Health agency is latest black eye for county supes

The LA County Board of Supervisors twice this week looked like it has been fumbling the ball when it comes to overseeing agencies that are within its realm.

First on Sunday there were new revelations about improprieties at the LA Memorial Coliseum Commission, where truly serious financial self-dealing could put some stadium bureaucrats in jail. All this happening on the watch of three supervisors who sit on the Coliseum's governing board.

Granted, the Coliseum agony has been spooling out for months. But Tuesday along comes First 5 LA, an obscure quasi-public agency (created by 1998's Proposition 10 ballot measure). A new audit purports to show that First 5 LA has a sketchy record of being able to account for how it has spent tens of millions of dollars of cigarette tax money on children's health programs. Disturbed by the audit findings, released in July, the Board of Supervisors Tuesday voted 4-1 to consider making First 5 LA a county agency, instead of an independent agency. And how would that help? Not exactly clear.

Also masked in Tuesday's hand-wringing vote was the fact that First 5 LA's nine-member board has been chaired for years by a member of the Bd. of Supes (now Mike Antonovich, before it was Gloria Molina) and that four of First 5 LA's board members are appointed by the supervisors. That the audit findings might be seen as giving a black-eye to the supervisors and their appointees did not figure into news media accounts of Tuesday's vote.

The First 5 LA mess comes on the heels of new allegations about the Coliseum Commission, a truly rogue agency that the Bd of Supes are also supposed to help manage. The LA Times Sunday entertained its readers with a story about how disgraced former Coliseum boss Pat Lynch tried to explain away money he was receiving from a Tony Estrada, the stadium's janitorial services contractor (payments that looked suspiciously like kickbacks) by claiming the payments were part of a business deal he had with Estrada (to jointly own a boat called "Wild Rose") - as if that explanation were any less suspect. Missing from the Times story - any mention that Lynch and several of his questionable assistants operated under the very noses of three supervisors (Mark Ridley-Thomas, Zev Yaroslavksy and Don Knabe) who sit on the Coliseum's governing board.

Previous revelations of financial shenanigans prompted mega-developer Rick Caruso in September to finally throw up his hands in disgust and resign as a Coliseum commissioner. That move was seen by some as Caruso's attempt at damage control if he chose to run for mayor. Meantime, another mayoral aspirant, Yaroslavsky, remained on the commission, awkwardly holding the reins (at least some of them) as the exposés kept piling up. No question the Coliseum mess could complicate Yaroslavsky's pitch if he were try to run for mayor as the candidate who knows how to run a tight ship and protect taxpayer dollars.

In fact, Yaroslavsky has not been the hard-nosed attack-dog of yore concerning the Coliseum, perhaps to avoid inevitable questions about his own oversight performance. But Yaroslavsky showed some of his old enthusiasm for outrage Tuesday vis-à-vis First 5 LA.

The Daily News account of the BOS vote highlighted Yaroslavsky's spunky take on the problems at the agency which is chartered to funnel cigarette tax money (under Prop. 10) to LA County programs that protect the health and safety of kids under 5 years old.

"Any reading of this audit should shock every single one of us," Supervisor Zev Yaroslavsky said, thanking his colleague, Supervisor Michael Antonovich, for requesting the review...."The lack of transparency, the lack of accountability ... any one of these things would be a bell and whistle," Yaroslavsky said. "All together they are a siren."

The Times also gave Yaroslavsky plenty of freedom to fulminate:

"That's no way to run an agency. That is a prescription for trouble. And while we have no evidence of malfeasance ... we really have no way of knowing anything about where that money went," Yaroslavsky said. "The current situation over there is not healthy."

The audit found that First 5 LA's staff - headed by executive director Evelyn Martinez (who earned a salary of $232,178 in 2009-10) - did not consistently inform the governing board (including supervisors and their appointees) about changes it was making in the money allocated to contractors and grantees. In the 2010-2011 year alone, the audit found $68 million in reductions to pre-existing allocations that were not fully documented by the agency's staff. Such findings - the auditors found - could result in situations where staff was "possibly making expenditure decisions that were inconsistent with Board direction." The audit also discovered that the agency's operating budget - basically for administrative expenses - was increased without explanation by $5 million in February 2011 and without the board's approval.

More from the Times:

The auditors said the lack of oversight means there is no way to determine if the agency has signed agreements "for inappropriate purposes or with unqualified vendors or grantees." The audit also said there was an absence of documentation that competitive bidding took place. And while it is First 5 LA's policy that commissioners must approve all new contracts exceeding $25,000, many agreements were approved "only by staff."

Add First 5 LA has replied that the audit was "superficial", found no malfeasance and that the audit team did not "even" interview CEO Martinez. In a prepared statement, the agency said:

Since 1998, First 5 LA has conducted annual independent audits of its financial statements and controls and at no time have these audits resulted in any material findings. In addition, First 5 LA has received several awards from national professional accounting organizations for the quality and accuracy of our financial statements. While I welcome any scrutiny of First 5 LA's financial records, policies and procedures, administrative expenses and programmatic decisions I hope that the lack of any significant findings in the special audit reports will confirm that First 5 LA takes its fiduciary responsibilities seriously and has been a responsible caretaker of the public funds entrusted to it. While today's action by the Board of Supervisors to take the initial steps to exert greater oversight and control over the administration of First 5 LA is completely within the Board's purview, I hope that we continue to maintain our focus on improving the lives of our youngest children in Los Angeles County."


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