Audit of SOCWA Shows Funds were Mismanaged

By Eric Heinz

A legislative audit found a local wastewater authority’s bookkeeping to be out of sorts.

The State Auditor’s office announced on March 22 that South Orange County Wastewater Authority (SOCWA) had not, until recently, adequately tracked money it collected from its customers for 15 years and therefore could not sufficiently account for any lack of funds. SOCWA has $18 million in unfunded obligations to pensions for its employees, and its Joint Powers Agreement doesn’t hold customers liable for that lack of funding. The auditor’s office also said it had been slow to correct any deficiencies noted.

SOCWA, on the other hand, said it was pleased with the State Auditor’s report.

This all started when SOCWA asked for funds from Moulton Niguel Water District, it felt was due for capital improvements to a facility in Laguna Beach. When Moulton refused to fork over nearly $1 million, SOCWA sued the district in 2017, but it was Moulton who claimed SOCWA didn’t have the authority to charge it for those improvements as they pulled out of the facility about a year earlier.

The subhead of the audit fact sheet was a bit more optimistic than the findings, titled “It Should Continue to Improve Its Accounting of Member Agencies’ Funds and Determine

Whether Members Are Responsible for Its Unfunded Liabilities,” implying that the wastewater authority is in fact making improvements; they just need to come quicker.

The city of San Clemente is a member of SOCWA but did not pay into the treatment plant as it has its own facility in town.

The State Auditor recommended that new Joint Powers Agreements should be forged and that all existing members communicate better. It also said SOCWA should continue to investigate cash balances and develop or amend policies for better accounting.

According to SOCWA representatives, Moulton Niguel has not withdrawn from the coastal treatment plant, and that the water district has “not paid bills for close to two years and are close to $1.5 million,” though  Moulton Niguel has argued it shouldn’t have to pay for the capital improvements.

“The plaintiff‘s which are the city of Laguna Beach, South Coast Water District and Emerald Bay service district, have extended an olive branch in hopes of reaching a settlement,” said Steve Greyshock, a spokesperson for SOCWA, “but (Moulton Niguel) still remains a part of the plant and still has responsibility for its bills.”

Article updated to reflect details of SOCWA and Moulton Niguel Water District obligations to the water treatment plant.