EBMUD Director Calls for More Oversight
April Chan, Ward 7 Director
The East Bay Municipal Utility District (EBMUD) has vowed to fix a practice of letting hundreds of millions of dollars be transferred between projects with no notification to nor approval from the elected board of directors.
April Chan, Ward 7 Director who represents both Castro Valley and San Leandro, raised the issue at the end of the EBMUD board's August 8 meeting, when board members can make general comments. Some $279 million was transferred without board knowledge in fiscal year 2023 alone, she said.
“That’s a lot of money going project to project, and directors have no idea about it,” Chan said.
EBMUD Director of Finance Sophia Skoda said management always knew exactly where the money was and what it was being used for. Details weren't being shared with the board up till now, she said, but will be moving forward.
Chan had received a letter from a constituent who turned out to also be an EBMUD employee complaining about the practice and passed it on to Internal Auditor Barry Gordin for investigation.
After seeing Gordin’s report, Chan said, “I was shocked to read in the audit report that in FY 2023 alone, $279 million was moved between projects with no approval or visibility from the elected Board of Directors. As such, we cannot provide the mandated fiscal oversight that the public deserves.”
She continued, “The report further states that the auditor will be placing necessary internal controls on the budget in the near future to ensure transparency. I have asked that this item be agendized so the Board of Directors can decide what are the next steps, if any.”
Chan also urged going back to previous years to see what transfers had occurred without board knowledge or approval.
The amount Chan questioned had been moved to an improvement project at EBMUD's Upper San Leandro water treatment plant.
Skoda said that any initial appropriation over $80,000 had always required board approval, but that transfers of any amount within appropriated funds hadn't been going to the board.
However, an internal set of controls ensured agency managers knew what money was being spent where, with any transfers above certain amounts requiring signoffs from department heads, she said. EBMUD is divided up into six departments.
“It’s a bit like a family setting aside some money for home repairs or improvements, and then discovering one part costs more than expected while another cost less,” Skoda said.
Budget Manager Sam Feldman, when he joined the agency about 18 months ago, had suggested informing the board about transfers within projects, she said.
Skoda said, “He just saw it as a good practice.”
The finance director said there was already an internal report on transfers seen by herself, General Manager Clifford Chan (no relation to Director April Chan), other top managers and the affected department heads.
That report can be sent to the board as well, for their possible discussion, Skoda said, but her staff is still working on what exact format would be most useful to the board for its purposes.