Orange County supervisors acted Tuesday to grant themselves control over the county’s financial checks and balances – a move encouraged by two former employees who allege wrongdoing and opposed by people concerned the supervisors were dismantling independent oversight.

The supervisors’ most immediate action was to take control of the county’s internal auditors, who are supposed to function as watchdogs against fraud in county departments and currently report to the county’s independently-elected auditor-controller, Eric Woolery.

The 14 budgeted staff of the Internal Audit Division will be transferred from Woolery’s office and will start reporting to the supervisors this Sunday, July 1, according to the supervisors’ action. The move was approved on a 4-1 vote, with Supervisor Todd Spitzer opposing.

Additionally, the supervisors moved forward with efforts to take over 287 accounting and financial control staff positions from Woolery’s office. Those employees could be transferred this fall, after supervisors receive an analysis about it and decide whether to proceed.

At Supervisor Shawn Nelson’s request, the supervisors also effectively cut funding for twelve employees in Woolery’s office, totaling about $1 million in the upcoming fiscal year.

Woolery won re-election last week with 74 percent of the vote. But he has repeatedly drawn the ire of Nelson and Supervisor Andrew Do since he took office in early 2015, including Woolery’s challenging the legality of pension payments to Nelson and supervisors’ taxpayer funded mailers to voters that prominently feature the supervisors.

Nelson and Do have led the ongoing moves to take over 301 job positions from Woolery’s office, which is two-thirds of Woolery’s staff.

Supervisors’ Chairman Andrew Do (center) repeatedly clashed with Supervisor Todd Spitzer (right, back to camera) during Credit: JULIE LEOPO, Voice of OC Contributing Photographer

To justify the takeover, Nelson and Do have variously cited the size of Woolery’s staff, claims that five of Woolery’s employees aren’t doing office work, and allegations Woolery exaggerated his achievements in campaigning for the recent election.

“We had a good system,” said Supervisor Shawn Nelson, referring to when the internal auditors reported to supervisors, before a 2015 switch to Woolery’s office under pressure from the state Legislature.

“It was independent, and it was transparent and it worked for a very long time, very well,” Nelson said, adding it’s supposed to be “just dry, unimpressive, but competent audit work.”

Opponents said the moves against Woolery’s office – along with a proposed move involving the county’s Office of Independent Review – would strip away independent oversight over the supervisors and law enforcement.

“Contained within this item is a significant escalation in a long history of systemically dismantling transparency and accountability mechanisms within Orange County, while consolidating power within the board,” said Sylvia Schwartz, a Costa Mesa resident who spoke during public comments.

“We cannot just have have people who report to the positions that they are trying to hold accountable. That’s not how true transparency and accountability works,” said Cynthia Valencia, a staff member with the American Civil Liberties Union of Southern California.

The ACLU sent a letter to the supervisors Monday alleging the move against Woolery’s office is illegal.

The auditor takeover was one of several actions Tuesday that prompted criticism of the supervisors.

Woolery’s office was the only county department, out of the 23-plus departments, in which supervisors cut funding in the new budget year against the recommendation of county CEO Frank Kim.

As part of the new county budget, supervisors authorized a $24 million increase in discretionary funding to the Sheriff’s Department to maintain existing service levels, as well as increases for expanded services.

In another oversight item, the supervisors had planned on cutting all funding for the county’s law enforcement review agency, the Office of Independent Review, just weeks after hiring a new director of the office supervisors had left vacant for two years.

But the supervisors ended up funding the office Tuesday, with the caveat that it focus on a new work plan from Do that focuses on homelessness instead of county law enforcement conduct.

Do handed a copy of the work plan to the other supervisors during the meeting, who then approved it without providing a copy to the public, despite state law requiring that meeting documents distributed to most supervisors during the meeting “shall be made available for public inspection at the meeting.”

When a Voice of OC reporter asked for a copy of the approved work plan after the meeting, a county lawyer provided one copy and the county spokeswoman went upstairs to make more copies and provided them to reporters.

Most of the discussion at Tuesday’s meeting centered on the supervisors’ attempted takeover of most of Woolery’s staff. The moves came after years of tension between him and the supervisors.

Shortly after he took office in 2015, Woolery challenged a retroactive $247,000 pension payment for Nelson, who publicly had refused to take a county government pension and then succeeded in getting a ballot measure passed that he later said required him to receive a pension.

In 2016, Woolery temporarily blocked taxpayer payments on several mass mailers from Do and Supervisor Lisa Bartlett in the weeks before the June primary election. The mailers prominently featured the supervisors’ names as Do ran in a tight re-election and Bartlett sought a seat on the county Republican Party’s central committee.

