State and City of Varick officials agree to disagree over handling of water and sewer finances after audit

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A recent audit from the state comptroller’s office criticized the city of Varick for how it handles water and sewer finances.

City officials failed to effectively manage most aspects of the water and sewer districts’ financial operations, according to the report released Feb. 4, 2022.

Varick is located in Seneca County and governed by a city council, which includes a city supervisor and four council members. The Board of Directors is responsible for general oversight and operations, including finances.

The City of Varick provides water and sewer services to customers located in its four water districts and two sewer districts. Costs for these districts are increased by assessments against beneficiary properties in the districts, as well as user fees.

The Village of Waterloo (Village) provides billing and collection services for the City’s water and sewer districts through various intermunicipal agreements.

According to state auditors, the city failed to effectively manage most aspects of water and sewer district operations by:

  • Adopt realistic budgets over the past three years.
  • Adopt fund balance and reserve policies, formal multi-year financial and capital plans, or written billing and collection policies and procedures.
  • Ensure that customers are billed consistently and accurately or that operating and administrative costs are fairly distributed among owners.
  • Establish intermunicipal agreements and adequate sales contracts.

The State issued the following recommendations:

  • Develop and adopt realistic budgets, balance and fund reserve policies, and long-term financial and capital plans.
  • Negotiate appropriate written intermunicipal agreements and contracts with suppliers.
  • Develop a fair and equitable method for allocating costs among districts.
  • Develop and adopt comprehensive billing and collection policies and procedures and ensure customers are properly billed.

According to the auditors, generated city officials disagreed with the findings.

Reading the city’s response to the audit’s criticisms, along with secondary responses from state auditors, shows the division of philosophy. For example, while the state says the city of Varick has not effectively managed the financial situation of the districts, Varick officials say they chose to understate revenues to be on the safe side because the revenues of the fluctuate.

In response to this, state auditors called the city’s current process “neither realistic nor transparent.” Instead, auditors suggested that revenues should be estimated using historical data over a three to five year period.

Read the full audit here.


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