Watershed Protection taking steps to improve fee system

The city lost nearly $1 million in revenue over four years due to problems with fee administration in the Watershed Protection Department, according to estimates calculated by the Office of the City Auditor. Non-residential Transportation User Fees and Drainage Utility Fees generate approximately $36 million for the city annually, but inconsistencies in the application of those fees resulted in an estimated revenue loss of $870,000 between October 2006 and June 30, 2010.

 

According to Assistant City Auditor Niki Raggi, there is evidence that some of the fees are not being applied in a timely or accurate manner. The auditor’s office conducted an audit on the program recently, taking a sample of 337 accounts out of a total account population of approximately 9500. Of those accounts, 9 percent were charged fees an average of seven months late, resulting in a loss of revenue.

 

The average monthly charge for the sampled accounts was $153.

 

On Tuesday, Raggi told the Council’s Audit and Finance Committee that her office determined that “inadequate quality control” was resulting in the problems with the fee administration. Those inadequacies include:

 

1) limited monitoring and oversight, such as no ongoing review of the work performed by the fee office staff to determine compliance with regulations, accuracy of billing, or timeliness of service provided;

 

2) policies and procedures that don’t include all the information needed to perform jobs;

 

3) lack of adequate training; and

 

4) lack of succession planning – there is only one employee in the fee office who has the knowledge to measure, calculate, and assess the fees.

 

To solve the problem, the auditor’s office recommended to the committee that Watershed Department management identify under-billed revenue and determine whether prior unbilled amounts should be back-billed, evaluate the fee office organizational structure and adequacy of needed skills to administer the fees, and review the administration of the fees to address issues raised in the audit including training, staffing, oversight, and information management.

 

The director of the Watershed Protection Department, Victoria Li, told the committee that her department was already putting many of the auditor’s recommendations into place.

 

“Basically we agree and have already taken steps to correct the potential lateness of invoicing those new accounts by … starting a new billing system,” she said. “We believe with the structural changes recommended by the audit combined with a much (more) precise and better billing system, we should be able to correct our late fees.”

 

The department is currently in the process of implementing a new billing system, which should result in greater efficiency and quality control, she said. That is targeted for completion in April 2011.

 

Despite the changes her department is making, Li said they did not totally agree with the auditor’s conclusions. She said that the methodology used by the auditor’s office resulted in forecast revenue losses much larger than would have been the case had different methodologies been used.

 

Li also pointed out that the auditor used an outlier as one of its sample accounts, thereby skewing the revenue-loss numbers. This account was 33 months late, whereas the average account on record was between 0 and 5.5 months late. Eliminate that outlier, Li said, and “the average lateness of all these accounts would result in much less revenue loss.”