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BCC Minutes 09/15/2009 Closed Session (#12C-Brock) MINUTES Brock September 15 , 2009 • • M1� IN THE CIRCUIT COURT OF THE TWENTIETH JUDICAL CIRCUIT IN AND MR COLLIER COUNTY,FLORIDA r' CIVIL ACTION ro DWIGHT E.BROCK,CLERK OF CIRCUIT =-11i COURT OF COLLIER COMFY,FLORIDA, Plaintiff co V Case No.04941-CA Consolidated with Case Na:05-953-CA,and Case No.05-1506-CA COLLIER COUNTY,FLORIDA,a political subdivision of the State of Florida,BOARD OF COUNTY COMMISSIONERS OF COWER COUNTY,FLORIDA,AS EX-OFFICIO THE GOVERNING BOARD OF THE OCHOPEE AREA FIRE CONTROL AND EMERGENCY MEDICAL CARE SPECIAL TAXING CD DISTRICT,A/K/A/THE OCHOPEE FIRE DISTRICT,a Municipal Services Taxing Unit cis pursuant to Section 125.0I(1)(g),F.S.; a —an LINDA T.SWISHER so and PAUL W.WILSON, Defendants. " v~ FINAL JUDGMENT IN CONFORMANCE WITH APPELLATE DECISION AND MANDATE THIS MATTER having come before the Court on the Plaintiffs Motion to Conform Judgment to Appellate Decision; the Court having considered the Motion and the mutual agreement of the parties and being otherwise duly apprised in the premises; hereby GRANTS the Plaintiffs Motion. Based upon the Appellate Mandate, and to enforce the mandate as directed by the Second District Court of Appeal, and not to vary It or allow acts at odds with it, it is further ORDERED AND ADJUDGED as follows: 1. The Clerk's Motion for Partial Summary Judgment filed August 1, 2007 and 11 • previously denied by the Trial Court is hereby GRANTED in conformance with and for the reasons set forth in the Opinion of the Second District Court of Appeal in Brock v..Board of County Commissioners of Collier County, dated September 23,2009,found at 21 So.3d 844(Fla. 2ND DCA 2009). 2. Collier Couaty►'s Cross Motion for Summary Judgment as to the Clerk's Declaratory Judgment Count filed August 2, 2007 and previously granted by the Trial Court is hereby DENIED in conformance with and for the reasons set forth in the Opinion of the Second District Court of Appeal in Brock v. Board of County Commissioners of Collier County, dated September 23,2009,found at 21 So.3d 844(Fla.2ND DCA 2009). 3. Collier County's Motion for Summary Judgment as to Case Number 05-953-CA And The Issuance of a Writ In Quo Warranto filed June 11, 2007 and previously granted by the Trial Court is hereby DENIED in part and GRANTED in part, in conformance with and for the reasons set forth in the Opinion of the Second District Court of Appeal in Brock v, Board of County Commissioners of Collier County, dated September 23, 2009, found at 21 So3d 844 (Fla.2ND DCA 2009). Specifically,only the Trial Court's ruling regarding the source of the Clerk's authority to prepare financial statements,and the discretion of the Board of County Commissioners to modify the scope of its delegation of that authority,is upheld. Id.at 846. 4. Collier County's Cross Motion for Summary Judgment On The Undisputed Role of the Clerk of Courts filed August 2,2007(which also incorporated"Collier County's Cross-Motion For Summary Judgment as to the Cleric's Declaratory Relief Count" filed with the court on August 2, 2007) and previously granted by the Trial Court is hereby DENIED in part and GRANTED in part, in conformance with and for the reasons set forth in the Opinion of the Second District Court of Appeal in Brock v. Board of County Commissioners of Collier County, dated September 23,2009, found at 21 So3d 844(Fla.2ND DCA 2009). Specifically,only the Trial Court's ruling regarding the source of the Clerk's authority to prepare financial statements,and the discretion of the Board of County Commissioners to modify the scope of its delegation of that authority,is upheld. Id. 2 • i . • • B1 846. Based upon the foregoing, the Summary Final Judgment Orders referred to herein are modified as noted, and, as modified, are entered as Final Judgments on the claims presented. DONE AND ORDERED this L11.1 day of U a'' ' ,2011. ( 9 . 0 Honorable Michael T.McHugh CIRCUIT COURT JUDGE Conformed Copies to: • 1. Anthony P. Fires, Jr. Esquire Woodward,Fires&Lombardo,PA. 3200 Tamiami Trail N.,Suite 200 Naples,Florida 34103 \I" 1,/ 2. Yale T.Freeman,P.A. `\`t r0 2325 Stanford Court Naples,FL 34112 ✓3. David P. Ackerman, Esq. Ackerman,Link,and Sartory,P.A. 222 Lakeview Ave,Suite 1250—Esperanto West Palm Beach,FL 33401 All Theodore Tripp,Esq. Hahn Loeser&Parks LLP 2532 East First Street Fort Myers,FL 33901 2. Jacqueline Williams Hubbard, Esq. Collier County Attorney's Office 3299 E. Tamiami Trail, Suite 800 Naples,FL 34112 3 • upremce Court of pflortba 1:-...„, :.1.. ... .A. Cf► < No. SC09-2190 BOARD OF COUNTY COMMISSIONERS OF COLLIER CO , FLORIDA,etc., , Petitioner, vs. DWIGHT E. BROCK,etc., Respondent. [November 10,2010] PER CURIAM. We initially accepted jurisdiction to review Brock v.Board of County Commissioners of Collier County,21 So. 3d 844 (Fla. 2d DCA 2009), • granted, 26 So. 3d 581 (Fla. 2010)(table),on the basis that the district court' decision expressly affected a class of constitutional or state officers. After er, full consideration,we have determined that we should exercise our discretio and discharge jurisdiction. Accordingly,this case is dismissed. i It is so ordered. 1 PARIENTE, LEWIS, POLSTON,LABARGA, and PERRY,IL, concur. QUINCE,J., dissents. CANADY,C.J.,recused. I NO MOTION FOR REHEARING WILL BE ALLOWED. Application for Review of the Decision of the District Court of App - —Class of Constitutional Officers Second District- Case No. 2D07-4549 (Collier County) Jacqueline Williams Hubbard,Litigation Section Chief,Office of the ounty Attorney,Naples,Florida, and Christine David Graves of Carlton Fiel P.A., Tallahassee,Florida, for Petitioners David P.Ackerman and Richard J.Brener of Ackerman Link and S .ry,P.A., West Palm Beach,Florida, Anthony P. Piers,Jr. and Steven V. B:oun of Woodward,Fires and Lombardo,P.A.,Naples,Florida,Jon L. Mills ; d Timothy McLendon,Gainesville,Florida,and Larry A.Klein of Holland and 4 .ght,West Palm Beach,Florida, for Respondents David Hallman, President,Yulee,Florida, Virginia Delegal, General 4 .unsel, Tallahassee,Florida,Herbert W.A. Thiele and Patrick T. Kinni,Tall- _ -see, Florida, on behalf of the Florida Association of County Attorneys,In. ; and Fret W. Baggett and M. Hope Keating of Greenberg Traurig,P.A.,Ta_lah: see,on behalf of the Florida Association of Court Clerks, Inc., As Amici Curiae -2- IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA SECOND DISTRICT, POST OFFICE BOX 327, LAKELAND, FL 33802-0327 November 13, 2009 CASE NO.: 2D07.4849 L.T. No.: 040941-CA Dwight E. Brock,Collier v. Board Of County County Clerk Circuit Ct. Commissioners, Et Al. Appellant 1 Petitioner(s), _ Appellee 1 Re pond (s). $ _^ _ _ BY ORDER OF THE COURT: ` D rf Appellee's motion for rehearing is denied. cn T Appellee's motion for certification is denied. 0 I HEREBY CERTIFY that the foregoing is a true copy of the original court order. Served: Leonard Berger, Esq. Virginia Delegal,Esq. Thomas R. Grady, Esq. Richard J. Brener, Esq. Jacqueline Williams Hubbard, Esq Theodore L Tripp,Jr., Esq. Herbert W.A.Thiele, Director Dwight E Brock,Clerk David Hallman, Esq. ma \ - I ,°, AOiliAtigirkikt. , ' ;9 ,, IR { Clerk BUWtold , 1�\.. ±r•i r is NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT c DWIGHT E.BROCK, CLERK OF THE ) . CIRCUIT COURT OF COLLIER COUNTY, ) v, :::> r Appellant, ) ` ) V. Case No. 2D07-454g r BOARD OF COUNTY COMMISSIONERS ) OF COLLIER COUNTY,as ex-officio the ) Governing Board of the Ochopee Area Fire ) Control and Emergency Medical Care ) Special Taxing District allcla the Ochopee ) Fire District, a Municipal Services Taxing ) Unit pursuant to Section 125.01(1)(q), F.S., ) and on behalf of Collier County,a Political ) Subdivision of the State of Florida; LINDA T.) SWISHER; and PAUL WILSON, ) ) Appellees. ) Opinion filed September 23,2009. Appeal from the Circuit Court for Collier County; Michael T. McHugh, Judge. David P.Ackerman and Glory P. Ross of Ackerman Link&Sartory, PA,West Palm Beach,Anthony P. Pires, Jr. and Steven V. Blount of Woodward, Pires&Lombardo, P.A., Naples, and Jon L. Mills and Timothy McLendon, Gainesville,for Appellant. Theodore L Tripp,Jr. of Garvin &Tripp, P.A., Fort Myers,Jacqueline W. Hubbard of Office of the County Attorney, Naples,and Elise S.Worthington of Elise S. Worthington, P.A., Pineland,for Appellee Board of County Commissioners of Collier County. No appearance for Appellees Unda T. Swisher and Paul Wilson. Fred W. Baggett and M. Hope Keating of Greenberg Traurig, PA,Tallahassee,for Amicus Curiae Florida Association of Court Clerks. Herbert W.A.Thiele,Tallahassee,for Amicus Curiae Florida Association of County Attorneys, Inc. Walter T. Midland,Tallahassee,for Amicus Curiae Common Cause. CANADY,Associate Judge. In this case involving a dispute between appellant, the Clerk of the Circuit Court of Collier County(Clerk), and appellee,the Board of County Commissioners of Collier County,we consider questions concerning the scope of the powers exercised by the Clerk acting in his capacity as county auditor and custodian of all county funds. The establishment by county employees of a checking account for a fire district controlled by the county precipitated the dispute underlying this litigation. Although the funds in the fire district checking account were ultimately surrendered to the Clerk,the rr lgation of a declaratory judgment action instituted by the Clerk and quo warranto proceedings instituted by the county moved forward. In the declaratory judgment action,the Clerk sought a determination that it was appropriate for him to make inquiries regarding an account such as the fire district account and to obtain custody of the funds