AUBURN, IOWA – JUNE 14, 2010
Auburn, Iowa residents decided to take matters into their own hands and force their non-compliant city government to get a financial audit.
According to sources within the movement to audit, this move was a reaction to concerns about how the city’s finances are being applied.
At the May, 2010 meeting, the council seemed to split up into two camps; those city council people that seemed to want to punish its residents by charging them a fee to pay for the audit, and those that felt it should be budgeted.
The council also rashly chose an auditor without first exploring if there were anyone less expensive to be found, potentially costing Auburn taxpayers more than was necessary.
On June 14, 2010 Auburn City Clerk, Nancy Janssen presented the Auburn City Council with possible scenarios for paying to have the audit conducted.
According to Janssen, the city attorney is of the opinion that the city could establish an ordinance directing that the city have an audit conducted every 5 years. In the same ordinance, there would be established a fee of between $2.00 and $5.00 per month that every utility customer would pay on a monthly basis. This fee would be established to pay for the audits.
According to Janssen, this move would “Establish a mechanism for being more open with the public about our finances.”
The first question Janssen fielded was remedial. Councilperson Cindy Finley asked how much the city would have to come up with in the first few years. Janssen informed her that the cost of the audit is $6,750.00. Finley then asked how much the fee during the first year would have to be in order to pay for the audit. According to Janssen, a $5.00 monthly fee would raise approximately $8,000.00 in the first year, which is more than is needed. A monthly utility fee of $3.00 would bring in $4,860.00, nearly two thousand dollars less than they need.
Finley suggested that there could be a provision in the ordinance whereby extra money received due to the imposition of a fee on the residents could be designated for street work or “Something like that.”
Councilperson Dustin Mead suggested that if the audit happens every five years, then perhaps the money could just be budgeted, presumably out of the general fund. Councilperson Justin Pottoff, seemed to agree saying, “I don’t like that separate charge to the citizens bit at all.”
Janssen reminded the council that the only way to apply that to the first audit would be if reserve funds were already established. According to Janssen, there has been no reserve funds established, “Because… the bookkeeping on reserve funds is too difficult in [the city’s] system.”
Seemingly undeterred by the clerk’s “it’s too hard” argument Mead continued, insisting again that if the audit is going to be a known thing then the city should just budget for it. Potthoff too, continued saying, “It’s normal business practice for a business to do an audit, and they pay for it.”
Janssen engaged Potthoff at this point saying, “A lot of towns, Justin, our size don’t do audits very often.”
At the heart of the argument between Pottoff and Janssen, which I encourage you to watch in the video below, was a dispute between the size of the towns and the frequency with which the towns have an audit performed. The matter was not definitively answered at the meeting, so I broke out the TSN calculator to figure this out. If Wall lake and Auburn pay exactly the same amount for audits per unit, ($6,750.00,) and Wall Lake has an audit every three years, as is claimed, and Auburn has an audit every five years, then in 15 years Wall Lake will spend $33,750 on audits and Auburn will spend $20,250 on audits. (Wall Lake has 5 audits, Auburn has 3 audits.) During a 15 year period there are 180 months, which means that Wall Lake needs to come up with 187.50 per month and Auburn needs to come up with $112.50 per month.
Wall Lake has 511 utility bills sent out each month, so each bill would have an extra surcharge of $0.37 attached to it. Auburn has 135 utility customers so each customer would have an extra surcharge of about $1.20 attached.
In the video, regarding the discussion between Janssen and Pottoff, Janssen’s point that it will cost the city more per utility customer seems to be correct. If all costs are fixed and equal, it will cost the city of Auburn roughly 3.3 times as much per utility bill/customer to have audits performed compared to Wall Lake, even though they would be spending $13,000ish less in every 15 year period.*
With this point (mostly) cleared up, the council got down to the business of figuring how pay for the cost of the first audit. It was first agreed that a direct assessment to each utility customer for the full amount might be too costly for some to handle, and was dismissed. Janssen then brought to the attention of the council a line item that could be used called “Other General Government.” She pointed out that if the council chose to utilize money from this line item the housing project might be too underfunded to happen.
On motion from Mead with a second from Finley, the council decided to charge Auburn’s residential utility customers $25.00 apiece to cover half of the cost of the audit, and to cover the other half from the general fund.
Ayes: King, Finley and Mead,
Nay: Potthoff
Due to bad sound on the video, it is not clear what Zimmerman’s vote was.
A sample ordinance dictating how the council will move forward paying for future audits will be presented to the city council during the July, 2010 meeting.
*Please keep in mind that all of the preceding math is just a shoehorn attempt to make Auburn and Wall Lake compare on an apples to apples basis and is not based on actual confirmed amounts of money that have been spent by either city or that is planning to be charged by either city for audits. The claim that Wall Lake has an audit every three years is not confirmed. The 511 figure for Wall Lake is based on the number of bills sent out, not the number of customers, which is actually fewer than 511 by an unknown amount. The 135 figure for Auburn is number of customers, not bills sent out, so that isn’t precisely apples to apples. What I’m trying to say is that not being in possession of more accurate figures, there is wiggle room. It generally appears that Janssen is correct on this point, and that an audit is more expensive for the City of Auburn than it is for Wall Lake per customer.
Copyright (c)2007-2010 Curtis Bloes All Rights Reserved
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