The Allen Parish Courthouse in Oberlin is one of the historic buildings in the parish. (Doris Maricle / American Press)
Last Modified: Tuesday, January 14, 2014 11:08 AM
OBERLIN — The town should consider raising its utility rates to offset declining income, according to its auditor.
Oberlin has a $303,000 deficit up from a previous deficit of $209,000, leaving it unable to pay most of its bills, according to accountant Royce Scimemi, who presented the findings Monday.
Most of the loss is due to less money coming in from water and sewer rates and police fines not being collected, he said.
“You may want to consider raising water and sewer rates because those funds had a loss,” Scimemi said. “The water, sewer, and gas make money to help fund the police department operations,” he said, noting that while police revenues are down, spending is up.
The audit also found inconsistencies in the way money is handled and a lack of collection of revenues which have caused cash flow shortages, Scimemi said.
The audit found problems with collection of delinquent utilities, noting a significant number of accounts are over 90 days past due including a current council member whose debt is growing deeper. The audit did not identify the council member.
Town ordinances requiring utilities to be shut-off for non-payment are not being followed and extensions are being granted to some customers, the audit found. Such practices place the town at risk of loss with accounts that are not current, Scimemi said.
Scimemi urged the town to enforce cut-off procedures and monitor accounts with proper actions taken on delinquent accounts.
The audit also found problems with collection of occupation and ad valorem taxes. According to the audit, certain businesses were allowed to operate without filing or paying their occupational licenses and no documentation of enforcement of the businesses could be provided.
Alderman Phil Beard said his occupation license was over $1,700 last year.
“I want everybody who operates a business to have to pay theirs too,” Beard said.
Ad valorem taxes are also not being collected timely and property is not being adjudicated or sold at tax sales as required by the state.
Delinquent customers should be notified and procedures enacted for those who fail to pay, he said.
Building inspections and permit fees are also not being collected, he said.
Many residents at the meeting voiced concern about the town considering rate hikes while some funds are not being collected.
“Before you raise the rates you need to go back and make those pay who are in non-compliance,” one resident said.
Another resident agreed saying the town needs to consider raising the rates only after all the ones who have not been paying settle their debt.
Another resident voiced concern for residents on fixed incomes who may not be able to pay the rate hike.
Beard assured residents that the council will consider all options including collecting past due amounts before raising rates.
The fire insurance policy for the town expired in August 2012 and has not been renewed, Scimemi.
“This is a very dangerous risk,” he said. The audit also found that since payroll time cards are used to document time manually without the use of a time clock no safeguards are in place to prevent payroll overpayments.
In one instance, a dry line was used on a manual time card that was not authorized on the face of the timecard, which could lead to more time being paid than worked.
The audit recommends the town buy and install time clocks and require all employees except salaried employees to use them.
In a separate finding, paychecks were issued to two former employees. In both paychecks in question, a time card had previously been completed by the employee and submitted to their supervisor for approval and submitted to the clerk for payroll processing. In both instances, a check was issued and cashed by the employee and a subsequent payroll check was also generated with the mayor’s approval - one verbally and one written.
In one instance, the mayor’s administrative assistant, who had never before prepared payroll checks, prepared the check without the town clerk’s prior knowledge. In both instances, direct supervisors of the employees stated that the employees did not work the corresponding hours. In one instance, additional hours worked on Sept. 7 and Oct. 11, 3013 were paid a month later.
The town should ensure original payroll checks are proper and accurate and not issue paychecks subsequent to normal payroll processing. A time clock would also ensure accuracy, the audit noted.
Smith contends employees were paid for actual time worked including some weekend and after hours work not documented on the time card.
Other findings included problems with cash and other receipts not being deposited daily or on a timely basis; undated deposit slips; lack of documentation of authorization on utility adjustments and lack of segregation of duties.
Scimemi said the town should be making deposits daily, even if they are unsure of where the money came from, for collection and control purposes.
The town also was cited for not funding the required reserve accounts in accordance with the USDA Sewer Revenue Bond agreement. Only 11 of the 12 payments were made.
The report also cited a full-time police officer for being allowed to serve without the required basic training course and passing the POST statewide exams within one year of employment, a possible violation of state law. The officer has been given until June 29 to complete the training and pay any fees.
In the most egregious finding, the audit found that former mayor Rick Smith may have violated state law, the town’s subdivision regulations and state trespass laws when he had town employees install sewer and water mains in a subdivision he owns using $693 in town materials, equipment and manpower.
Smith has strongly denied the claims of having work done on private property, saying the town adopted the subdivision in 2001 before he became mayor and as the developer he met all requirements. He asserts the town has maintained the subdivision, including cutting grass in ditches, fixing streets and repairing water lines before he was elected and residents have been paying for town utilities.
However, Scimemi said he does not believe the town actually adopted the subdivision because Smith only completed part of the requirements and a plat was not filed at the courthouse. The property probably should have never been sold and town crews should not have been performing work without proper easements and right of ways being obtained, he said.
The audit notes the town approved and took responsibility to maintain the subdivision’s streets in May 2001, provided that the subdivision meet specifications of the town’s subdivision ordinances. However, the audit contends the subdivision was never approved by the town because the ordinances were never met, only part of the sewer and water mains were installed and a plat was never filed at the parish courthouse.
Without meeting the requirements, the audit states rights of ways were never established for utilities which would prevent the town from maintaining streets, sewer and gas infrastructures without violating state laws or trespassing on private property. The audit says costs to install the sewer and water mains should have been borne by Smith as developer of the subdivision.
Posted By: Fontenot On: 1/25/2014
Title: A small town with BIG BIG problems
Its called the buddy system.
Posted By: C. L. Armnentor On: 1/14/2014
Title: A small town with BIG BIG problems
How could this happen? Looks like the city employees have a lot of friends and they just let everything ride. Oberlin needs a Sgt Major or Master Chief to go in there and kick --- and take names. I imagine the employees take smiles for payment of water and sewage.