Audit: Oberlin should raise utility rates

By By Doris Maricle / American Press

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


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


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,


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.