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Report: Century Is ‘Teetering On A Financial Cliff’ And Quick Action Is Needed To Rescue It
June 10, 2019
The Town of Century is “teetering on a financial cliff, and quick decisive action is needed to rescue it”, according to a report from an independent financial consultant retained by the Florida League of Cities at no cost to the town.
Bob Inzer has spent nearly 50 years in municipal finance, including 30 years with the City of Tallahassee.
Inzer’s “high level” review highlighted major recommendations that included new utility taxes to increase revenue, a charter review, an additional administrator, contract management or sale of the town’s water and gas systems, and asking for budgeting help from other local governments.
“The town is perilously close, if they do not already qualify, to falling under the State’s Financial Emergency Statute which can limit or take away some of the decision-making authority from the Town’s elected officials and vest it with an appointed oversight board,” Inzer wrote. “It is imperative that the Council and the Mayor quickly clarify their roles and responsibilities and commit to change. Failure of the Council and Mayor to “get on the same page” will greatly undermine trust in both them and the organization and likely make it impossible to address the difficult issues facing the Town. The Town no longer has the option of operating without financial accountability and oversight as it has in the past, and must move quickly to change its operations.”
HIGHLIGHTS OF INZER’S REPORT
Relationship Between Town Officials
“The working relationship between the mayor and council is hampering the town’s ability to respond. In my meetings, this was mentioned routinely and concern was expressed that the Grand Jury was correct that lack of trust and working relationships were a significant factor for staff and consultants. It has been my experience that this type of breakdown undermines the trust and support citizens have in their government. They become wary of any information coming from their government and not sure what to believe. It is critical for the Mayor and Council to get on the same page.”
He mentioned poor communications, the Sunshine Law, and a lack of understanding by the mayor and council in understand their roles and responsibilities, or appreciating those roles. He cited a lack of good staffing on issues brought before the council. Many issues are considered after oral presentations with no written backup or information.
“I believe that the Town would be well served by bringing in a facilitator/trainer experienced in local government operations that could work with the Council and Mayor to better understand each other’s roles and responsibilities and develop ground rules on how the Council and Mayor will interact and communicate in the future.”
Charter Review
The town has not had a charter review in nearly 40 years, and it appears to be a “bare bones” charger addressing a limited number of issues. Inzer recommended that the town “retain the services of an individual or institution familiar with Florida governmental structures to work with the Mayor and Commission in a comprehensive review of the Charter.”
Administrative/Financial Support
“The Grand Jury pointed out that there was a lack of accountability over employees and supervisors. The financial losses in the gas, water and wastewater funds speak directly to a lack of oversight and control. The fact that the Town is in its third year of substantive losses in its gas utility with total losses approaching half a million dollars demonstrates this lack of accountability and oversight.”
“While the Mayor is the chief executive officer responsible for the operation of the utilities, the Council approves the budget, and therefore some level of oversight therefore, both share to some extent, in allowing this problem to continue for this long.”
“The Town needs additional experienced administrative depth with a strong background in management and finance. A strong executive administrator would provide oversight that is lacking today; namely, employee accountability, coordination among department directors, and better staffing of the Council on problems, solutions, implementation schedules and on-going monitoring of Town activities. I do not want to underestimate the difficulty of finding an individual with this experience and skills, particularly given Century’s proximity to any major urban area. Therefore, it may take some time to find the right individual, but is critical to the Town’s future success.”
Gas Utility
“The gas utility appears to have been poorly managed for a long time….Most gas systems operate with losses of around two to three percent. Century’s losses have run as high as 50 percent. The faulty meter at the prison is a major part of the problem but it is not all of the problem. Even before the meter at the prison was broken, losses on the system were running between 10 percent and 14 percent, or three to five times the industry norms. In discussions with the gas superintendent, he indicated that he had run checks on the system and there did not appear to be any significant leakage. Therefore, the unaccounted-for losses most likely relate to customers with dead meters, no meters or meters not properly calibrated. It is also my understanding that since the articles about the gas utility have appeared in the local press, many customers have called the town and self-reported that they are receiving gas and they have not been billed for.”
“Continue to support the operational changes being implemented by the gas superintendent. The Town should pursue all available avenues for collection of the previously unbilled gas. The Town should aggressively consider either selling the system or entering into an operating agreement with a company to manage the system.”
Water and Wastewater Utility
“The Town operates a water and wastewater utility system that serves all of the customers within the Town and certain customers within the franchise area outside of the Town limits. Both of these systems are very small, with the prison being their largest customer. The system lost $312,737 in FY2016 and $221,810 in FY 2017.”
