Can Oceano make employee payroll?

May 24, 2011


Crippled by years of financial mismanagement, Oceano Community Services District is facing the possibility it will not be able to cover payroll in August.

“It is to early too tell if we can make payroll in August,” said Raffaele Montemurro, the district’s general manager. “We have to see when the water rate increases go into effect, how much we will collect.”

On June 1, the district’s water and sewer rates increase by eight percent, the first raise since 1997. Both former and current district officials point at years of financial deficits without raising rates as one of the primary reasons for the district’s precarious financial situation.

“I am frustrated, we shouldn’t have to be wondering how to make payroll,” said Matt Guerrero, an Oceano board member. “I want to see the ship righted. I want to make sure we stay solvent.”

Even though the district has more than $1.5 million in several accounts, all but about $887,901 is restricted or already allocated. Of that, $561,450 is owed to the county in payments due in June and September, according to a recent financial statement.

In an attempt to remain solvent, Montemurro wrote a letter on Friday to District 4 San Luis Obispo County Supervisor Paul Teixeria asking that the county defer the district’s bills until September.

The district, responsible for serving about 7,600 residents and business owners in Oceano and Halcyon with fire protection, street lighting, sewer and water services, has been running about $25,000 in the red for more than a year depleting its reserve account.

Even so, in a February 2011 report titled “Financial Challenges,” Montemurro said the district had about four years before insolvency under the current budget, which only allows for $20,000 in capital improvement expenditures for the 2011/2012 fiscal year.

Those numbers did not take into account monies already allocated or the likelihood that expected and needed repairs could put Oceano further in the red. For example, at Wednesday’s meeting the board plans to discuss putting a new roof on the district offices building which leaks during rainstorms.

In addition, the district needs about $1.2 million to provide necessary repairs to five water mains, according to district reports. Since Montemurro took charge in Oct. 2009, water mains have required three substantial repairs.

And while municipalities typically apply for loans and grants to ward of insolvency while rates or fees are raised, the district has been disqualified by the fact that most loans and grants require that communities have audits and accounting records available, and the district has yet to complete its 2008/2009 audit. In July, the district is slated to be three years behind on its audits.

In March, former directors Jim Hill and Carole Henson tendered their resignations, citing disagreements with Montemurro over his accounting practices and failure to follow the board’s direction that asked him to complete the past few years of audits. Most of the current board members have been serving the district for less than a year.

Also at Wednesday’s meeting, the board is scheduled to conduct a closed session employee performance evaluation into Montemurro’s management practices.

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Now we finally know why Jim Hill left Oceano. His boy is just a screw-up.

And so was he!

Total failure by an obese bumbling fool in a pink shirt who couldn’t get a job in Walmart in the private sector is very surprising, and I assume we are paying him six figs.

Monte wants to replace the whole roof; why not get a couple of estimates to repair just the leaks?

Its the economist in him.

Money sitting in reserve accounts is available to be spent on whatever a board wants to spend it on with a 4/5ths vote (though unanimous would be better).

Money that is already allocated for something can always be re-allocated until it is actually spent, just postpone or cancel the project the money is supposed to be spent on.

Audits are supposed to be done by an outside firm (one of the biggest is right next door in A.G.) so the only way an audit from 2008-09 isn’t done yet is because they never paid to have it done.

There’s no reason in the world why an audit for one fiscal year can’t be done by the end of the “calendar year,” none whatsoever, unless there’s something to hide.

This board needs to rid itself of its G.M. If you ask me, he’s your No. 1 problem.

As for dissolving the OCSD, that can be done but only through LAFCo. But LAFCo.’s No. 1 criteria is it must be “revenue-neutral” for the county, meaning there has to be sufficient revenues to off set any additional costs to the county government, otherwise LAFCo. (which has 5 county supervisors on its board) won’t go for it.

So long as they don’t have a lot of debt, there is no reason why the county couldn’t take this over OCSD’s duties once again. The revenue appears to be there. They just seem to be incompetent to manage it properly (not that the county is much better).

What reserves? Already spent. Also, money allocated cannot just be re-allocated at will. Water is an enterprise fund and cannot take money from non-enterprise funds such as Fire. For a long time, it appears the CSD co-mingled funds and “borrowed” from Fire inappropriately. Now that Fire is part of a JPA agreement, the co-mingled money isn’t available to play with. It cannot simply be re-allocated.

He has already co-mingled the fire department funds and illegally used them in the water department. If the developers who paid those funds to the OCSD want to, they can sue to recover them and the OCSD would have to pay them back.

