Cash-strapped Oceano operating in the red

March 20, 2015

By JOSH FRIEDMAN

oceano closedThe Oceano Community Services District Board recently voted to raise water rates to reduce budget deficits. However, the amounts to be garnered through the higher utility rates will not cover the overspending the board has approved in recent years.

Last year, the OCSD board of directors adopted an approximately $4 million budget with a deficit of more than $265,000. A mid-fiscal year update released in January states concern for a budget overrun beyond the existing deficit.

On Friday, the district finance committee may begin preparations for the 2015-2016 budget. In advance of the meeting, CalCoastNews asked district officials to state if and how they plan to balance the budget.

Neither General Manager Paavo Ogren, nor Board President Mary Lucey responded to email questions.

Earlier this month, the board approved a 3.5 percent water rate hike that is scheduled to take effect in May. The rate hike is expected to add $70,580, about a third of Oceano’s deficit, to the budget, according to a district staff report.

The primary duty of the district is to provide water, sewer and trash collection services. District officials have particularly struggled to operate the water fund.

In late 2013, the district loaned the water system $770,000 from the general fund. Debt from the loan is protracted over 30 years, and it will cost the water fund more than $3,500 a month in principal and interest payments.

The most recent district audit shows the water fund ran at a loss of about $150,000 in 2012-2013. On June 30, 2013, the CSD only had $58,025 in its water fund.

That amounts to just 10 days of operating expenses, according to ratings agency Standard & Poor’s.

Last year, S&P downgraded ratings of county bonds issued to fund improvements to the Lopez Dam. The Oceano CSD is one five agencies that fund the project, and S&P criticized the district’s water fund in its report on the bond downgrades.

“We consider the system’s liquidity position to be weak,” the S&P report states.

When asked for an update on its water fund reserves, CSD office manager Marie McGrath said the district computers’ servers were down, and would remain that way for at least the rest of the week.

McGrath later said the CSD had $369,765 in its water fund as of June 30, 2014, but she said she was unable to give a more current balance. Nevertheless, the district was scheduled to make a state water payment of about $410,000 in July.

Twice a year, on Jan. 1 and July 1, the district pays half of its yearly $818,000 payment for state water.

Even though Oceano uses less than half of its allocated 1,953 acre feet of water, it is still required to pay for its portion of state and Lopez water allotments. In addition, the amount of water used by the financially strapped community is exacerbated because of failing infrastructure.

The district loses 83 to 136 acre feet of water a year due to leaks and structural failures, according to a recent grant application.

“The district’s water system is old,” the application says. “The bulk of the system has not been properly maintained for 60 years.”

Nevertheless, revenue from the upcoming water rate hike will not go to infrastructure repair, either. The $70,580 expected to come from the rate hike is needed because of the water fund shortfall and a state mandate to cut water usage during the current drought, according to a district staff report.

Coincidentally, $70,000 is also the difference in salary costs between Ogren’s base pay and that of the district’s previous general manager. The board hired Ogren last May at a base salary of $196,000.

Paavo Ogren

Paavo Ogren

The previous general manager received a salary of $126,000. Just four years ago, the position came with a base pay of $87,500.

Ogren is also due for raises of about $5,000 this year and next. Likewise, district retirement contributions have increased since his hiring, and other district staffers have also received pay increases.

Ogren, the former San Luis Obispo County public works director, officially holds two jobs with the district. In addition to being general manager, he is also the CSD’s chief accountant.

But, some question the need for the accountant job. The position did not exist until two years ago, and it was vacant when Ogren applied to work for the district.

Still, board members have touted Ogren’s hiring, claiming it has made the CSD functional. Prior to approving his contract, then-board president Matt Guerrero said Ogren’s hiring would bring the district a lot of credibility.

The district has gone through numerous general managers in recent years, and the board has fired several of them. Two of the last three general manager firings came amid allegations of theft.

One former general manager, Tom Geaslen, overpaid himself by more than $45,000, according to a district audit.

Oceano ratepayers may soon pay for the fiscal shortcomings, which the district is blaming on decreased water sales because of the drought and revenue shortfalls.

In addition to the water rate increase scheduled for this year, another rate hike is expected to take effect in 2016. Oceano residents could stave off the upcoming rate increases through state-sanctioned ratepayer protests, but few community members participate in local government.

A ratepayer protest hearing is scheduled for April 20.

The finance committee meets today at 9:45 a.m. in the district boardroom.


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Julie

Also on the agenda is a Q & A about the current rate increase process.

Good questions are being asked by ratepayers.


http://oceanocsd.org/agendas/03252015%20Agenda%20Item%2010E%20Prop%20218%20Update.pdf


r0y

More incestuous government employees fleecing the public coffers. If they had a surplus, I’m sure they would just divvy it up among themselves like SLO County Board of Charlatans did… or just give themselves even MORE of a raise… also like SLO County Board of Thieves did… I think I see a pattern here.


r0y

We need to IMMEDIATELY implement a SALARY CAP for ALL PUBLICLY-FUNDED people. CAP retirement pay, CAP base pay. CAP pay packages.