“Audited financials are not available for FY2018 but losses in the prior two years of over $500,000 cannot be sustained. Cash and investments in the system declined from $677,852 to $156,677.”
Inzer also noted that the town may need to spend $1 million over the next several years to rebuild sewage lift stations.
“The Town should aggressively consider all options including sale or contract management of the systems. It is clear that the Town has not operated the system in an efficient manner nor has made the reinvestments in the system to keep in good operating condition. The Town should also examine every connection to see if a bill is being rendered and also see if the meter is properly calibrated.”
Operational Efficiency
“The Council is responsible for determining which services to provide and at what overall service level. The Council does this with input from the Mayor and affirms its decision through the budget process. Every municipality is different in their priorities and how they choose to allocate limited resources. There is no right or wrong answer; it is subjective based upon perception of the needs and wants of the community. Once these decisions are made, the objective should be to provide those services as efficiently as possible. Said another way, the goal is to try to provide the highest level of services at the lowest possible costs.”
“The Town of Century has 1,500 residents and approximately 20 employees. No other city/town in Escambia County or Santa Rosa County operates four utilities. Managing four utilities stretches employee resources very thin and does not allow any depth when an employee leaves or is out of the office. Each of these systems is very small (gas, 509; water, 816; wastewater, 689; and sanitation, 524 estimated). Each of these systems operates under certain state and federal rules and regulations that the Town must know, monitor and comply.
“Each of these systems are very small are not able to enjoy any of the economies of scale that come with larger operations. Secondly, the Council and Mayor may be spending much of their time monitoring and trying to manage systems that take away from providing other general government services. The most efficient way of providing these services may not be through direct ownership or control but under a contract or possible sale of the systems.”
“A prior recommendation was to retain additional administrative/financial expertise. The acquisition of good talent may be able to provide the monitoring and depth currently missing. This individual should be able to provide the oversight but can only make marginal differences in efficiency given the size of the systems. The Town should consider either contract management for some of these functions with a public or private operator or possibly sale of the systems. Contracting all utility operations may eliminate the need for the additional administrative position. However, continued control over all utility operations makes filling this position an imperative.”
Budgeting
“During the past couple of years, the gas system and the water and wastewater systems had expenditures greatly exceeding revenues. Luckily the water and wastewater systems had significant cash balances that allowed the town to get through this very difficult period. The gas system was transferring money in from the sanitation fund and the water fund to cover expenditures. I could find no action during the year, where the Mayor agendaed or the Council acted to amend the budget to keep it balanced.”
“The budget format is not easily understandable. The general government budget is a continuous string of object codes with no breakdowns by departments or divisions. There is no budget message that accompanies the budget that addresses changes in services, why expenditures or revenues are increasing or decreasing, changes in rates for services, and what goals the Council is trying to achieve. The budget document should be one of the primary communication tools with citizens to keep them informed. Citizens should be able to read the budget message and have an understanding of what the Town is trying to accomplish with the financial resources their citizens are providing.”
“Budgets should be a tool for both the management, the Council and the Mayor. Clearly, in the past several years, while the Town has been bleeding red ink, a detailed budget should have been presented at each Council meeting and an in-depth discussion should have taken place about how to stem this flow. I could not find where any regular discussion of the Town’s financial situation took place in the minutes I read.”
“The overall financial health of the institution is the responsibility of both the Mayor and Council. It does not appear that either has adequately assumed that responsibility.”
“The Town should contact the City of Pensacola or Escambia County and ask for assistance in revamping its budget process. Both of these governments are close by and have the resources and sophistication to assist. This should not only include the development of the annual budget, but also a monthly budget review of revenues, expenditure, activity and reserves.”
Policies and Procedures
“The only written policy Century has is its employee handbook and it appears very dated and insufficient to insure the desired employee behavior. There were no financial management policies, procedures or handbooks guiding employees on purchasing, utility billing, bad debt write-offs, discontinuance of service for delinquent accounts, investments, banking, or any other financial activity. While I did not ask, it is my assumption that within the operating departments there are few if any written policies or procedures. Some of the problems the Town has experienced associated with overdrafts, failure to pay taxes timely, unbilled utility accounts, etc., could have been avoided had there been written procedures.”
“I believe the Town will need outside assistance to develop the appropriate policies and procedures for the organization. I believe this should be undertaken after the hiring of the aforementioned professional managerial/financial support recommended in Section 8. Developing policies and procedures without the necessary managerial/administrative oversight to follow up and ensure compliance could result in any adopted policies being put on a shelf and not used.”
Special Revenue Fund Balances
“The Town receives infrastructure half-cent shared sales taxes and gas tax revenues. These funds are restricted by the State as to usage. It appears that the Town has deposited these funds into a special revenue fund for a very long time. Expenditures that would have qualified for usage were recorded in the general fund and an interfund loan created. Over time, this grew to approximately $4 million.”