Slorider also suggested the SLO Grand Jury is a “civil” and not capable of criminal investigations or investigations. According to the Grand Jurys website and related information there is no notable difference in our GJ and they can peruse criminal charges and investigations. Time will tell what they come up with as their term comes to a close in a matter of a couple months.

No, it’s not that simple. The regular county grand jury is a civil grand jury. That jury is empowered to investigate any agency in the county, can look at records, and can ask questions (all in secret). Their findings are published in a report that is not binding. The agency is usually required to provide a response to each finding, but does not have to implement any recommendations. The civil grand jury is not empowered to make any criminal indictment whatsoever or investigate criminal matters. If the civil grand jury discovered something they felt was criminal, they are still not empowered to make an indictment–they would turn it over to law enforcement.

A criminal grand jury does not exist unless one is impaneled. This is usually done by the D.A. in cases where it might be a conflict for the D.A. himself to investigate–someone in law enforcement or high government office is being investigated, etc. We do not have a criminal grand jury at this time. Criminal investigations don’t occur unless there is evidence of a crime–this would typically mean something clearly substantial such as an actual murder, or very clear evidence. Bad management is not a crime, and suspicions of missing money is also not a crime.

OCSD really, really, really need those audits. If a crime occurred, that is the way the evidence will surface. A paper trail showing illegal money transfers WOULD constitute evidence of a crime, for example. The people need to get the Board to finish the audits! Nothing is black and white, of course, but when the D.A. asks, “What crime?”, you’ve got to have real proof that a crime occurred. Otherwise, it’s just inept government.

As a service district, Oceano is responsible for it’s actions. I see where they have two choices: 1) find out what the problem(s) are as has been suggested by several people, including a completed audit, 2) if you can’t figure it out turn the mess over to the County. As a taxpayer in this County, I was not happy with County tax dollars going to Los Osos for the mess the imposed upon themselves and I don’t want to see that in Oceano. Perform or fail!

Perform or fail is nice and all, but what are the ramifications of fail? It seems the board took that route (not the current “less than 1 year” people, but all the ones that fled the sinking ship).

Also, a forensic audit would cost a pretty penny and take a lot of time – both of which are running out fast for Oceano.

Votes matter. Even for those little community services district elections. Votes matter and have consequences. Make sure you have virtuous people elected, not just some random schmoe who’s name gets circulated on a paid-for flier. We need to, as a society and especially on the local levels, know who they hell it is that we’re electing. Preferably before the election.

It is interesting to note that SLOrider chided me for suggesting that Supervisor Teixeria step up and do something to help the OCSD resolve its messes. SLORider claimed that Teixeria had absolutely “no jurisdiction” over the OCSD and thus should not be asked or expected to help.

But now we see that the OCSD General Manager is requesting Teixeria’s help. So, apparently I am not the only one who thinks Mr. Teixeria should step up and better serve his constituency in Oceano.

(Of course, one must realize that SLOrider doesn’t even live in Oceano and thus we are left to wonder why he is always doing his best to try to manipulate Oceano politics and residents in ways that don’t seem to be in the best interest of most Oceano residents.)

Sounds like you know better, Wise, but I thought the whole point of any CSD was for LOCAL control, ie for better responsiveness than the County can provide. In lieu of giving money to provide for essential services, the citizens of Oceano elected to keep their money “in house” and provide their own services.

To me your suggestion contains a temporal concurrence regarding having and eating cake.

The OCSD misspent the money. The County quit collecting money from Oceanoids to provide for their fire/water/sewer. Now that the Oceanoids admit that they spent all their money on gum, it’s unfair for them to look to me and the rest of the County for a bailout.

How can the board evaluate Montemurro when they obiviously don’t know what is going on? It takes at least a year to understand how a district runs and unless you can read and analyze a financial report and have hours to devote to understanding process a board member will never get it. It is time for the county to step in and rescue Oceano from its self. A community cannot survive without water and sewer.

I’ve been to enough OCSD meetings to know that Montemurro is in far over his head and isn’t making good decisions on behalf of the board. Choosing to purchase a new computer system for $250,000 in the midst of all this especially without receiving competing bids. One gentleman commented at one of the meetings that the computer co. that was chosen has a reputation for being the most expensive out there. Then having family members coming in to help with the system essentially putting another person on the payroll sounds fishy as well.

FVire the lot and give it back to the County… Bad enough when government hides mismanagement, but to be blantant or ignorant about what you are doing is worst. Obviously, the board and the manager are totally incompent except for the ones who bailed because of the writing on the wall. This is almost worst then Los Osos and look at what the did (or didn’t do – lol). Turn out the lights!

It doens’t take a year to know that the GM has screwed things up for OCSD. We know that right now.