Publisher's summary
Because the Board did not adopt realistic budgets, the sewer fund incurred operating deficits and a decline in its overall financial health. The Board overestimated revenues by $379,000 in fiscal years 2014-15 through 2018-19, resulting in net operating deficits in the sewer fund totaling $144,000. The Board also did not annually review contractual revenues, resulting in potential unrealized revenue totaling approximately $295,000. Finally, the Board did not document a basis for, or adequately monitor, shared service costs, resulting in possible sewer fund inequities. However, with rate increases in effect and the adoption of more realistic revenue estimates in 2018-19 and 2019-20, there has been marked improvement.
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whether the sewer fund’s proportionate share was equitably allocated based on
supporting documentation. In certain instances expenditures had no reasonable
basis for the allocation percentages used. For example, the June 2015 Board
minutes indicated that a highway employee was “moved to the sewer fund” and
100 percent of his $44,662 earnings were charged to the sewer fund in 2015-
16. However, according to his time sheets, only 220 hours should have been
charged to the sewer fund (10 percent),6 approximating $4,446 in actual payroll
costs during 2015-16.7 This practice continued in 2016-17 through 2018-19.
Additionally, in 2015-16 the Village’s proportionate share of this individual’s health
insurance cost, totaling approximately $4,500, was charged to the general fund.
The Treasurer told us that historically the annual retirement and workers’
compensation costs were allocated based on budgeted personnel costs rather
than actual expenditures or time worked by shared employees. However, if payroll
costs are allocated based on budgetary expectations, rather than actual time
worked, the sewer fund could be paying a disproportionate share of these costs.
A Board member told us she was aware of the workers splitting time between
departments and had assumed that shared costs were allocated based on actual
time worked, not budgeted costs.
Additionally, we question whether shared service expenditures totaling
approximately $26,000 were allocated equitably. In January 2016, the Board
approved a mileage reimbursement totaling $4,420. Although Board minutes
indicated this should be a water fund expenditure, the entire amount was charged
to the sewer fund. Further, the sewer fund expended $21,600 for building
upgrades to accommodate moving the Water and Highway Departments into the
Sewer Department building. We could not determine whether the Board’s intent
was to make this a sole cost of the sewer fund.
While it is appropriate to share costs, the basis for allocation should be clearly
documented during the budget process. Budgets should be reviewed, and
amended as needed, based on supported actual costs.
Without proper oversight officials cannot be sure the sewer fund is paying the
appropriate share of the costs. Further, because the DOCCS contribution is based
on total expenditures, it is critical that this amount includes actual, and all, sewer
fund costs. After discussing with officials, they made a significant effort to provide
more detailed information regarding cost allocations in the 2019-20 budget.
6 Based on a 40-hour work week
7 This same individual only charged 56 hours totaling approximately $1,100 to the sewer fund in 2014-15. Time
clocks were used between October 2016 and February 2018 with no detailed time sheets and therefore we could
not determine the amount charged during this time period.
Of f ic e of t he New York State Comptroller 5