Release the sanitation district audit without interference
December 16, 2015
OPINION by DEBBIE PETERSON
When, as the mayor of Grover Beach in 2012, I joined the board of the South San Luis Obispo Sanitation District, I followed up on claims of malfeasance of several ratepayers by reviewing and analyzing district accounts and investigations and reporting my findings in a red flags report to the board.
As a result, the district was reorganized and district administrator and engineer John Wallace retired. Almost immediately, losses of $1 million a year turned to positive cash flow. Following my report, the board initiated a request for proposal for a forensic audit of the district.
However, the board subsequently refused to authorize an audit, voting against it while I was out of town on city business. As the dramatic improvement in the district became apparent to the public, the original whistleblowers and other alert community members began to advocate for an in-depth audit.
Finally, in April 2015, the district board authorized funds and appointed a citizens’ committee to recommend a firm to evaluate irregularities, inconsistencies, and malfeasance in district contracts and practices. The citizens’ committee and board agreed to appoint Knudson Associates. Chief executive, Carl Knudson is a nationally known certified fraud examiner and forensic accountant who has worked for the Office of Naval Intelligence, the Central Intelligence Agency, as an IRS special agent, and “Big Five Accounting Firm” Director.
Knudson’s report is now in the hands of staff at the district, but has not been released to the public. Rather, it will be provided to the board in closed session at their 6 p.m. meeting Wednesday Dec. 16 in the Arroyo Grande Council chambers at 215 E. Branch Street. If the report is released, the public may finally learn why the district’s $11 million reserves shrank to the point of bankruptcy by 2013.
Based on the red flags apparent over the past twelve years, I expect the report to reveal activity that will require review by the SLO County District Attorney. Such a report should not be reviewed and possibly edited in closed session by a board that steadfastly resisted the investigation until forced into it by public pressure and may contain members who are implicated in the report.
My fear is this is not an isolated incident. In the interests of transparency and accountability to the citizens of this county, and perhaps further afield, it is critical that all agencies ‘served’ by these parties be investigated in light of this information to be sure the agencies are fiscally healthy and transparent. The public and their representatives must become aware of the practices to guard against and ensure ratepayers recover misused funds so they can carry out the health and safety mission of their sanitation district.
The public, the employees, the whistleblowers, the district’s neighbors, and I have paid a very high price over these past years. We deserve to see the report and we need our elected representatives to learn from it how to govern more responsibly going forward.
Grover Beach, Arroyo Grande and Oceano residents and business owners are the district ratepayers who stand to win or lose, depending on the actions of the District. The plant needs $19 million in upgrades to provide for the health and safety of the community. It is the ratepayers’ funds that were misused and it is the ratepayers who will cover that cost when rates increase.
If the community wishes to hear the full report, they should attend the meeting Wednesday evening and make their views known, asking the Board to release the unedited report immediately.
Debbie Peterson is the former mayor of Grover Beach and a candidate for the San Luis Obispo County District 3 supervisor seat.