Consultant pay 'multipliers' at the MSD

The presentation to the Hamilton County Commissioners by Gerald Checco, Metropolitan Sewer Department (MSD) Director, on December 7th, 2016 included the consultant/contractor salaries. The slide also includes proposed 'savings' by restructuring but the total budget continues to rise.

I have redacted the names of the individuals. The issue is the management and judgement of the MSD:

Page 1: click to enlarge image

page 2: click to enlarge image

Watch the cost to the MSD based on the salary multipliers for contractors and consultants.

Reform the MSD

Cincinnati City Councilman Charlie Winburn and Hamilton County Commissioner Chris Monzel have taken opposite sides of a non-issue.The Metropolitan Sewer District (MSD) watchdog group never had any chance of providing over site or insights into the MSD. The State of Ohio audit and the city's own internal audit prove the city and county allow the MSD to operate to standards completely unacceptable in modern government or business. Both audits blast the MSD for millions of dollars unaccounted for or characterized as mismanaged. If the auditors cannot tell you where the money has gone the watchdog group had no chance either...time for these gentlemen to role up their sleeves, work together, and accomplish meaningful reform.

Where did money go in the MSD?

Details for spending in the Metropolitan Sewer District (MSD) of Cincinnati are sometimes difficult to find. An excerpt from the supporting documentation for the 2016 internal audit of the MSD by city hall raises several questions regarding what MSD rates paid for :

...Actual cost detail for the SIA program from 2007 — 2009 could not be located. Final cost summaries for 2010 through 2015 also could not be located, but documents collected for 2010 through 2015 including budgets and budget narratives, the Student Intern Academy Annual Report dated December 31, 2012, and various other invoices, contracts and reports reflect estimated annual SIA costs as follows:

2010         $ 112,125 (1)

2011         $ 471,839 (2)

2012         $ 645,706 (2)

2013         $ 705,502 (2) (3)

2014         $ 950,216 (2) (3)

2015      $1,130,099 (2) (3)

      (1)    excludes the direct salaries and costs for MSD employee time spent on SIA

     (2)    includes the direct salaries and costs for MSD employee time spent on SIA

   (3)    the Project Rebuild Workforce Collaborative Foundation reimbursed MSD a total of $36,475 for SIA expenses over the course of 2013 — 2015

The 2015 budget included $356,000 for intern salaries and benefits, $256,250 for consultants contracted for the program and approximately $500,000 for time spent by MSD employees on the program.

2.       The cost of the program grew exponentially and was funded almost exclusively by MSD ratepayers. Contract signature authority given to the MSD Director and the use of MSA's to hire consultants diminished visibility of the program's cost.

3.       The MSD workforce appears to have not looked favorably on the program given the requirement to manage high school students in the workplace for 8 weeks while under the stresses of Consent Decree deadlines and the merging of MSD and Water Works.

4.       Questions have been raised as to the appropriateness of spending ratepayer funds on a high school student internship program.

5.       No tracking methodology was put in place to follow graduates of the SIA to determine if the program has been successful in attracting graduates to the MSD workplace....

Why didn't internal auditors and internal controllers raise a flag on this?.

State of Ohio audit of the MSD

The most recent Cincinnati Enquirer article concerning the Metropolitan Sewer District (MSD) focuses on $100,000 that the MSD paid in police salary but there is a bigger issue. The MSD has millions of dollars in ledger errors...apparently nobody in the MSD, city council, or county council knows what is actually being spent at the MSD. The special audit by the State of Ohio found this most distressing and calls out the lack of internal controls as a concern.

Page 56 of the Audit:

Financial Statements - Statement of Net Position:  

 There was no total line for Deferred Outflows.  The two line items in this category should have totaled to $42.4 million   

 Deferred outflows were reported below Net Position as the last item on the statements instead of after Total Assets  

 The total Net Pension Liability at December 31, 2015 of $266.9 million was reported as Net Pension Obligation and compared to the 2014 GASB 27 Net Pension Obligation  

 The Net Pension Liability at December 31, 2015 was reported as a lump sum of $266.9 million instead of identifying separate amounts for the Ohio Public Employee Retirement System (OPERS) of $1.8 million and the Cincinnati Retirement System CRS of $265.1 million  

Cash Flow Statements: 

 Income from operations was reported as $50.6 million, but should have agreed with the operating statement amount of $107.4 million.

 The Cash and Cash Equivalents amount was reported as $152.7 million, which did not the Statement of Net Position or Notes to the financial statements amount of $160.2 million.

 The reconciliation section contained errors in various numbers and items noted as reconciling items: certain reconciling items in listed in this section were not supported by related ledger and worksheets prepared by the District.     

Notes to the Financial Statements:  

 Capital Asset depreciation columns not consistent with prior year disclosure: amount were presented in the wrong columns, positive numbers were presented as negative numbers, and vice versa.     

 OPERS information was missing from the restatement note  

 Various numbers throughout the notes did not agree to other areas of the report, the notes contained information that was no longer relevant, and the notes did not include all required pension disclosures. For example, long term debt that no longer applied was included in the tables with a zero balance, and descriptions for these debt issues continued to be disclosed; 2013 fund balance restatement information continued to be disclosed; and the other post-employment benefit disclosure was not included in the pension section.  

The District has posted material audit adjustments to the financial statements and made significant corrections to the notes to the financial statements where appropriate.  

Lack of internal controls over accounting and financial reporting increases the risk that errors, omissions, theft or fraud could occur and not be detected in a timely manner.

Fix It Cincy!

