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A lapse in money management has left the DuPage Water Commission millions of dollars short, and leaders are considering increasing water rates, among other fundraising steps, to cover the hole.
As the price of Lake Michigan water rose in the past two years, money that should have gone toward construction projects went to keeping rates even.
Now, commissioners are questioning whether they can pay some bills unless they raise cash quickly — or perhaps halt some construction projects.
The problem became apparent in September when the commission’s then-financial administrator went on medical leave, said General Manager Robert Martin.
Richard Skiba, a former financial administrator, filled in and discovered the books out of order.
Money had been improperly allocated “in several areas for an extended period of time,” Martin said, choosing his words carefully because it is a sensitive personnel issue.
The financial administrator, Max Richter, left the DuPage Water Commission in late October. Martin said officials do not think any laws were broken.
“He either resigned, or he was going to leave,” Martin said. Efforts to contact Richter on Thursday were unsuccessful.
As the City of Chicago raised the cost of water in 2008 and again this year, the DuPage Water Commissions’ sales tax revenue, which normally funds construction, was spent on operations.
“As a result, rates were set too low,” said Skiba, who is staying on as acting financial administrator.
The goal is to have $20 million stored in an emergency repair reserve, which pays for unforeseen costs such as a burst water main. But because that money had been spent on operations, the commission has nothing in that fund, Skiba sad.
Now commissioners are trying to sort through the remains. The first step, officials say, is bringing in outside analysts and consultants to put the finance department in order. From there, commissioners will decide the steps to fix the budget.
The most prominent plan on the table involves getting a $30 million short-term loan and issuing $60 million in long-term municipal bonds. The bonds would be used to pay back the loan.
It would allow the commission to raise money quickly, and it would help cover costs of ongoing construction. Skiba said commissioners would need to act by the end of December to pay their bills.
The commission is also considering raising water rates in 2010 — from $1.48 per 1,000 gallons to $2.21. The 73-cent increase would bring in additional $20.8 million next year.
A lapse in money management has left the DuPage Water Commission millions of dollars short, and leaders are considering increasing water rates, among other fundraising steps, to cover the hole.
As the price of Lake Michigan water rose in the past two years, money that should have gone toward construction projects went to keeping rates even.
Now, commissioners are questioning whether they can pay some bills unless they raise cash quickly — or perhaps halt some construction projects.
The problem became apparent in September when the commission’s then-financial administrator went on medical leave, said General Manager Robert Martin.
Richard Skiba, a former financial administrator, filled in and discovered the books out of order.
Money had been improperly allocated “in several areas for an extended period of time,” Martin said, choosing his words carefully because it is a sensitive personnel issue.
The financial administrator, Max Richter, left the DuPage Water Commission in late October. Martin said officials do not think any laws were broken.
“He either resigned, or he was going to leave,” Martin said. Efforts to contact Richter on Thursday were unsuccessful.
As the City of Chicago raised the cost of water in 2008 and again this year, the DuPage Water Commissions’ sales tax revenue, which normally funds construction, was spent on operations.
“As a result, rates were set too low,” said Skiba, who is staying on as acting financial administrator.
The goal is to have $20 million stored in an emergency repair reserve, which pays for unforeseen costs such as a burst water main. But because that money had been spent on operations, the commission has nothing in that fund, Skiba sad.
Now commissioners are trying to sort through the remains. The first step, officials say, is bringing in outside analysts and consultants to put the finance department in order. From there, commissioners will decide the steps to fix the budget.
The most prominent plan on the table involves getting a $30 million short-term loan and issuing $60 million in long-term municipal bonds. The bonds would be used to pay back the loan.
It would allow the commission to raise money quickly, and it would help cover costs of ongoing construction. Skiba said commissioners would need to act by the end of December to pay their bills.
The commission is also considering raising water rates in 2010 — from $1.48 per 1,000 gallons to $2.21. The 73-cent increase would bring in additional $20.8 million next year.
For the typical family of three, the increase would mean $6.65 more per month on the water bill, Martin said.
But deciding on those steps is still a few weeks off. At Wednesday night’s meeting, commissioners tapped an outside firm to look at their accounting practices.
“I think we need some kind of analysis and review,” said Commissioner Donald Zeilenga. “We’ve got some holes in the ship, but we don’t know how many. And we want to make sure whatever action we take, we plug them.”
At an upcoming meeting commissioners will review their ongoing construction projects and determine the repercussions of freezing some of them — though they made clear such a move is only a possibility at this point.
Commissioners did shoot down a new project at this week’s meeting — underground construction to protect a main line from corrosion. Depending on scope, it would have cost up to $669,000. The commission pushed it off indefinitely.
“We don’t have any money,” Commissioner James Zay said, his exasperation showing. “What are we doing new projects for?”