Why is THIS never mentioned? I’m nearly 100% positive that NO ONE, not a single person in any of our government is worth over $100,000 a year, let alone $250K or more! This is insane and crazy. STOP.


ABANDON your stupid party and their destructive platforms! Get off the plantations!


Julie

Just an FYI here:


The latest agenda is up for Oceano CSD.

The OCSD two (2) week payroll for all seven (7) employees is $20,284.12 of that $8,873.59 is for Paavo.


indigo1955

I don’t even like to drive into Oceano….no matter how broke they are.


falconbh

Proclamation to the citizen ratepayers from King Ogren, Queen Lucey, and Judge Guerrero, Let Them Eat Sand.


A lot of options to reduce costs and eliminate waste have been ignored.

I find it so interesting that the only creative solution to the problem is to raise rates by our high paid G.M. Ogren.

We need to pay Paavo Ogren 250,000 in salary and benefits to make this recommendation and then receive a pay increase.


For the good of all the citizens, Ogren, Lucey, and Guerrero, should resign, so we have the democratic opportunity to improve the Oceano Community Services District, Sanitation District, and Five Cities Fire Department.


The Power To Tax, Is The Power To Destroy

Daniel Webster


justbeware

Is it any wonder Ogren and Mary Lucey wouldn’t comment?

These folks should be ashamed of that they’re doing to the ratepayers of Oceano, and the residents should be ashamed for letting these people rape their town.


Julie

Benefit of the doubt here; maybe Matt and Mary weren’t “properly” emailed by CalCoastNews for a quote like they weren’t “properly” noticed of the Special Meeting of the San Dist. last week?


justbeware

Numbers don’t lie.

No benefit of the doubt, the OCSD board is driving the district into the ground.

Mr. Ogren is laughing all the way to the bank…bring on that raise!


agag1

Matt Guerrero claims [overpaid] Ogren brings the district credibility.

Can the ratepayers of Oceano afford to care about district credibility?

They should be more concerned with a financially solvent district.


Where is Guerrero’s credibility?

He’s on the board of OCSD, which spends $$$ (they don’t have) irresponsibly.

How does Ogren’s salary make sense to anyone?

Is the fact that he makes more money than half the town put together

what makes him credible?


Matt sat on the board of the SSLOCSD, and along with Bill Nicolls

and Tony Ferrara drove that entity down the road to financial destruction

by pursuing no-win litigation (still ongoing),

and supported John Wallace and the Wallace Group

as ratepayer funds were foolishly spent to cover Wallace’s

botched management of the plant for YEARS.

Guerrero currently serves as one of the stonewalling bookends

(along with GB Mayor Shoals) sitting on the board.

Good luck Chairman Jim HIll, in getting anything accomplished with these two!


Oceano’s problems tie right back to decisions made by poor leadership–and Matt

(I wanna be a judge) Guerrero is right in the thick of it.


Julie

Now agag1 let’s be fair to Paavo. You quote the story here: “How does Ogren’s salary make sense to anyone?

Is the fact that he makes more money than half the town put together what makes him credible?”


Paavo only makes what six (6) median households combined make in Oceano each year.


agag1

Thanks for the more accurate comparison.

My statement was obviously an emotional, completely frustrated over exaggeration,

not meant to be in any way factual.


Julie

No worries.

My statement was to be factually sarcastic.


doglover

Sounds a lot like what the Lucia Mar teachers want.

Give us our big fatty raise and figure out how to pay for it later.


The San District needs $70,000 to make the books (for now)current so they go to the community and raise water rates. Just so happens to be the amount they are grossly overpaying their Director.


C’mon OCSD, hire an interpreter and get some of those pickers in there. They will work hard and turn this thing around in minutes.


scoopone

Rate increases were predicted when Ogren was hired, There will be more to come

if/when Ogren finds another cash cow or is fired.


ajdury

“Rate increases were predicted when Ogren was hired.”


Predicted by WHO?


Julie Tacker.


The same Julie that never ceases to predict what eventually comes true in Oceano.


Cloak-of-darkness rate increases, account under-funding & budget shortfalls, Brown Act violations, misinformation at meetings, lack of staff reports at almost every meeting, disrespect, unending vilification and deterrence of public involvement, just to name a few egregious issues.


The same Julie that has constantly and consistently been vilified by every OCSD Board member and every poorly-chosen OCSD General Manager for years and years now.


Yet she names it and claims it and has been proven right time and time again.


She can accurately quote entire chapters of Oceano history. No one on the current board could boast the same. In fact, the board has, on many an occasion, shouted out to her in the audience, for a particular date or financial figure, in order to make their point. She always has the right answer. That’s Julie.


If only the OCSD, and the current GM in particular, were equally educated about the “purview” they CHOSE to be tasked with. I’m guessing we wouldn’t be in this fine mess we find ourselves now.


Thank you Julie, for your psychic “predictions” that you saw coming a mile away.


Julie

Thank you for the recognition; or maybe its a diagnosis?


Jorge Estrada

Garbage, sewer, water and if only Gov could sell insurance too the peasants would be funding the bad King just like the days of old when knights were bold.