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Findings and Recommendations 7 findings
F1
Significant turnover in the EID finance department from 2022-2023 contributed to staff’s inability to maintain financial policies and transparency.
Related Recommendations (1)
R1
– Direct the Auditor of the 2024 ACFR to verify by September 30, 2025, and publicly report that all significant deficiencies noted in the 2023 Auditor’s Memorandum of Internal Control have been rectified and not repeated through actions documented and taken in Management’s Response to the Auditor’s Recommendations.
F2
EID lacked or ignored accounting policies regarding commingling funds and transfers between water and wastewater enterprises. Even very large transactions of this type were not discussed or approved at the Board level.
Related Recommendations (1)
R2
– Direct staff to create and make publicly available a separate report on the District's Facility Capacity Charge (FCC) account of each fiscal year end, which includes all the information in California Government Code Section 66013(d), and as generally shown in the example reports provided from other water districts herein.
F3
Statutory requirements for reporting Facility Capacity Charges (FCC) are being met primarily through the Annual Comprehensive Financial Report (ACFR). The lack of a dedicated compliance report reduces transparency and traceability, making it challenging for the EID Board and public to provide effective oversight.
Related Recommendations (1)
R3
– Direct staff to create policies by September 30, 2025, that establish a finance committee with the responsibility to act as a crucial resource to the Board, providing analyses and recommendations critical to the organization's financial decision-making process.
F4
The issuance of a Pension Obligation Bond in 2022 carried financial risk that was not adequately communicated. The Board provided only minimal oversight of the decision, deferring completely to the General Manager and financial advisors, rather than providing sound governance.
Related Recommendations (1)
R4
– Direct staff to implement a revised Capital Improvement Plan (CIP) project tracking page that offers a more realistic total cost estimate, including construction cost estimates, for each project throughout its duration in the CIP
F5
The EID Board collectively has lacked sufficient financial expertise and engagement in recent years to provide adequate oversight in the absence of a financially focused subcommittee or neutral outside expertise.
Related Recommendations (1)
R5
– Direct staff to extend its Capital Improvement Plan (CIP) from a 5-year to a 10-year planning horizon by September 30, 2025, which will provide more flexibility in managing budgets and allow for more stable rate adjustments over time. RESPONSES
F6
Leaving construction cost projections out of Capital Improvement Plan (CIP) reports for several years gives a misleading picture of financial requirements and may serve to delay rate increases but may make future rate increases even higher.
No recommendations for this finding
F7
Boards in the past decided to implement smaller rate increases than what was recommended by staff, but recent history has shown that larger rate increases, including double- digit increases, are being considered and have been accepted. The double-digit rate increases are partially due to deferring maintenance projects to keep rates low in the short term. RESPONSES
No recommendations for this finding
Agency Responses 1
Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.