Lenoir City board meets, issues statement on audit By HUGH G. WILLETT, knoxnews.com
March 16, 2007

The Lenoir City Utilities Board met in executive session for several hours Thursday to review the findings of a state comptroller's audit concluding the utility district is not in compliance with a variety of state laws and regulations.

LCUB General Manager Fred Nelson released a statement after the meeting addressing some of the issues raised in the report, including payments to advisory committee members.

"When I became general manager, I asked for a review of these payments as soon as I became aware of them. Payment was stopped, and a lawsuit was filed."

The statement did not directly address charges in the report, including details about the awarding of 40-year personal services contracts provided to former Dixie Lee Utility commissioners upon the merger of LCUB and Dixie Lee in 2000.

Other issues raised by the comptroller's office that were addressed in the statement include unauthorized payment of more than 800 vacation hours for a former general manager when the LCUB handbook authorized only 80 hours, and unauthorized payment from a retirement account.

"We are conducting an analysis to determine how this situation occurred," LCUB attorney Shannon Littleton said. "Regardless, we agree with the comptroller that the handbook should be followed."

The issue of some $32,000 in unauthorized payments to an LCUB employee from a retirement account already has been litigated and was resolved through a settlement, Nelson said.

The auditors' report was helpful in dealing with the issue of delinquent customers, Nelson said. The software the utility has been using was unable to pick up delinquencies less than $20. The system has been changed, and the utility plans to revamp its system, he added.

With regard to using unlicensed contractors for tree-trimming services, Nelson said the city checked and could find no contracting license for tree-trimmers, although the statement went on to say that the current tree-trimming service does have a contractor's license.

Nelson said LCUB agrees with the comptroller's office about most of the other findings related to fringe benefits not being reported for some employees and violations of retirement plan rules.

"We agree with the comptroller that previous management should not have had this arrangement, and we have controls in place to make sure that it does not happen again."