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State flags utility district for diversion of grant money, more

March 6th, 2014 9:12 pm by John Thompson

State flags utility district for diversion of grant money, more

BUTLER — The diversion of emergency grants for line extension into funding for a new district office building and the personal use of an unmarked district pickup truck were some of the findings of a special investigation of the Carderview Utility District.

The audit was conducted by the state comptroller’s office and the report was released to the public Wednesday. The investigation focused on the 2012-13 fiscal year. When warranted, the scope was expanded.

The report listed four findings:

- Management failed to follow the utility district’s policy to obtain required bids on purchases more than $1,000.

- The district manager improperly used grants from the Department of Agriculture’s Rural Development agency for emergency water line extensions. The auditor reported some of the funds partially paid for the construction of a new district office building.

- The district commissioners did not have a clear policy and did not provide adequate guidance on customer cutoffs for not paying water bills, and the department was not consistent in cutoffs and dry tap fees.

- The district’s pickup truck was not marked as a district vehicle and was licensed as a commercial vehicle. There was no report of the value of the superintendent’s personal use of the vehicle.

On the first finding, the auditor said there were multiple purchases more than $1,000 without competitive bids during the new district office building’s construction.

The utility’s board of commissioners agreed and said the policy has since been changed to require competitive bidding on purchases more than $5,000.

On the second finding, the auditor reported the district manager used at least $6,463 of an emergency line extension grant from USDA Rural Development to pay for invoices on the new office’s construction.

Rural Development de-obligated the remaining unused emergency line extension grants but did not require the district to reimburse the improperly spent funds, the auditor reported.

To prevent possible penalties, including being declared ineligible for future grants, the auditor recommended a qualified person should be retained to ensure grant funds were used only for the purposes with which they were intended.

The board of commissioners concurred and said an independent qualified person would be hired to oversee grant money.

The auditor said the district did not establish a service cutoff date and customers’ bills did not mention the policy. As a result, “delinquent customers were disconnected ... at the discretion of the manager.” The auditor said some delinquent customers were disconnected while allowing continuation of service for similar customers, including family members.

The auditor said there was also a lack of consistency in dry tap fees. Properties in subdivisions or developments were billed, but other properties were not assessed, including property owned by the district manager. As a result, the district failed to collect approximately $1,600 during the fiscal year from 13 dry taps not located in a subdivision or development.

The board of commissioners said it had revamped its cutoff policy to ensure there were concise deadlines procedures for dry tap fees. Board members said they would ensure proper enforcement of the policies.

The final finding was that a district pickup truck was not marked as a utility vehicle and personal use of the vehicle had not been properly reported.

The auditor not only reported the truck was unmarked, but the manager had purchased a commercial license plate for the vehicle at a much higher cost than the government license the truck could have had at a cost of $4.

The report said the former district superintendent admitted he used the truck for personal purposes, including hauling firewood and produce. He did not maintain mileage logs documenting the amount of personal use and the manager failed to properly report the fringe benefit to the Internal Revenue Service.

In a footnote on the report, the auditor said the district superintendent resigned immediately before the investigation’s start and was the husband of the former manager of the utility district, who resigned before the audit report’s release.

The utility board said a new manager and operator of the vehicle has been hired and will keep a mileage log. The manager understands the vehicle is strictly for district use. The truck will also be marked as a district-owned vehicle.

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