RANCHO MURIETA, CA (MPG) - The interim finance administrator for the Rancho Murieta Community Services District delivered some discouraging news about the overdue audits and the accounting for the current fiscal year at the May 21 board meeting.

Another notable topic was the tabling of an ordinance implementing barcode sticker fees. (See "RMA, CSD Boards Discuss Barcode Stickers".)

The board also discussed myriad other issues, including water shutoffs for non-payment of utility bills, and several audience members contributed their observations.

However, the most dramatic moment came at the end of the meeting when Board President Steve Booth unexpectedly announced his resignation.  (See "CSD Board President Stephen Booth Resigns, Cites Lack of Accountability".)

Audits/Accounting

The district hired accountant Cecilia Min, a temporary employee from Robert Half International, to take over financial operations after Mark Matulich resigned in late April.

Although the 2021-22 fiscal-year records are in the hands of the auditors, Min reported that after the audit began in December, it stalled in February when the district didn’t respond to the auditor requests. As a result, the auditors moved their assigned staff to other projects.

Min said district staff have been working intensively to respond to the auditor requests, and she expects to provide everything needed by June 25.

She next reported on preparations for the 2022-23 and 2023-24 audits. In January, the board approved hiring two temporary accountants from Robert Half to help complete the needed accounting. Because the existing records were so problematic, they began with reentering the financial transactions from scratch as had happened with the 2021-22 records. Although Matulich indicated in his last report that the two accountants were making good progress, Min estimated that the total amount of work needed before it could be sent to the auditors was only 40% complete. She did confirm they had completed all of the reentries.

Min said she must review their reconstructed accounting and migrate it into the Great Plains accounting system, which will be very complex. The two temporary accountants will then complete balance-sheet reconciliations and preparations for the audits, which Min must also review before the interim audit can begin.

Min stressed the importance of engaging the auditor to reserve time to conduct the audits for both years simultaneously to avoid further delays.

Min also asked the board to hire a third temporary accountant to work on the current 2024-25 fiscal year to reconstruct the accounting.

That surprised Board President Steve Booth.

“We’ve had repeated reports in this chamber indicating our current year was all set up based on what we learned from the problems were in the prior years,” he said. “Was that information not accurate or is there something more to the audit process that I am simple not aware?”

Min explained that the current accounting hadn’t been properly prepared. While data has been entered into the system, it has not been reconciled to bank statements, which is a critical accounting requirement and has not been done for three years. She noted that other basic monthly reconciliation processes haven’t been done.

“So the data is inside the system but no one has looked at it to see if it is right,” she said. “And there is audit preparation work that we should be doing every month.”

Min said a third temporary accountant was needed to reconstruct the 2024-25 accounting to prevent further delays. If that work doesn’t begin soon, the audit could be pushed into the auditors’ busy fall and tax season, potentially delaying the 24/25 audit until next year, she warned.

“As I am looking at the current accounting, I’m also cleaning up all the processes to make us more efficient and faster,” Min added.

The board voted 4:0 to hire a third accountant. Director Randy Jenco didn’t attend the meeting.

Minn also created what she “a high-level chart” about the status of the audit components with start and end dates in the form of a colorful graph that is available in the board packet. She is projecting completion of staff work for the 2021-22 year by June 25, for 2022-23 and 2023-24 by June 30, and for 2024-25 by Aug. 5.

At the June 2 Finance Committee meeting, Min provided another update. She reported that she had reassigned all staff to focus on completing the 2021-2022 audit. She expected to finish responding to the auditors by the end of the week, although additional issues had been discovered, including a 2021 accounting error by the Punn Group. She anticipated needing another week to enter data into the Great Plains accounting system due to complications with the two existing databases.

Water Shutoffs

District Secretary Amelia Wilder reported that after suspending service shutoffs during the pandemic, the district is now implementing a policy to collect delinquent water bills. Staff is sending letters to accounts that are 60 days past due, giving customers 10 days to respond. If no payment is made, they will place a three-day door tag warning of water shutoff.

Wilder said staff had sent out 52 letters totaling $127,000 in unpaid bills, and have already received $22,000 in payments. Seven customers have been put on payment plans, and five accounts are now paid in full.

Wilder said any remaining delinquent accounts will be added to the Sacramento County tax roll by Aug. 1, which would create a lien against the properties.

Other Business

The board unanimously approved the introduction of the ordinance to implement water, sewer and solid waste service rate increases as part of the proposed 2025-26 fiscal year budget. Wilder reported that only district patrol lodged a protest.  The board was slated to review the draft budget at a special meeting on June 9 and approve it on June 21.

The board voted unanimously to approve a resolution proposed by Merchant that states that maintaining a one-year emergency water supply is a priority for the district. Greg Dyer, who is CEO of Rancho Murieta Properties, criticized the resolution as being vague and not accurately reflecting state water code requirements.

Audience member Tom Shewchuk reported he is part of a group working to potentially buy the Rancho Murieta Country Club from Carol Anderson Ward. He said he is willing to explain their vision to anyone interested.

Audience member David Zian, who said he has three decades of experience in public services, offered to held the district develop a  code of conduct to help prevent ongoing legal issues and expensive settlements. Booth said the district already has a code of conduct.

Operations Director Eric Houston presented a revised list of capital improvement projects for the 2025-26 fiscal year with projects totaling $1.35 million for water and $1.75 million for sewer. His original list of proposed projects was about $5 million, but he dropped some to match the funding that will go into reserves for the next fiscal year.

The board unanimously approved a motion that asked District Counsel Patrick Enright to assess whether the district’s Human Resources program complies with state and federal laws, identify any gaps in current policies and practices and to provide guidance on what is needed. Director John Merchant had asked that the issue be placed on the agenda, emphasizing the need for professional HR guidance for the district, which is a “$10 million company with 60 employees.”