The state's Pooled Money Investment Board dealt today with Modoc County's request for an emergency $12.5 million loan to stave off bankruptcy in less than a minute by doing nothing.
The three-member board's staff said that the request presented thorny legal and financial issues that have not been resolved and that the state treasurer's office is exploring other methods of helping Modoc, a sparsely populated county in the state's northeastern corner.
On Monday, Modoc County's supervisors asked the investment board as a "last resort" to keep it afloat, saying that in the absence of state aid, the county cannot meet its July payroll. Supervisors also retained a law firm to prepare for bankruptcy.
The county needs the money to plug holes in its restricted accounts, such as road maintenance funds, from which the $12.5 million had been diverted to prop up the county's money-losing hospital, Modoc Medical Center.
The clandestine money shifts were uncovered in an audit, freezing the county's finances and rendering it unable to secure commercial bridge loans.