contained in the account. In addition,the Clerk sought a determination that certain other actions were within the scope of his powers with respect to the county's fiscal affairs. In the quo warranto proceedings,the county sought a judgment limiting the Clerk's activities related to the county's fiscal affairs. In the consolidated declaratory Judgment and quo warranto proceedings, the circuit court entered summary Judgment in favor of the county. On appeal, the Clerk challenges the circuit court's ruling on three Issues. First,the Clerk challenges the ruling that the Clerk has no authority to investigate the status of county funds which were not in the actual custody of the Clerk. Second,the Clerk challenges the ruling that the Clerk is not authorized to conduct postpayment internal audits concerning county expenditures. Third,the Clerk challenges the ruling that the Clerk does not have independent authority to prepare the county's financial statements. With respect to the third issue,the trial court ruled that"the Clerk's authority to prepare financial statements on behalf of the County Is not derived from a specific grant of constitutional or statutory power, but rather is derived from a delegation of authority by the Board of County Commissioners"and that the"scope of this delegation is within the discretion of the Board of County Commissioners, and may be granted, removed or modified." We affirm the trial court's ruling on this Issue without further comment. With respect to the other two issues,however, we reverse the trial court's ruling for the reasons we explain below. On the issue of the Clerk's power to investigate county funds which are not In the Clerk's custody,the circuit court ruled as follows: [TJo the extent that the Clerk Is the custodian of all County funds, he necessarily can only be the custodian of those funds to which he has been given custody,which would presumably encompass all County funds. Even if the Clerk -3- • • becomes aware or suspects that there are County funds of which he has not been given custody, this Court is unaware of any constitutional or statutory authority that would allow the Clerk to initiate an independent investigation or attempt to recover those funds,absent Instruction from the Board of County Commissioners. The court went on to state that this"does not preclude the Clerk from seeking authority to pursue these funds or making these funds known to any appropriate authority, but. . . the Court cannot acquiesce to the Clerkrs]making unilateral investigations into these funds." On the issue of the Clerk's authority to conduct postpayment audits with respect to county expenditures,the circuit court ruled as follows: [P]rior to signing any warrant for the payment of any claim, bill or indebtedness from county funds,the Clerk is required to insure that the payment is lawful. Consequently,any auditing necessary to insure the legality of the expenditure prior to the payment Is proper. However, the Court is unable to find that the Clerk has been granted any specific constitutional or statutory authority to perform further audits beyond the time that the warrant is signed, unless so directed by the Board of County Commissioners. Article 8, section 1(d)of the Florida Constitution provides that"[w]hen not otherwise provided by county charter or special law approved by vote of the electors, the clerk of the circuit court shaU be ex officio clerk of the board of county commissioners, auditor, recorder and custodian of all county funds." There Is no special law or charter provision divesting the Clerk of the duties specified in this constitutional provision. As Is the case with other state and county officers,the powers and duties of the clerk of the circuit court"shall be fixed by law." Art. II, §5(c), Fla. Const. Section 28.12, Florida Statutes(2007),provides that the"clerk of the circuit court shall be clerk and accountant of the board of county commissioners,"and that the Clerk"shall keep the minutes and accounts and perform such other duties as provided by law." Section -4- "accounts board 136.08, Florida lta Statutes(2007),provides that the accounts of each and every and the county accounts of each and every depository. . .shall at all times be subject to the inspection and examination by the County auditor." Section 136.06(1)requires that checks or warrants drawn on county accounts shall be"attested by the clerk." Section 129.09, Florida Statutes(2007), imposes both personal civil liability and criminal liability ' on any clerk of the circuit court acting as county auditor who signs a warrant for any illegal or unauthorized payment of county funds. . "A statutory grant of power or right carries with it by implication everything necessary to carry out the power or right and make it effectual and complete." Wag Corp.v. Fla.Pub. Serv. Comte,220 So.2d 905, 907 (Fla. 1969), It is the well settled rule in this state that if a statute imposes a duty upon a public officer to accomplish a stated governmental purpose, It also confers by implication every particular power necessary or proper for complete exercise or performance of the duty,that Is not in violation of law or public policy. Peters v. Hansen, 157 So. 2d 103, 105(Fla.2d DCA 1963);see also j3allev V.V p Pelt 82 So.789,792(Fla. 1919). We conclude that the trial court's ruling prohibiting the Clerk from investigating county funds that have not been placed in his custody unduly limits the Clerk's ability to carry out his responsibilities as the custodian of all county funds. A public officer with the right and responsibility to maintain custody of public funds necessarily has the authority both to investigate circumstances in which public funds have wrongfully been withheld from the officer's custody and to seek to obtain custody of the withheld funds. Restricting the Clerk's authority to do so is inconsistent with the goal of protecting public funds from misappropriation,and it is inconsistent with the -5- effectual and complete exercise of the Clerk's authority as custodian of all county funds. We make no comment on the availability of any specific legal processes that the Clerk may seek to utilize In investigating county funds that have been withheld from his custody. Similarly,we conclude that the trial court's ruling prohibiting postpayment audits is inconsistent with the Clerk's statutory power to inspect and examine all county accounts at all times and with the Clerk's statutory duty to ensure that all payments of county funds comply with applicable legal requirements. Postpayment audits to verify the legality of payments that have been made are necessary to effectively carry out the Clerk's duty to ensure that county funds are expended only as authorized by law. Verification of the legality of payments already made—a process which tests the soundness of existing Internal controls—Is directly related to ensuring that future payments are al To deny the Clerk the ability to conduct such postpayment audits would compromise the Clerk's duty and power to guard against the illegal use of county funds. Such audits are distinct from the"financial audits"of financial statements defined in sections 11.45(1)(c)and 218.31(17), Florida Statutes(2007). Affirmed in part; and reversed In part. FULMER,1 J., Concurs. SILBERMAN,J.,Concurring In part„dissenting in part,with opinion. 'Judge Fulmer has been substituted for Judge Stringer,an original panel member in this proceeding, and she has viewed and listened to a recording of the oral argument. _g_ SILBERMAN,Judge,Concurring in part and dissenting in part. The majority correctly states that the issues before us involve the scope of the power of the Clerk to perform certain functions. In my view,the trial court correctly resolved the questions before it Thus, I concur in the majority's decision to affirm on one of the issues, but I dissent from the decision to reverse on the remaining issues. jitackaraun4 Procedurally,the Clerk brought a declaratory judgment action against the Board of County Commissioners of Collier County(the county),as ex-officio the Governing Board of the Ochopee Area Fire Control and Emergency Medical Care Special Taxing District(the fire district), and county employees, Paul Wilson and Linda T. Swisher. Wilson Is the fire chief of the fire district and he supervises Swisher, an administrative sec retary.2 The trial court entered final summary judgment In favor of the county and its employees. In cases that were consolidated with the declaratory judgment action,the county and Wilson each instituted quo warranto proceedings against the Clerk,and the trial court entered final summary judgment in favor of the county and Wilson hi those actions as well. All three cases deal with.the scope of the Clerk's authority in financial matters of the county. This dispute arose when the Clerk discovered that county employees controlled a fire district checking account in the name of"Ochopee FCD Volunteers." The Clerk did not have custody over the funds deposited in the account, and the account was not subject to the normal financial controls of the county. The county 2Wlison and Swisher have not made an appearance In this appeal. -7- contended that only funds raised by volunteers were deposited in the account and that the funds were used to purchase equipment for the fire department. The Clerk sought a determination that it was appropriate for him to inquire into such an account and have the employees account for and return the funds to him.3 The Clerk also sought a determination of the general rights and duties of the Clerk. In the quo warranto action, the county sought to prohibit the Clerk from exercising powers to which he Is not entitled relating to fiscal affairs of the county. The trial court determined that there were no disputed Issues of material fact and that the determination of the rights,powers, and duties of the Clerk involved issues of law. An appellate court's review of a trial court's ruling on a motion for summary judgment concerning issues of law is by the de novo standard of review. Pinellas County v. City of moo, 984 So.2d 847,851 (Fla. 2d DCA 2007). The Clerk and the county agreed,and the trial court found as a matter of law,that"the Clerk is the auditor,recorder and custodian of all County funds,that the Clerk is the accountant for the Board of County Commissioners, and that the Clerk has the duty to determine the legality of all County expenditures before issuing a warrant for payment" The Clerk challenges the trial courts rulings that the Clerk's powers do not include(1)preparing and certifying the accuracy of the county's financial statements; (2) controlling funds not in his custody and conducting investigations of outside bank accounts that he suspects may contain county funds;and (3)conducting Internal audits beyond the Clerk's pre-audit function required before a warrant for payment is signed. 