Billing errors cost Cairo big
City officials are now coming forward with an explanation of why water and sewer revenues were down nearly $1 million from fiscal year 2008 to fiscal year 2009.
The Cairo City Council learned of the difference late last year when officials with Bowen, Phillips, Carmichael, Davis & Sims, the city’s auditor, presented a draft of the FY-09 audit. At that time Councilman James H. (Jimmy) Douglas suggested the auditor request an extension from the state for submission of the annual audit so city officials could verify if the audit’s findings were accurate.
On Monday, Cairo City Manager Chris Addleton briefed first members of the council finance committee and then later the full city council on his review of the water and sewer fund.
“Based on our findings I believe the figures in the draft of the audit are correct and I would recommend we notify the auditor so that he can finalize the report and submit the audit to the state,” Addleton said.
The city manager told the councilmen this week that $210,959 of the reduced revenue was the writing off of uncollectible debts in that amount. According to Addleton, these bad debts had accumulated over a number of years and the previous finance director had not written them off as uncollectible.
The city manager is also estimating $200,000 was lost due to a decrease in water and sewer use in FY-09. That estimate is based on a 6.4 percent reduction in water use or 29 million gallons from FY-08 to FY-09.
Addleton says, “Two things happened at once. We came off of an extremely dry year into a really wet year and one of the largest water customers, Timken, now Koyo Bearings, reduced operations, which resulted in lower water and sewer revenues.”
Addleton’s review also indicates approximately $111,465 of revenue was lost to billing errors as a result of a conversion to the new UBILL software developed by the City of Thomasville.
“When we converted to UBILL we had some billing errors that we didn’t catch and Thomasville didn’t catch,” Addleton said.
The city manager admits that in hindsight the city should have operated parallel systems during the conversion to avoid billing errors.
“That’s a given,” commented Councilman James H. (Jimmy) Douglas, who suggested prior to the conversion that both the new and old systems be run at the same time to help detect accounting issues.
However, the city manager is not willing to accept all of the blame. Addleton says City of Thomasville officials have admitted their failure in identifying errors and are offering financial concessions.
Addleton described the conversion period as a “chaotic environment” that was “not as easy as we were led to believe” by Thomasville officials.
The city manager noted that Cairo officials were not the experts in the conversion and they were depending on the expertise of Thomasville city officials.
Councilman Ernest Cloud asked the city manager who at the utility department was responsible for reviewing the billing which likely would have detected the problem earlier.
“There is a lot of would’ve, could’ve, should’ve, but the bottom line is if you are going to blame anyone then you’ve got to blame all of us,” Addleton said and added, “I will take the responsibility for this.”
During the conversion Addleton found that the January 2009 UBILL billing formula error of 100’s versus 1,000’s of gallons resulted in an under billing of $80,616, which is the bulk of the $111,465 in under billing.
The city manager’s investigation also revealed that the residential sewer cap of 15,000 gallons was also applied in error to the city’s commercial sewer customers through May 2009 which resulted in an under billing of approximately $25,849.
Another approximately $5,000 of revenue was lost because, in the conversion to UBILL no service code for sewer penalty charges was plugged in and the error was not discovered until May.
On top of the reduced usage and under billing, the expense of operating the water and sewer system increased by $225,000 from FY-08 to FY-09. According to the city manager the bulk of that expense, about $150,000, is a result of additional expense from Tropical Storm Faye. Another $75,000 was major repairs to the #3 well at the city’s northeast water plant.
“Not running a parallel system is the main reason for this happening, but if someone had looked at a few of the bills, either us or in Thomasville, they would have found the error,” Councilman Douglas said.
Addleton noted that Thomasville city officials have agreed to waive $60,240 of the initial cost of converting to Thomasville’s MSGovern (Management Solutions for Government) financial software because of the conversion errors with the UBILL conversion.
The Cairo city manager recommended Monday that the city enter into an intergovernmental agreement to convert from Tailored Business System (TBS) financial software to Thomasville’s MSGovern software.
Finance Director Miriam Faircloth preferred the software offered by Computer Software Innovations, Inc. of Easley, South Carolina, but she agreed with Addleton that the difference in the cost could not be justified.
“There is no doubt that CSI has more bells and whistles, but I’m not sure we can justify the difference in cost,” Addleton said. The CSI bid was over $100,000.
“When they (Thomasville) are practically giving it to us that’s hard to pass up,” Faircloth told members of the council finance committee Monday.
The city’s finance director told councilmen that she would have to maintain the current software in order to obtain previous years financial history.
Councilman Douglas, a former Cairo finance director and current finance director of the City of Camilla, was involved in the conversion to MSGovern in Camilla and he recommended the city convert to the Thomasville system.
He also noted that the city may negotiate for additional concessions as a result of what he described as the UBILL conversion “fiasco.”