The senior management of the Cincinnati Metropolitan Sewer District (MSD) has come under the microscope as of late. Many things have been alleged including mismanagement, diverting monies, poor project planning, using delaying tactics on a consent degree mandating system wide improvements and being unresponsive to environmental groups critical of outdated designs for the future. The local paper has had a series of articles on these topics and a recent internal city audit substantiated many of these concerns and raised new concerns to be investigated. The department is under a state level audit and investigation by the FBI...

As a new resident of Cincinnati it would be easy to dismiss the entire MSD for the alleged actions (or inaction) of these top managers. The MSD is actually several hundred people. From what I have seen those who are responsible for keeping the system running take that task seriously.

I recently had the opportunity to use the 'Fix it Cincy!' smartphone application for the first time. As an avid dog walker I saw a number of problems after a storm and reported clogged rainwater intakes using the app. Before I finished my walk I got a call from the MSD asking me to clarify what what happening. The MSD sent a truck out and the clogged intakes were remediated the same day as my reporting the problems.

I also reported more complex erosion problems that had been developing over time. The washouts were, in my opinion, deep enough to be safety issues. On the same call with the city I described the problems observed and was told that those issues would take some time to fix as a contractor would need to be sent out to design a repair. Within a month the two issues that required contracting were also resolved. The contractors also drove though the Sayler Park neighborhood of Cincinnati noting other items for repair and those were also addressed.

While it might seem that the repairs are 'mundane and expected' considerable effort was put in to make the work as permanent as possible. The areas were dug out, cement poured, dirt repacked, the dirt seeded and the road repaired next to the erosion. A recent letter to the Cincinnati Enquirer editor was critical of what 600 MSD employees do all day...I can say a good number are working hard.

repairs complete (click images to enlarge)

While the news regarding the senior management at the MSD is an unfolding soap opera it would be unfair to paint the entire department with the same brush. In remediation of day-to-day issues I have been very impressed with the MSD. I have never lived in a city before where reported problems got a callback within 10 minutes and would never have expected action to start the same day.

I hope the City Council takes action to get the right management in place for the MSD. The new managment will be getting a caring team that is performing well beyond expectation for what I expect the morale of the department to be given the months of critical press.

Now if we could get that combined sewer issue resolved...

A Poop Question

There is disbelief anything is 'wrong' with the water safety of the Ohio River.

The Ohio River Valley Sanitation Commission (ORSANCO) monitors the Ohio River for fecal coliform and E. Coli bacteria. Fecal coliform is the stuff you flush and from farm animal waste as well. Many days the waters are considered to be within accepted limits. Other days the waters had levels many times the EPA established thresholds. The ORSANCO data is shared online and is updated weekly.

If the water is used for swimming the EPA guideline is that the level be below 400 fecal colonies coliform per 100 ml. The Ohio River is often below a count of 100 but has been as high as 7000 in the last three months. Some sections of the river trend better than others. The peak fecal colony counts and the rains go hand in hand.

11.5 Billion Gallons

Sometimes numbers are so big they become difficult to make personally meaningful. How many grains of sand in a bucket? How many stars do you see in the night sky? The annual combined sewer overflow for the Cincinnati Metropolitan Sewer District (MSD) is one of those numbers. 

11,500,000,000 gallons of human waste contaminated rain water isn't like visualizing a single gallon of milk. A billion gallons of water is about equal to 1,500 Olympic sized swimming pools. Eleven and a half billion gallons is about equal to 17,250 Olympic sized swimming pools...none of which you would want to swim in. 

The contaminated overflow ends up in the Ohio River, the streets of Cincinnati and sometimes the basements of the residents. One recent rain storm caused nearly 200 overflows. In recent years the city of Cincinnati has documented thousands of reported overflows and acknowledges that thousands more go unreported.

I hope the informational graphic puts the problem into a context you find meaningful:

click to enlarge

Clean Enough?

The first weekend in August is many things in Cincinnati, the Ohio River Paddlefest is one of the star events. It will include over 2000 participants and looks to be one of the more enjoyable ways to use the dog days of summer. 

Paddlefest 2016 represents new event organizers, a new route from previous years and new experiences for the participants. In a Cincinnati Enquirer article an event organizer says this is an opportunity to demonstrate the Ohio River to be safer and cleaner than people believe. Being a hobbyist paddler this is exciting but also being environmentally conscious, the new event route gives me pause... 

The new route on the Ohio River overlaps a century of unfinished business for the city of Cincinnati.  The new route matches closely with a concentration of sewer overflows locations that empty, unfiltered, into the Ohio River. Being an older system these overflows mix human waste water with rainwater runoff. The Cincinnati Metropolitan Sewer District (MSD) website says that 11.5 billion (11,500,000,000) gallons of human waste contaminated rainwater overflows into the Ohio River each year.

“Every year, about 11.5 billion gallons of raw sewage - mixed with stormwater - overflows from MSD's combined sewer system into local streams and rivers and also backs up into homes and businesses...”

The amount of contaminated water is difficult to visualize...picture a wall of ‘poop’ contaminated water 50 foot high, 50 foot wide and 9 miles long.

If it is dry the event will likely go as planned but a surprise heavy rain could raise 'cleanliness' questions. Project Groundwork publishes a detailed interactive map of combined (sanitary + rain) sewer overflow locations (you will need to zoom in a bit to see the features).

A higher level map of where the combined overflow locations are found along the event route:

Overflow Locations (click to enlarge)

Being a working river the Ohio is under pollution stress from a number of factors that impact the cleanliness of the water, the MSD is one among many contributors.

I hope paddlefest is safe and fun for all participants. Showcasing a 'clean' Ohio River will depend more on good weather than the organization of the event.

The situation with the MSD is complicated and court orders are present requiring the system improve and modernize. It will be 2018 before the MSD has their plan ready to respond to the court orders to improve the combined sewer system. Cincinnati is a great city and can do better than this.