3The county later had its employees turn over the remaining funds In the account to the Clerk and account for how funds had been spent -8- The Clerk argues that the powers at issue are necessarily Implied from a constitutional or statutory source. In Coca-Cola Co.. Food Division, Polk County v., Std, Department of Citrus,406 So. 2d 1079, 1081-82 (Fla. 1981),the Florida Supreme Court addressed Implied powers and explained that they include powers that are necessary to accomplish a stated governmental purpose and those that are necessary to carry out a power and make it effectual and complete. The county contends that the trial court ruled properly as a matter of law because the Clerk, as a constitutional officer, has no power that is not conferred upon him by the Florida Constitution or general law. &it Esoambla Cc ratty v. Bell.717 So. 2d 85, 87(Fla. 1st DCA 1998)(citing While y, Crandon. 156 So. 303, 305 (Fla. 1934)). The Clerk"only has such authority as is clearly conferred by statute or is necessarily implied from express statutory powers or duties." J. (citing White, 156 So. at 305). In Escambia County,the court recognized that°'while an express power duly conferred may include implied authority to use means necessary to make the express power effective,such implied authority may not warrant the exercise of a substantive power not conferred.'" td at 88(quoting Op.Att'y Gen. Fla.82-95 (1982)). "'(Wjhere there is doubt as to the existence of authority,it should not be assumed.'" J(quoting White, 156 So. at 305). With these principles in mind, I would resolve each of the issues as follows. Preparation of Annual Financial Statements. As to this issue, I agree with the majority's decision to affirm. The Clerk is an elected county officer,and unless otherwise provided by county charter or special law,"the clerk of the circuit court shall be ex officio clerk of the board of county -9- commissioners, auditor, recorder and custodian of all county funds." Art.VIII,§ 1(d), Fla. Const. The powers and duties of the Clerk, as a county officer,"shall be fixed by law." Art. II, §5(c), Fla. Const. Section 28.12, Florida Statutes (2007), provides,"The clerk of the circuit court shall be clerk and accountant of the board of county commissioners. He or she shall keep the minutes and accounts and perform such other duties as provided by law." Section 125.17,Florida Statutes(2007), provides,"The clerk of the circuit court for the county shall be clerk and accountant of the board of I ' county commissioners. He or she shall keep their minutes and accounts, and perform such other duties as their clerk as the board may direct" Thus, other than keeping the minutes and accounts,the Clerk shall perform other duties only as provided by law or as the board directs. The Clerk must•keep"books of account and of record In accordance with s. 218.33." § 116.07, Fla. Stat. (2007). Section 218.33(2), Florida Statutes (2007), provides that a"local governmental entity shall follow uniform accounting practices and procedures as promulgated by rule of the department to assure the use of proper accounting and fiscal management by such units. Such rules shall include a uniform classification of accounts." Section 136.05, Florida Statutes(2007), provides that"(t3he board of county commissioners shall keep an accurate and complete set of books showing the amount on hand,amount received,amount expended and the balances thereof at the end of each month for each and every fund carded by"the board. General law does not specifically give the Clerk the duty to prepare the annual financial statements. Instead, it is the board's duty to prepare and submit the annual financial statements. Section 218.32(1)(a) provides as follows: - 10- 218.32 Annual financial reports; local governmental entitles.— (1)(a) Each local governmental entity that is determined to be a reporting entity, as defined by generally accepted accounting principles,and each independent special district as defined in a. 189.403,shall submit to the department a copy of Its annual financial report for the previous fiscal year in a format prescribed by the department. The annual financial report must include a list of each local governmental entity included in the report and each local governmental entity that failed to provide financial information as required by paragraph (b). The chair of the governing body and the chief financial officer of each local governmental entity shall sign the annual financial report submitted pursuant to this subsection attesting to the accuracy of the information Included in the report The county annual financial report must be a single document that covers each county agency. In accord with section 218.39(1), unless the county is notified that the Auditor General will perform a financial audit in that fiscal year,the county must have an annual financial audit performed by an Independent certified public accountant. Section 218.32(1)(d) requires that the county submit the audit report end financial report to the Department of Financial Services. The county argues that nowhere in the Florida Statutes is there a requirement that the Clerk prepare the financial report or that he serve as the county's chief financial officer. Therefore, any duty for the Clerk to prepare the financial statement is as the board may direct." § 125.17. Thus,the trial court properly determined that the Clerk's authority to prepare financial statements is derived from a delegation of authority by the board and that the scope of that delegation Is within the board's discretion to grant, remove,or modify. - 11 - Per to Investigate Outside Ac u_nts andio Collect and Deposit Fu de, I disagree with the majority's analysis of this issue and would affirm. In my view the county,and not the Clerk, has the power and the duty to investigate into accounts that are not maintained by the Clerk and to pursue remedies for wrongdoing. The Clerk,as ex officio clerk of the board of county commissioners, is "custodian of all county funds." Art.V, § 16,Art.VIII, § 1(d), Fla. Const. His powers and dudes in this regard must be"fixed by law." Art. II,§5(c), Flo. Const. General law provides for county officers who are authorized to collect funds due to the county to pay those sums into the county treasury"not later than 7 working days from the close of the week in which the officer received the funds." §§ 116.01(1),219.07. All persons who receive county funds must turn them over to the Clerk by depositing the funds in a qualified county depository. See§ 136.03. The Clerk's duty Is to keep accounts of the funds In county depositories. Section 136.08 provides that"Mho accounts of each and every board and the county accounts of each and every depository, mentioned or provided for In this chapter,shall at all times be subject to the inspection and examination by the county auditor and by the Auditor General." Thus,the Clerk, as county auditor, has the power to inspect and examine the accounts In county depositories. This allows the Clerk to keep accounts of county funds. As the county argues,the duty to coiled and deposit county funds does not shift to the Clerk if the county officers fall to perform these duties. Section 219.08 provides that"[ejach of the duties required to be performed or done under the provisions of this act which is not done or performed at or within the time or times herein prescribed shall continue to be the duty of the person charged therewith until it is -12- actually and completely performed." The Clerk has not pointed to any statutory provision that gives him the authority to collect funds or compel their collection, and in my view, it is not necessary to find that the Clerk has an implied power to undertake such actions when that responsibility is already specified by law as the responsibility of county officers. Therefore, I agree with the trial court's ruling that to the extent that the Clerk is the custodian of all County funds, he necessarily can only be the custodian of those funds to which he has been given c ustody,;which would presumably encompass all County funds. Even if the Clerk becomes aware or suspects that there are County funds of which he has not be[sic]given custody,this Court is unaware of any constitutional or statutory authority that would allow the Clerk to initiate an Independent investigation or attempt to recover those funds, absent instruction from the Board of County Commissioners. The trial court further determined that"[t]his does not preclude