State Audit Scrutinizes Our County Fair, by Jondi Gumz

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State Audit Scrutinizes Our County Fair

By Jondi Gumz

Longtime Santa Cruz County Fair CEO Dave Kegebein, who led a financial turnaround during 11 years at the helm, has lost his job after a state audit found the fair had no receipts and had no supervisory review for $163,442 of purchases from 2017 to 2021, including $31,345 for fuel for his truck.

On Oct. 4, the board voted 7-2 to terminate, with Loretta Estrada and Jody Belgard voting no.

Board president Don Dietrich is overseeing the operation until a replacement is hired. He said the board will take up the matter at a regularly scheduled meeting at 1:20 p.m. Oct. 25. The fairgrounds in Watsonville, like 51 others in the state, is a state entity and required to follow state rules. The state auditors found 12 problem areas and made 35 recommendations, requiring a response from the fair.

Most of the identified problems are due to lack of documentation and receipts for spending and travel, lack of an annual

review and lack of oversight by the CEO, the fair board and California Department of Food and Agriculture, the agency overseeing county fairs. Because of the fair’s lack of documentation, the relationship between the fair and the Santa Cruz County Fairgrounds Foundation, a 20-year-old nonprofit that Dave Kegebein raises hundreds of thousands of dollars for improvements such as water tanks, storage, and outdoor lighting, via events and alcohol sales, also came under scrutiny. The audit said an equipment lease agreement between the two entities did not appear to be at arm’s length, as required.

Don Dietrich

Family Legacy

Dave Kegebein’s ties with the fair go back to his childhood when his father, John Kegebein, worked for the fairgrounds.

John Kegebein put in 50 years at the fair, most recently in 2007 as a volunteer CEO for two years to help bail out the fair, which was in financial straits, and he’s still active with the Ag History Project, which is based at the fairgrounds. John’s wife Jeannie, stepmother to Dave, is the volunteer executive director of the Fairgrounds Foundation.

Yvette Jordan ran the fair for three years, and left the budget in the red.

The next CEO was Michael Bethke, a building contractor with a master’s degree in urban planning, Rotarian and Santa Cruz Chamber Man of the Year. Bethke faced a deadly horse disease, equine herpes myloencephalopathy, which shut the horse barns, lawsuits over a planned rodeo, and a threatened lawsuit by Max

Kelley and his neighbors and did living close to the fairgrounds racetrack over noise from Speedway races.

Overspending was an issue, and after Bethke resigned, Dave Kegebein, a strawberry grower, offered to come in as a volunteer manager.

When his two-year stint was successful, Kegebein, 56, was offered a paying position to be in charge.

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Accounting Manual

The fair, also known as the 14th DAA, is required to respond in writing on

Dave Kegebein’s Departure Letter

On Oct. 4, at a specially-called board meeting of the 14th District Agricultural Association, otherwise known as the Santa Cruz County Fair, the California Department of Food & Agriculture (CDFA) Deputy Director Michael Flores terminated me as the CEO of the 14th District Agricultural Association.

District Ag Associations are state owned agencies with a nine-member board of directors that are appointed by the Governor so one might wonder how one individual bureaucrat from Sacramento can pressure the local board of directors. It’s really pretty simple, just show up at a fair board meeting with a team of 5 staffers dressed up in fancy clothes and intimidate, coerce, threaten and railroad the local volunteer board with a threat of state takeover and dismissal of the directors.

Of course, if you are a state official coming into a community to seize control of a beloved community asset you might feel a bit unsafe so you bring along two Highway Patrol officers and three sheriff’s deputies.

“Kegebein Letter” page 7

how its 35 recommendations to improve internal controls, operations, and compliance with state laws and regulations will be implemented.

Good internal controls are essential to assuring the accomplishment of goals and objectives, according to the University of Florida Office of Internal Audit. They provide reliable financial reporting for management decisions, and they ensure compliance with applicable laws and regulations to avoid the risk of public scandals.

John Skinner, a floriculture volunteer at the Santa Cruz County Fair rallying Kegebein supporters, contends the CDFA has not conducted any staff training for 10 years.

He said Kegebein was issued a state credit card and debit card in 2016 and he contends neither Kegebein nor the board was made aware of reporting requirements.

The CDFA has, however, produced regulations for county fair leaders, the 288-page Accounting Procedures Manual in 2009 and a 60-page update in 2017, both posted online.

In 2011, the Santa Cruz County fair board discussed the feasibility of hiring a comptroller for one to two hours a week to oversee finances as a third-party expert but concluded the fair could not afford it.

Patrice Edwards, publisher of Aptos Times, served on the fair board from 2006-2011.

“These are the same problems we had in the five years I was on the board and chair of finance,” she said.

“The Finance Committee had instituted a policy where every check needed two signatures and no reimbursement took place without a receipt or invoice,” she said. “Had the board followed through on this policy set forth by the Finance Committee, Dave would not have been put in this position.”

She credited Kegebein with orchestrating a “spectacular comeback” for the fair.

“Lack of oversight on the part of the board’s responsibility to review the finances created this situation, along with the state’s lack of follow-through and Dave’s lack of documentation,” she said. “Very sad for our community.”

Red Tape Compliance

In his departure letter, Dave Kegebein said CDFA did not provide training on procedures or audits when he started in 2012.

He called the issues in the audit “red tape compliance that we were not aware of.”

When he started, he said it was “chaos,” with multiple lawsuits and staff dysfunction.

He said his 11-year tenure improved the facilities, which had deteriorated to be unsafe, to the best condition ever, garnering praise from customers and the community.

He also said finances have improved, from 2012 revenue of $1.3 million, and no cash on hand, to revenue of $4 million in 2021 with cash on hand of $1.75 million.

He said he had supplied “$650,000 of various resources to the fairgrounds including two years of not accepting compensation and benefits, supplying multiple pieces of equipment for daily operations, and using my own truck for transportation.”

He said he put 200,000 miles on his pickup truck doing fair business.

He contended he could have been reimbursed $116,000 over the years for his vehicle use but he opted to ask only for fuel and oil consumed, which in the audit was $35,000.

“Kegebein” page 8