RD311 - Special Review Southeastern Public Service Authority - October 2008


Executive Summary:
FINDINGS AND RECOMMENDATIONS

In collecting and analyzing such data and information, the Auditor of Public Accounts shall assess Southeastern Public Service Authority's financial stability and performance, compare SPSA’s operations with similar public and private entities, and make such recommendations as he may deem relevant to the purposes of this study.

The above is a direct quote from the Joint Resolution authorizing this review. Fundamental to accomplishing this charge is a comparison of SPSA’s actual performance against its financial and operational plans both short and long-term. SPSA has never completed a comprehensive financial and operational plan with which to conduct such a review.

Overview

We believe that many of the actual and perceived problems with SPSA’s operations come from the lack of a clear business focus and direction, which a comprehensive financial and operational plan would demonstrate. Although SPSA faces an uncertain long-term future, financial and operational planning would provide the governing body and management a framework with which to begin addressing SPSA’s future direction and aid in making long-term decisions.

Further, we believe that management has made a number of debt financing decisions, and taken revenue setting and generation actions and other actions without a long-term vision of their consequences or effects on the operating viability of the authority. For example, should SPSA terminate as an entity, the governing body and management need to have available the long-term funding to monitor and maintain all landfills and other such facilities after SPSA closes them for a lack of space. However, SPSA has not adequately assessed these future obligations nor funded them.

Our review, therefore, focused on SPSA’s governance, planning, operations, and financial position. There are a number of areas we believe require both management and Board attention. A vast majority of these areas focus on fundamental policy and management practices.

Historically, SPSA has used bond proceeds as a primary source of short and long-term capital funding. This ability to easily access the capital markets has allowed management and the Board to have sufficient funds to operate and expand and not forced the authority to always consider operational and financial best practices.