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City out to reduce delinquent accounts

July 5, 2013
By KATIE SCHWENDEMAN - Staff Writer (kschwendeman@mojonews.com) , Salem News

COLUMBIANA - The city is working on reducing the number of delinquent utility accounts.

City Manager Lance Willard said the city is "actively shutting off utilities" to bring up the delinquent accounts.

Willard has been addressing the problem since becoming manager in January. He said about 10 to 20 past-due accounts are shut off a week.

The delinquent accounts have cost the city money over the years, and the state auditor's office has recommended the city create a formal policy for the account collections.

Not having a formal policy "increases the potential for inconsistent treatment to utility customers and loss of revenue to the city," state Auditor Dave Yost said in a letter to the city following the 2011 audit, the results of which were released last month.

Finance Director Mike Harold said it is difficult to estimate how much revenue is lost through the delinquent accounts because it varies from month to month.

Willard said the money owed is "significant," although it has been trimmed down through the active shutoffs.

As for Yost's recommendation, Harold said the city has always followed the procedures laid out in the city's charter.

Under those procedures city utility customers complete and sign an agreement that outlines the city can shut off service for non-payment.

The services are not turned on until the customer completes and signs the agreement and pays the deposit, if necessary.

Deposits are not required for homeowners and can be waived for renters if their landlord signs off on it, Harold explained.

If service is shut off it can be turned on when their account is paid in full and the $25 or $50 reconnection fee is paid. The $50 fee is for electric and water reconnection.

Harold said some accounts that are past due are no longer active or the customer may have filed bankruptcy.

"Once customers are shut off, some of them just leave town and never pay their bill, or some actually skip out in the middle of the night," he said.

He also said that when some past due accounts are sent to a collection agency, recovery of the lost revenue isn't guaranteed.

The city does try to work with customers to help with their utility bills by directing them to the Community Action Agency, Job and Family Services, HEAP and local churches, he added.

Other recommendations by Yost were the implementation of an internal audit committee and a disaster recovery plan.

It is not the first time the recommendations have been made, and they do not mean the city has violated any laws. The city is not obligated to develop a committee, although Yost said in the letter it would be beneficial.

He said members of the committee could include those on City Council, but it is "preferable to include representation that is independent from elected officials or management," such as attorneys or bankers.

The committee would meet on a quarterly basis to monitor financial reporting and control activities, as well as meet with independent auditors before and after each audit.

In order to be implemented, it would need to be approved by City Council.

Harold said the city is looking to establish a committee, and Willard recently held a management meeting regarding the disaster recovery plan.

The plan is recommended in the event the city has an extended outage of computer resources.

The only non-compliance finding in the audit report was for stale-dated checks older than one year.

Three checks were found in the general operating account, 15 in the city's payroll checking account and 10 were in the self-funded insurance account.

Harold said checks with dates older than 2011 in the general account were transferred to unclaimed funds in December 2011.

There were 13 checks that were put into unclaimed funds that amounted to $502.09, he said.

He added the city is working on transferring the payroll and insurance checks to the unclaimed funds.

"The only way to avoid outstanding checks is to do direct deposit or pay electronically. We did go to direct deposit of employee paychecks in 2012 which has cut down on outstanding checks in the payroll account," he said.

Most of the time, checks aren't cashed because they are for small amounts and the payees don't bother to cash them, or they get lost, he added.

 
 

 

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