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King County Executive
Dow Constantine


Audit finding highlights some county best practices but overstates potential savings

Summary

An audit released by the Washington State Auditor on Wednesday highlights nearly two dozen instances of industry standard best practices being used by King County to reduce taxpayer costs for utility services.

Story

An audit released by the Washington State Auditor on Wednesday highlights nearly two dozen instances of industry standard best practices being used by King County to reduce taxpayer costs for utility services.

The report recognized the county's utilities for implementing 22 leading, cost-effective practices that save taxpayer dollars. While many of the auditor's recommendations already reinforce areas where the County is focused on savings and generating additional revenues--extending the life of the Cedar Hills landfill and increasing revenues from biogas operations and biosolids management--the report lacks practical considerations that must be taken into account to achieve the additional savings and revenues.

The Auditor's estimate of annual savings for the utilities is $17.3 million, compared to the county's estimate of $1.6 million when implementation considerations are taken into account because the audit overestimates potential savings from recommended changes in other areas and failed to consider current management best practices when assessing expenditures and revenue sources for King County administered utilities.

Among the county's utilities' 22 leading practices mentioned in Appendix B of the audit report:

1. Selling biogas as a commodity at the South Treatment Plant (Wastewater)

2. Achieving 100 percent compliance with national pollution discharge standards over the last three years (Wastewater)

3. Publishing real-time operational information to the public regarding any overflow site conditions (Wastewater)

4. Collecting and selling landfill gas as a commodity (Solid Waste)

5. Applying leading practices to maximize the life of the Cedar Hills landfill (Solid Waste)

6. Using performance measures to monitor operations and plan fleet replacements (Solid Waste)

"The findings highlight King County's utilities' innovative and industry-leading practices in several areas and validate the county's stewardship of taxpayer resources," said King County Executive Kurt Triplett. "However, we don't believe the auditor followed his own published protocols for compiling and presenting these findings to the county nor did they fully incorporate clarifications to this audit, which would have resulted in a much better and more accurate outcome and a better understanding of these complex issues for the public."

For example, the audit questions the documentation used to allocate the overhead costs of elected officials , implying that eliminating charges supporting the offices of the County Executive and the County Council would save the utilities $9.7 million over five years, and it would save Transit $27.3 million over five years.

County finance staff found the figures to be grossly exaggerated because they assume the utilities are not receiving a direct benefit from the oversight and leadership provided by the governing elected officials. In addition, not allocating any general government costs to the utilities, as the audit suggested as a savings, would actually violate state law; specifically the state accountancy act, which requires that each government department must pay for the fair value of services it receives from other departments.

The county also took issue with the auditor's findings that overtime costs should be reduced. The findings do not take into account that overtime costs by King County utilities are controlled and cut overall costs by reducing the need to hire additional employees. The findings also did not factor in that most overtime expenses result from running 24-hour facilities, which pose unique challenges for staffing round-the-clock shifts.

The Audit's concerns about King County's information technology use do not acknowledge the server move project to the new King County new data center, which effectively addresses the Auditor's physical environment concerns. The auditors were provided information on the move project during their fieldwork, and made the decision not to include this efficiency in their analysis.

In several cases, the audit identified potential cost savings and/or revenues, but ignored the costs to achieve those savings and/or revenues. In some cases, this means that the recommendations are not, in fact, cost effective.

For example, the auditor's recommendation to add additional water to already constructed areas of the Cedar Hills landfill does not make economic sense. Any cost savings are eliminated when accounting for the added costs of removing permanent soil caps and re-installing the facility infrastructure. Under this scenario, King County would need to spend $24.7 million dollars to install the infrastructure, which would be roughly equivalent to the presumed savings. However, the anticipated savings is included in the audit as a potential savings point, without consideration for cost.

Another example is that the audit report recommends relocating Solid Waste's fleet operations to create more space in the landfill, resulting in savings of $25 million. The associated savings would not be realized until 2026 or later. This cost savings estimate does not account for the cost of relocating maintenance facilities or operational disruptions and is premature based on environmental studies underway. The County will be issuing a draft environmental review document in October that explores five options for extending the life of the landfill.

Despite these concerns, the audit provides some useful insights and recommendations. Executive Triplett pledged to continue work with the County Council and department staff to further evaluate the auditor's findings and undertake any elements that will result in savings for taxpayers or efficiencies for operations.



King County Executive
Dow Constantine
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