Oceano, how much money does it take?
December 12, 2012
By JULIE TACKER
After years of questions surrounding the Oceano Community Services District finances, they don’t seem to be much closer to finding answers.
The district’s current General Manager, Tom Geaslen, discloses bank account balances in his periodical Friday reports along with other bits of district business, but bank balances don’t explain what funds are restricted, how they are allocated or how much is set aside as reserves.
The last four Friday reports, over six weeks, say “Staff cleaned up additional audit questions.” The report doesn’t articulate what the nature of the questions are, who is asking or what answers have been provided.
Geaslen’s highest priority when hired in June 2011 was to “complete ongoing back audits and perform first stage of forensic accounting.”
At that time it was well known that the district was three years delinquent concerning state required audits. Geaslen, the OCSD accounting manager and the “accounting team;” two auditing firms, Moss, Levy & Hartzheim, LLP., and Caliber Audit & Attest, LLP., an accounting firm, Pressley & Associates, plus two independent consultants familiar with the district’s previous accounting system, have racked up $83,000 in bills, with one audit still delinquent and the most current audit now due.
The 2008-2009 audit was completed in late 2011, but later rescinded and “restated” it to include FEMA monies received and spent that year related to repairs from damage that occurred in the San Simeon earthquake of 2003. The 2010 Board requested that the 2008-2009 audit be forensic in nature and hired CPA consultants Glenn, Burdette, Phillips & Bryson but for a narrowed scope of only the fourth quarter and specific to checking and credit card charges.
The $8,000 analysis found numerous irregularities and red flags for fraud. The final audit was never presented to the board, leaving the board and public with no opportunity to question the independent auditor.
Under Geaslen’s direction the 2009-2010 audit was completed in June of this year; using sole discretion Geaslen forewent the auditor’s management letter, normally included. Geaslen claimed, “We know what it would say and we didn’t want to pay for it.” Suggesting the poor accounting practices of the past continued through that year. Again, no auditor presentation.
The years 2010-2011 and 2011-2012 audits for the fiscal years that closed under Geaslen have not been presented to the Board. No closing statement or 4th quarter report for fiscal year 2011-2012 has been given to show any contributions to reserves or budget deficits. Instead, something Geaslen called a “projection” was only available to the public using the Public Records Act request process.
Fiscal year 2012-2013 is well underway, having begun July 1, the board has yet to see a 1st quarter report. The report would show how July’s $560,000 windfall of FEMA reimbursements for earthquake repairs done in 2005 and 2006 effect the district’s bottom line. With the district coffers seemingly fuller than they have been in recent years it would be prudent to discuss allocations, look at priorities, decide how funds and reserves will be backfilled and make budget adjustments to track how much money is going where.
The OCSD adopted a series of rate increases in 2011 that will take water rates incrementally up over five years. The recent influx of cash may prove that the rate increase was unnecessary or that further increases slated for each of the next three years should be stayed. An analysis should be done immediately and any additional rate increases heavily scrutinized.
Even with the new found funds and rate increases over the last two years, Geaslen is delaying implementation of the district’s capital improvement infrastructure projects in hopes they will be funded by grants. Pursuit of said grants is being done by yet another consulting firm. Eligibility for grants includes sound financial reporting, grant providers will be looking for clean audits and transparent handling of the people’s money. So until the audits are current and complete, applying for grants is an exercise in futility.
Last spring Geaslen brought $485,000 worth of improvement projects to the Board. Identified in the projects was a leaky water main at 17th and Beach streets, estimated $300,000 to replace. This important project was only partially funded at the time, but still no replacement plan is in place.
The district’s main sources of water come from the State Water Project and Lopez Lake, hundreds of thousands of dollars each year spent on some of the most expensive water available. Letting water continue to leak into the ground is irresponsible and negligent, wasting a precious resource and the ratepayer’s money.
In the meantime, Geaslen appears to be gadget shopping, looking to spend over $150,000 on a Jetter truck; telling the board he’s looking into financing it as to keep the district’s cash accounts flush. This said in a community that prides itself on having paid cash for an expensive fire truck in the past.
Geaslen is disconnected from his board, failing to follow through on their ideas and direction. The board appears to want to show consensus and solidarity behind Geaslen, rather than hold his feet to the fire, to the detriment of the ratepayers in the tiny community.