Ongoing Turmoil: CRFR financial woes continue to mount | News

The suit alleges that Medina was the subject of defamation, wrongful termination, retaliation, violations of the First and Fourteenth Amendments, and discrimination.

Before Moody gave his report on the district’s finances, Blitz informed the board that U.S. Bank “has effectively canceled” the district’s tax anticipation line of credit, which has been relied upon “year after year” to support district operations from the beginning of the fiscal year until November, when the district receives its property taxes. 

“This is a huge problem,” Blitz said. “Because unless we solve it, we can’t meet payroll at some point.” 

Blitz said that he had considered five solutions to the issue of the lost credit line. Of the five solutions, Blitz said he “widdled them down” to one viable solution. Blitz did not feel that approaching a smaller bank would be fast enough to secure the funds in the coming months. 

Blitz said the best option would be to approach the City of St. Helens for a “secured loan” to keep the district afloat until the district could pay the city back in November with tax revenues. 

Moody, who is a partner with Merina+Co, said in his presentation that in their projections of district finances, the auditors did not consider the lawsuits against the district filed by Medina or the lawsuit previously filed by former employees. After discussing the processes by which they came to their conclusion, Moody began to describe the financial picture of the district. 

Moody said that on July 1, CRFR had beginning unrestricted cash deposits of $3.1 million. As of Aug. 16, CRFR had $1.3 million, which Moody said made some sense given two months of payroll and other expenses.   

“$3.1 million to start the year, the estimated cost of operations, payroll, and materials and services for the first four months is about $4.35 million,” Moody said. “The math isn’t hard to see there. Without significant other revenues or cash coming in, you’re going to run out of money before that four months.”

Moody said there would be some money coming in but not enough to make up the deficit, which is why in past years, the district has borrowed money to make ends meet until November’s property tax revenues. 

In addition to the short-term financial need, Moody said there is also a structural deficit for the district. Moody said that estimated revenues for 2023/24 are $11.4 million, but the expenses are about $13 million, leaving a $1.6 million deficit.

“It’s not sustainable,” Moody said. “You’ve budgeted for expenditures to be higher than revenues, so the result is basically a deficit, and you can chew through a fund balance until it’s just not there anymore.” 

Moody said the structural deficit had been the case in “several budgets going back.” Moody said the deficit for the year 2023/24 fiscal year is compounded each year in their projections. Moody said the deficit will get bigger year after year.  

The estimated beginning budget balance of $1.4 million in 2023/24 will be diminished to a $283,000 deficit at the end of the year, according to Moody. 

Moody then dove into the impact that the labor contract that is in arbitration between the district and the union would have on the numbers. 

Moody said it was difficult to forecast because they didn’t know how the arbitration would resolve. The contract would be retroactive to July 1, 2022. That would mean that the EMS personnel would garner backpay under the terms of the new contract. 

The contract in question was signed by the previous board, but has been in arbitration because the previous board said they signed it in error without the understanding that a wage table in the contract entitled EMS personnel to a 10% premium pay into base salary, in addition to a 2% increase, and a $7,500 stipend.  

Blitz spoke about the arbitration process earlier in the meeting and said that, in hindsight, there were significant errors made during the contract negotiations between the union and the district.   

Blitz said that the board should have made it clear that the board would not be able to meet the demands of the contract that was signed. What occurred at arbitration was that two union executive board members admitted to knowing that the district had made errors in their presentation of the contract, and the union members did not disclose it to the district bargaining team. 

“That was a surprise development for everybody in the course of the arbitration hearing,” Blitz said. “Some might call it bad faith bargaining, who knows. It’s a significant problem, and we’ll see what the arbitrator does with it.” 

Moody said that if the arbitrator finds in favor of the union, there will likely need to be an estimated $247,000 retroactive payment. If the arbitrator rules in favor of the district, there would be no retroactive payment, and there would be reductions in personnel service costs for 2023/24 and going forward, amounting to about $313,000 a year. 

Though the reduction in pay will not erase the full scope of the issues, Moody said it would certainly help. Moody said immediate and significant steps to “reverse the current financial direction” are necessary, including cutting costs and additional resources. 

“Without some pretty significant and timely steps, we question the sustainability of the district over the next 12-24 months,” Moody said. “It’s a big deal, it’s a big deal for the community, and it’s a big deal for you guys.”

In a lawsuit filed Aug. 17, Medina named the district, St. Helens Professional Fire Fighters Association IAFF Local 3215, board members Austin Zimbrick, Kelly Niles, Rick Fletcher, and Ryan Welby, union president Aaron Schrotzberger, union vice president Aaron Peterson, union secretary and treasurer Lisa Strolis, union administrator Jeff Lockhart, paramedic and union member Kyle Melton, and Ronda Melton. 