the Clerk from seeking authority to pursue these funds or making these funds known to any appropriate authority, but as stated above absent any constitutional or statutory grant of power the Court cannot acquiesce to the Clerk making unilateral investigations into these funds." With respect to investigations, section 125.01(1)(s), Florida Statutes (2007), gives the board of county commissioners,as governing body of the county, the power to"[m]ake investigations of county affairs; inquire into accounts, records,and transactions of any county department, office,or officer, and,for these purposes, require reports from any county officer or employee and the production of official records." Further,section 125.01(1)(b)gives the board the power to"[p]rovide for the prosecution and defense of legal causes"on behalf of the county. Section 125.74(1)(g) gives the county administrator the power to"[s]upervise the care and custody of all county property." The trial court correctly concluded, "This Court is unable to find any - 13- constitutional or statutory authority that would give the Clerk the power to investigate the nature of funds not currently in its custody or to supervise the care and custody of funds not currently in its custody or to file a lawsuit regarding those funds." Conductinu Posinavment Audis, I also disagree with the majority's conclusion as to this issue and would affirm. The Clerk contends that the trial court erred in concluding that the Clerk's duty to determine the legality of payments ends once the warrant for payment is signed. The Clerk argues that no statute or case law places time limits on the actual exercise of his role to determine legality of payments. He further argues that as a matter of modem accounting,this time restricction on his auditing role makes his Job impossible. The trial court ruled as follows: [T]he Court finds as a matter of law,that prior to signing any warrant for the payment of any claim,bill or indebtedness from County funds,the Clerk Is required to insure that the payment is lawful. Consequently, any auditing necessary to insure the legality of the expenditure prior to the payment is proper. However,the Court Is unable to find that the Clerk has been granted any specific constitutional or statutory authority to perform further audits beyond the time that the warrant is signed, unless so directed by the Board of County Commissioners. The county contends that the supreme court's decision in Alachua County viPowq s, 351 So.2d 32(Fla. 1977), supports the trial court's ruling. In Alachua County,the supreme court addressed the clerk's role as auditor.4 The Clerk contends,however, that because Alachua County determined that the clerk could not perform"post-audits" 'Note, however,that section 218.31(15)defines"auditor"as"an independent certified public accountant licensed pursuant to chapter 473 and retained by a local governmental entity to perform a financial audit." Thus,the Clerk's role as "auditor"must have a different meaning because the Clerk is clearly not an external auditor as defined by section 218.31. - 14- i and that term has been replaced in the statutes by"financial audit'that Alachua County has no application to the internal audits the Clerk performs to assure good payment controls. The Clerk's constitutional and statutory role as county auditor"shall be fixed by law." Art. II,§5(c), Fla. Const. The supreme court recognized that the clerk's pro-audit function stems from the responsibility to refuse to sign illegal warrants and the corresponding civil and criminal liability imposed for violating this requirement fda 351 So. 2d at 36; § 129.09. The court stated that"there must be some type of pre-audit review of the disbursement In order to be sure that the funds will not be used for an unlawful purpose." 351 So. 2d at 36. The court described the clerk's role as pre-auditor of county funds but also recognized that"the board has the right to audit its own funds and make such investigations as may be necessary before the use of any public funds." at 37; see also§ 125.01(1)(s)(providing for the board's power to investigate county affairs and inquire into county"accounts, records, and transactions"); § 125.01(1)(x) (providing for the board's power to employ an independent accounting firm to conduct audits). The court declared that [t]he constitutional and statutory language discussed above require that the auditing function in making such an investigation be carried out by one of three entities: pre- auditing by the clerk In his capacity as county auditor, performance audit by an independent certified public accountant(or independent accounting firm), and post-audit by the auditor general or the independent auditing firm. 351 So.2d at 37. The supreme court further explained as follows: The clerk has the.authority and responsibility to perform the auditing functions both as an arm of the board in auditing the records of constitutional officers and as a watchdog of the board in the case of pre-auditing accounts of the board in - 15- determining legality of expenditure. The phrase"legality of expenditure" includes that the funds are spent for a public purpose,that the funds are spent in conformity with county purchasing procedures or statutory bidding procedures,that the expenditure does not overspend any account or fund of the budget as finally adopted and recorded In the office of the clerk. If the board becomes concerned, it has the authority to require a performance audit or post-audit by an independent accounting firm. Id. The term"postaudit"was defined in section 11.45(1)(c), Florida Statutes (1975), and Is no longer in the statutes. Chapter 11 now contains the term"financial audit." § 11.45(1)(c), Fla. Stat. (2007). The Clerk does not claim to have authority to do a financial audit, because a financial audit is an external audit. Rather, he contends that Alachua County does not prohibit him from performing internal audits after transactions occur as part of determining the legality of payment. However,as the county points out,the Clerk cannot exercise any authority unless that authority is conferred upon him by law. In Alachua County,the court recognized that the clerk has the authority to inspect and examine county accounts.5 &in 351 So. 2d at 36;see also § 136.08("The accounts of each and every board and the county accounts of each and every depository, mentioned or provided for in this chapter, shall at all times be subject to the inspection and examination by the county auditor and by the Auditor General."). The Clerk cites to W&F Ltd. v. Dunkte,444 So.2d 554(Fla.4th INCA 1984),to support his view that he has the power to do more than pre-audit before a warrant is signed. In W&F Ltdu a board of county commissioners created a nonprofit 9t seems self-evident that the inspection and examination of accounts Is less extensive than what is contemplated by an audit, a financial audit, an operational audit, or a performance audit,as those terms are defined in section 11.45(1)(a), (c), (g), (h). - 16- corporation that controlled disbursements for a public construction project,and the trial court determined that the corporation was the alter ego of the county. 14,at 557. The Fourth District stated that the issue on appeal was"whether there Is substantial competent evidence in the record,supported by applicable law,to justify affirmance of the trial court's determination that the appellee clerk has the authority to pre-audit the contemplated expenses of this project and to audit those whic�_have been expended 1st,at 557(emphasis added). It appears that the clerk In W&F Ltd. never had the opportunity to perform his pre-auditing function as to funds that had already been expended. jg:,at 558. This may explain the Fourth District's determination that the clerk could audit expenses of the project that had already been paid. In affirming the trial court's judgment,the Fourth District quoted Alachua County, reiterating the role of the clerk, as county auditor,to perform pre-audit review of disbursements to ensure they are not made for an unlawful purpose. d at 557-58 (quoting Alachua County. 351 So. 2d at 36). The W&F Ltd. court recognized that the legislature had"wisely not done anything since[the Alachua County]decision to devitalize the caretaking of public funds." Id.at 558. As noted,Alachua County recognized the cleric's authority to inspect and examine accounts under section 136.08. See 351 So.2d at 36. I would affirm the trial court's ruling that any auditing by the Clerk "necessary to insure legality of the expenditure prior to the payment is proper"and, • under the circumstances here, that the Clerk does not have the power to conduct a postpayment audit absent authorization by the county. I make one observation as to the following statement that the trial court made: "However,the court Is unable to find -17- I. that the Clerk has been granted any specific constitutional or statutory authority to perform further audits beyond the time that the warrant is signed, unless so directed by the Board of County Commissioners." Concerning that statement,while the Clerk's ftwa powers are limited by law,the Clerk remains entitled to inspect and examine county accounts. ftft§ 138.08;segikag§ 125.17(providing that,as accountant for the board,the clerk shall keep the board's accounts). The statutory provisions contain no time limits; in fact, section 138.08 states"at all times"regarding the Clerk's authority to inspect and examine county accounts. For these reasons, I would affirm the final judgment - 18- September 15, 2009 TRANSCRIPT OF THE MEETING OF THE BOARD OF COUNTY COMMISSIONERS Naples, Florida, September 15, 2009 CLOSED SESSION