Wednesday, August 10, 2016
[Kern County] State controller confirms sloppy fiscal management at Lamont PUD
Blog note: this article references a recent grand jury report.
The Lamont Public Utility District has lost more than $224,000 in cash and check deposits, the California State Controller's office has found.
Being accused of incompetence, corruption, cronyism, and playing fast and loose with the public’s money is not a new experience for the Lamont Public Utility District.
The agency that provides water and sewer service to some 18,000 customers in the tiny farm town of Lamont has been the target of such accusations, on and off, for at least a decade.
But 2016 may be the agency’s year of reckoning.
A state review of the troubled utility district found inadequate cash handling and poor accounting practices allowed $224,000 to go missing, the office of California State Controller Betty Yee announced Friday.
The controller’s team examined 79 elements of the district’s work and determined 65 of them, or 82 percent, involved deficient policies and procedures, according to a news release from the controller’s office.
It said the most significant findings included poor cash handling procedures, lack of segregation of duties, failure to conduct timely reconciliations, insufficient review of expenses and inadequate accounting software. The report can be found here.
“With districts of this small size, limited staff resources can make it difficult to segregate duties,” Yee, the state’s chief fiscal officer, said in the release.
“This makes it all the more critical to have strong manager oversight, cross-training, complete documentation, and up-to-date technology. It is likely other small districts are facing similar challenges, with few staff and few citizens watching.”
Peter Cosentini, a professional city manager who earlier this year temporarily replaced fired General Manager Mario Cervantes as interim general manager, told The Californian in April that “a quarter of a million dollars” had essentially walked “out the door.”
But on Friday, Cosentino was no longer listed as interim GM on the agency’s website. That title is now held by Martin Nichols, who on the day the state’s scathing report was released, was not in the office.
A voice mail and an email were left for him.
While the report is highly critical — and it follows a blistering report last April from the Kern County grand jury — the controller’s office acknowledged Friday that the Lamont PUD was already working toward solutions.
In a letter to the PUD’s board of directors signed by Jeffrey V. Brownfield, the chief of audits at the controller’s office, Brownfield thanked the PUD staff and management for their cooperation.
“It should be noted,” Brownfield wrote, “that the district is in the process of developing corrective actions and implementing our recommendations. Therefore, the district should be commended for taking these matters seriously and being proactive in resolving the noted deficiencies.”
The state report is no surprise to the PUC. In his April interview, Cosentini said auditors from the controller’s office had been there.
One of the auditors “said, ‘you have minimal staff here. It’s so lean that if one person (in) the organization goes away, you become non-functional,” Cosentini said in that interview.
The auditor wasn’t wrong, he said.
“I see what we do here and the people we have to do it and we’re bare-bones. That’s the underlying bedrock problem here. You don’t have enough people to do the job.”
Using a Brown Armstrong audit of the Lamont PUD presented to the district’s governing board in March, the grand jury concluded the Lamont PUD had a problem with too much overtime, its pay structure was a mess, its water fund was propping up its sewer fund, which has run a deficit for 16 years, and the district desperately needed professional financial staff.
Cosentini told The Californian the governing board approved his action plan to respond to the audit and agreed to consider hiring new financial staff — potentially a financial manager with CPA certification — to run the district’s finances.
Unfortunately, without the new interim manager responding to a reporter’s questions on Friday, it’s impossible to determine whether the Lamont PUD has since hired new financial staff or made any progress in determining where the lost $224,000 ended up.
July 29, 2016
By Steven Mayer