CU audit alleges inappropriate spending

In her presentation of findings Dec. 18, Montee pointed to various spending issues ranging from subsidization of other utility sectors and the city’s transit system to donations to nonprofit organizations and employee perks.

“As a result of these situations,” the report states, “utility rates may be set higher than necessary to provide the related service, and CU’s electric customers are being required to subsidize the costs of other city services and departments through the payment of their utility bills.”

The CU audit was released on the heels of the state’s audit of the city, presented Dec. 6. Both were the result of citizen petitions submitted in 2006.

Among CU expenses for the fiscal year ended September 2006 that the report said are not “necessary or essential to the operation of the utility”:

• $1.2 million in payment in lieu of taxes to the city from water revenues, which are not spelled out in city charter;

• Leases on two parcels of land, worth nearly $2.7 million, to the Springfield-Greene County Park Board at no cost;

• Donations of money and services to local organizations totaling more than $259,000;

• $89,000 to the Downtown Community Improvement District for wireless Internet service costs;

• $19,000 for CU’s 2006 Family Day Picnic; and

• $3,125 for a suite at Hammons Field for Springfield Cardinals games.

Montee said some of the payments could be in violation of the Missouri Constitution, which “prohibits the use of public money or property to benefit any private individual, association or corporations except as provided in the constitution.”

City Utilities General Manager John Twitty defended the expenses, saying the utility doesn’t feel it’s in violation of state law.

“It’s perfectly all right for reasonable people to disagree about issues,” he said. “We would never do anything to knowingly violate the constitution or any statute – we don’t operate that way.”

He added that the utility has the option to contact the Missouri Attorney General’s Office and request an official ruling on the constitutionality issue, though no decision has been made.

Much of Montee’s overall criticism stemmed from what she said was a problem with the organization’s philosophy.

“If City Utilities were a private corporation, we would say this is a company being a good corporate citizen,” Montee said. “The problem is, City Utilities is not a corporate citizen – it’s a public body.”

One example pointed out in the report was awards for employees. The utility, according to the report, spent more than $50,000 from October 2005 to September 2007 on safety and longevity awards for employees.

Twitty, however, said that the cost of rewards for long-standing employees is more than offset by the savings achieved by reducing turnover.

Overall, he said he felt the utility is being run well.

“Most of the people that I visit with in our community want City Utilities to be operated as a business – they want good, solid business practices employed every day to provide good service to customers,” Twitty said. “It just happens to be that this utility is owned by the city of Springfield.”