Item #12C — DWIGHT E. BROCK LET IT BE REMEMBERED, that the Board of County Commissioners, in and for the County of Collier, and also acting as the Board of Zoning Appeals and as the governing board(s) of such special district as has been created according to law and having conducted business herein, met on this date at 12:46 p.m., in CLOSED SESSION in Building "F" of the Government Complex, East Naples, Florida, with the following members present: CHAIRMAN: Donna Fiala Fred Coyle Jim Coletta Frank Halas Tom Henning ALSO PRESENT: Leo Ochs, Deputy County Manager Jeffrey A. Klatzkow, County Attorney Jacqueline Hubbard, Assistant County Attorney Page 1 — Item #12C (Brock) September 15, 2009 Item #12C THE BOARD IN EXECUTIVE SESSION WILL DISCUSS: STRATEGY SESSION RELATED TO LITIGATION EXPENDITURES AND SETTLEMENT NEGOTIATIONS IN THE PENDING CASE OF BOARD OF COUNTY COMMISSIONERS V. DWIGHT E. BROCK, CLERK OF COURTS, CASE NO. 07- 1056-CA, NOW PENDING IN THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY, FLORIDA. - CLOSED SESSION MS. HUBBARD: Jeff, I assume, is going to present unless you MR. KLATZKOW: We had a slight change occur since the settlement agreement was entered into, and I'll let Leo describe what happened since he took the -- MR. OCHS: I want to go back to the beginning. Last Thursday and Friday we entered into court-ordered mediation with the clerk in an attempt to settle the fee versus budget officer case. In the course of that two-days mediation, Commissioner Fiala attended, myself, Jeff and Jackie and Ted Tripp representing the county's side. We had intermittent attendance from Mark Isackson from our budget office to confirm information. We went through two full days with the mediation conducted by a former justice of the Florida Supreme Court. MS. HUBBARD: Yes. Justice England. MR. OCHS: And blatantly, late in the -- or early evening last Friday, we thought we had a settlement, and I'll ask Jeff and Jackie or Commissioner Fiala to jump in to help me with the facts if I don't recall them. But essentially the mediated settlement from the mediator that we chopped off on was that the board would agree to pay the clerk $5 Page 2 — Item #12C (Brock) September 15, 2009 million for services rendered in fiscal year 2010, an additional $273,500 in statutory fees required under Florida law for services the clerk provides to the circuit and the county court system. In exchange for that, the board would get a number of considerations. One of those was that the clerk would drop all of his pending lawsuits, and that has an obvious financial benefit going forward to the board. The clerk also represented that, as part of this mediated settlement, he would be turning back to the board on October 30th as required by Florida law approximately $6 million in turnback, and that was over and -- to be over and above the $6 million in interest earnings that have already been allocated to the board in your current budget. He also had agreed to undo the unilateral action he took a few weeks ago in allocating your interest income back to the principal funds from where they came instead of sending those to the general fund, as has been the practice since you entered into that resolution in 2002. The net effect of the clerk agreeing to go back to that allocation schedule retroactive to July 1 of this year and then carrying it forward through fiscal year 2010 had a value just in the three remaining months of this fiscal year of over a million dollars, about $1.15 million to the board's interest income in the general fund. Last evening -- also that carryforward would allow the general fund to continue to earn about $6 million of interest, which is what your budget calls for for fiscal year '10. With those considerations and the fact that we had assurance that the current 6 million in your funds would be preserved in that fund and be available for carryforward and for desperately needed working cash beginning the new fiscal year, we decided that that was a settlement offer that we could bring to this board. Last evening about 7:15 I was in my office. Susan Usher came Page 3 — Item #12C (Brock) September 15, 2009 running in with a piece of paper that essentially showed that last Friday morning in the second day of the mediation, the clerk had removed the 6 million-plus of interest that has already been allocated to your general fund this year and placed that money back in his fund. I called Jeff, I called Crystal Kinzel and said, you know, what is this? And essentially, she explained to me that, well, that's the $6 million that was represented in settlement agreement as the carryforward commitment -- excuse me, the turnback commitment for July -- excuse me, October 30th. That creates, you know, some serious concerns on my part. What that means in a nutshell is that $6 million of cash that we anticipated having on hand October 1 to pay -- COMMISSIONER HALAS: Salaries. MR. OCHS: -- salaries -- let me put it this way. We thought we would have $23 million in beginning balance cash to pay obligations until -- for the first two-and-a-half months of the year until your property tax revenue started coming in. We thought we would have 23 million. This action lowers that to 17 million. You have -- you have payment obligations in the first week of October with transfers to constitutionals and required debt service payments in excess of$18 million. So from a cash standpoint, you're basically going into the year upside down. I'm told by our finance or budget director that that's not legal. So that would require some immediate maneuvering on our part to go do some inner-fund borrowing trying to free up enough cash to pay bills for the first month of the year, assuming the clerk turns back the 6 million he just took from you last Friday on 30 October. That's -- and please, that's my brief summary of how I understand the events as they transpired late last week and last evening. COMMISSIONER HALAS: My question is, in -- when everybody was sitting at the table discussing this -- first of all, the clerk's budget was approved at $3.5 million. Then through this negotiation, there was, I believe, something that came forward that he Page 4 — Item #12C (Brock) September 15, 2009 would end up with about $5 million, and that should take care of his needs and whatever other little trickling of money came in. So it would be very close to the $6 million that he thought that he required to meet his budget; is that correct? MR. OCHS: No, sir. Let me go back to -- COMMISSIONER HALAS: Okay. And now he's gone in there and taken another $6 million? MR. OCHS: Yes. COMMISSIONER HALAS: Okay. But -- MR. OCHS: What you agreed to in your budget hearings was -- COMMISSIONER HALAS: Five-and-a-half mill. MR. OCHS: -- was $3-and-a-half million due to the raise through an increase in the ad valorem millage for FY 10. You had a placeholder of another 1 .5 million, contingent on the clerk coming back with turnback in excess of what was budgeted so that you could consider applying that to the additional million and a half that you had earmarked. CHAIRMAN FIALA: Can I just jump in -- MR. OCHS: Yes, ma'am, whatever. CHAIRMAN FIALA: -- and say, one of the reasons the clerk was agreeable with that, very agreeable with it, and he had mentioned it on the dais when he was visiting us that day at the commission meeting, he had wanted 6.177. And he said, but -- he knew that he wouldn't need $500 (sic) for his satellites, and 400- -- 500,000 -- MR. OCHS: For attorney's fees if his lawsuits got settled. CHAIRMAN FIALA: Yep. One was for attorney's fees and one was for satellite offices -- MR. OCHS: Yes, ma'am. CHAIRMAN FIALA: -- he said. So you deduct 900,000 from that, and then of course, the 273,000 which was a statutory requirement on us, you deduct that and you came right up to $5 million. So that -- you know, he was still getting everything he Page 5 — Item #12C (Brock) September 15, 2009 wanted when he deducted all of those things that he wouldn't need. And so -- that's why he was very agreeable to that. I'll just -- COMMISSIONER COLETTA: Is there a way we can -- the money we got allotted for him -- if he's going to hold the $6 million and not give us access to it to be able to -- COMMISSIONER HALAS: Why should we give him the funds? COMMISSIONER COLETTA: -- can't we just keep that three and a half rather than giving it to him? I mean, just go ahead and adjust it, put that back in the general fund and make up some of the deficiencies? I mean, he's going to -- he's playing the clock out. October 1st is going to come real quick -- unless we get a court order against him to turn that money over, I don't know what we're going to do. Or could we do that? MS. HUBBARD: Well -- Jeff, you want to speak to that? MR. KLATZKOW: This is where we are. We have a trial that's scheduled to commence next week? MS. HUBBARD: No. It's been moved to the 28th. MR. KLATZKOW: Twenty-eighth. In that trial we have no claims, all right. It's the clerk's counterclaim is against us. Five-and-a-half to $6 million, all right. So that best we could do at trial is not lose. COMMISSIONER HALAS: Not what? MR. KLATZKOW: Is not lose, that's the best we can do. Clerk's best-case scenario -- and I asked our trial counsel to send it out in a letter -- is he can get a judgment against the county between five-and-a-half and $6 million in addition. Now, we would argue that there's no need to pay it because he's got to give back his excess monies at the end of every fiscal year anyway, but that's just more arguing in court over it. So the only issue is this. I've got the settlement agreement. When I did this settlement agreement, it was my understanding that Page 6 — Item #12C (Brock) September 