“The auditors identified this as a problem and in 2017 the Town reviewed expenditures in the prior five years and were able to demonstrate that during this time, approximately $1.4 million was spent on qualifying expenditures. An adjustment was made and the interfund loan reduced to $2.7 million.”
“…The Town also elected in 2019 to adopt a policy that would begin repayment of the interfund loan in the amount of $300 per month.”
“The fact that this activity was allowed to continue without correction for a very long period of time is very concerning. The prior auditors should have brought this to the attention of the Mayor and Council for corrective action many years ago and draws into question the quality of their work. Any cursory review by the Council, Mayor or the Financial Consultant should also have questioned the appropriateness of having an unassigned fund balance of $4.340 million in the general fund.”
“The Town should continue to review past expenditures to determine which qualify for use of these restricted funds and making the appropriate adjustments. The Town Council and Mayor must take a more active role in reviewing the Town’s finances. It is clear that this process began well before the current administration, but it has been allowed to continue. The Town should move quickly to hire a manager/finance person (see section #6) that has the education and training to monitor the Town’s financial statements and advise the Mayor and Council accordingly.”
Diversifying General Government Revenues
The Town’s tax base is extremely weak and the ad valorem tax revenues provides little in the way of resources to fund general government functions. The Town is fortunate to have significant funding from the Capital Trust Agency; however, this revenue stream is volatile and uncontrollable. Transfers from municipally controlled utilities are a source many local governments use to subsidize their general government, but given the deferred maintenance requirements of the utilities, they may not be a source or a number of years. The Town should explore additional revenue sources to provide the resources to repay the Special Revenue Fund, repay any other borrowings from other funds and build up a reserve in the General Fund.”
“The Town should consider the imposition of a utility tax on electric, gas and water services. This is a tax that is levied by almost every City in the State of Florida and is a stable source of revenue to support general government services.”
Audits
“The Town has been late with getting its annual audit completed for at least the last two years. By this time, most local governments are completing their audit and Century has not begun. In discussions with the auditors, they are not sure that they will be engaged this year as they have had so many problems in past years.”
“The Mayor or President of the Council should meet with the auditors as soon as possible and enter into an engagement letter. The audit is the only clear communication of the Town’s financial condition to bondholders, state agencies and the general public. The Grand Jury report has brought into question the continued viability of the Town, and quickly moving forward with the audit, would provide both the Council, Mayor and outside agencies a clearer picture of the Town’s financial condition. There should also be a meeting between the auditor and the financial consultant to review last year’s finding and reach agreement.”
The Century Town Council is set to meet with Inzer at 5:30 p.m. Wednesday to discuss his report.
Comments
30 Responses to “Report: Century Is ‘Teetering On A Financial Cliff’ And Quick Action Is Needed To Rescue It”
This is a huge grocery list of things to do. Maybe someone should go through each item on the report and get those things done. Highlighting issues is not a bad thing if the goal is on improving. My wife landed a job recently doing similar type of work and auditing, and she tells me the first thing folks do when she points issues out is get defensive instead of just fixing the issues. Just fix it. Also too many folks are in roles without real qualifications. They either got there on luck, learned how to mimic someone really qualified, or are preferred for some reason other than having experience. Eventually it catches up. It works until it doesn’t.
Teetering? No, they done gone over the edge man
If we buy and monitor more cameras that will save us
The company I work for recently allowed me to keep my role while moving back to the Century area after a five year tour. In those five years I had a large role in managing the successful commissioning and operation of a $300 million facility. I’ve spent the last few years developing/writing technical procedures and training folks. I also hold a Bachelor’s in Business Administration.
I don’t say that to brag but to say this article really struck home with me. It’s a shame this place seems worse off than what I remember. Especially in the current economy. I put my job on the line by requesting to move back to here. I did it because my wife and I love the area. I would hate to see part of it go down the tube.
I’m loyal to my current employer so I couldn’t do it as my full-time job but I wouldn’t mind lending a hand in my off time to help get this place on track. If Century doesn’t have the money to spend then it might take looking at local resources to donate time and effort. I’m sure there are others locally with equal or greater experiences who would love the challenge and reward of making Century better. Speaking just for myself all it would take is someone asking.
MLK
If they stick their fingers in their ears and pray maybe this will all disappear.
Given enough rope…
The mayor disagrees with the grand jury report and the league of cities report and basically anyone…
“He who knows not, and knows not that he knows not is a fool. Shun him.”
