​Auditor Praises SUD; CIPs on the Horizon

by Leslie Lytle, Messenger Staff Writer

Financially the district is healthy,” said auditor Don Mills addressing the Sewanee Utility District Board of Directors at the June 24 meeting. “Two of three findings noted in the 2017 audit were corrected. I look for the district to have a clean slate next year.” Following the discussion with Mills, the board reviewed Capital Improvement Projects (CIPs) needing attention and approved a pay raise for manager Ben Beavers.

The single critical finding in the 2018 audit had been corrected before the end of the year. Mills praised SUD for addressing another criticism which had appeared on its audit since 2013. To avoid an “inadequate segregation of duties” citation, SUD employed Tennessee Utility Assistance to perform a monthly review of financial accounts. The “inadequate segregation of duties” finding is common for small utilities that lack the staff to provide the required degree of financial oversight and lack the resources to hire additional full-time staff.

Mills said his firm the MG Group could perform the oversight function “a little more cost efficiently.”

“If we go with another auditor, we could look at switching the oversight provider as well,” said Beavers. On the recommendation of the state, SUD switches auditors every five years. For the audit and oversight to be provided by the same entity would be a conflict of interest. SUD typically selects an auditor in October.

Board President Charlie Smith brought to Mills’ attention the audit’s inaccurate reference to SUD board member term lengths and how board members are selected. Mills will correct the error before submitting the audit to the state comptroller.

Looking ahead to Capital Improvement Projects needing addressed, Beavers cited replacement of old deteriorating cast iron water lines on Tennessee Avenue and at St. Andrew’s-Sewanee School. Identifying the constricted sections on Tennessee Avenue and replacing only those could cut the cost by half, Beavers said. At SAS, he proposed eliminating the old section of line and tying into the new line already there. SUD could do both projects “in-house,” Beavers noted, meaning additional cost savings.

Asked about the need for replacing old constricted, leak-prone waterlines versus addressing inflow and infiltration into the sewer system, Beavers observed the cost of losing treated drinking water due to leaks was greater than the cost of treating increased wastewater due to inflow and infiltration (I&I). Also significant, SUD had already cut I&I by half and has not exceeded its Wastewater Treatment Plant spray limit in years.

Pointing to another upcoming capital expense, Beavers said the two membrane filters at the water treatment plant would need to be replaced in the next three or four years, estimated cost $50,000.

Commenting on operations and lower water sales, Beavers said, “The trend in the past five years has been for decreased water use in the state and across the country.” Beavers attributed much of the decline in water use to low flow toilets.

Revisiting the discussion at the June 17 special called meeting about Beavers salary, Smith said the board reviewed Tennessee Association of Utility Districts data on utility managers’ salaries. Beavers’ current salary falls at the midpoint for other utilities of the same size. Beavers hasn’t received a wage increase since 2017.

The board approved board member Ronnie Hoosier’s proposal to give Beavers a 3 percent salary increase for 2018, with the portion for the first half the year paid as a bonus.

The board meets next on July 23.