The suit claims that Medina was the subject of defamation, wrongful termination, retaliation, violations of the First and Fourteenth Amendments, and discrimination and demands a jury trial. The suit makes a claim for $19,950,000.  

“The Plaintiff seeks injunctive relief, compensatory damages, and attorneys’ fees due to the unlawful retaliation against them for their right to free speech and due process in reporting official misconduct,” the suit says.  

The suit claims that the board violated Medina’s contract with its termination of him without notice at a board meeting on Aug. 8. 

The meeting began with a surprise addition to the agenda, which included a motion to terminate Medina with immediate effect. After much discussion, the three new board members, Welby, Zimbrick, and Fletcher, voted to immediately remove Medina from his position.  

In the suit, it is stated that even with cause, Medina had a right to have notice of allegations and potential sanctions and the date and time when the district would consider charges and sanctions.

The suit also alleges that Medina was terminated after he brought attention to the financial irregularities he noticed within the district. Medina made “a good faith report in the public interest about misconduct by public employees and public officials.”

“Plaintiff suffered an adverse employment action when Defendants CRFR, Fletcher, Welby, and Zimbrick terminated Plaintiff for his protected activity. Defendants’ adverse employment action was directly related to the good faith reports made by the Plaintif,” the suit says.

Additionally, the suit alleges that Medina was subject to defamation relating to false statements made by union members and individuals to “interfere with his agreement with CRFR.”

“Throughout the course of the Plaintiff’s employment as Fire Chief with CRFR, he has been subjected to defamation by oral and written statements made by Defendants Fletcher, Zimbrick, Welby, Niles, Peterson, Schrotzberger, K. Melton, Lockhart, Stolis, and R. Melton at public board meetings of CRFR, on Defendant St. Helens Professional Fire Fighters Association Local #3215, Facebook site, in text messages, and statements made to the local media newspapers, The Chronicle and The Spotlight,” the suit says.

The suit seeks Medina’s reinstatement with back pay, economic and emotional distress damages. The lawsuit also seeks unspecified punitive damages against many of the defendants.

At the meeting where Medina was terminated, Gary Hudson, the lone director who voted against removing Medina, warned the new board that this could be a consequence. Hudson said that any board member who voted to take this action could be liable if Medina chooses to bring litigation against the district regarding his termination. Hudson resigned the day after the meeting. 

It should be noted that Medina’s termination follows months of controversy within the fire district. At a board meeting on Jul. 11, Zimbrick, Welby, and Fletcher were sworn in as the three new members of the district’s board and, among the proceedings, elected to continue the forensic audit that was ordered on Apr. 28.

Prior to the forensic audit being ordered, a civil lawsuit was filed against the CRFR and Chief Joel Medina on Apr. 7 by former employees Anika Todd and Jennifer Motherway, alleging sexual harassment, wrongful termination, retaliation, and a hostile work environment. A third employee, Monica Cade, joined the lawsuit on Apr. 28. The local union also filed a unanimous vote of no confidence against Medina Apr. 11.

A second, amended vote of no confidence from the union was filed Aug. 7. The second Vote of No Confidence expressed concerns over Division Chief Jimmy Sanchez, Deputy Chief Eric Smythe, and then Board Director Hudson.  

At the end of the emergency meeting held Aug. 17, the board ultimately resolved to send Division Chief of Finance Sanchez to meet with St. Helens City Administrator John Walsh about securing funds so the district can operate until November. 

Blitz also encouraged the district to get creative with their solutions. Blitz advised that the district’s chiefs and union work together to find “out of the box” solutions to the district’s financial challenges.

Board President Niles put forth the motion.

“The board authorizes Chief Sanchez to go have a conversation with the City Manager John Walsh to see if the city can help us out in our short-term financial need in a way that is beneficial to both the district and to the city,” Niles said. 

Niles said that the board will have the final say on any decision that arises as a result. 

The Chronicle contacted Walsh for comment from the city about CRFR’s upcoming fund request. Walsh said that the council discussion and approval would be required.

Walsh said that the city would need assurances that the loan be repaid. That assurance could come in the form of a priority lien on the district’s November tax revenue. The city has priorities of its own that require funding.

“The City is also facing budgetary constraints in the coming fiscal year, and funding for essential services that the city provides – police and public works – is a factor in the city’s ability to assist other agencies,” Walsh said.

The city does have sufficient reserves to accommodate the short-term loan, according to Walsh. Still, he noted that Columbia County may also be able to support a request from the district. 

While the city may be able to support the district with its short-term financial need, Walsh said that the future of the district’s finances will take problem-solving.  

“Emergency services are an essential component of safe and livable communities. A temporary loan secured by the district’s tax revenue would bridge the gap and avoid a disruption in services,” Walsh said. “If the district continues to operate at a deficit, they will need to adjust service levels and look for solutions to operate within available resources.”  

Follow this developing story at thechronicleonline.com and in the Wednesday print editions of the Chronicle.