Deputy County Manager and Finance Director Marissa Chavez said Santa Cruz County is implementing new financial controls and working closely with auditors and consultants after an embezzlement by the county's former treasurer.

"It's the embezzlement by the former treasurer. That's been a situation that has really put on a really, a dark cloud over us," Chavez said. She said the finance office is recording the loss and moving to implement policies and procedures intended to prevent a repeat.

The department described its audit and year-end work in detail. Chavez said the county closed its fiscal year on June 30 and that staff worked late into the night to complete year-end reconciliations. "We were here probably a little bit past almost close to midnight, trying to make sure that everything happens and everything is, in a manner that it closes as best according to accounting principles," she said.

Assistant Finance Director Maria Martinez described several steps the office has taken to strengthen internal controls, including new policies, closer work with external auditors and financial consultants, and clearer separation of duties in the payroll system. "That's really called a segregation of duties," Martinez said, explaining that payroll access and rate-setting are handled by human resources and that finance only processes what HR enters.

Chavez and Martinez also summarized how the county manages funds and the budgeting calendar. Chavez said the county manages about 226 funds, and that the general fund includes roughly 28 departments. She described the fiscal year as July 1 through June 30 and said the county is preparing its candidate budget presentation for the board on July 8. The county will post the budget for public review and comment and is targeting Aug. 5 for final board approval.

Both leaders said they are focusing on transparency and accountability as the county moves forward. Chavez said staff have prioritized documenting and reporting the loss and that the department is training staff and revising procedures across departments. Martinez said the work has required long hours from finance staff: "We're here about 10 to 12 hours a day. We're here working on the weekends."

The county did not specify the dollar amount of the loss or the current status of any criminal or civil proceedings related to the former treasurer; Chavez said only that the loss is being recorded and that the department is moving forward with internal reforms.

The finance office encouraged the public to review the candidate budget after the July 8 presentation and to provide comment during the public-review window before the Aug. 5 final-board action.