The state Auditor’s Office issued findings this past week to the city of Montesano and Grays Harbor Fire District No. 5.
In Montesano’s case, auditors said the city did not do a good enough job documenting why its deputy clerk, community development director, parks department manager and city administrator were partially funded by utility funds.
For Fire District No. 5, the issue revolves around whether the fire district was making its payments on a revolving credit line in a timely manner. The fire district says it was, the State Auditor’s Office is questioning it.
Both of the local governments say they have issues with the findings.
In Montesano’s case, the state Auditor’s Office says the city “allocated $193,881 in salary and benefit costs to its utility funds without documenting that amount was fair and equitable. Increased costs to city utilities may result in higher utility rates.”
Auditors say they had mentioned the issue before in prior reports and issued the finding because the city remained out of compliance.
“Perhaps it was a result of my being new in the position, but I did not read the comment in the earlier audit report as a directive to actually track the specific hours of each split employee,” City Administrator Kristy Powell wrote in her response. “For that reason I cannot agree that the factual situation supports such a significant action of a finding.”
Powell says since the audit report was done, the Montesano City Council adopted a resolution requiring management to analyze and document different employees and the time they spend with each fund. Powell said that employees will submit time sheets to her three times a year so that better documentation can be in hand.
Fire District No. 5 Chief Dan Prater says he absolutely disagrees with the finding, saying the Auditor’s Office doesn’t understand the nature of its loan or repayment schedule and, more to the point, that the district’s bank has never said they’ve missed a payment.
The loan repayment stems from a 2009 lawsuit filed by Sterling Savings Bank.
The State Auditor’s Office said that as of December 2012 the District was $125,431 behind on its payments and the total remaining balance of $189,093 is due by May of 2013.
“The District misunderstood the court order and believed that the semi-annual lump sum payments were supposed to equal at least $40,000 per year, in total,” the finding says.
Chief Prater says there were no misunderstandings on the district’s part. He insists the Auditor’s Office is wrong and that the key word in the agreement is the word “aggregate,” which called for the district to pay a combined total of $40,000, which included the monthly payments, by the time each lump sum was due. In this case, he says, the district paid lump sums of $20,000.
“In fact, we were paying more than we needed to, beyond the minimum payments,” Prater said, adding that Sterling Savings Bank could have demanded everything paid right away had the district missed any payments. Prater said the district is working with Sterling Savings Bank to extend the agreement out another year. They hope to have the loan paid off by November of 2014.