City overcharges fitness center for utilities

Published 6:26 am Tuesday, October 16, 2007

By Staff
Error likely will result in water, sewer funds having revenue shortfall
By MIKE VOSS, Contributing Editor
The City of Washington has overcharged LifeStyles Medical Fitness Center at Beaufort County Hospital $169,185.56 for water and wastewater treatment.
An account audit discovered the billing error, according to city officials.
City Manager James C. Smith, during a brief interview Monday, said the city and hospital are working together to find an equitable solution to the problem. The city’s attorney is drawing up an agreement to resolve the matter, Smith said while attending a conference in Fayetteville.
The proposed agreement calls for the city to credit half of the $169,185.56 in 60 equal payments over the next five years against the hospital’s monthly utilities bill, with the balance due in lump sum in January 2013. The arrangement allows the city to make the larger payment after existing debt service declines after 2012.
Riggs said although the overbilling has not hurt the hospital’s financial health, the hospital would have preferred to have kept the money it was overcharged.
Bill Bedsole, the hospital’s chief executive officer, was out of his office Monday.
The billing error occurred over a period of two years.
If paid in a lump sum, the credit comes to 2.64 percent of the water fund’s $2.7 million sales revenue for the current fiscal year and 3.51 percent of the sewer fund’s $2,783,068 revenue for the current fiscal year, according to the memorandum. In addition to the refund owed to the hospital, the corrected billing on an annual basis will reduce water-fund revenues by approximately $30,000, or 1.1 percent, and sewer-fund revenues by approximately $40,000, or 1.4 percent.
A revenue shortfall ranging from 1.2 percent to 1.6 percent in the funds may be manageable without an effect on rates, Smith wrote in his memorandum.
The reason this error occurred is because the city uses the same software for its water, sewer and electric billing.
The company that provides the city’s billing software has been asked to lock out or eliminate that multiplier field for all water and wastewater accounts.
To prevent something similar from occurring in the future, a meeting involving all city employees who deal with billing matters will be conducted, Smith said. Those employees will be asked to notify their supervisors if and when they notice anomalies pertaining to billing procedures and data, he said. They also will be instructed how to better spot such anomalies, Smith said.
Sometime during late August, the center’s pool began leaking. Because of the leak, the water and wastewater service provided beyond the normal service appeared to be in excess of $20,000, according to the memorandum. The center’s monthly utilities bill has averaged from $4,000 to $6,000. At that point, it appeared the center owed the city more than $20,000, and it was recommended a payment plan be developed.
For about three and one half years after the center opened in July 2001, the center’s utilities account had not been properly charged after a contractor turned the center over to the hospital, according to the memorandum. As a result, there was a back charge paid by the hospital, but the back charge was not the full $21,720 the hospital should have paid for its first 41 months of water and wastewater treatment service. The hospital was charged $17,010 because of incorrect commodity charges being used, the memorandum reads.
Those events indicated a complete account review was needed, city officials concluded.