Is Oceano attempting to blackmail the sanitation district?

June 5, 2015
Julie Tacker

Julie Tacker

OPINION By JULIE TACKER

Einstein’s definition of insanity is, “doing the same thing over and over again and expecting different results.” I don’t know who is insane; the Oceano Community Services District (OCSD) for using bully tactics to get their way, or me, for writing about it.

In 2012, when Oceano CSD General Manager Tom Geaslen was struggling to find money to pay his overpriced salary of $126,000 plus the $45,000 he “overpaid himself,” he attempted to extort revenue from the South San Luis Obispo County Sanitation District for billing services the OCSD provides.

The district serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach. Sewer charges are included in the water bills for each of the three communities served by sanitation district; funds are collected and passed through to the sanitation district.

The sanitation district is supposed to pay each community the cost for sanitation district billing. Oceano should have the smallest cost because it has only 20 percent of the sanitation district’s customers.

In 2012, Geaslen demanded $60,000 annually for a longtime service that had been $4,930 for over a decade. To drive the sanitation district to renegotiate, Geaslen stated “we hold the check.”

Geaslen was successful in sending the member agencies to the table, the finance directors from Arroyo Grande and Grover Beach met with Geaslen. They calculated actual costs, using the same methodology for the cost of billing for the sanitation district each month. These collection fees are defined as “enterprise” and the agencies cannot charge more than it reasonably costs to perform the service.

The actual cost for Grover Beach, based on time, salary and benefits and supplies used for billing was calculated at about $22,000 for billing 36 percent of the district’s customers. As an aside, for some unknown reason, Grover Beach hasn’t billed or been paid since the formula was derived; district staff will be looking into why and resolve this snafu promptly.

Arroyo Grande has 44 percent of the districts connections and charges $0.37 per billed account and $1.50 for new hookups each month. Costing sanitation district roughly $1,000 per month for administering the billing, their justification is that the sewer charge is a flat fee for each property and adding it to the water bill is a fairly minimal cost. Acknowledging there is some work involved in passing through the revenue collected for the sanitation district. Arroyo Grande has been billing approximately $12,000 a year since the Geaslen round table discussion.

To date, no cost breakdown for Oceano’s 20 percent of the district’s service area has been presented to justify their invoice for service. The amount morphed up to $22,000 during the management transition after sanitation district administrator John Wallace resigned and Geaslen was fired. No one appears to know how or why, but the assumption can be made that $22,000 was a placeholder for the following year’s budget.

The matter lay dormant until the sanitation district budget hearings this past week wherein former OCSD board member, now Mayor of Arroyo Grande, Jim Hill, questioned the OCSD’s $22,000 line item and why it differed so from the other agencies. Hill asked for justification and equity among the billing practices, suggesting the ratepayers in Arroyo Grande and Grover Beach were subsidizing those in Oceano.

Additionally, Oceano currently has an outstanding $11,000 installment for these services waiting to be approved by the sanitation district. Predictably, Matthew Guerrero, who is Oceano’s representative on the sanitation district board, responded, “I think we should just pay it.”

While, Grover Beach Mayor, John Shoals, requested the invoice be held for a month, to allow for an analysis. Sanitation district manager, Rick Sweet, was visibly shaken and explained that it would be a shame if the service was interrupted. His statement implied that the overpriced Oceano General Manager, Paavo Ogren, had suggested if no payment is received billing services would cease.

Ogren’s only justification for the charge is that it’s been paid as a “past practice.” Since fiscal year 2013 just three installments have been made.

Complicating the matter, none of the agencies have formal agreements in place to reflect any of these methodologies for the charges.

Between Geaslen’s extortion and Paavo’s blackmail; even Einstein would be embarrassed for the ratepayers of Oceano where it seems “past practice”, right or wrong, is expected to be status quo.


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Otis

Audits follow accounting rules and very rarely address management practices. That is why fraud is so often unaccountable. Been there — seen that!


