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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 10 findings
F1
Page 70
District audits done by a private auditor for the past three years have indicated many flaws in the District's accounting systems. Recommendations included: a. Establish administrative policies and procedures b. Establish an investment policy c. Maintain an adequate accounting that completely and at all times shows the financial condition of the District. 2. Some suggestions have been repeated for two to three years with no action taken.
F2
Page 67
The Board requested that the district engineer develop a facilities needs assessment plan for the District. Three alternatives were presented in May 1994.
F3
Page 67
On July 11, 1994, the Board passed resolution #231 adopting a ten-year plan and setting rates to most customers of $1.97 per 1000 gallons plus a monthly meter charge based on meter size. They also passed a resolution that the Board's intent was that the increased revenues be used primarily for projects outlined in the ten-year plan.
F4
Page 67
The water charge of $1.97 per 1000 gallons was described in Ordinance 97-1 as $1.45 for operating expenses and $0.52 for capital projects. (As presented on the monthly billing, this information is confusing to customers.) The $0.52 fee together with the connection fee and interest income are restricted funds and are to be used only for capital projects.
F5
Page 68
The District has a separate bank account in which to hold funds allocated for capital improvement projects. The restricted funds balance on February 28, 1999, was $574,893.
F6
Page 68
There is no evidence of Board policies for accounting procedures of these restricted funds.
F7
Page 68
The District has relied on its auditor to reconcile the restricted funds during his annual audit rather than the District reconciling funds on an ongoing basis.
F8
Page 68
California Water Code Section 31007 mandates that the rates and charges collected by a district shall be established to yield an amount sufficient for the following: a. Provide for repairs and depreciation of works owned or operated by the district. b. Pay the interest on any bonded debt. c. So far as possible, provide a fund for the payment of the principal of the bonded debt as it becomes due. d. Pay the operating expenses of the district.
F9
Page 68
Water Code Section 60245 mandates, "The Board shall fix such rate or rates for the sale or exchange of water for replenishment purposes only as will result in revenues which will pay, insofar as practicable, the operating expenses of the district."
F10
Page 68
For several years, costs have exceeded $1.45 per thousand gallons.
Recommendations 2
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R1Page 67The Board should explain clearly to its customers the rate structure. This should include a statement of the reasons behind the payment of various portions of the water charge and connection fee: normal operating expenses, plant expansion necessitated by increased demand, plant replacement because of wear, and system upgrading because of mandates.
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R2Page 67The Board should establish policies concerning restricted funds, including a comprehensive policy for accounting and reporting on the restricted funds. The District should annually disclose the use of the Capital Improvement and Facilities Reserve Fund. Comment An issue was raised regarding California Government Code Section 66006(b) which requires that any fee imposed in connection with a development project must be deposited into a separate capital facilities account. This is to assure that fees are not commingled with other revenues and funds. The District asked its attorney for an opinion as to whether it was subject to this code in its handling of these funds. The opinion provided was that the code does not apply since neither the service connection fee or the water delivery fee are imposed "as a condition of approving a development project." Insurance Payments