State Auditor Jim Petro's office released a performance audit of the Mahoning Valley Sanitary

State Auditor Jim Petro's office released a performance audit of the Mahoning Valley Sanitary District this morning. The audit, which was requested by the MVSD's directors, includes 74 recommendations. A list of key findings and recommendations:
MVSD does not have a strategic or technology plan in use. Without a plan, the directors aren't able to effectively direct and monitor operations. Directors should develop and adopt a strategic plan, including mission and vision statements. Effective strategic guidance should improve MVSD's ability to operate effectively by providing guidance to management and measures to assess activities.
MVSD has a particularly high number of division managers when compared with the peers, but the district is below the peer average in the number of assistant manager positions. The district also has two executive managers, chief engineer and treasurer, who report to the board and are accountable for operations. MVSD should restructure to reduce the number of division manager positions, increase managers' span of control, consolidate functions and improve communication and accountability. This should save about $111,000. The treasurer should report to the chief engineer who should be solely accountable to the board.
MVSD doesn't have rules guiding its internal operations or use committees in its regular business activity. The directors should adopt bylaws and should create a minimum of three committees. Recommended committees are planning/budget, personnel and safety/security.
Since MVSD's inception, many resolutions have established policies but no formal process exists for the board to review the effectiveness of MVSD policies. The board hasn't given policy guidance to management in key areas and needs to improve communication with management. The board should create and adopt key policies and rules in order to more clearly define their positions.
Human resource functions are inconsistent, incomplete and lack proper documentation. MVSD should hire a part-time human resource/risk manager to oversee and coordinate human resources, workers' compensation and safety training. The cost to hire the manager is about $32,000.
Managers at MVSD lack tools for tracking and analyzing significant human resource performance indicators. MVSD should acquire human resource software to facilitate management tracking and analysis of key human resources data.
MVSD has a residency preference in its hiring policy that raises both legal and operational issues. MVSD should revise its hiring policy and process to focus on hiring the most qualified candidates.
Auditors discovered that the district was classified with the Bureau of Workers' Compensation as a private corporation instead of a public employer. In comparison with similar entities, BWC costs for MVSD have been high in past years. MVSD reclassification will make MVSD eligible for certain programs and discounts and will temporarily reduce premiums. MVSD should improve its management of workers' compensation, be more proactive in addressing safety issues and reduce workers' comp costs.
The average number of sick days taken per employee in 2000 was 14 or nearly three times the number taken by the average 12-month government worker. The large amount of sick time used is likely a cause of overtime. MVSD should employ sick leave policies and procedures to reduce the amount of sick leave used. During future contract negotiations, MVSD should try to modify contract language that hinders its ability to implement effective sick leave policies. This should allow MVSD to use employees more effectively and reduce costs by about $80,000.
MVSD employees had a lot of overtime in the last several years. The average overtime hours worked per hourly employee for 1998 through 2000 is 270. Average annual overtime cost per employee for those three years is $6,600. MVSD should start to eliminate excessive overtime costs. It should be used only to compensate for unexpected leave time or emergency situations. Steps suggested include employing enough hourly workers to cover all shifts and have adequate staffing for routine work and negotiating overtime policy so the district pays overtime for hours worked in excess of 40 hours per week.
The average hourly employee wage at MVSD is higher than the peer average. MVSD also pays the employee share of the Public Employees Retirement System contribution, which is 8.5 percent. That is usually paid by the employee in peer organizations. The district should negotiate compensation levels more in line with peer water districts and surrounding localities by requiring employees to make the PERS contribution. This should reduce MVSD costs by about $136,000 and provide needed funding for capital improvements.
Average wage of a division manager at peer districts is 17 percent higher than at MVSD. Assistant division managers at peer districts earn slightly more on average than those at MVSD. The board should adjust management salaries so they're more comparable with peer districts. would cost about $20,000.
Total health-care costs are about 42 percent higher than peers'. MVSD should strive to lower these costs such as by negotiating a maximum health-care contribution it will pay per employee.
MVSD lacks financial planning policies and procedures that can ensure long-term financial stability and growth. The district should ensure the treasurer is the primary person managing and coordinating financial planning at the district. The treasurer should be the district's chief financial officer.
MVSD's capital improvement plan hasn't been updated since 1997. It originates from a study done in 1985. MVSD should update its plan and establish a formal capital improvement planning committee to update the plan to reflect the current operational needs and costs associated with capital improvements.
MVSD's main source of revenue is from the sale of water to member communities Youngstown and Niles. The rate structure should be updated periodically based on factors such as inflation. It's critical for a utility's rate structure to be current and adequately cover operational costs and capital improvement needs.
MVSD has funded capital improvements primarily through general obligation and water revenue bonds. It hasn't sought additional funding on an ongoing basis. The district should identify and obtain additional funding from professional organizations and state and federal programs that provide grants and low-interest loans. Receipt of eligible grants could increase revenue by about $500,000 annually.
MVSD maintains more square feet per full-time equivalent employee than the peer and industry standards.
Source: State Auditor Jim Petro's performance audit