Paz Dominguez. | File photo/screenshot.


A letter arrived at the County Administrative Office on Wednesday. The signatories all go by John or Jane Doe, though they identify themselves as county employees, including two department heads, two deputy directors, a division director and an unspecified number of other staffers. 

These anonymous employees say they’ve been organizing in their off hours and are writing in hopes that county officials “understand the severe and critical nature of the growing and looming fiscal crisis which threatens the county organization.”

It goes on to say that the county’s inability to resolve its own fiscal problems “threaten[s] the organization, its employees and Humboldt County residents as a whole.” These problems, the letter asserts, “are a result of failures and financial missteps caused by the County Auditor Controller, Karen Paz Dominguez, as well as tolerance of her behaviors by the Board [of Supervisors].”

The signatories say they’re exploring a variety of options, including filing “further” grievances, organizing a protest or even taking legal action against the county, the Board of Supervisors or elected officials. 

“To avoid retribution or undue attention we hereby execute this document in anonymity and will make our identities known at the proper time,” the letter reads. 

Real cloak-and-dagger stuff, though after the letter was sent the Outpost briefly spoke with one of the signatories, a division director who verified the letter’s authenticity. You can read the full thing here.

In the absence of names and more specifics, it’s hard to know just how seriously to take this letter, though the county appears to be taking it seriously. The agenda for next week’s Board of Supervisors meeting indicates that they will discuss it in closed session, and in an unusual move, a link to the letter was posted in the agenda.

Regardless, it’s no secret that Paz Dominguez, the county’s first-term auditor-controller, has found herself at the center of numerous controversies and inter-departmental conflicts during — and even before — her tenure in office.

Lately, the turmoil seems to be picking up steam and there are signs that matters could be coming to a head. At a recent meeting of the First 5 Humboldt Commission, two county supervisors voiced dismay over systemic problems with the Auditor-Controller’s Office, and former employees have begun speaking out about their grievances with Paz Dominguez personally.

The Outpost learned just this morning that the executive committee of the county’s Workforce Development Board yesterday voted unanimously, with one abstention, to pursue a vote of “no confidence” against Paz Dominguez at its next meeting, scheduled for Nov. 19.

Scott Adair, the county’s director of economic development, says in an email to county officials that this dramatic move was made after hearing from the State Employment Development Division regarding the county’s Fiscal Year 2019/20 single audit, a comprehensive year-end financial report that was due more than six months ago. 

“As you are likely already aware,” Adair writes in his email, “completion of the County’s Single Audit is required in order for the County to qualify for (and receive) state and federal workforce WIOA [Workforce Innovation and Opportunity Act] funding.”

That funding is now in jeopardy as a direct result of the county’s failure to complete the Single Audit, according to Adair. The state could issue a compliance finding, potentially triggering a program freeze and claw-back of existing funds. “Such an outcome would put the County’s current workforce programs, vendors, and program beneficiaries at jeopardy,” Adair writes.

Meanwhile, county departments say they’ve already lost hundreds of thousands of dollars in state and federal revenues as a result of the Auditor-Controller’s Office’s delays in closing the books over the last two fiscal years. Outside agencies and county employees also say they’ve had trouble even getting in touch with Paz Dominguez. Emails and phone calls go unreturned for weeks and months at a time. 

Connie Beck, director of the county’s Department of Health and Human Services (DHHS), sent an email Wednesday to the Board of Supervisors, County Administrative Officer Elishia Hayes and County Counsel Jefferson Billingsley. “DHHS continues to be impacted by the inability to get any information on the work that is required from the Auditor or that office,” Beck writes. “The financial issues continue to get worse, more federal and state programs and funds are in jeopardy, and staff are feeling quite hopeless.”

With her email, Beck forwarded her department’s latest attempt to reach Paz Dominguez — a letter sent to her and the county’s Audit Committee from Trevis Green, DHHS’s deputy director of finance.

