Nearly $14.3 million of Siemens settlement funds used to prop up water, sewer and sanitation accounts
JACKSON, Miss. (WLBT) - The majority of proceeds from Jackson’s Siemens settlement have gone toward bringing the city into compliance with its bond covenants and propping up its water/sewer billing fund, according to documents obtained through an open record request.
As of June 13, 2022, Jackson had just $8 million left from the nearly $90 million it received in its settlement with Siemens Industry.
Of that, about $30 million went to cover legal costs, while another $36.7 million was set aside to bring the city into compliance with its water and sewer bonds, documents show.
Jackson has approximately $219 million in outstanding water/sewer bond debt, including the nearly $90 million the city issued for the Siemens contract, according to the city’s 2019 bond catalog.
To maintain compliance with its bond covenants, Jackson must maintain a reserve fund to cover payments when water and sewer collections run short.
Another $14.25 million was transferred to the water/sewer enterprise fund or sanitation fund to make up for shortfalls in billing collections.
That amount is in addition to the more than $4.1 million in general fund transfers the city made to prop up water/sewer since 2017.
The enterprise fund is typically funded through revenues collected through monthly bills to customers.
Ward One Councilman Ashby Foote said he’s not surprised so much money has gone to water and sewer, saying for a time the city was collecting very little.
“It’s exasperating that the city’s poor collection rates on water and waste billing continue to drain away resources needed to keep our infrastructure sustained,” he said.
For years, water/sewer and sanitation have been operating at deficits.
For the fiscal year 2020, the water/sewer enterprise fund ended the year with a nearly $10 million deficit, down from the more than $17 million deficit the water/sewer department reported the prior fiscal year.
“You’ve got revenue reported during the year that is not going to be collected,” the city’s independent auditor, Scott Hodges said in April. “That needs to be allowed for during the year, so you’re not looking at inflated numbers, and then at the end of the year, $7 million disappeared because it’s not going to be collected.”
Sanitation also has reported multi-year deficits. In fiscal year 2020, the department brought in $8.5 million from sales to customers but spent more than $10.7 million.
The year prior, sanitation lost more than $2.7 million, with more than $11 million in expenses and around $8.36 million in sales to customers, city audits show.
| Sanitation - sales to customers | Operating Expenses | End-of-year income/loss | |
|---|---|---|---|
| 2020 | $8,527,596 | $10,760,221 | ($2,223,343) |
| 2019 | $8,368,989 | $11,082,290 | ($2,708,548) |
| 2018 | $9,447,549 | $10,656,769 | ($1,154,728) |
| 2017 | $10,252,613 | $10,901,293 | ($629,292) |
| 2016 | $11,625,505 | $11,991,352 | ($365,847) |
Collections are down, in part, due to complications with the city’s water billing system. About a decade ago, Jackson brought on Siemens to replace the city’s water meters, install new billing software at the Water Sewer Business Administration Office, and put in place a network of repeaters and transmitters that would allow those meters to communicate with WSBA.
The system never worked, and the Lumumba administration filed suit. In 2020, the city settled with Siemens for around $89.8 million, or the cost the city paid to do the work.
The city is currently working to replace water meters as part of a new agreement with Sustainability Partners. Crews began replacing commercial meters last fall and residential water meters in February, said Public Works Director Marlin King.
To date, more than 18,000 residential meters have been replaced. Billed amounts to those customers have increased almost monthly as a result.
| Month billed | Usage fees calculated for homes, businesses with new water meters |
|---|---|
| October 2021 | $94,572.49 |
| November 2021 | $16,847.58 |
| December 2021 | $54,700.24 |
| January 2022 | $267,643.86 |
| February 2022 | $669,747.10 |
| March 2022 | $1,016,410.84 |
| April 2022 | $1,694,911.47 |
| It’s unclear how much of that billed amount has been collected. Figures for May were not available. |
Collections issues aside, sanitation is running out of money due to poor collections and rising garbage rates. Sanitation fees are added to customers’ water bills, so when water and sewer fees aren’t collected, neither are sanitation fees.
In recent months, that problem has been exacerbated by the city’s emergency trash collection fees.
Since October, contractors have been picking up trash under emergency contracts. Last fall, the city entered into an agreement with Waste Management to provide collections at $10.56 for the first month and then $15 per home for the five months after that.
Earlier this year, the mayor issued a notice to proceed to Richard’s Disposal under a one-year emergency deal, which also charges $15 per home.
However, the city is still charging customers $20.84 per month, a fee that was set more than a decade ago.
To make up for the cash shortfalls, nearly $4.5 million in Siemens money has been transferred to the sanitation division, documents show.
Deputy City Attorney Terry Williamson told the council the funds are needed to make up for rising costs and budget shortfalls in the sanitation division.
He said the increase is $2 more than the proposal the administration brought forward in December, in part, because the council did not act on increasing rates at the time.
“Without this increase, there is simply just not enough money to pay for collections and disposals and also operate the sanitation division,” he said.
A breakdown of the Siemens expenditures is shown below.
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