Seaside releases audit of councilmember expenses; DA will not charge former councilmember Kayla Jones.

A forensic audit of Seaside City Council members' expenses has been released, detailing tens of thousands of dollars in expenditures that violated city policies and city budgets. 

The majority of the questionable expenses were made by former councilmember Kayla Jones, who resigned Dec. 1, shortly after a failed run for mayor. During Jones' campaign for mayor, public records revealed her travel expenses and childcare expenses far exceeded those of her colleagues on council, and it became a campaign issue that galvanized both her supporters, and those of Ian Oglesby, who won the election. 

Amid the swirling allegations, City Council voted unanimously to authorize an audit in September to examine expenditures by all councilmembers going back to July 2015. 

The audit, conducted by the firm CliftonLarsonAllen LLP, was completed on Jan. 18, then turned over the Monterey County District Attorney Jeannine Pacioni for consideration of whether to prosecute Jones.

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Pacioni announced today, March 7, that her office would not file charges against Jones, and city officials released the audit to City Council and the public for the first time.

The 95-page report and 962 pages of attachments are viewable on the city's website.

"After reviewing an audit commissioned by the City of Seaside for potential criminal charges against Ms. Jones, the District Attorney’s Office has determined that there is insufficient evidence to prove that Ms. Jones committed a crime," according to a statement released by District Attorney Jeannine Pacioni.

"To prove criminal misappropriation of funds by a public official, it must be proven, beyond a reasonable doubt, that the official knowingly acted without legal authority or authorization. The evidence presented to the Monterey County District Attorney’s Office showed that city administration approved all expenses incurred and reimbursements requested by Ms. Jones, rendering insufficient proof that she knowingly acted without legal authority or authorization."

The audit shows authorization came from a variety of channels, often from now-retired finance director Daphne Hodgson, sometimes from City Manager Craig Malin and sometimes from Malin's executive assistant, Rosa Salcedo. 

Auditors found inconsistencies for numerous expenditures and failures to properly report items for several councilmembers, both current and former, but the total number of instances and dollar figures were relatively small. 

Councilmember Jason Campbell, for instance, exceeded the city's meal budget by $14.73; former councilmember Dennis Alexander by $76.90. 

Jones' expenditures violated city policy and budget on several fronts. Auditors found that over two years, she was reimbursed $11,469 for childcare expenses—beyond the city's budget of $6,000 for that time period. 

Those expenses included $3,439 to her mother, Bree Jones, and $5,992 to her grandmother, Michelle Saleh, for childcare expenses, though Jones told auditors Saleh never directly provided childcare, but managed the process on her behalf. 

Auditors found that only one childcare expense—$56 for the duration of one event, to Hailey Nelson—had a supporting receipt. 

Auditors struggled to piece together supporting receipts for 72 events listed for 20 reimbursement requests, because Jones does not use a checking account, and paid childcare providers in cash and using Venmo. 

“Council Member Jones has not provided CLA with sufficient information to support the childcare expenses she claimed on the Family Care Reimbursement requests submitted to the City, with the exception of one request for $56.00,” the audit states. 

The remaining $11,413 are "unsupported and possibly false expense reimbursement requests."

Jones did not respond to a request for comment on Thursday afternoon. 

As an advocate for the city's family care reimbursement policy, Jones wanted to see expenses covered for people who care for young children or elderly relatives, enabling them to serve on council; for meeting that ran late, her reimbursement requests sometimes included overnight care, because her daughter would sleep over at her grandmother (Bree's) house. 

Malin notes the childcare reimbursement policy has been suspended, and says if it's ever reinstated, he expects it will be more complex as to specifying what's appropriate; there was no language in council's policy as to whether family members may provide care, or caregivers must be licensed. 

The city has also changed its policy, he says, so that all councilmember expenses must be approved in advance, even those that are within budget. Jones' travel expenses exceeded the $1,500/year allocation, so city administrators upped her budget to $8,000; she exceeded that amount, as well. 

Because of her frequent travel and requests to staff, Jones was issues her own city expense card, a CAL-Card, on March 1, 2018. That card was supposed to be used exclusively for city business, but auditors found $2,766.44 in personal expenses. 

Auditors also looked closely at a trip Jones took to Hilo, Hawaii, for a grant-writing workshop. She repaid the city $490 for expenses associated with that trip, but auditors found that she could have chosen other dates for the same workshop in California. Their research revealed that between the date of her canceled San Mateo grant-writing class and her Hawaii class, the same workshop was offered in Ontario; Merced; Walnut Creek; and San Diego. 

CLA determined $766.31 was personal expenses, and wrote that the city should consider whether the entire Hawaii trip—$4,345.40—should be treated as a personal trip. 

They also found $2,505.29 for four separate trips that were canceled and never repaid, for things like airfare and car rental costs. 

“It appears to CLA that Council Member Jones did not take her stewardship of limited City funds seriously, which resulted in wasteful spending by the City,” the audit states. 

Malin says the city should pursue getting repaid by Jones in the full amount.  

In the interest of building public trust, Malin notes the city's transparency. "The city said we would conduct a forensic audit and we would release it, and we did. If you conduct a forensic audit, you will find things to improve. Seaside was open enough to do that, and as soon as the DA was done, we released it," he says. 

"The councilmember who had the greatest variance from budget is no longer with us. The finance director and assistant finance director have moved on. We've implemented rather significant policy changes, including a finance transparency portal on our website," he adds.