THIS STORY IS GETTING TO BE REAL BAD, IT’S JUST A BIG AND I SAY REAL BIG JOKE. HOW LONG BEFORE SOMETHING IS DONE OR A VOTE IS TAKING TO GET THOSE OUT OF OFFICE THE PEOPLE OF THE TOWN SHOULD SAY IT’S TO HAVE VOTE AND PUT SOMEONE WHO KNOWS WHAT TO DO !!!!!!!!!!
To many coons in the garbage cans if we recycle things in office they would eventually starve themselves out
@Bobby bluebland: well played. Old and run down Atmore. Rapidly becoming a ghetto.
the town is not being run properly. the mayor may mean well, but he doesn’t have a clue. i just hope the state moves in and helps us out of this mess.
We don’t want taxes raised. Would rather you sell utilities have some one take them over who will follow through not just non impressive big talk, get the rural water grants.
Don’t have much faith in the town government, nor employees –nothing personal.
Dunning–Kruger
Alabama doesn’t need anymore dilapidated towns, we already have Atmore
It will be hard for Century to ever be a pristine, beautiful, prosperous town because the money is just not there for it. A lot of the residents of Century are not in a position financially to have taxes raised on them enough to make the town work. For the town to continue viably, I think the money and resources would need to be managed very carefully, and some other revenue streams would need to be figured out… like leasing out their old empty buildings when someone wants one, or something else. However, I don’t think this crew over in city hall can handle that.
But… if they disband the town where are we supposed to get our daily entertainment from?
Before they turn out the lights, I would like to know:
1) All information regarding all personal loans made by TOC.
2) All information regarding the billing of any utility services to all TOC employee.
3) All information regarding the usage of TOC vehicles for work/personal use.
4) All informatiom regarding the actual work hours/work accomplished by the Mayor and TOC council.
This shouldn’t come as a surprise to many. The suspense is when/if Florida will take the town over and run off the current leaders (and I use that term leaders loosely)
In another words, there has been a lack of professionalism in the town government for a long time.
This is the dire question the mayor and council need to ask themselves if they are going to make any progress….Am I willing to put aside my hurt feelings and be a part of the solution or will I wallow in the idea that they’re blaming me for everything?
As a resident of Century I don’t care who created the problems. For all I know it could be whoever the Mayor was 20 years ago. I do know we can no longer kick the can down the road.
This report is very informative and true. I felt many times that the mayor and council were not on the same page. There’s definitely a mayor’s team and council president’s team.
As far as employees . … if they continue to put entry level into senior level positions this chaos will continue. If you have employees lacking experience you must hire some one with experience from the outside. There are special skills like problem solving and creating procedures that even a $4000 training session will not cover. Experience only comes with years.
New taxes will only be squandered away by the current leaders (sic).
Mr. Izner’s report is in many ways a duplication of what the Grand Jury’s report said, except he suggests that Century hire a bunch more experts that will tell them the same things. For those of us that can’t speak bureaucratic double talk, the long and short of it is that you can’t spend money that you don’t have. He also suggests a tax on utilities. If the town taxes utilities that it owns it is a rate increase pure and simple. Under his plan, the citizens will have to pay the price for the bungling job the King and His Court are, and have been doing. As a town, Century is dead, Let’s play taps over it and put it to rest. Century can join the ranks of the rest of Escambia County that is un-incorporated and nobody will miss the antics of the King and his Court,,,,,,except those that are drawing pay checks for sitting in the Mayor and Council seats. I still would like to know how many of the Town Council, and town employees were getting “free” utilities before that fiasco came to light.
Are any of you surprised? Century has always been the armpit of Florida. It is an embarrasment to me as a Floridian for people from out of state to cross the Alabama line on Highway 29 and the first thing they see of Florida is Century.
I see light at the end of the tunnel. . . And it’s no longer a freight train coming at us!! ♡♡♡ These are reasonable accommodations that can provide giant steps forward in our Precious hometown!!!
the mayor will not listen and reject any suggestions
An unbridled orgy of mismanagement.
The town government should fold and put a for sale sign out in front of town hall. After reading this report, there is no way anyone could see Century ever becoming a viable entity. Hiring additional “experts” to manage the town; with what money?! LOL!!!
Time to fall off that cliff and end the misery.
There it is.
Shut it down.
Sell assets.
New taxes to increase revenue?!?! Make the citizens pay for their ineptitude?!? Again?
If you do not take anything else from this article- this statement reveals the critical state of the town ” The Grand Jury report has brought into question the continued viability of the Town.” If you haven’t gotten out of the area yet, now is the time because it will not get better. It has been in a steady state of decline since the ’70s-’80s.
I vote we give Century to Alabama. We sure as hell cant afford them in the Escambia County budget.