Thursday, June 14, 2001

Stormwater unit's reporting criticized

By Dan Klepal
The Cincinnati Enquirer

        The Metropolitan Sewer District had a $25 million discrepancy in the budgets it submitted to Cincinnati City Council and the Hamilton County Commission in 1999.

        One year later, the discrepancy was $21 million.

        A report released Wednesday by the city's Internal Audit Division shows capital improvement budgets submitted by the agency to its two controlling boards don't match up. The audit actually examined the city's Stormwater Management Utility but also looked into some practices of its controlling agency, the Metropolitan Sewer District.

        There is no suspicion of theft or other wrongdoing, the audit concludes. But the discrepancies are a concern to politicians at both the city and the county because it shows sloppy bookkeeping that could harm their ability to make decisions.

        The sewer district must submit its budgets to both the city and county. Cincinnati manages its operations, while the county owns the utility.

        In 1999, a $25 million line item for “sewer improvements,” appeared on the city's version of the budget but did not appear in a later version sent to the county.

        “The county's budget resolution made no reference to this line item or amount,” the audit states. “Current sewers management could not explain what the $25 million represented or why it was not included in the (budget) submitted to the county.”

        A similar problem occurred last year.

        “Although a year had lapsed between preparation of the 2000 projections submitted to the city and the county, the $21 million discrepancy was not explained or reconciled,” the audit says.

        Councilman Phil Heimlich said the city should consider hiring a private company to provide its stormwater service. Opening the utility up for contract is a way to get competition, he said.

        “This is just good old-fashioned sloppiness,” Mr. Heimlich said. “This is the kind of bookkeeping that wouldn't be tolerated in the private sector.”

        The audit was called for by Commissioner Todd Portune more than a year ago, while he was still a member of City Council.

        The report says stormwater employees performed work on county sewers, but that the utility was reimbursed for that work by the MSD. Six stormwater projects, needed to protect basements in the city from flooding with sewage during heavy rains, remain on the books. The cost for those projects has risen from $1.2 million to an estimated $3.1 million.

        Mr. Portune said stormwater employees should never work for the sewer district, whether the city is reimbursed or not. City residents are taxed about $7 million per year to keep the stormwater utility in business.

        “The stormwater utility was created to do a job, so do it,” Mr. Portune said. “This report presents a witch's brew of bad practices, poor oversight and a lack of accurate informed reports to allow decision-makers to make informed decisions.”

        Mr. Portune said he will not support the stormwater utility continuing to operate under the sewer district — an arrangement that has been in effect since 1995. He also would like to see a full audit of the MSD next.

        Cincinnati City Manager John Shirey said removing the SMU from the sewer district's control would be a mistake. The audit proves that stormwater utility employees were not working for the county free of charge and funds between the two agencies were not co-mingled, he said.

        “There was such a history of poor management at the SMU that it needed to be put under someone that would reform it,” Mr. Shirey said. “I believe that's being done.”

        Mr. Shirey said he was concerned about the differences between sewer district budgets submitted to the city and the county.

        But that is a result of the process, said MSD Director Pat Karney.

        MSD takes its budget to city council months before it presents it to the county commission. That lag leads to changes in the budget, Mr. Karney said.

        The sewer district is the only entity that must report to both the city and the county.

        “One of the things we have not done well is closing the loop back to the city and making sure that once the (budget) has been finalized to take it back to council,” Mr. Karney said. “That's been a hit-and-miss process.”


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