Marinette groups work on debt plan
Month taken to address $1.5 million debt
Sunday, August 25, 2013 7:00 PM
MARINETTE - After the joint meeting between the Marinette City Council and the Water Utility and Wastewater Commissions Aug. 5, the council and commission members were given more than a month to stew over the Water Utility's $1.5 million debt to the city and other financial issues.
This discovery led to other questions about how long the problems had been apparent and what was happening to solve them and prevent similar problems in the future.
According to Mayor Denise Ruleau, she has been involved with solving the Water Utility's overtime issue since she was made aware of it in September 2012.
"The overtime issues started over a year ago, so I was bringing that to the attention of the commissioners because that even though the commissioners knew there was overtime, they didn't know the dollar amounts involved," she said. "I brought it to the commissioners and have continued to report to them what I have found out and made some comments and suggestions about other things that are happening."
Overtime paid to Water Utility employees rose from $72,302.48 in 2011 to $143,926.24 in 2012, a 99 percent increase in just one year. The overtime budget presented at the recent Water Utility and Wastewater Commissions meeting showed that overtime payments were at $94,346.79 by Aug. 9, with $31,065.70 going to the office staff and $63,281.09 going to the operational employees.
However, the city did not realize there was an issue with the stormwater account as well until March when Brian Miller, the city's engineer, wanted to fund a project with the stormwater and refuse fees that have been collected. According to Ruleau, this led to the city finding out about the $1.5 million debt.
"It took a lot of time to get to that point because our auditors don't only audit us, they audit other municipalities as well," Ruleau said. "So they weren't able to totally work on our issues so that is why it took us until the Thursday before that meeting on Aug. 5 to find out the dollar amount."
In a letter distributed at the Aug. 5 joint meeting from Thomas Karman, chief auditor looking into the disparities, he explained that the Water & Wastewater Utility had undergone a few significant changes recently, including a change in the demand of services from Waupaca Foundry and multiple changes to its billing system.
The other two major reasons for the cash deficit were from both operational and capital spending - there was a 99 percent increase in the amount of overtime paid from 2011 to 2012, and the utility completed a number of capital improvement projects using the cash it had on hand instead of financing them.
Compounding these problems was the fact that the Water & Wastewater Utility hadn't had a formal annual budget since 2008.
"Not having a budget would have something to do with that. The audit for 2011 was fine but it was the audit for 2012 that would come to everyone's attention," Ruleau said. "Typically the auditors come here in October or November and we have a joint meeting with the utility commissions and the council and that's when the budget is present. So actually, we found out about this sooner than we could have. So it was a good thing that we found out about it when we could."
The early detection may have prevented the problem from growing, but neither the city council or the utilities have said much about their plans.
"We really don't know more than what we presented at the meeting," Ruleau said. "We'll have a better understanding of where things are, at that point (a Sept. 9 meeting with auditors), and then we'll have a better understanding of which direction the commission want to go in and the city wants to go in. We will be looking into things."
At the Aug. 5 joint meeting, both Karman and Ruleau submitted their ideas and suggestions for how the council and commissions members should deal with the situation.
- Start paying the stormwater and refuse fees to the city on a monthly basis.
- File a rate increase application with the Wisconsin Public Service Commission.
- Establish a repayment schedule and interest rate that is agreeable to both parties.
- Increase site management presence.
- Borrow money to finance capital projects in the future.
- Freeze office overtime and hiring office/utility staff.
- Gain approval from the finance director of operational staff prior to hiring.
- Present budgets to utility commissioners at regular monthly meetings.
At the Water Utility & Wastewater Commissions meeting Aug. 19, Kathy Cleven, Marinette's financial director, presented a working monthly budget and reported that all office staff had ceased their overtime for the past week and a half.
The other options were scheduled to be discussed at another joint meeting previously scheduled for Aug. 19. However, because Karman could not attend, the meeting was rescheduled for Sept. 9 at 5:30 p.m.
"We don't like the lag time, either, but we have to deal with it," Ruleau said. "We want him present at the next meeting. We don't want to go into another meeting without the senior auditor."