Santa Cruz County treasurer reports accounting adjustments after former-treasurer loss; board holds executive session on potential litigation

Santa Cruz County Board of Supervisors members on June 3 heard the county treasurer report that the treasurer’s office prepared adjusting entries to record an “extraordinary loss” tied to investments handled by the county’s former treasurer, and the board subsequently met in executive session to discuss potential litigation.

The treasurer (Chavez) told the board the office made entries required under generally accepted accounting principles to allocate the loss among affected county entities and to reconcile its financials with the county treasurer’s revised statements. Chavez said the loss is reflected in the cash and investment report and is reflected as a negative cash balance until recoveries are realized. “As funding comes in or we recover, that’s gonna be reflected on this report,” the county manager said during the discussion.

The treasurer read fund-by-fund figures in the regular-session report. He reported a general fund cash balance of $23,103,015 (investment amount $16,214,761); a road fund overall balance of $76,772,722 (investment amount $5,012,741); a flood control district balance of $3,252,760 (investment $302,095); and a jail district overall balance of $7,359,326 (investment amount $5,299,271). He stated total cash across all funds of $61,954,232 and an investment amount of $28,904,805 for the period covered by the report.

After the public portions of the meeting the board made a formal motion and voted to enter executive session “pursuant to Arizona Revised Statutes §38-431.03(A)(3)” for discussion and consultation with counsel regarding potential litigation involving financial institutions arising from the embezzlement. The motion carried. The board then reconvened in open session and adjourned; no further public details were disclosed in open session about the substance of the executive-session discussion.

No formal policy change or new budget appropriation was announced in open session. Chavez said the treasurer’s office will continue to update public reports as recoveries or funding arrive; the manager reiterated those updates would appear on future cash-and-investment reports.

The board’s actions: the motion to enter executive session was moved, seconded and approved in open session. The meeting minutes show the executive session was held and later adjourned back to general session; no vote record was provided in public minutes for any litigation action within the executive session.