PIC(ing) up the pieces

This week the Butte County Board of Supervisors got a glimpse into the demise of the Private Industry Council (PIC), which closed suddenly in February and filed for bankruptcy in May.

PIC provided training and employment services to county residents and operated on $7 million in annual federal funding. Somehow 90 percent of that money was spent by the third week of January, only halfway through the fiscal year.

The County Administrator’s Office asked Auditor-Controller Dave Houser to conduct an audit of PIC’s county-related funding. In a complex arrangement, PIC subleased county-owned buildings as a source of revenue. Those buildings were the Southside Community Center in Oroville and facilities on Carmichael Drive in Chico and Table Mountain Boulevard in Oroville that housed the One-Stop Centers, which provide employment services to county residents.

Shari McCraken, county deputy administrative officer, said the financial reviews were not formal audits and did not include the majority of PIC’s funding that came from the feds. A separate audit by another entity is looking into where that money went.

Houser told the supervisors that the county audit did not reveal any criminal activities, but had problems that were more the result of “sloppy bookkeeping.”

Revenues, he said, did not cover operating costs. As one example, according to a document in the supervisors’ agenda, PIC did not charge the county to use the Southside Community Center as a voting precinct.

On the other hand, PIC overcharged the county by $118,000 for janitorial services and supplies from 2005 to 2011.

PIC also failed to create and maintain financial reserves, as its contract with the county called for.

Supervisor Bill Connelly cut to the chase.

“A question people have asked: Was there any embezzlement of funding?”

Houser assured him not.

“There was no indication that we found that any monies were improperly removed or improperly used by PIC,” he said.

At that point Supervisor Kim Yamaguchi chimed in.

“That doesn’t work for me,” he said. “When you run out of money halfway through the fiscal year, where did the money go? So I’m assuming that the next audit that’s being independently accomplished by the federal side may give us some light in that regard.”

McCraken told Yamaguchi that she had been in touch with Stuart Knox, who is familiar with the other audit. Knox is the director of Northern Rural Training and Employment Consortium (NoRTEC), an eight-county association through which the federal funding was dispersed.

She said that audit, by an agency called Tenney & Co., is ongoing.

“They have not found any wrongdoing,” she said. “It just looks like the agency spent all of its allocation too fast. It over-obligated early in the year and ran out of money.”

Yamaguchi said the board must use what happened as a learning experience.

“We can’t correct PIC; it’s done,” he said. “So going forward we should have a requirement that it is mandatory that you have reserves and replacement funds if you want to do business with Butte County. You have a threshold of accountability to hold to. And I think on our part maybe we slipped in regards to not checking.”

Citing health problems, PIC’s longtime director, Bill Finley, stepped down in February, just as PIC’s demise was announced. He has not been available for comment.

His replacement was John Peace, who was president of the 19-member PIC board of directors. Peace is married to Fran Peace, Chico district office manager for Rep. Wally Herger. Part of the reason cited for PIC’s decision to dissolve was fear that federal funding was being slashed.

That fear was based on the Republican-controlled House of Representatives’ federal budget proposal that called for cutting federal workforce revenues like those funding PIC. Herger voted for those cuts.

Small world.