OnTheOtherHand

The SSLOCSD audit is supposed to include management practices and the firm chosen has a track record in doing that as well as financial practices. You are right in your generalization about routine audits but this one is not supposed to be routine in that sense. I guess we’ll both find out how well it is done in about 3 months.


Mitch C

You have to look way beyond what OCSD is charging the San District. The county of SLO charges each subordinate government agency a percentage for tax money’s collected on their behalf. It appears that OCSD just put into place a procedure that has been in place for years (any service performed by the county will be charged back to the recipient agency … OCSD is just following precedent


Julie

Why didn’t the SSLOCSD keep up with the cost of living by paying all agencies what it cost. It took Geaslen and Ogren, both looking for revenue, to push open this door. Both appear have to have gone too far for just 2,300 connections.


ajdury

Here is the thing I’m having such a hard time wrapping my brain around:


Every single one of these agencies goes through a certified audit procedure, handled by an auditing firm that has been hand-chosen via a transparent selection process, based on their qualifications and costs. Correct?


This should result in an audit that does not miss things like ‘lack of billing income’, ‘missed opportunity to collect funds’, ‘no billing for the last X years’, ‘contract missing’.


HOW DOES THIS HAPPEN???


The three agencies (AG, Grover and Oceano) have been falling down on true income sources/discrepancies all this time. Grover hasn’t billed for years, Oceano has been extorting their billing services and AG has been towing the previous government’s party line, in terms of fees.


My mind is utterly boggled. Not one, two, three or FOUR audits for these transactions had unearthed this issues previously? What is really going on in the south county, financially?


Vagabond

I hear banjos


tomsquawk

yes and it makes me laugh


SLO_Johnny

Are any of the routine functions of our local governments done properly? The government enthusiastically enforces regulations and laws on citizens but they govern any damn way they please with no accountability.


Otis

Financial questions regarding the Oceano Community Services District (OCSD) and the South San Luis Obispo County Sanitation District (SSOCSD) continue to abound. Where is the proposed audit?


http://calcoastnews.com/2014/12/arroyo-grande-mayor-seeks-sanitation-district-audit/


The financial effervescence emanating from the situation is a stench that must be resolved. Supervisor Lynn Compton should assist Mayor of Arroyo Grande, Jim Hill and Grover Beach Mayor, John Shoals before an implied action of interrupting services occurs as reportedly suggested by Oceano General Manager, Paavo Ogren. That would cause a real stink!


ajdury

Otis,


I relish your involvement in our 5Cities, without question. I do hope you make a point to involve the OTHER District Supervisor we are forced to acknowledge, even though he rarely acknowledges us – Mr. Adam Hill. I live off of Oak Park and Old Oak Park – prime country land and the fringe of Adam’s territory. It’s unfortunate this slice of prime real estate has meant nothing to him for years and years . . . and years. Let’s don’t let him pretend in our districts. We know better!


OnTheOtherHand

Otis,


Regarding the audit, check the recording of the last (June 3) SSLOCSD meeting. It is about to begin and I think the auditor will do as good a job as he can. “The wheels of government grind slowly but they grind exceedingly fine.” (I don’t know who I am quoting here but I think it is appropriate to this situation.)


justbeware

Finally! Someone is watching out for our wallets!

Can’t wait to hear how Oceano tries to justify charging more than AG with as few residents as they have. Should be interesting…


agag1

Sure makes me wonder why Ferrara and Nicholls previously approved these rediculous charges.


Thanks to Hill and Shoals for putting the brakes on the runaway $$$ train until they reach a fair and equitable resolution.


It is not the responsibility of AG and GB ratepayers to help Oceano pay Ogren’s exorbitant salary.


Rich in MB

Strap on your seat belts folks….we are about to go on yet another small town Government abuse of tax payer funds roller coaster ride. We have been on this ride dozens of times before and know how it always ends: Tax/rate payers screwed, government hack that did the screwing get a pass, pension and severance package on the way out the door.


dogeatdog

Oceano I think your cash cow might be going dry.