15, 2009 that $6 million turnback was new money, it was my understanding. MR. OCHS: In addition to the interest already allocated to the board. MR. KLATZKOW: In addition to what we had before. CHAIRMAN FIALA: And I'll throw in here, no wonder it's your understanding because I asked the direct question while we were all sitting in that room together. MS. HUBBARD: Yes, you did. CHAIRMAN FIALA: And I asked his attorney, now, is this new money? We've already got the 6 million that you've turned back. And yes, he said. MS. HUBBARD: That's right. CHAIRMAN FIALA: So I mean, let me just clarify why that was your impression. MR. KLATZKOW: Yes, so that's what happened, all right. And you know, Ted Tripp feels the same way. It was supposed to be new money. Apparently it's not new money. Apparently he intends to give us the turnback from monies he already deposited with the board previously. The question is, the question is, given all that, okay, do we still want to get into the settlement agreement and be done with the litigation? If we don't get into -- if we don't get into this litigation, we're still -- Leo is still going to have this cash problem. That's not going to change, all right. If we don't get into this settlement agreement, we will be trying this case, all right. I can't force the clerk to give us an extra $6 million because apparently he doesn't have it. He never had it. COMMISSIONER HALAS: Who doesn't have it, the clerk? MR. KLATZKOW: The clerk. COMMISSIONER HALAS: Who's got it? Grady? MR. KLATZKOW: It doesn't exist. That interest -- that interest that we thought we were getting which was budgeted for doesn't exist, Page 7 — Item #12C (Brock) September 15, 2009 apparently. MS. HUBBARD: So, you know, my concern is whether or not this was an exercise that was done in good faith. COMMISSIONER HALAS: I don't think it was. MS. HUBBARD: No. I mean, I honestly thought -- COMMISSIONER COLETTA: Yes or answer? MS. HUBBARD: No. When we were sitting there, I honestly thought we were dealing in good faith here. And it turns out that the $6 million was actually moved Friday morning while we're still in mediation, and no one bothered to inform the parties or the representatives that the money had been moved. In fact, that money was never even put on the table as an issue. MR. KLATZKOW: And I don't disagree with anything you said. I'm simply saying, whether the clerk was in good faith or whether the clerk acted in bad faith, okay, we still have this same money crunch, all right, and whether or not we get into the settlement agreement, that's not changing. The only thing that changes with the settlement agreement is that we end the litigation that's pending. That's what we get out of it. If-- COMMISSIONER HALAS: So we've got to fold our tent again. MR. KLATZKOW: I'm not saying that. I'm telling you that what you get is you end this litigation. If you do not want to get into this settlement agreement, that's fine with me, okay. At that point in time we'll have to -- the board will have to have a discussion of what it wants to do with the clerk's budget. COMMISSIONER HENNING: I need some clarity about the $6 million. MR. OCHS: Yes. COMMISSIONER HENNING: It was in our account, our operating account? MR. OCHS: In your general fund, sir. COMMISSIONER HENNING: General revenues. Page 8 — Item #12C (Brock) September 15, 2009 MR. OCHS: Yes. COMMISSIONER HENNING: Interesting. And it was transferred out of our general fund. Do we know where? MS. HUBBARD: No. That's the interesting thing. COMMISSIONER HENNING: We don't know -- this happened Friday. Did the budget office, management, look at our other funds and see where that $6 million is? MR. OCHS: No. It was made payable to the clerk. COMMISSIONER HENNING: Oh, it was made payable to the clerk. MR. OCHS: Yes. It was transferred to the clerk's budget. COMMISSIONER HENNING: Okay. So we do know -- MR. OCHS: I don't know where it got posted. COMMISSIONER HENNING: So we do know where it is. MS. HUBBARD: They know it's transferred to the clerk, but they don't -- I don't know if they know what fund he put it in, what account. COMMISSIONER COLETTA: Does it really matter? MS. HUBBARD: I don't know. MR. OCHS: You started the year with $20 million budgeted because of interest income in your general fund. That was adjusted downward as a forecast of$15 million during the budget. COMMISSIONER HENNING: Just to keep it simple, so I understand. MR. OCHS: It's now $35,000 in your account. COMMISSIONER HALAS: 35,000? MR. OCHS: Yes, sir. COMMISSIONER HENNING: Just so we can keep it simple, all right? MR. OCHS: Sure. COMMISSIONER HENNING: He doesn't have the ability to pull it out of your funds and transfer it to another. That's an illegal Page 9 — Item #12C (Brock) September 15, 2009 transfer. MS. HUBBARD: Sounds like it to me. MR. KLATZKOW: Well, no, because I think what he did, sir, is that we were receiving, under Judge Thompson's order, interest. He was splitting it two-thirds to us, one-third to the clerk for a period of time. And the second circuit said, no, that is income to the clerk -- COMMISSIONER HENNING: Right. MR. KLATZKOW: -- that $6 million. And then the legislature said, well, we don't really -- we're going to change the law so that income becomes income to the board effective July 1st. So my guess is what's happening is that the clerk is taking the position that, well, up through July 1st, that's my income, that belongs to me, and that's his -- and that's his reason for transferring it to his funds. That's what I think is going on. COMMISSIONER HENNING: Okay. So it's not an illegal action? MR. KLATZKOW: No, I don't think it's illegal. COMMISSIONER HENNING: Okay. So can we go out and make a motion to settle and, what the mediator said, in addition to returning the $6 million back into the board's general fund? MS. HUBBARD: You're still $6 million short from what we thought we were negotiating. MR. OCHS: The answer is yes. COMMISSIONER HENNING: Well, let me repeat what I said. MS. HUBBARD: Okay. COMMISSIONER HENNING: I think it's important for the Board of Commissioners to act in good faith publicly, because that isn't what the public is seeing right now. So the issue is, settle -- agree with the mediator on the settlement in addition to having the $6 million returned into our general fund. MS. HUBBARD: Well -- MR. KLATZKOW: Yes, you can do that. You can make it a Page 10 — Item #12C (Brock) September 15, 2009 condition of the settlement agreement. COMMISSIONER HENNING: A condition of the settlement agreement. MR. KLATZKOW: That the moneys get returned by a certain date. COMMISSIONER HENNING: And that certain date better be -- COMMISSIONER HALAS: October 1st. COMMISSIONER HENNING: No, earlier than that. MR. OCHS: If it was me I'd say have the transaction done before you adjourn today. COMMISSIONER COYLE: Yes. MR. OCHS: Seriously. He did it in five minutes Friday morning. He can reverse that in the same five minutes this afternoon. COMMISSIONER HALAS: And if he doesn't, what's our recourse? COMMISSIONER HENNING: Then we're going to court. MR. OCHS: You can go to court or you can still settle. MR. KLATZKOW: That's your decision. MR. OCHS: I wouldn't advise it, but you could do it. COMMISSIONER COLETTA: But what Commissioner Henning's suggesting covers all worlds of what we're looking for. COMMISSIONER COYLE: Yeah, but you're looking for the second step. What happens if the sheriff(sic) doesn't -- I mean the clerk doesn't transfer? COMMISSIONER HENNING: No settlement. COMMISSIONER COLETTA: There's no settlement. COMMISSIONER HENNING: We're going to court. COMMISSIONER COLETTA: It's a condition of the settlement. COMMISSIONER COYLE: Yeah, but we want to get rid of the court case, too, anyway. COMMISSIONER COLETTA: Yeah, I know, but the settlement gets rid of the court case. The only problem is is, can we be held Page 11 — Item #12C (Brock) September 15, 2009 hostage at the cost of being able to start the October 1st stuff without the funds we need? I don't know. I'm a little disappointed somebody couldn't see this coming down, you know. When you play all the scenarios out -- COMMISSIONER COYLE: Oh, you can't see that coming. The clerk is so devious. There is no way you can see -- MR. KLATZKOW: Commissioner, the question was put to him, is this new money, the answer was yes. I don't know what else to tell you. COMMISSIONER COLETTA: Was that -- in public he said this, right? MR. KLATZKOW: No, no, no. It's part of the mediation. COMMISSIONER COYLE: It's part of the mediation. COMMISSIONER HALAS: So it's on the record? COMMISSIONER COYLE: No, it can't be used as evidence. MR. KLATZKOW: No, it's confidential. COMMISSIONER HALAS: Oh, I'm sorry. CHAIRMAN FIALA: I have another question to throw into this pot regarding Commissioner Henning's suggestion that we settle as long as we get the 6 million back that we had plus the 6 million we were promised in the settlement, okay. I wonder if he doesn't have the money? MR. KLATZKOW: Oh, he doesn't have that other 6 million. CHAIRMAN FIALA: Huh? MR. KLATZKOW: I don't think he has that other 6 million. CHAIRMAN FIALA: So if he doesn't, then, you know, do we need to have a plan B? COMMISSIONER COLETTA: How -- what do you mean he can't (sic) have it? He can't take the money and make it disappear. COMMISSIONER COYLE: Well, that's a good point. COMMISSIONER HALAS: We need an audit. COMMISSIONER COYLE: Look, are you telling me that the Page 12 — Item #12C (Brock) September 15, 2009 clerk produced for us official records, accounting records, which indicated that money exists and now we find the money doesn't exist? CHAIRMAN FIALA: You know what, Frank, he never -- COMMISSIONER COYLE: Is that true? CHAIRMAN FIALA: He never