Budget Fiasco
Sequoia Healthcare District
(see www.CAPP.info)
On June 13,
2006, the Sequoia
Healthcare District held a delayed meeting of its' Board of Directors.
See agenda: http://www.sequoiahealthcaredistrict.com/boardmeetings-2006-0613-agenda.html
This meeting was rescheduled from the regular meeting date of June 6, because of the
unavailability of as yet unnamed Directors. This delayed meeting convened with only three
Directors present. Directors Oblak and
MacNaughton were absent. As one of those
present, I was aware of Policy and Procedures adopted at a
special meeting on April 19, 2005. Discussions at that special meeting made clear
that in a situation with only three of five Directors present, 3 votes were required
to take action. The requirement for a Board majority (3) is contained in POLICY NO. 10.22.
It was discussed at that meeting that under those circumstances any one Director would
have a veto power.
I exercised that veto power by casting a NO vote on several items. Most importantly was the vote on 6.d. Adopt Proposed Budget for Fiscal Year Ending June 30, 2007. Allowing two members of a five member board to approve the District budget is unacceptable. Absent the 3 vote requirement, I would have been obligated to leave the meeting. Without a quorum, my foot veto would prevail.
In actuality, the District ignored the Policy and Procedures and acted as though the budget and other items which I "vetoed", actually passed. See my corrections to the initially posted "draft"minutes of that meeting. Amended/adopted minutes for the June 13 meeting are available at: http://www.sequoiahealthcaredistrict.com/boardmeetings-20060613-minutes.pdf
Additionally, the District CEO caused a press release to be issued, on the day following the meeting, announcing an increase in the Sequoia Hospital Foundation Grant from $1,000,000 to $1,500,000. This came to the attention of Board Members when the District CEO sent an e-mail on 7 July, 2006 entitled Good News to Share. On 8 July I sent the following e-mail to President Kane:
Preident(sic)
Kane, it would appear that the subject press release was issued
prematurely in anticipation of budget approval (Action Item 6d.) at the June
13, 2006 meeting. Unfortunately, budget approval failed due to lack of a
Board majority. I trust that you will issue a press release to correct the
misinformation.
Additionally, since the District is now operating without a budget, Board
Policy No. 18 restricts contracts over $5,000 without Board approval.
Jack Hickey, Director
On July 12, I received the following:
Jack,
The release was removed several days ago from the website. There will not
be a release to redact any information.
Stephani Scott, CEO
On August 9,
2006, the
Sequoia Healthcare District held a delayed meeting of its' Board of Directors. Director Faro was absent.
See agenda: http://www.sequoiahealthcaredistrict.com/boardmeetings-2006-0809-agenda.html
This meeting was rescheduled from the regular meeting date of August 2. President
Kane informed me that "Regarding the August meeting, I spoke with Dr.
Oblak's Assistant, she informed me that Dr. Oblak is out of the Country and will be returning Friday, August 4th and asked that the
meeting be changed."
Significantly, on the recommendation of District counsel item 6d: was passed amending the Policy and Procedures to allow less than a majority of the Board to take action. During discussion on the item, I suggested to my fellow Board Members, that should the situation arise in the future, and critical issues such as a budget are involved, ethically, I would be obliged to leave the meeting and deny a quorum.
Regarding the budget and other items from the June 13 meeting which failed to attain a 3 vote Board Majority as required by Policy NO. 10.22, counsel speculated that it was probably illegal for the Board to establish the 3 vote Board Majority requirement. Counsel was directed to provide a basis for such speculation.
On September 20, 2006, the Sequoia Healthcare District held a
special meeting of its' Board of Directors, ostensibly for item 3.b.
Additional Presentation Of San Mateo Medical Center (SMMC) Proposal Continued From August 9, 2006 Meeting: Decision Regarding
Funding Request For Fair Oaks Medical Clinic – Nancy Steiger, CEO, SMMC and Sang-Ick
Chang, M.D., Medical Director and COO, SMMC
See agenda: http://www.sequoiahealthcaredistrict.com/boardmeetings-2006-0920-agenda.html
The meeting started at least 3 minutes early, and the clock in the meeting room was > 4
minutes fast.
The audio tape of this meeting, which was scheduled to begin at 4:30 P.M., will show the following:
1. After Vice
Chair MacNaughton called the
meeting to order, it took exactly 2 minutes to call the roll, postpone public comment,
change the agenda to act on item 3c. Ratification of
Approval of Items Passed With 2-1 Votes at June 13 Board of Directors Meeting – Ms. Greenberg
PASSED
2. Prior to my arrival, and only 3 minutes after the meeting started,
without discussion, the Board approved item 3d. Ratification Of
Increase In CEO Compensation In Accordance With Employment Contract Dated July 1, 2004
Per Government Code Section 53262 – President Kane
PASSED
3. Discussion on Item 3b. was limited, by Vice Chair
MacNaughton, to 1 minute comments because Director Oblak
had to leave at 5 P.M.
PASSED
4. Director Kane, who participated by phone
from Minnesota, departed the meeting at 30.03 minutes after the meeting
began. The meeting adjourned 30.25 minutes after the meeting began.
On September 27, 2006, I notified the District by FAX that a violation of the Brown Act had occurred on September 20, 2006. Given the 3 minute early start, and an accelerated and truncated meeting, one might suspect that this was more than a "Brown Act" violation.