general manager and overdue audits sparked significant debate during the Rancho Murieta Community Services District Board meeting on Nov. 20.
Additional agenda items included approval of a new security budget, which will fund a new patrol position by raising barcode fees. The board also recognized Director Marty Pohl for his service, as he attended his final meeting after opting not to seek reelection.
Other actions included granting staff permission to apply for federal matching funds for projects such as new water meter technology capable of detecting hidden leaks and an initial discussion on increasing developer fees.
For more details, see the separate stories in the Dec. 6 issue of the River Valley Times.
GM Pay Raise
President Tim Maybee opened the discussion on a pay raise for General Manager Mimi Morris by noting the receipt of eight form letters from residents opposing the increase. He then asked if any board member wished to make a motion.
Director Randy Jenco provided context before presenting his motion. He explained that in January, the board had reached a general consensus to grant Morris a 10% raise, but due to a technical issue, only 5.5% was implemented. Jenco then moved to approve a 4.5% increase, retroactive to January.
Morris was initially hired at a salary of $194,180. The first raise increased her pay to $204,838, and the proposed adjustment would raise it to $213,576.
Director Steve Booth stated that he “forcefully” opposed the motion for two main reasons. First, he argued that the board had not followed its established policy, which required a performance evaluation of the general manager starting in January. Second, he said the general manager was not performing satisfactorily in many areas.
“The prime objective when we hired this GM was to get these delinquent audits done, and they are not done,” he said.
While Morris and Director of Administration and Finance Mark Matulich have explained the audit process was more challenging than anticipated, Booth said, “Unfortunately, a lot of those excuses sound like a lot of the excuses we have heard from prior staff. While I believe they are making progress, I also believe they are spending a lot of time on initiatives that are not necessarily of prime importance to the board.”
Booth further expressed concerns about the general manager’s adherence to state and federal laws, citing either her actions or inactions as problematic.
“I think there is a tendency to sometimes provide less than accurate and honest information,” he said.
Director Linda Butler concurred with Booth’s opposition to the pay increase, stating that Morris had not met the board’s expectations and was promoting projects that she believed would not benefit the community.
Director Martin Pohl, however, expressed a “completely different view” of the general manager’s performance.
“I think she is doing a good job,” he said. “We hired the best candidate we could get when we hired her, and she has lived up to those expectations from my standpoint.”
Pohl also suggested the board should recognize Morris and Matulich for their progress on the audits, saying they deserved commendation for getting as far as they have.
Maybee began his comments by stating, “I can only go off of what the GM is producing for us.”
He explained that before Morris joined the district, the board had approved contracting with the Punn Group to address the district’s financial issues and prepare for the audits.
“For everyone’s edification, it was the only audit firm that was willing to assist us,” Maybee said. “And we were paying them north of $100,000 a year.”
When Morris assessed the situation, she described the task as “monumental” but assured the board she had the knowledge and skills to navigate the district through the audit process without relying on the Punn Group.
“It may have taken longer because we didn’t have the resources of that audit firm,” Maybee said. “But at 18-plus months into this, we are obviously a couple hundred thousand dollars ahead.”
District records show that the Punn Group invoices for 2022 and 2023 came to $220,534.
While he shared Booth’s frustration over the delayed audits, Maybee concluded that the situation ultimately came down to a cost-benefit analysis.
Audience Comments
During public comments, resident Brian Rosebrock expressed outrage that, since the first audit took a year and a half to complete, the remaining three audits might take as long as four and a half years.
“That is absolutely inaccurate,” Morris responded. “We have said we will be done with 2021-22, 2022-23 and 2023-24 by May of 2025.”
Maybee clarified that Booth had been referencing a Grand Jury report issued in March 2023, which stated the audits should be completed by September 2023.
“That was an impossible task,” Maybee said.
Booth acknowledged the challenges of the auditing process but expressed frustration over missed deadlines.
“We were told we would receive the 2021-22 audit last month, but no, we are being told we should have it next month,” he said. “We’ve canceled committee meetings. We’ve delayed reports, all in deference to getting these audits done. And we are continually being told there isn’t enough time to get it done.”
District Counsel Patrick Enright interjected, noting that Booth’s comments were veering into a board discussion while an audience member was waiting to speak. Booth responded that he was rebutting Maybee’s earlier remarks. Enright acknowledged, saying he had probably also let the board president go on too long.
Audience member Jim Farrell was the next to speak.
