Missing Manzanita Water Fund Revenue

By Randy Kugler
At the June 5 City Council meeting I raised issues regarding overhead allocations resulting in 50% of the City Manager and Assistant City Manager’s salaries being taken from the City Water Fund.
One of the justifications given by the City for this was that the City Manager also acts as the City Water Utility Manager and in this capacity provides 4 hours each day of management activity of the water utility. I requested a copy of the City Manager’s job description expecting to see prominently listed the City Managers duties as the City Water Utility Manager. There is nothing in this job description that even remotely suggests that this is a role that the City Manager performs.

I then reviewed the job description of the Public Works Director which contains the routine functions of the daily management of water utility operations, including the planning and overseeing of construction projects and preparing and managing his various budgets. Under Examples of Duties and Essential Functions, the Public Works Director is specifically designated to serve as Direct Responsible Charge for the city’s water system.
By the City’s own job descriptions of employee responsibilities, the City already has a water utility manager. He is called the Public Works Director and 90% of his salary and benefits are paid with water utility revenue to operate and maintain the City water system. This Budget allocation would have you believe that the Manzanita water system is so complex to operate that we now must have two additional managers at City Hall providing daily assistance and supervision of the designated manager of our water utility.
Another explanation given was that the City had identified other cities that were using a 50% allocation from their Water Fund to pay the City Manager’s salary and thus felt that 50% would also be appropriate for Manzanita. I have contacted City Managers from around the State to test the accuracy of that statement. The following is the summary of the responses that I received for cities that employ both a City Manager and Public Works Director and the percentage of funding from their respective Water Funds that pay the overhead allocation of their City Managers for general supervision of the water utility.
La Grande 22% Sutherlin 21.6% (In middle of $22M Water & Waste Water construction project) Silverton 20% Brookings 17% Aumsville 15% Gervis 15% Philomath 15% Roseburg 13.5% Sweet Home 11.6% Coburg 11%
Madras 10.5% Dallas 10% Baker City 7.5% Cascade Locks 5% Gold Hill 5% Myrtle Creek 0% Harrisburg 0% Cottage Grove 0% Central Point 0% Sandy 0%

If the City can share which cities it was referring to in justifying a 50% overhead allocation, now would be a good time to share that information with citizens. I would note that even the 25% allocation previously used by the City bears further scrutiny for justification.
These sample cities allocate between 30-40% of their Public Works Director’s salary from their respective Water Funds, further calling into question Manzanita’s allocation of 90% for its Public Works Director as the City water utility manager who apparently requires substantial assistance from City Hall to do the work contained in his job description.
The City Budget document in describing how revenues for the Water Operating Fund are to be used states “Water revenue is the largest single revenue source in the City’s budget, although all monies must be used for the water utility”. The City’s inability to provide any common sense answers as to how the City Manager and Assistant City Manager are entitled to receive 50% of their salaries from the Water Fund creates a clear conflict with the intent of this stated City policy.
I requested a written explanation from the Public Works Director as to how the City Manager currently and now how an Assistant City Manager would provide him with a total of 8 hours of management assistance each day in operating the City water utility. I believe a fair summation of his response is: while he acknowledged the general supervisory role of the City Manager regarding the water utility, he had little direct or personal knowledge of the details of this activity nor the time required in performing these management tasks.
As far as his understanding of the role of the Assistant City Manager as a City Planner, the Assistant City Manager’s involvement with him and the water system is dependent and limited on when and if development projects are submitted to the City for his review.
The various explanations given at the June 5 meeting are clearly at odds with the City’s own descriptions of the job duties of the City Manager and Public Works Director. That cities with organizational structures similar to Manzanita obtain 50% of their City Manager’s salary from water revenue appears to be unfounded. The Public Works Director who is the supposed beneficiary of all of this management assistance is understandably caught in the dilemma of trying to explain that which cannot be explained. And finally, the clear expectation that all water revenue must be used for the water utility is not happening.
I appreciate that by my bringing this matter to the City’s attention, the Council has now instructed staff to investigate this matter in time for next year’s Budget process. The Council expressed no reservations over the 50% allocations and showed no interest in having staff investigate this matter during this year’s Budget process when the question was raised by a citizen member of the Budget Committee. At the June 5 City Council meeting in response to a citizen question on the Water Fund allocation, the Mayor represented that the matter had been discussed at length during the recent Budget meetings and the City was indeed justified in continuing the current allocations for the upcoming fiscal year.
This recently discovered sense of fiscal responsibility is an inadequate response especially since the Council could have taken steps to address this year’s misallocation before the FY 2019-20 Budget was adopted on June 26. Your failure to take timely action after my June 5 presentation results in another approximately $75,000 being inappropriately taken from the Water Fund for the new Fiscal Year and compounds a far bigger problem for next year’s Budget discussions. That being, how does the City plan to restore the hundreds of thousands of dollars taken from the Water Fund since this ill advised policy decision was first implemented 11 years ago?
This Council’s insistence on pushing for passage of a multi million dollar Bond issue this November in light of your questionable fiscal management in purchasing the Underhill property and now the budgeting of our Water Fund is troubling. What is even more problematic is the refusal to acknowledge or even provide a creditable response of your role in these matters.