Thursday, August 2, 2012

Lake Worth faulted in Billing procedures to Regional Sewer Customers

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No surprise here--Audit finds Lake Worth had sloppy billing procedures.

When Susan Stanton was hired, she soon found out that we had regional sewer customers that had not paid their bills relative to moving sewage to a regional treatment plant. We were owed in excess of $10 million and an Audit began in March 2011. Prior to Stanton, the city had swept it all under the rug.

The State Audit determined the following:

  • Renewal and replacement costs were not always calculated properly
  • Debt costs were not always passed through to those cities
  • Supporting Documents were not always retained by staff
  • Operating and maintenance costs were not always calculated correctly
  • Budgets were not given to the cities for six years through September 2011

It is still unclear if we will ever re-capture money owed to the City of Lake Worth because of Staff incompetence or mis-management. Until these issues are resolved, the Sub-Regional fund does not have sufficient revenues to maintain operations--this fund's unrestricted reserves will be totally depleted in less than 2 years and the Lake Worth taxpayer will absorb the cost.

It always simply amazes me, considering we pay great salaries with great benefits that remain 70% of our fixed costs of our entire operating budget, that we get incompetence at this level. If it were not for Susan Stanton, we might never have found out that seven cities owe us $10,418,237, with a portion of that non-collectable because of basic procedures not in place.

P.S. Why didn't we hire Internal Auditor, Robert Marksmeier?


8 comments:

Anonymous said...

Boy you really spun that story. What did the State audit say the cities owed Lake Worth? Was it anywhere near the $10+ million you say Stanton discovered was owed? Who from the City went to Tallahassee to try and stop the State audit from being done?

Anonymous said...

Part of Jeff Clemens quote in FB:
"And for the record, the City did NOT order the audit. They simply had no choice but to go along with it when the 7 cities demanded it. Then the City fought the scope of the audit and refused to open the books. It wasn't until the State Joint Legislative Auditing Committee ruled in March 2011 that the audit had to include all financial records that the ball finally started rolling."

Anonymous said...

Lake Worth has a 20-25% share in the Regional Sewage District. We then formed The Sub-Regional Sewage District (6 municipalities and PBSC + LW) and required that the Capital Programs of the Regional reflected the needs of the Sub Regional District.

All went well as LW was able to pass through to the Sub Regional District a pro rata share of the CIP allocated to LW. Then the disagreement, made worse by Stanton’s negotiating techniques. Now we are facing a share of a $200,000,000 Regional CIP and the possibility of one or more sub regional customers bailing out on us. Of course, LW has to pick up 100% of what the defectors would have been charged.

The recent upgrades and expansion of Palm Beach’s system which allow them greater flexibility, could possibly be a matter of significant concern over the short term.

Lynn Anderson said...

the disagreement was made worse when Stanton uncovered the fact that 7 regional sewer system entities were not paying their fair share of the costs especially the renewal and replacement fund. Their attitude was, prove it. They demanded everything imaginable from the City to prove its case. We sued. They knew, all along, that they were not paying for a service they were getting. Those cities, because they did not get a bill, stopped paying. It was later that a State Auditor came in. It had nothing to do with the lack of Stanton's negotiation skills as you put it. We already know how good she was in that area.

It seems to me that Bornstein now has a conflict of interest here as he represented one of the deadbeat cities and had to have known Lantana owed the money.

To use the excuse that "we didn't get a bill," is no excuse. Over time, because of a change in personnel, records get lost, misplaced, etc.

Anonymous said...

Without commenting on your position Lynn,
wasn't it very appropriate for the CM's & Staff of our municipal customers to demand a detailed audit------and making a thorough review of the audit before paying what we alleged---given the mistakes that LW Staff made on previous bills?

After all, they had the responsibility of protecting and responding to their citizens.

Of course if the audited number really is close to $1,100,000, we will have to rebate to some municipalities.

Lynn Anderson said...

Anonymous above-
I agree. As it turned out, all of the entities really did screw the City of LW because LW could not prove its case. Although all of them knew they owed the money, they are going to beat us on these points. Pathetic. Sometimes you win. Sometimes you don't. It just shows how important records are. It also shows, staff that runs this city and makes expensive suggestions that are voted on, can be incompetent and cost us millions.

We really need to do better--the understatement of the Century.

Anonymous said...

Oh great. This will be another law suit settled and we will pay.

Anonymous said...

Who cares if we have to pay? Lake Worth has TONS of money to spare. Why else would three Commissioners think nothing of having a special election when the issue could have gone on the ballot for nothing?