“Departments need to know the status of the year end to effectively plan,” Green writes. “Why are you continuing to not communicate with all of us on where you are in your process and when you will finish?”

He goes on to say that the Public Health division of DHHS was unable to claim more than $350,000 as a result of late fiscal reporting, and another state allocation was cut by nearly $60,000 partly due to such delays.

“The fiscal year-end process only seems to be getting worse not better as time goes on,” Green writes, noting that millions more hangs in the balance with new fiscal reporting deadlines looming. “DHHS is extremely concerned that the way things are going, the department will lose the ability to claim even more reimbursements, see more allocation cuts and suffer through even more cash flow issues as we move forward.”

Reached by the Outpost, Green elaborated on the cash flow issues, saying the department’s year-end balances from Fiscal Year 2019/20 have yet to be rolled forward into the 2020/21, even though that year ended more than three months ago. 

“That’s made it so our Public Health Department cannot accurately determine how much funding we have,” which is interfering with plans to expand the county’s public health laboratory, Green said. “Because we can’t look at the county’s accounting system and know with accuracy what our fund balances are, we can’t adequately tell [developers] how much money we have for this expansion.” 

Other departments are being affected, too. The Public Works Department, for example, has been compiling a spreadsheet of lost revenues. It includes more than $657,000 in overhead costs that the county can no longer claim from CalTrans “because the single audit is not done and the projects are now closed,” according to Deputy County Administrative Officer Sean Quincey. (Paz Dominguez disputes this, as you’ll read below.)

The previous year’s audit remains a point of contention, too. Paz Dominguez has assured officials that the books are closed on Fiscal Year 2019/20, but Quincey says, “It appears there may still be more work that needs to be done: between August and early October, more than $100M in additional transactions [from that year] were posted to the General Ledger.”

He added, “Getting the audit done is critically important to the county and other agencies in Humboldt, and we stand ready to help in any way we can.”

Professional accounting firm CliftonLarsonAllen (CLA) was engaged by the county to conduct last year’s single audit, but in September the firm disengaged from the process citing “difficulties” including blown deadlines, a failure to submit necessary account balances and a lack of communication from the Auditor-Controller’s Office. 

“We have reached out to the County through email and telephone and by submitting our requests and selections through the portal established for the Auditor-Controller’s Office,” the firm said in a letter to the county. “As of September 10, 2021, we still have not been able to formalize a plan with the County for completing the audit.”

The firm said it will come back to finish work on the overdue audit in early February, assuming the county has submitted the necessary information by then.

When Paz Dominguez first took office in 2018, her department was allocated 11 full-time employee positions, which she argued was woefully inadequate. She has since has lobbied successfully for extra help. As of the current fiscal year, the Auditor-Controller’s Office is allocated 19 full-time positions, an increase of 73 percent.

Last month, employees with outside accounting firm MGO performed about 295 hours of work for the Auditor-Controller’s Office, according to the County Administrative Office. 

However, short-staffing problems persist. The Auditor Controller’s Office currently has nine vacancies, some due to fairly recent departures. For example, former assistant payroll services manager Kara Fales left in March, and in a recent interview she said she quit after 14 years with the county because of disputes with Paz Dominguez, whom she described as controlling and vindictive.

“I couldn’t do it anymore. I just couldn’t do it anymore,” Fales said. “And I literally feel like I ran away. Even the last day of my 14 years felt like a blur.”

Fales said the entire payroll staff has quit except Payroll Services Manager Katherine Lourenzo, who is out on sick leave. Reached by the Outpost, Lourenzo said she’s out on extended stress leave because of “the toxic workplace that Karen has created.”

Lisa Dugan, the county’s former director of child support services, said she, too, left county employment earlier than she’d planned, and constant fights with Paz Dominguez were part of the reason.

“It’s horrible, I have to tell you,” she said. “The county is being torn apart and it makes me sad.”

Torn apart by the auditor-controller? 

