All day I hear the noise of waters
Making moan,
Sad as the sea-bird is when, going
Forth alone,
He hears the winds cry to the water's
Monotone.
The grey winds, the cold winds are blowing
Where I go.
I hear the noise of many waters
Far below.
All day, all night, I hear them flowing
To and fro.
~James Joyce
Meaghan McDermott of the D&C had an excellent article early this morning about the SBWD paying back, with interest, what the Town has loaned them so far. They think they can do this in two or three installment payments within the next two years. They are also going to hire a "forensic auditor" to figure out how the finances got so bad.
From the article: "The town collects payments from the district's customers and writes the checks for the district's own bills." and "The district pays the town $20,500 per year for the accounting services, said district superintendent Lindsay Putnam."
Also, "water district commissioners say they were blindsided to learn in August that the district didn't have enough money to repay the December loan, and that the district needed even more money to pay its September bills."
Maybe they should have read the audit?
For reference, here is the SBWD Audit covering the period of January 1, 2007 - January 1, 2010.
The article also states that "interfund advances are not uncommon and that it is frequently used accounting tool to make up for cash flow problems" and "Normally, interfund advances are repaid at year-end when the various funds close their books and reconcile revenues with expenses."
General Municipal Law, Article 2, 9A, 3 says:
"3. Moneys temporarily advanced pursuant to this section shall be repaid to the fund from which they were advanced as soon as available but in no event later than the close of the fiscal year in which the advance was made."
SBWD was loaned $110,000 in December 2010 - and it was not paid back by the close of the fiscal year - and it seems that the other loans in 2011 won't be paid back by the end of this fiscal year either. Sooooo......"in no event" means what, then, according to the laws of NYS? They didn't, and aren't paying it back by the end of the fiscal year(s) in which the advance(s) were made.
#3 also states that "the repayment shall include an amount reasonably estimated to be the additional amount that would have been earned on the investment of moneys in the fund making the advance had the advance not been made." - so I am assuming that's why they are paying interest on top of what they owe.
The article also reiterates that the SBWD's expenses have been more than their revenues every year.....since 2008......but the district commissioners were "blindsided" by the loan.
Um, ok. I'm having a hard time believing that. For the past 4 years nobody had a clue that revenues were not MORE than expenses? Really? The Town Board never relayed that information to the SBWD? The SBWD didn't realize this from the audit? Amazing.
Article also states that "Sea Breeze is the only small water district or distribution system in Monroe County that is not run by a municipality."
"Although Irondequoit Town Board members have suggested Sea Breeze dissolve and be absorbed by the Water Authority, the town board does not have the authority to direct any of the water district's operations."
"Sea Breeze commissioners say they and their customer base have no interest in becoming part of the Water Authority."
So - the Town has no authority to "correct" the SBWD - but are held responsible for their financial obligations. They don't want to become part of the MCWA - even though they are the ONLY small water district not run by a municipality.
Ugh. Not good.
Ok - just a suggestion - but maybe this crazy law should be changed so the Town could get out of being the "accountants" for the SBWD and let them do their own accounting?
Why should the Town be held "financially accountable" for an entity that they have no authority over? Makes no sense to me....but then again.....a lot of NYS laws don't make sense to me.
Here is the article in the D&C: D&C SBWD Repayment Article
At the end of the article it says that MJD received the repayment plan, and will share it with the TB at the next meeting. How about sharing it with the residents too? Was the repayment plan shared at the workshop on the 14th? Or, is it going to be shared at the TB meeting on the 20th? I don't see any reference to it in either the Workshop agenda, or the Regular TB meeting agenda - so - will it be brought up at all at the meeting on the 20th? Workshop agenda:
15 comments:
Hi. Thanks for the blog post.
I just wanted to pipe in with this, which I wrote in my last article about Sea Breeze, but didn't squeeze into this one.
The Commissioners knew they were spending more than their revenues during 08, 09 and 10. They say they were avoiding raising rates, so were spending down some of their fund balance. I think in 2008, it was in excess of $343,000 at the end of the year and if memory serves me, it was running somewhere around $500,000 before that. Even at the end of 2010, their books still reflected a $111,000 fund balance...the same year the town made the $110,000 interfund advance.
Hi Meaghan - thanks so much for commenting!
If I'm understanding you correctly - the TB voted to approve an interfund loan to the SBWD for $110,000 in December 2010....even though the SBWD had $111,000 in their "books" to pay vendors and meet payroll?
Why on earth did the TB vote to do that?
SBWD knew that they weren't generating enough revenues to meet expenses....and decided to drain their fund balance instead of coming up with something to increase revenues?
To avoid raising rates....they drained the fund balance.
But this year....they couldn't make payroll or pay vendors (according to the TB) and had to have interfund advances again - and since the "tap" (their fund balance) was run dry previously.....they ended up having to raise rates by $.41 per 1,000 gallons.....so they ended up raising the rates considerably anyways.
Thank you so much for the article and commenting - as it does explain a lot and helps keep us updated.....since the TB hasn't updated anyone and doesn't have it on the Town Website....it's hard to know what is going on.
'Preciate it!
No problem. The unfortunate thing (sometimes) about a news story is there is so often information that could help provide context that just won't fit in the space we have.
You asked about the fund balance....yes, and here's when it becomes kind of complicated. The fund balance isn't necessarily a measure of cash-on-hand. When December hit last year, the water district was out of cash, but was still anticipating significant revenue with its January billing. Because the January billing covers services provided in the last quarter of the previous year, the January billing is part of the prior year budget. I hope I'm not making this too convoluted....
