An independent auditor will dig into the Tuolumne County Economic Development Authority’s finances and management practices, the agency’s Governing Board decided at a special public meeting on Monday night.

The board voted 7-0 in favor of retaining the services of MGO — a firm that annually audits the county’s books — to handle the audits of the TCEDA that were recommended in June by the Tuolumne County Civil Grand Jury.

Completing both audits is estimated to cost a combined $41,250, which will come out of the TCEDA’s $460,000 annual budget that’s funded 77 percent by the county and 23 percent by the City of Sonora.

Prior to voting in favor of the audits, TCEDA Director Jim Gianelli addressed recent talks by the Sonora City Council about potentially opting to withdraw from the joint-powers agreement that was approved in 2008.

“If we do an audit for TCEDA as a JPA, and it’s no longer a JPA, then the audit was for nothing and we’ve wasted a lot of taxpayer money,” he said. “I think it’s presumptuous, especially after watching that last city council meeting on public television, that the city is totally on board here.”

Sonora Mayor Jim Garaventa, who joined the TCEDA board in August, and City Administrator Tim Miller took issue with Gianelli’s suggestion as forcing the council into making a decision about whether to stay without being able to take the results of the audits into consideration.

Garaventa said much of what he decides will be contingent on the outcome of the audits, while Miller said he felt that asking for a commitment prior to their completion put the council in an unfair position.

The California Association for Local Economic Development, or CALED, was also approved by the board to compile information on best practices employed by similar agencies and provide a list of three recommended agencies for comparison.

County Administrator Craig Pedro refuted a story in The Union Democrat on Aug. 25 that reported he had suggested CALED to serve as the auditor for the management audit. The article also examined close ties between Cope and the statewide agency.

“That’s never been the proposal, ever,” Pedro said of CALED serving as auditor, adding that the idea was always for the information gathered by CALED to supplement an audit by an independent firm.

The audits stem from the annual report released by this year’s grand jury that found the TCEDA lacked effective oversight and didn’t follow the best practices for public entities that utilize taxpayer money.

While finalizing responses to the report at the meeting on Monday night some of the directors said they were unaware of how the TCEDA’s policies differ from the rest of county government prior to seeing the findings in the report.

“It was the grand jury who revealed that to us,” said TCEDA Director Barry Hillman, who said he’s served on the board for the past eight years. “We’re coming from the outside trying to understand what the difference is between the standard county rules and what the TCEDA rules are.”

Of particular concern were the differences in the policies regarding TCEDA Executive Director Larry Cope’s travel, meal expenses and vacation time, compared to other county employees.

The jury found that Cope was allowed to spend more than a month in England last year where he claimed four vacation days, cash-out 720 hours in unused vacation time, and purchased meals for TCEDA board members and other government officials with public funds intended for entertaining prospective business clients.

Debi Bautista, auditor-controller of the county, is assigned to review the annual expenses of the TCEDA to make sure they conform to the agency’s policies and took issue with a line in one of the proposed responses that stated:

“The Board also had a misunderstanding of the of the role of the Auditor in reviewing expenses. The Board mistakenly believed the County infrastructure had more of a role in the operational oversight, including budget expenditures. Now that this mistaken belief has been clarified, the Board will make efforts to cure the deficiencies.”

Bautista said the line made it sound as though her office wasn’t doing its job, when she said they have always reviewed the expenditures according to TCEDA policy.

For one, the TCEDA’s policy on expenses differs from the county’s in that Cope is not given a specific allowance on meals. His contract also doesn’t require him to take at least 80 hours of vacation per year before being eligible to request a cash-out, which the board’s responses indicated will be changed.

“The fact is the TCEDA has a lot of rules that are different from county rules,” Bautista said to the board.

Garaventa asked about whether Bautista’s office reviewed the expenditures made by the Economic Prosperity Council of Tuolumne County, the TCEDA’s nonprofit arm that’s overseen by the same board members.

Bautista said she has never reviewed any of the nonprofit’s finances because it’s independent from the TCEDA and county, so any audit of that organization would be separate from those approved Monday night.

“The county of Tuolumne, the auditor’s office, the treasurer’s office has nothing to do with the Economic Prosperity Council,” she said. “I have never seen their books, I have never seen anything that was never brought into the county. Whether it was on purpose or not, I don’t know.”

The board’s final responses to the jury’s report, which were unanimously approved Monday night, are more detailed and pointed than those that were originally proposed at a special meeting on Aug. 8.

Three of the findings that were originally proposed to be punted back to the grand jury for further clarification now have lengthy responses in which the board acknowledges that some its policies are “loose” and need to be revised.

Among the board’s suggestions is for Cope to work with Bautista and other county staff on a policy requiring him to file quarterly reports on all marketing activities, including meals.

Dave Thoeny, who said he’s served on the TCEDA board for four years, said he was under the impression initially that the board’s role was mainly to set policy as opposed to vetting Cope’s expenses.

“We’ve never been presented with Larry’s individual expenses at that level to understand if each and every one was legitimate or appropriate given the policy,” Thoeny said. “This whole idea that we knew each time Larry went out to lunch and who he had lunch with, that was never presented to us as a board.”

Eight people spoke before the board approved the responses and each explained how Cope helped them with a business endeavor.

The board opted to table a discussion about the development of a strategic planning session at the end of the meeting that spanned more than two hours.

Contact Alex MacLean at or (209) 588-4530.