“It hugely has to do with that office,” she responded. Dugan said she is aligned with Paz Dominguez’s progressive politics and was rooting for her to succeed but quickly grew frustrated with her micromanaging of details at the expense of government functions — “seeing the trees but not the forest, paying attention to minutia and not understanding the big picture.”


Another example of the building frustration: At a commission meeting of First 5 Humboldt last Friday, Executive Director Mary Ann Hansen and her fellow commissioners gathered via Zoom to discuss an urgent issue. The organization’s own annual audit was due with the State Controller’s Office that very day, but Hansen said they’d been unable to complete it due to the county’s late reporting.

She explained that her organization, an independent government entity supporting young child development with cigarette tax dollars, never received beginning balances for Fiscal Year 2020/21, and so all of its ending balances were incorrect.

“We have been requesting a response from the Auditor-Controller for a couple months and haven’t gotten any answer until just yesterday, which does not leave our independent auditor any time to complete the audit,” Hansen said. She added that she didn’t get a reply to emails on the matter until she send one that cc’d county counsel and supervisors.

She had reached out to the State Controller’s Office to ask for a deadline extension but was clearly distressed about missing the reporting deadline. 

“Never in our 20 years have we failed to meet that fiscal, fiduciary requirement until now,” she said, later adding, “As a caretaker agency administering taxpayer funds, this is highly, highly frustrating that we can’t meet that basic public trust.”

Humboldt County Supervisor Michelle Bushnell is the board appointee to the First 5 Commission, and fellow Supervisor Virginia Bass is an alternate. Both were present at Friday’s meeting.

“This is a bigger issue that‘s endemic to our auditor’s office,” Bass said. She noted that some people don’t believe the issues in that office are as bad as people say. “This is a real life example of how people’s lives can be turned upside down,” she said.

Bushnell added, “On behalf of the county, I’m extremely sorry this added stress has been added to your plate.” She apologized to Hansen — again, on behalf of the county — for the lack of communication.

Bass, who is a member of the county’s Audit Committee, said the matter could potentially be addressed at the next meeting, though they’ve had trouble scheduling one.

“We’ve planned many, but every time [Paz Dominguez] says she’s not available,” Bass said. “We’ve had a hard time getting the auditor there. I think we can’t wait very much longer.”

Reached by phone after the meeting, Hansen was still upset. 

“It’s shocking to me, it’s just shocking that we don’t have our basic account balances for the year that ended 16 months ago,” she said. “I can’t do my job when [Paz Dominguez] won’t respond to emails or post how much money we have in the bank, for crying out loud. How is it responsible for us to spend money when it looks like we don’t have any money in our accounts?”

On Monday, Hansen updated us via email, saying Paz Dominguez was working to reconcile the issues in the county fund where First 5 moneys reside and “looking at options … to provide the information requested.” She said Paz Dominguez anticipates being able to do so by the end of the week.

The Outpost reached out to Paz Dominguez on Monday and asked for an interview. She responded via text, saying she was “knee-deep in payroll” until at least Thursday and suggested we talk Friday. (The county’s payroll function, as some readers may remember, was moved out of the Auditor-Controller’s Office and into Human Resources about three years ago, shortly after Paz Dominguez was elected, but in August the county agreed to move it back despite serious concerns voiced by employees.)

We wound up emailing a list of questions to Paz Dominguez, and late Friday morning she sent back responses to some, but not all, questions along with attachments containing supporting documents.

Regarding the First 5 situation, Paz Dominguez said she was surprised to hear about Hansen’s comments at last week’s meeting “as it is our experience that we have provided responses as soon as we have been able to and have received expressions of gratitude in return.”

She forwarded a number of email exchanges between her office and First 5 Humboldt staff, dating back to July 2019. All the exchanges were friendly, though most were unrelated to First 5’s audit. Those that were related are from late last week, as Hansen attested.