said -- we asked him two days how much money, interest money we were going to get. COMMISSIONER COLETTA: I have to leave shortly. CHAIRMAN FIALA: And he would never ever give us an amount. COMMISSIONER COYLE: You're going to be sick, right? CHAIRMAN FIALA: Are you going to leave the room? We have to stop. COMMISSIONER COLETTA: I won't be more than just a minute or two. MS. HUBBARD: We'll wait. COMMISSIONER COYLE: We have to have everybody here. CHAIRMAN FIALA: Yep. (A brief recess was had.) MR. KLATZKOW: What I will tell you is that when we asked him how much we were going to get back in turnback and he said 6 million, Leo was surprised because our people figured he had about what, about a million in interest? MR. OCHS: We didn't know. The first question we asked on Thursday morning, the very first question to the clerk was, what's your estimate of the turnback, and we continually got no answer. Well, we don't know. We're not sure. That depends. And it went like that almost two days until late on Friday evening when our attorney came back from the visit to the clerk's attorney and the mediator and said, you know, the agreement is that he'll turn back $6 million, as Commissioner Fiala said, in addition to the 6 million we have in our budget already? That's correct. That was, in my personal view, one of the main reasons why I could support bringing this to the Page 13 — Item #12C (Brock) September 15, 2009 board. Now, that having been said, it's clear that -- it's clear to me that our initial suspicion is that he doesn't have an additional $6 million to turn back if he is required by the board to move the $6 million that he took last Friday back into your general fund. That's okay. But the question for you-all is that when you set aside that extra million and a half in the budget beyond the 3.5 million, which is what staff believes is true value of the direct service, you made that contingent upon him producing a like amount or more of additional turnback to cover that extra cost. If that doesn't materialize, you-all have to decide whether 5.2 million is still a good number for you or whether some other number is, because you're going to have to cover that reserves instead. COMMISSIONER COYLE: Here's my problem. I don't care about any of that. MR. OCHS: Okay. COMMISSIONER COYLE: Okay? MR. OCHS: Yep. COMMISSIONER COYLE: What I care about is the clerk's responsibility to produce accurate financial reports and forecasts. Now, you had to have gotten the impression that there was some amount of money based upon some report that was produced by the clerk, some official report that was produced by the clerk which indicated this is interest money that you should be getting back. It was either forecast or it actually existed. Now, if that, in fact, is incorrect, the clerk has given us incorrect and misleading financial reports. That is the issue. How he sneaks that stuff around back and forth we will never trace down because, as I said, he is so devious you can't get a straight answer out of that guy. COMMISSIONER HALAS: Almost to the point. COMMISSIONER COYLE: And we've tried it in public hearings. I have tried it personally. There is no way you can get a Page 14 — Item #12C (Brock) September 15, 2009 straight answer out of that man. COMMISSIONER COLETTA: You can ask him today. COMMISSIONER COYLE: You can ask him today, and you will get an answer that is unintelligible that will not let you pin it down at all. COMMISSIONER COLETTA: And I'll make a bet even that report that you're talking about does not exist. COMMISSIONER COYLE: Well, you know, we get reports -- we should get reports every month about interest that's been earned. MR. OCHS: You had him give you a report. He brought the professor in from Florida State -- COMMISSIONER COYLE: Oh, okay. MR. OCHS: -- and he told you that he posts those things on his website, and that's where you're supposed to go to find. The last time we knew that he had posted interest prior to just a couple of weeks ago was prior to June 1. I mean, he posts it periodically when he's ready to post it to his budget. COMMISSIONER COYLE: But he forecasts interest income for his budget, and the figures in there are supposed to be reasonably accurate. I mean, you just can't have a figure of, let's say, 24 million or 17 million or even 13 million as an estimate of interest earned and then find out that, whoops, it doesn't really exist. That's criminal, okay. And that's the issue here. And I think we're missing that issue. The question is to find out if, in fact, that's what happened. But I'll tell you right now, if you get into an argument with the clerk about transferring this from here to there and back to here and back to there -- COMMISSIONER COLETTA: He can move those shelves faster than you can see. COMMISSIONER COYLE: -- he'll move that around so fast and he'll tap dance and he'll tell you stories that you'll never understand and nobody will ever be able to trace down. But a Page 15 — Item #12C (Brock) September 15, 2009 financial report or a budget estimate that contains figures that do not exist is criminal. COMMISSIONER COLETTA: Here's where are you, Commissioner Coyle. You're up against October 1st -- COMMISSIONER COYLE: Yes. COMMISSIONER COLETTA: -- which is so close you can't even believe it. You're being told by your attorneys that there's no legal recourse we can really count on to be able to get us where we need to be. So he's creating a crisis. Maybe at this point in time we can't rely on the courts, we can't rely on the clerk's record. We may have to make an appeal directly to the governor and the cabinet to intervene in this case. COMMISSIONER COYLE: They won't. I can tell you they won't do that right now. MR. OCHS: Commissioner, it is a hardship -- it would be a hardship to deal with what the clerk's done, but you can do it if you need to with temporary borrowing to get you -- COMMISSIONER HALAS: Go out in the local market. MR. OCHS: No, you wouldn't. You'd borrow internally. Frankly, you'd go to your self-insurance fund and borrow the $6 million you need to 1 October since the clerk took it away from you. COMMISSIONER HENNING: Or pollution control. MR. OCHS: No, I wouldn't recommend we go to pollution control. COMMISSIONER HENNING: Landfill. MR. OCHS: We've been there twice already. Remember the Elks building. COMMISSIONER COYLE: I just don't want to go borrowing more money right now. You know, we're mortgaged up to our eyeballs. MR. OCHS: No. I'm not recommending you do that, but what I'm saying to you is, you know, in terms of the waiting game, in my Page 16 — Item #12C (Brock) September 15, 2009 view -- COMMISSIONER HALAS: You've got to pay the employees. MR. OCHS: You hold the card. The clerk is -- the clerk needs you for funding. If he doesn't want to get funded, then he ought to -- COMMISSIONER COYLE: All right. Here's the solution then. Let's make the solution that -- proposal that Commissioner Henning specified and make it contingent upon the return of the $6 million. If it -- if the $6 million isn't returned by -- COMMISSIONER HALAS: Close of business. COMMISSIONER COYLE: -- some day this week, well, that -- MR. OCHS: Close of business today. It's that easy. COMMISSIONER COYLE: Then what we do is we -- then we remove $6 million from his budget for this next year. COMMISSIONER COLETTA: How can you? His budget isn't 6 million -- MR. OCHS: You can remove 5 million. You have a public hearing on the 24th -- COMMISSIONER COYLE: Then we'll remove $5 million from his budget. MR. OCHS: -- and -- before your court date. You can zero that budget if you want at that point on the 24th. MR. KLATZKOW: But let's just -- you cannot hurt the clerk. He's an elected official, okay. If you zero out his budget and he starts firing people, okay, those are the people getting hurt. So, you know, I understand -- I understand the anger here, okay, but you cannot hurt the clerk by cutting his budget. You can only hurt his people. COMMISSIONER COYLE: He already got his money. He got $6 million. I'm not hurting him. He took $6 million. I'm taking $5 million. He just made a million bucks on the deal. How's that hurting him? MR. KLATZKOW: No. I'm just saying if you want to zero out his budget. Page 17 — Item #12C (Brock) September 15, 2009 COMMISSIONER COLETTA: We're not. We're just recognizing the 6 million he's holding as part of his funds. MR. KLATZKOW: But he's got to -- he's got to turn that back. He can't spend that $6 million for next fiscal year. COMMISSIONER HENNING: No, that's not true. If you -- if you believe that because of the judge's order that interest is his to run his operation until the legislators change the law, if that $6 million is prior to changing the law, that is his to run his operation. MR. KLATZKOW: Right. But I think he has to zero out every -- at the end of every -- the close of every fiscal year. MR. OCHS: What Jeffs saying is as a constitutional officer whatever -- COMMISSIONER HENNING: He has to do that November -- MR. KLATZKOW: October 3 0th. MR. OCHS: He has to turn it back on October 30th for the fiscal year ending September 30th. So whatever excess revenues over expenses he has in his budget on 30 September, he's required by law, and always has been, to turn it back on 30 October. COMMISSIONER COLETTA: Well, let's hit this one more time. All you have to do is recognize the money he has. Don't zero out his budget. His budget's still the same. The funds he gets going to his budget he's already got. MR. OCHS: Let me suggest this, that you modify this slightly along the lines as Commissioner Henning said, that if you want to settle this, tell the clerk to take the $6 million of your interest income that's in your general fund