Missing MSD money turns up—in the bank

The mystery of the missing Buncombe County sewer money has been solved: According to officials at the Metropolitan Sewerage District, the cash was never really missing in the first place.

MSD staffers had been furiously recalculating cash receipts from the past four years, trying to figure out why fiscal year 1996-97’s revenues would be down $432,519 from the previous year.

“All the results came back saying the income should be higher” than the annual audit showed, explains Jim Fatland, MSD’s deputy general manager for administration.

It turns out that most of that money — $391,171 — was collected by the city of Asheville and properly forwarded to MSD. And, in fact, that money showed up in the bank balances, according to MSD General Manager Bill Mull.

But Asheville’s correct sewage-revenue total for the year didn’t make its way into the annual audit conducted by Asheville accounting firm Killian, Cole & Marshall.

The apparent information glitch has led to a low-grade feud between MSD and city of Asheville staff. Asheville and all other municipalities in the county are responsible for collecting sewage-treatment fees from their water customers, based on the amount of water those customers draw.

As Fatland tells it, the auditor sends a list of questions to each municipality in Buncombe County every year, as a prelude to balancing MSD’s end-of-year books. Every municipality is asked, among other things:

• How much money has been collected by the end of the fiscal year (in this case, June 30, 1997), but not yet forwarded to MSD?

• How much money was billed to customers but not paid by June 30?

• In the natural billing cycle, what amount of services used before June 30 would be billed after June 30?

According to Fatland, the city accidentally gave the auditors the wrong answer to the third question, saying that $457,488 remained unbilled on June 30, instead of $848,659.

“They filled the form in incorrectly, and the auditor took it as correct,” Fatland explains. (This came at about the same time that Asheville’s Water Department blamed a “computer error” for the fact that it overestimated its water revenues by some $2 million.)

Fatland also says that Asheville Finance Director Bill Schaefer has graciously apologized for the city’s error.

Schaefer would not discuss the issue with the Xpress. But Assistant City Manager Doug Spell, who has served as acting Water Department director since Mike Holcombe abruptly stepped down from the post last fall, maintains that the city has no reason to apologize. “I think there was some error that their auditors had made,” says Spell.

Ironically, Fatland notes that Killian, Cole & Marshall is the very accounting firm that had advised MSD to keep a more careful watch on the towns handling MSD money.

Fatland also contends that the city of Asheville has been irregular about billing. This past Christmas, he asserts, no bills were sent out for two weeks, because so many employees took time off at Christmas, instead of staggering their vacations.

“Absolutely not,” Spell responds. “I don’t agree with that. We’ve got a regular billing cycle.”

Either way, Fatland and Mull vow that this confusion will lead to more careful monitoring of all municipalities collecting sewage-treatment fees on MSD’s behalf. And since most of the district’s sewer users live in Asheville, the city is likely to attract the closest scrutiny. Asheville collects nearly $1 million per month in MSD fees.

MSD now pays municipalities $1.30 per bill to collect sewer fees from their water customers. On July 1, the collection fee rises to $1.55 per bill.

During a finance committee meeting, Mull told MSD board members that some water customers have not been getting billed for sewer services. As an example, he cites new construction sites where the water has been connected but — for whatever reason — no one has gotten around to billing for sewage treatment.

“There’s no incentive for the city or anybody else to go after them,” Mull explains, “because they weren’t getting the revenue.”

MSD board member Mike Sobol has been among those asking whether the agency should start collecting its own money. And new MSD board chair Larry Casper has suggested adding an internal auditor, who would monitor local water departments and look for problems within MSD’s own system.

“I think there’s a lot of holes, from what I’ve seen … especially in the last few months,” Casper says.