Campbell officials cast blame for water fund deficit

By Sarah Lehr

slehr@vindy.com

CAMPBELL

With a water fund now six figures in the red, Campbell city officials are casting blame.

The water fund closed May with a negative unexpended balance of $107,569 and a negative ending balance of $163,779, according to a report provided by Finance Director Michael Evanson. The fund ended April $96,043 in the red.

Mayor Nick Phillips points a finger at his predecessors, whom he characterized as “putting a Band-Aid” on the water department’s fiscal problems. For their part, city council members George Levendis and Juanita Rich have suggested that the mayor should fire the finance director.

A water-rate increase, which the mayor announced June 9, reignited rancor over the water department’s finances.

Effective July 1, a fixed service fee will increase $12.75 to $21.75 a month. A usage fee will decrease from $5.50 per 1,000 gallons consumed to $4.50, and the fixed water capital-improvements fee will remain at $6.75 a month. The average Campbell household uses 4,430 gallons of water a month, according to the finance department.

Levendis and Evanson said the city decreased the variable usage fee because, paradoxically, if that fee were to increase, residents would use less water and the city would lose revenue.

Under Campbell’s city charter, the authority to set water rates lies with the mayor. Phillips said the fee increase is necessary to correct the water fund’s deficit. He attributed the deficit to Aqua Ohio’s 2014 decision to purchase $288,160 less in treated water from the city than it had the previous year. The landlocked city purchases untreated water from Aqua Ohio and treats that water in its own plant, which is operating at about 31 percent capacity. In the past, Aqua Ohio has purchased a significant amount of treated water from Campbell to be sold to companies and municipalities.

To cover the 2014 water deficit, city council approved an advance of general-fund money to the water department. Since then, council has been approving a series of fund transfers in the opposite direction to reimburse the general fund. Phillips was present at meetings in which council approved those fund transfers.

Phillips said he was not aware of the water department’s budget problems until Levendis, council president and finance committee chairman, approached him after reviewing the city’s quarterly financial report. Levendis said he “caught” the deficit two weeks ago, consulted with the state auditor’s office and estimated the city would end the year with a negative balance nearing $300,000.

“I honestly had no sense the fund was in trouble. I thought it was healthy,” Phillips said.

During a council meeting last week, Rich expressed worry about the impact of a fee increase on elderly residents. He said though “he may be a nice guy,” Evanson may need to be replaced.

Both Levendis and Rich brought up the issue of Evanson’s being behind on reconciling the books, a matter that council members repeatedly have referenced in public session.

Evanson responded to say he has completed the books for January 2016 and is working on February.

“We can’t make informed decisions, neither could the past administration ...,” Rich said of what she described as Evanson’s failure to fulfill his advisory role. “My concern is this: What else do we not know?”

Levendis added that he believed Evanson should be fired if he is not up to date on the books by the time council reconvenes after summer recess.

“If there’s a problem, we need you to bring it to our attention early,” Levendis said, noting council is tasked with approving appropriations and setting pay. “I can’t take your word at face value. I need to call in for a second opinion to make sure.”

Evanson said he did not believe it was fair for council members to say they were not informed.

Levendis, in response to questions about council’s approval of fund transfers, later acknowledged he did have some knowledge of the water department’s financial problems, but said Evanson did not let council know how “grave” the situation was.

Rich said that until two weeks ago, she was under the impression that the 2014 deficit was a “one-time” problem that had since been corrected after council moved money from the general fund. She said Evanson did not communicate that the water plant had an ongoing fiscal viability issue.

Evanson said he is behind on the books because he must wait until the following month for a bank statement and because he is busy with other projects that council has asked him to prioritize. The finance office employs one other full-time employee along with two part-time water-bill clerks.

“The poor guy is swamped with paperwork,” Phillips said of Evanson, noting the finance office handles water bills for about 3,000 customers.

Evanson earns $42,000 a year and does not take a health package, the mayor said. Evanson became finance director in 2012 after 31 years of managing finances for public school districts.

Phillips, who is serving his first term, said he is willing to replace Evanson if Evanson does not reconcile the books by Sept. 7. Though city council must approve the mayor’s appointment for finance director, only the mayor has the authority to fire that person. City council most recently approved Evanson’s appointment 5-0 during a Dec. 2, 2015, reorganization meeting.