until last Friday, place it back in there and leave it in there so you have it for cash flow on 1 October, and that this provision in the settlement agreement that requires him to produce an additional $6 million next year, you modify that down a million and a half which would cover the million and a half beyond the three and a half that you've put in your budget for next year that was a contingent appropriation, contingent upon him producing that Page 18 — Item #12C (Brock) September 15, 2009 carryforward. You have a million-and-a-half dollars in reserves next year for the clerk that has no offsetting review, and you were going to get it from turnback. He may still be able to turn a million and a half back without touching your $6 million. We don't know because he won't tell us. If you ask him on that dais if he'll do that, you've got the makings of a settlement that still gets you out of the court case, saves you your litigation fees, and keeps the general fund getting the interest allocation for fiscal year '10 like you have been getting so we cannot have a hole next year. COMMISSIONER COLETTA: Yeah. Normally we go out there, the only thing we do is make a short statement and that's the end of everything. This time we go out there, we've got five commissioners that may or may not understand the true direction it's going. We need to delegate one person to be able to -- COMMISSIONER HENNING: She knows this. Not she. CHAIRMAN FIALA: She is fine. COMMISSIONER COLETTA: And we stand back and try to keep to ourselves, because this is going to get -- CHAIRMAN FIALA: But shouldn't it be the county attorney? MR. KLATZKOW: It's not my motion to make, ma'am. It's your motion. CHAIRMAN FIALA: Oh, I see. COMMISSIONER COLETTA: You might ask him for guidance on it. CHAIRMAN FIALA: Okay. COMMISSIONER COLETTA: But I got a feeling that if we start an open discussion with all five of us going at the same time -- COMMISSIONER COYLE: We'll be there till 9 o'clock tonight. COMMISSIONER COLETTA: Well, if you're not there, we'll get out at 8:30. Page 19 — Item #12C (Brock) September 15, 2009 MR. OCHS: I think we're all in agreement you want to preserve your $6 million and have it available for bill payment and debt service payment on 1 October. The only way to do that is for him to -- COMMISSIONER HALAS: Turn that revenue back tonight. MR. OCHS: -- turn that 6 million-plus back into your budget. CHAIRMAN FIALA: Now, but do I -- if it's me, indeed, that says it, do I reveal that he took it out and that he needs to put it back or COMMISSIONER COLETTA: Just make a statement. MS. HUBBARD: That's a public document. CHAIRMAN FIALA: Okay. COMMISSIONER COLETTA: I wouldn't make too big of a deal of it, you know. I mean -- COMMISSIONER COYLE: I would say the money you removed while we were having our settlement -- COMMISSIONER HALAS: Negotiations. COMMISSIONER COYLE: -- negotiations would be returned immediately. MR. KLATZKOW: So that's one piece. One piece is $6 million gets returned by the end of the business day. MR. OCHS: The other one is that he makes a representation that he will turn back one-and-a-half million dollars -- MR. KLATZKOW: By October 30th. MR. OCHS: -- by October 30th. That would allow you to then cover during the year that added one-and-a-half million dollars that you set aside for him for fiscal year '10. MS. HUBBARD: And then the rest -- MR. OCHS: The litigation goes away, he continues to allocate the interest as he has under the 2002 resolution, which he's agreed to do in this settlement document, and we march on. MS. HUBBARD: So you're suggesting that we give up the 6 million here? Page 20 — Item #12C (Brock) September 15, 2009 MR. KLATZKOW: It doesn't exist. MR. OCHS: Turnback, you mean? It's a phantom number, Jackie, I'm convinced at this point. It doesn't exist. And he didn't steal it, he didn't cook the books. It just doesn't exist. COMMISSIONER COLETTA: If the clerk isn't there at that time, we've got to continue this thing. COMMISSIONER HALAS: There was a transfer though. COMMISSIONER COYLE: No, that's another 6 million, I think. But wait a minute. Somebody got the impression there was another $6 million. MS. HUBBARD: Yes. COMMISSIONER COYLE: Now, how did you get the impression other than from somebody just telling you that? MR. OCHS: That's all. MS. HUBBARD: She asked -- CHAIRMAN FIALA: His attorney. His attorney -- when we were negotiating through the mediator, they came up with this figure that they would give us $6 million -- MS. HUBBARD: In turnback. CHAIRMAN FIALA: -- in turnback. And the reason I asked the question, is that an additional 6 million over what you've already given us, is because the numbers were the same, so I was -- I just wanted to make sure I wasn't confused, that we were talking about two separate 6 millions, not the same. COMMISSIONER COYLE: Total of$12 million. CHAIRMAN FIALA: Right. I never said total 12 million. I just said, is this in addition to the 6 million he's already turned back, and his attorney said, Tom Grady said, yes. MR. OCHS: And I think you'll either hear the clerk say that we were mistaken or Mr. Grady was misspoken. But in any event, there's not $12 million. CHAIRMAN FIALA: Dwight wasn't there. Page 21 — Item #12C (Brock) September 15, 2009 COMMISSIONER COYLE: And based upon what information you've seen from financial reports and/or budgets, there's no indication that that money was ever alleged to be there; is that true? MR. OCHS: Yes, sir, that's true. COMMISSIONER COYLE: Okay. So the only expectation of that money came up at the mediation? MR. OCHS: That's correct. COMMISSIONER COYLE: Okay. MR. OCHS: That's correct. And it's fair to say we were -- COMMISSIONER COYLE: Surprised? MR. OCHS: I was surprised and pleased when I heard that number. MR. KLATZKOW: It would put us over the edge. Because the 6 million, okay, monetarily we're fine, we get to replenish the reserves. The $1.5 million comes out of that, it's not an issue. I mean, it really was a deciding factor for us, but it wasn't a big deal. COMMISSIONER COYLE: You mean the fact that you thought you were getting 12 million? MR. KLATZKOW: Yeah. COMMISSIONER COYLE: So now we're not getting 12 million, we're getting 6 million, but it's still a good deal? MR. KLATZKOW: I'm not saying it's a good deal. I'm just saying your choice is either -- MR. OCHS: What he said to you was, that if he can commit to an additional million and a half in real turnback 30 October, then financially it will be a wash for you. That's all I'm saying. Whether it's a good deal or not, that's for you-all to decide. But it will cover your financial obligations, it will avoid the cost of further litigation, and it will, based on Commissioner Henning's suggestion, it will restore your ability to cash flow your operations for the first -- COMMISSIONER HALAS: Two months. MR. OCHS: -- month and a half of the year. Page 22 — Item #12C (Brock) September 15, 2009 COMMISSIONER COYLE: Oh, I'm okay with it. I don't like it, but I'm okay with it. COMMISSIONER COLETTA: The proceedings here, are we allowed to come back in here if we get to something that we need to discuss in private? MR. KLATZKOW: No. Once we're done, we're done here. You're going to get -- COMMISSIONER COYLE: You've got to advertise. MR. KLATZKOW: A motion will be made, and that will be the end of it. MS. HUBBARD: Do you have other questions you want to discuss now? COMMISSIONER COLETTA: Until I hear him talk, I don't have any more questions. COMMISSIONER HENNING: I don't think you're going to hear him talk. COMMISSIONER HALAS: He's not going to be there. COMMISSIONER HENNING: He's not going to say anything. He's not going to do it without counsel. And then if his counsel misspeaks, he's going to say, well, he misspoke. COMMISSIONER COYLE: That's right. COMMISSIONER HENNING: If it comes out of his mouth, he's not going to -- it's going to be harder for him to take it back unless he says, well, I made a mistake. COMMISSIONER COYLE: So he won't say anything. COMMISSIONER HENNING: So he's not going to say anything. COMMISSIONER COYLE: Yep. COMMISSIONER HENNING: That's what I would do. MR. OCHS: And the last thing I will say to you -- and I don't want to further complicate this, but all of this is contingent upon a satisfactory interlocal agreement approved by this board on the 29th of Page 23 — Item #12C (Brock) September 15, 2009 September. And everybody's kind of thinking about that as an afterthought. But I'm going to tell you that that's going to be hard work between now and the 29th. COMMISSIONER COLETTA: Is this above and beyond the settlement, a recommendation from the mediator? MR. KLATZKOW: No. MR. OCHS: No, sir. It's an integral part of the mediation that -- the terms and conditions of the payments of the clerk will be embodied in an interlocal agreement, which this board required, you know, when you sent us -- CHAIRMAN FIALA: Do I need to say that on the record today? MR. OCHS: No, ma'am. MR. KLATZKOW: That's part of the settlement -- MR. OCHS: It's in the document. CHAIRMAN FIALA: Oh, okay. Okay. Now, everybody, give it ten minutes. I know we're already late, but Terri needs to eat and get her stuff back in the office. (The closed session concluded at 1 :26 p.m.) ***** STATE OF FLORIDA ) COUNTY OF COLLIER) I, Terri L. Lewis, Notary Public, do hereby certify that the foregoing proceedings were taken before me at the date and place as stated in the caption hereto on Page 1 hereof; that the foregoing computer-assisted transcription is a true record of my Stenograph notes taken at said proceedings. Dated this 28th day of September, 2009. TERRI L. LEWIS, Notary Public, State of Florida; My Commission No. DD 909558 Page 24 — Item #12C (Brock)