Anyway, the water district was out of cash on hand in December. And that fund balance, while real for accounting purposes, wasn't going to materialize in actual dollars until after the January billing period.
And, it was a conscious decision to spend down some of the fund balance. With a budget of only about $900,000, the district had accumulated a high fund balance of nearly $500,000 - more than 55 percent of its total budget. School districts are limited by law to no more than a 4 percent fund balance. Commissioners told me they'd been pressured by Town Government to deplete their fund balance.
Thing is, it seems when the fund balance was fat and happy, it had consistent actual dollars in it that could be used to pay the water district's bills during the lean revenue months. Once that fell too far, the town had to cover the bills with the loan.
Meaghan - thank you so much for helping me to understand this better. It is a difficult thing for me to wrap my head around, as it's complicated due to the unique relationship between the Town and the SBWD....at least I think it's difficult.
So - again - if I'm understanding this correctly...."on paper" in December 2010 the SBWD had $111,000 in their fund balance, but not the actual dollars, and that is why the Town floated them the $110,000 interfund loan. Then, in January 2011 - the SBWD was supposed to get significant revenue to cover the December billing......but they didn't pay the Town back when they got that "significant revenue" - right?
Then the other loans this year haven't been paid back either.
Even though they anticipate revenue to cover the "on paper" accounting - it wasn't paid back.
I can understand spending down the fund balance to adequate levels - but not low enough where you can't make payroll or pay vendors (or pay the town back).
I guess I'm just not understanding why....if it was an "on paper accounting tool" being used to "balance the books" from one billing period until the next - and if the actual dollars weren't there and the Town had to float them a loan until the dollars came in - why the Town wasn't paid back when the revenue came in from the next billing?
*confusion*
I know the TB, in 2008, had a resolution to keep the fund balance at 5% to 25% for each operating budget....and from the figures you provided of the SBWD budget and their fund balances....it seems they had over the minimum 5% in fund balance.
How were they able to beef up the fund balance coffers before? Can't they do that again to get the levels back up to be able to cover expenses during lean times?
They ended up having to raise the rates anyways.....and....what are the MCWA charges per 1,000 gallons? Is SBWD more than MCWA?
Even if they didn't know about the December loan....they knew about the ones this year and haven't paid them back yet - which, according to NYS GMU they are supposed to.
What a headache!
Hi Meaghan,
So awesome to see you here. Thank you for the great article in the D&C today. We've been wondering what is going on with the SBWD. Nice to have an explanation.
I'm hoping this is going to be a discussion at the TB meeting this week. It should be...
You said it Jax - It is all a headache. :(
ps- When did FOILS get spell check? Love it! :)
I never noticed I had a spell check. Then again, I never noticed that I didn't have one either. lol
Maybe it's something new on blogger? Great to have it anyways - as I make typos and spelling errors all of the time.
Also - great that Meaghan is here to help us grasp this whole SBWD headache. Me likey!
Great article, and I like the "ha ha" lines in the article about the SBWD.
"Town officials last December floated the water district a loan of $110,000"
"the district won't know if any rate increases are on tap for next year until later this month"
Love those! :)
Forget to mention that I just love the "drop a bomb" comment. They give a suggestion of closing a library branch to shake up the Irondequoit residents. Talk about manipulating the system.
OMG - are these people for real?
Unbelievable...
Not only is it a manipulation - it put a gawd awful song in my head ALL DAY!
Not cool.
Hi Cheri- Always good to hear from you.
Jax, I'm not an accountant, but this is my understanding. Yes, the fund balance was there on paper, but not in the bank. Then, the town's books get finally closed and audited on the prior fiscal year in July. And it turns out by then, there wasn't enough actual cash money left in the fund balance to repay the town. That's how I understood it.
I think their plan now is to rebuild their fund balance and repay the town.
MCWA rates are 2.57/1000
It's a plan to get more money for friends. The infrastructure is junk and they spent fund balance on friends. Look at the election when aldersley ran for district president. He uncovered the dirt so the good old boys in seabreeze had a record turnout so assure he would not get in to clean up the filth.
The pipes are junk and look at the tower. The money went to their friends and not to the needs of the people of the district. Just raise the rates and keep the money flowing.
Thanks Meaghan - you may not be an accountant, but you are answering questions and helping me understand the whole process better. It's really confusing!
I was not understanding how the SBWD did not know about the December loan, or why they haven't paid anything back - or why their fund balance was going lower and lower....but because of your helpful info - I am "getting it"...I think! :)
Thank you for the MCWA charges numbers. It's lower than the SBWD - but that may change if MCWA raises the rates soon.
Anonymous -
"He uncovered the dirt so the good old boys in seabreeze had a record turnout so assure he would not get in to clean up the filth. "
Who uncovered the dirt?
Blame it on the past administration. Case and Point..HeyMan appointed Democrat Jim Markovics to the Water Board to fill a vacancy which occured after the death of a commissioner. I guess the TB appoints commissioners for unexpected vacancies until there is an election. Anywho..it was during Markovics time on the Board that things seemed to go south. Then he turned on HeyMan cus she wanted to be able to pull his puppet strings but he wanted nothing to do with it.
Did MJD ever explain the payment plan at the tb mtg?
Anonymous @ 8:15am -
Nothing pertaining to that was discussed at the December 20th TB meeting.
She did have the repayment plan in hand on the 16th of December, according to the article in the D&C on Dec. 16.
From the article:
"Town Supervisor Mary Joyce D'Aurizio said she has received the repayment plan and will share it with the town board at its next meeting."
Maybe at this month's meeting she will inform the residents? Although, the "will share it with the town board" part makes me think...maybe not.....
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