“I really question airing some of these comments in public like this,” he said, referencing Booth’s remarks about Morris. “I really question the appropriateness of it. That’s why you have closed sessions; that’s why you have performance appraisal sessions.”
Farrell, who said he was relatively new to the community, explained that he began following the CSD during the water study process. Drawing from his background in administration, human resources and strategic planning — a background he noted Booth also shares — Farrell shared his perspective.
When he first observed the district, Farrell said it appeared to be a “classic example of an organization that was in mayhem because of inadequate management, procedures and systems in play.” However, he added, “I can tell you that in the limited time that I’ve watched — audits aside for a minute because that’s a legitimate issue — I think that there has been significant improvement in the administration of this organization.”
However, Farrell noted that he would like to see improvements in the organization’s governance.
“You want to criticize this person (Morris) for pursuing different alternatives and priorities than you have. I would ask you as a board, ‘Do you have a plan?’” he said. “I haven’t seen it, except for fighting the fires, closing out the audits and trying to deal with a lot of controversy around this water study.”
Regarding Morris’ $200,000 salary, Farrell commented that it was not unreasonable given her role in the organization. He also highlighted her decision to bring in Matulich, whom he described as “far and above anything else in the organization.”
While Farrell acknowledged that the delay in completing the audits was a valid concern, he concluded, “I don’t know that should carry the day.”
The original form letter opposing the pay increase was submitted by Beth and Greg Buderus. The letter stated that Morris was hired to address the district’s financial issues and complete the overdue audits but had not achieved those objectives. It also urged the board to avoid reckless spending, citing the district’s low reserves and pressing facility maintenance needs. Seven other residents submitted letters with the same message.
The vote to approve the pay increase passed 3-2, with Jenco, Maybee and Pohl voting in favor, and Booth and Butler voting against.
Accounting Update
In addition to delivering his usual financial update, Matulich addressed the district’s accounting challenges. He explained that before he joined the district in October 2023, the Punn Group had been attempting to finalize the 2020-21 audit, at one point involving as many as seven accountants. After Matulich’s arrival, his team (Matulich, Morris and accountant Chris Funakoshi) completed the audit within four months.
While progress began on the 2021-22 audit, the team encountered significant legacy issues stemming from past years.
“Do we just disregard that every single day that goes by, there is no accounting happening and the billing is all messed up for the residents?” Matulich asked. “Or do we pump the brakes to fix that, so when we catch up on those prior audits, we don’t have a bigger mess?”
Another significant challenge arose in July when the team ran the 2021-22 trial balance, the initial step in preparing for an audit.
“Not one single fund was in balance,” Matulich said.
Instead of attempting to untangle the issues that had taken 18 months to resolve in the previous audit, the team made the “monumental” decision to start a new general ledger. They used the opening balances from the recently completed audit and reposted every transaction for the entire 2020-21 fiscal year.
Matulich explained that they adjusted the audit timelines to establish a solid foundation of day-to-day accounting and accurate billing practices.
“I hope the community and the board sees the value in that,” he said.
Although Matulich didn’t mention it at the meeting, he has taken on much of the responsibility for security since Security Supervisor Kelly Benitez unexpectedly retired in February.
Audience member Mike Martel, a previous member of the CSD and country club boards, said he wanted to separate the board’s action from the staff's action in past years.
Martel emphasized that the board was not to blame, as they had been asking the right questions. The real issue, he said, lay with previous staff, including two former general managers and a director of administration.
“It was all the information that staff was providing at the time,” he said.
Martel told the board they had inherited a financial mess.
“This is the first time in probably four years where you guys are getting your act together,” Martell said.
CSD Staffing
Morris came out of retirement to join the CSD in May 2023. She brought with her a 33-year state career largely dedicated to “doing a lot of cleanup” at various agencies. One notable example was her final role with the Judicial Council of California.
Six months into that position, the Council transitioned to a new accounting system, which led to a backlog of vendor invoices totaling approximately $100 million in a $2.8 billion budget.
To address the issue, Morris and her team swiftly shifted from paper to electronic invoicing and developed a database to track every step of an invoice’s journey, from receipt to payment within the financial system. By the time she retired three years later, the backlog of unpaid invoices had been reduced to less than $1 million.
Matulich joined the CSD as director of Finance and Administration in October 2023, bringing with him 14 years of experience as an accountant and 11 years as an FBI agent specializing in white-collar crime.
Funakoshi, the CSD accountant, and three account staff positions also help with the day-to-day finance operations.