Woolery said at the time he was concerned the mailers may violate state laws limiting how elected officials can display their names on publicly-funded mail.

One glimpse of the tension came in November, when Do said Woolery improperly thought he could decide what the supervisors can and can’t do.

“We have…very weird dynamics going on, where we have an auditor-controller that feels like he actually oversees this Board of Supervisors. Okay?” Do said at a supervisors’ meeting in November. “He feels like he’s the one who gets to review, actually, the legality of everything we do.”

In January, the former internal audit director in Woolery’s office filed a lawsuit alleging Woolery misused taxpayer money by having government employees drive his children to and from school and other activities during work hours and babysit them at the office.

Woolery declined to comment about the lawsuit’s allegations at the time, saying he couldn’t speak about ongoing litigation, particularly when a person leaves county employment.

Earlier this month, when Nelson proposed the takeover of Woolery’s office’s functions, he said he was concerned about “the size” of Woolery’s staff and an unspecified “suspicion” that employees aren’t performing the office’s core duties.

“There’s 448 people working there right now. And I’m just not convinced that 448’s the right number. I don’t know,” Nelson said. “I have a lot of suspicion…that there’s a lot of folks that work there that do things that don’t involve auditing and writing checks.”

Nelson didn’t provide any further details at the time.

At Tuesday’s board meeting, two former auditor-controller employees – Claire Moynihan, a retired director of central accounting operations, and Toni Smart, the former internal audit director who sued Woolery and unsuccessfully ran against him in the June 5 primary– alleged misconduct by Woolery.

Moynihan said Woolery created a team of government employees to promote himself, officially called the “Community and Government Relations Unit.”

“They call themselves Team Fluff,” Moynihan said during public comments.

“Staffed with close friends and political operatives with no accounting or auditing background. His entourage of cronies have been given high paying jobs costing $700,000 a year [in total], and granted special privileges, allowed to work from home, and work part-time for full-time pay,” she said, alleging it was an “illegal gift of public funds.”

The largest move by supervisors, in terms of scale, is the ongoing effort by Nelson and other supervisors to take over 287 financial control and accounting staff from Woolery’s office. These employees are ensuring county payments are properly processed and flagging potential fraud and misallocation of funds.

When he first publicly proposed the takeover earlier this month, Nelson wanted the hundreds of finance employees transferred to supervisors’ control as soon as possible.

At the time, county CEO Frank Kim said he needed more than two weeks to figure out how to absorb hundreds of employees into his office, but Nelson said he should just do it and sort out remaining issues later.

On Tuesday, Kim said it will take months to prepare the analysis needed for supervisors to take over the positions. State law requires that Woolery’s office conduct specific types of audits and other functions, so the analysis will need to examine each of the 287 job duties, and officials will have to meet and confer with employee union representatives, Kim said.

The supervisors directed the CEO’s staff to conduct an analysis of all 287 positions and how the supervisors could take them over, with Kim estimating he could bring it back to the supervisors by the end of September if Woolery cooperates with the review.

At that point, the supervisors would vote on taking over the jobs. The takeover effort received yes votes from three supervisors – Nelson, Do, and Bartlett – which is a narrow majority of the board. After the vote, Bartlett said she wanted to wait for the analysis before deciding on the takeover.

Woolery sat in the audience as the supervisors moved to take over most of his office, but did not speak at the meeting. Seated next to Woolery was Mark Rosen, an attorney who has represented Woolery on previous issues.

Woolery and Rosen seated together at the meeting. Credit: JULIE LEOPO, Voice of OC Contributing Photographer

“We may end up in litigation,” Spitzer said at Tuesday’s meeting, looking in the direction of Woolery and Rosen.

Spitzer also said he expected an effort in Sacramento to put the auditors back under Woolery’s office, pointing to a 2015 bill by Assemblyman Tom Daly (D-Anaheim) to require that.

“I expect there will a backlash [against] the board for its actions today,” Spitzer said, referring to state legislators.

The supervisors’ moves Tuesday came as part of their final approval of the county’s $6.5 billion budget for the 2018-19 fiscal year, which starts July 1.

Tuesday evening, after the supervisors voted to take over the auditors, the county issued a news release titled, “Board of Supervisors Votes to Ensure Accountability and Transparency in Auditor-Controller’s Office.”

“It’s not a best practice to have Auditor-Controller ensuring its own transparency,” Nelson said in the release, which was published as a standalone article by at least two news websites.

“I believe we did a great service to the citizens of Orange County by returning the Internal Audit Department under direct control of the Board of Supervisors.”

Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at ngerda@voiceofoc.org.

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