Audit Criticizes South L.A. County Water District

Poor planning and questionable management policies at a water replenishment district that serves 43 cities in south Los Angeles County has led to excessive water fees, a long-awaited state audit declares.

By overestimating water needs, the Water Replenishment District of Southern California has accumulated a $67-million cash reserve over the past 10 years, according to an audit released by the state auditor’s office. The audit suggests that the district carry an average reserve of $10 million.

It criticizes the little-known water district for hiring 10 lobbying and public relations firms over the past year and recommends tighter controls on the district’s finances.

“We believe that 10 lobbying firms is an excessive number for a district with fewer than 30 staff members,” the audit said.

The district does not directly serve homes and businesses. Instead, it charges municipal and private water companies to pump water from aquifers. The district replenishes the underground supply with water purchased from the Metropolitan Water District.

But local cities say that the high fees charged by the replenishment district are passed on to residents and business owners in the form of high water bills.

The audit was requested by state Sen. Martha Escutia (D-Whittier) at the behest of several of the 43 cities that are served by the district. The cities--including some of the poorest in the county--have complained about water rates that have increased by up to 200% since 1991.

Water district officials agreed with many of the audit’s recommendations but said the report fails to acknowledge that the district board has recently adopted several new policies to tighten lax financial policies.

“The board has made a dramatic shift in the way it operates,” said Board President Robert Goldsworthy.

Escutia called the problems uncovered by the audit “pretty disheartening” and said she will investigate what authority the state has to require changes in the way the district operates.

Downey Public Works Director Desi Alvarez called the audit results “revolting,” adding: “It confirms the worst suspicions we’ve had of the district.”

Animosity between the district and such cities as South Gate, Downey, Pico Rivera and Santa Fe Springs has been growing as rates have risen. The district increased fees from $51 per acre-foot in 1990 to $162 per acre-foot in 1996. The fee currently is $139 per acre-foot. Critics say the fee should be about $100 per acre-foot or less. An acre-foot is the amount of water used by two typical homes in a year.

The audit says the district has repeatedly based its water fees on overly inflated estimates of the region’s water needs. It says the district should have used its cash reserve to reduce its fees.

In response, Goldsworthy said the district has added “sophisticated computer modeling” to better estimate water needs. But he rejected the idea of using the reserves to reduce water fees, saying it would lead to “wildly fluctuating” prices.

Goldsworthy said the board has reduced the cash reserve to $50 million by creating a grant program to pay for cities’ conservation programs. He said the board will eventually cut the reserve to $20 million, which he said was the level recommended by financial experts.

The audit questions the size and pay level of the district staff. In addition, the audit criticizes the district for failing to require documentation to reimburse staff for travel and meal expenses.

Between July and August 1999, the audit found that the district spent $75,000 on six lobbying firms. But auditors said there was little documentation justifying the need for the lobbyists in Sacramento and Washington, D.C.

Goldsworthy said the district is cracking down on unneeded expenses. But he defended the need for the lobbyists and lawyers, saying the district is under attack by several cities, including a few that have sued the district on charges that it has wasted public funds.

“We have a cadre of legal advice and lobbyists because we are at war right now,” he said.