Paz Dominguez added that she and her team value the work done by First 5, and she is personally grateful for the agency’s help when she was a new mother. She said she’ll try to attend the agency’s next meeting to answer questions.

Regarding other county departments’ reports of lost revenues caused by delays in her office, Paz Dominguez said such statements are merely “unsubstantiated claims,” and she asked the Outpost to send any proof or evidence of their veracity to her so she can address it.

“It is a disservice to the public I/we serve to continue to misinform with false claims of lost funds,” she said. “If departments are choosing to not claim known expenditures for reimbursements, then that is a separate concerning issue that should be addressed by the Board of Supervisors.”

Regarding allegations that she is overly focused on details, missing the forest for the trees, Paz Dominguez said the purpose of the Auditor-Controller’s Office is to protect taxpayer dollars. “It is because of our diligent attention to detail that we are able to identify overpayments” and other errors, she said.

“We will continue tending to the trees and pulling out weeds in order for the forest to thrive,” she added. “I believe we all have a different function to serve in this County organization and ours as accountants and auditors is to make sure we are all complying with policies put in place to protect public funds.”

Paz Dominguez’s responses included a lengthy defense of her team. She said she’s tremendously proud of the work they’ve done in the face of recent challenges and limited support.

“We continue to do the best we can as fast as we can with limited resources and can take pride in the improvements we’ve made in automation and increased efficiency,” she wrote. “… We are extremely aware of the need for all departments, partner agencies, and vendors to get paid timely and we are proud to report that we are caught up to our standard 2-week processing time with invoices submitted to our office.”

Getting necessary funding to local programs is her staff’s “highest priority,” she says, vowing, “we will continue to do our best!”

She adds: “We also hope that the County’s current endeavor to improve our ‘work culture’ will be successful to reduce the current dysfunction and miscommunication present within this organization. It took a team many years to get here and it will take a team to get us to a better place.”

After learning about the Workforce Development Board’s upcoming “no confidence” vote via a forwarded copy of Adair’s email, we asked Paz Dominguez to respond. We’ve posted her response in full below:

Thank you so much for sending this over and giving me a chance to address it. I have not yet learned of this issue from the Workforce Development Board, Economic Development, the CAO, or Chair Bass nor has this item been agendized for the public so I hope you’ll forgive this brief response. 

I will be happy to attend the WDB meeting on 11/19 should they choose to send me an invite.

The 19/20 audit is currently in the hands of our external auditors. The A-C Office has provided everything it has available to provide and it is my understanding that the remaining inquiries were already addressed by the respective departments (Aviation, Planning & Building, and DHHS). Our County was delayed in closing 19/20 due to several factors (delays in departments, covid, staff turnover, etc). Those factors continue to exist and the progress we’ve made as a County is not the progress we all would have hoped to have made. However, there has not been one day that work has not been done to continue making progress.

State agencies are aware of the situation experienced in our County and have expressed their willingness to help. Some (like the agency working with Planning & Building) have said they will accept a statement from the County describing when the audit will be complete rather than penalizing the County by withholding any funds for not having a published audit. Our external auditors have also continued to work diligently on our audit as well as their other numerous responsibilities. The 19/20 audit will be published by our external auditors within the next three months (I say three months generously as I don’t anticipate it would take them that long and I’m being considerate of the upcoming holiday season).

It is unfortunate that the challenges we are all facing is impacting processes but it is also due time that we recognize, as a County, that these are not normal times, things are not how they used to be nor will they likely ever be again, and continuing to scapegoat individuals for things outside of their control will not make anything better. I believe that we are all doing the best we can considering the limited resources available. From my part, I am committed to continue working every day to support the A-C team and the community we serve.

Thank you,

Karen Paz Domínguez


An addendum: In the midst of our email exchanges with Paz Dominguez today, a DHHS administrative analyst named Mychal Evenson, who previously served on the county’s Audit Committee, announced his intention to challenge Karen Paz-Dominguez for the Auditor-Controller’s office next year.