News Archive

5/24/2012 AWA Board Meeting Minutes

  • AWA Annual Audit Still not in Agreement with 66013 Fund Report (Again)

    AWA’s General Manager Gene Mancebo still did not explain problems the public found in AWA financial reports on March 22, 2012. AWA staff said the problems were corrected during the lunch recess. The independent auditor said the draft audit would be easily corrected, but nothing more has been said for 9 weeks. An approved audit is supposed to be submitted to the State Controller by July 1.

    At the May 24th meeting, Mancebo asked the Directors for $7,900 to contract an outside accounting firm to do an independent financial review of the Agency. Two weeks earlier Mancebo said the contract would cost $5,500.

    AWA controller Marvin Davis told the public and board that restricted funds were not kept in separate accounts from other funds. Government Code 66013 strictly prohibits the intermingling of restricted funds with any other funds. On May 10th, Mancebo told the Directors that although there was no separate accounting for the 66013 funds, the reports were accurate and staff was working to get the audit to agree with those reports.

    The AWA board voted not to give Mancebo the $7,900 to spend until he can bring a list of deliverables expected from the contract. They also told Mancebo that they wanted an accurate audit before money is spent on another financial consultant.

    It could be a very long time before the audit is finalized because in order to get the audit to agree with the 66013 reports the reports must first be free of mistakes. Since the restricted funds have not been properly accounted for, AWA will have to go back over 20 years of records and reclassify the expenses to produce accurate reports. This could be a very time consuming process and Davis said he is the only person working on the reclassifications.

    AWA has refused to disclose any correspondence with the auditor, including emails, even though records were promised over two weeks ago. AWA's attorney also said that all of the records would be available by June 9 in response to a request made on April 29.

    One of the plaintiffs in the lawsuit, Ken Berry, asked the Directors why they allowed their attorney to fight the lawsuit. Berry asked if the Directors had read the lawsuit, which simply requests that accurate reports be prepared, and the answer recently filed by AWA. With regard to the internal discrepancy of $400,000, AWA says that the "reports speak for themselves", but that AWA denies the allegations of the lawsuit.

    Berry pointed out that if the reports are going to be corrected, then the lawsuit should be settled before either side runs up more attorney fees. The Directors had no comment.

  • AWA Responds to Howard Jarvis Taxpayers Association Letter

    AWA Attorney Steve Kronick presented a draft response letter to a letter that Howard Jarvis Taxpayers Association (HJTA) wrote to AWA. The HJTA letter claims that AWA resolution 2012-04 that was enacted by the AWA board in March is contrary to the California Constitutional Amendment Prop 218.

    The public pointed out that only Kronick would benefit from the legal exercise, ratepayers will lose, and that board member’s reputations were at stake. After the public gave numerous reasons not to send the letter, the board reviewed the letter and voted to send the letter as is. The Watchdog will be sure to report HJTA’s response to the letter if there is one.

    Kronick did not address HJTA's primary contention that Prop 218 must be interpreted to give the greatest weight to ratepayer preferences. For example, Kronick argues that because one part of Prop 218 provides for elections, the part that provides for less formal protests should be made more restrictive by requiring a special form. That form can easily be lost or misplaced, thereby depriving ratepayers of their right to protest. Kronick did not explain why, if the people really wanted the same procedures in all parts of Prop 218, they made raising property taxes different from raising rates.

    HJTA may simply wait until AWA actually violates Prop 218 and then file suit on the grounds it has already explained to the Directors. If that is what happens, the expense of Kronick's reply after the Directors had already decided to ignore HJTA, and the public, is truly a waste.

  • Internal Loan Policy Sent Back to the Drawing Board

    The AWA board rejected a resolution that gave procedures for establishing internal loans. The Policy Committee recommended the resolution in order to prevent AWA systems from having negative fund balances. Both the public and some board members were not satisfied with the resolution.

    One issue the public had is that the proposal gave loans to outside entities priority over internal loans. Bill Condrashoff told the board “It isn’t fair to commit ratepayer funds to a lower priority for payback than outside loans without ratepayers having a say.” Some board members didn’t think it was fair to borrow or loan funds for a system without first letting those ratepayers know what was happening.

    The resolution was sent back to the policy committee for further review before it comes back to the full board for possible adoption.

  • Board Gives OK for General Manager to Hire Temp Employee

    AWA General Manager Gene Mancebo asked the board for direction to hire an additional employee to “assist with the work load created by the volume of public information requests.” A week earlier, Ken Berry asked for information that would justify the time spent on requests. Even though Berry was promised "what information we can provide" on May 17, nothing has actually been provided as of May 31.

    A verbal staff report from Karen Gish stated that 144 hours of employee time was spent on public records requests over the last 5 weeks. Board members pointed out that a new hire would need more attention and require the existing staff’s time to get the new hire up to speed. Director Molinelli said that “he has seen the stress the requests have caused staff.” Ken Berry asked, “Why are information requests so stressful to staff?”

    Berry did not get an answer to his question. The right of the public to examine public records is part of the California Constitution. No obligation is placed on public agencies to create documents, only to disclose the records by which the public's business is conducted. Berry later commented "I can understand how it is stressful to produce records that contradict what you have said in public, but I cannot understand why the Directors keep making decisions when AWA staff presents no facts to justify their recommendations."

    The board approved the hiring of a temporary worker for a 3 to 5 month trial.

  • Board’s Reputations are at Stake

    Several people at the meeting expressed that the AWA board members are putting their reputations at risk by seemingly ignoring the seriousness of AWA financial problems. Bill Condrashoff urged the board to be sure that they completely understood the seriousness of the 66013 suit and the discrepancies between those reports and the annual audit. The 66013 suit arose because the Directors voted not to provide Condrashoff with a report that would have shown the Directors that AWA was in financial trouble. Condrashoff first asked for the report in August of 2011.

    Out of a sense of obligation, Debbie Dunn read a prepared statement to the board giving them notice that they will be fully responsible if they continue to follow staff recommendations without regard for the public’s wishes. Dunn told the board that they will have no one to put the blame on to but themselves. She said they still have every opportunity to save their reputations by doing the right thing from here on out.