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July 5, 2020

6/25/2020 2:58:00 PM
Water & Light audit finds nothing to substantiate OT and on-call excesses

The 2019 audit for North Branch Water and Light was delivered last week to utility commissioners, with Chris Bibeau absent.  There were no fiscal red flags, according to the audit presenter Dennis Oberloh, Redwood Falls.

He explained that organizations do audits specifically to go through financial statements for accuracy.  

North Branch Water and Light’s 2019 audit information shows an adequate 156 percent of debt service is covered, and the utility had a net-income-over expenses of $1.2 million for water and electric in total, and funds are in their appropriate designated accounts.

“...there don’t appear to be any misstatements...whether due to fraud or error,” the Oberloh & Oberloh Ltd. audit cover letter states.  

This 42-page audit included nothing to support an announced hundreds of thousands in payout to a handful of staff, that city officials announced a few months ago.

An expert hired by the Water and Light Commission  to review the budget was said to have unearthed possible “malfeasance” according to a December 31 2019, administrator’s  e mail to city staff and members of the city council updating the ouster of the General Manager and Office Manager the commission acted on..   

There was concern, the e-mail stated,  tied to “a $335,000 in an on-call and overtime expenditure paying  four utility employees.” 

In the wake of this now-unsubstantiated accusation, two longtime utility administrators saw their management of the budget questioned, and were dubbed as insubordinate when they were hesitant facilitating outside access to utility records and accounts.

The behavior was described in the Dec. 31 city administrator’s e-mail as disconcerting and might possibly indicate “malfeasance.”

December 30, 2019 the Water and Light General Manager and the utility office manager were removed from duty by  an “emergency” vote of Commissioners Peter Schaps and Kelly Neider.

Under MN Open Meeting Law public employees who are the subject of a closed session, must be allowed to request an open session -- which didn’t happen.  There was a follow-up meeting to revise the office manager status to “paid leave” instead of unpaid, and this meeting was opened when the office manager requested it.

She has since officially severed ties and is working elsewhere.

 The utility is still seeking a permanent general manager.  Applicants for GM were scheduled to be interviewed late last week.  

The General Manager requested the commission set a “retirement” date retroactive for early in what was termed an  administrative leave period, and it was approved.

When asked about the accusations originating at the commission level alleging the unauthorized $335,000 expense-- associated with  longtime staff being forced out-- Commissioner Neider, who is also a North Branch city council member, responds with ‘no comment’ to protect what she says is an active “investigation.”

In discussing finances at last week’s Water and Light Commission meeting, there was perhaps a tiny light shed on what instigated that turmoil.

The budget expert who alleged the on-call and OT payments, now is the commission’s Finance Director.  She requested a software accounting program upgrade be approved, causing Commissioner Neider to remark that maybe this new computer format will help her comprehend financial information.

Neider explained that this budget format “..will make it a little more simplistic for those of us who aren’t totally about numbers.”

She said,  “...last December, I didn’t understand” (the budget.)

Newly-promoted to a job created by the commission as Water and Light Finance Director, Brenda Jepsen explained the software upgrade will make operating versus non-operating revenues and expenses etc., easier to input and comprehend.

Neider motioned at last week’s meeting to approve hiring Jepsen to be a permanent employee as Finance Director. Neider explained she had consulted with legal staff and it’s “my opinion” the newly created position doesn’t require posting or advertising.  She added that Finance Director is a “confidential” employee classification, excluded from the union which utility employees are forming.  

Terms in Jepsen’s employment agreement were not made public.  The Press has requested a copy.

Following the sounding of the 2019 budget alarm besmirching staff reputations, along with the improperly noticed and closed commission meetings, on top of the abrupt vote by the chair and Neider to freeze employee pay and reduce benefits going into 2020; it came as no surprise when Water and Light staff gave notice they were going to unionize with IUOE Local 49.  

There have been a few meetings and some Tentative Agreements reportedly are coming out of the negotiations. The contract completion is timed for mid-July, when the hope is a permanent General Manager can be hired.  

New legislation just signed by Governor Walz, lets the city appoint four new members to the utility commission.  (Bibeau retains his seat until end of 2020)

In debating policy and process for expanding the three person commission to five members, city council members have spent considerable time arguing whether to have a city councilperson  seated on the new utility commission.

Applicants for the“new” Water and Light commission were to begin to be be called in for  interviews June 25 in a special council session.

In other business the city of North Branch and Water and Light will cooperatively work on submitting a potentially multi-million dollar grant application to the federal government, seeking inclusion in a one-time CARES Act appropriation that offers an 80-20 split (city covers 20.)  North Branch has a tentative new water tower on the horizon the grant would be used for.

City council members will need to authorize city staff hours for assisting in writing the grant.

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