City to Consider Restructuring Policy on Transfer of Funds

City officials said they are considering a policy that would regulate the way money is transferred from its water fund to its general fund, an issue that has generated debate in recent months.

The proposal was prompted by community activist Berklee Maughan, a former accountant, who has alleged some improprieties in the way past transfers were made, city finance director Ron Nault said.

Though city staff members, attorneys and the city’s Audit Committee found no wrongdoing, Nault said, they have determined that Tustin could be more exact in the way it calculates and documents the transfers, generally made to reimburse the city for time its staff spends on water-related projects.

“We didn’t have a very sophisticated system in place,” Nault said. “We did it informally. And rightly so, [Maughan] pointed out that we should have a more formalized methodology.”

Generally, Nault said, transfers had been made using a flat rate--about $670,000 a year--to reimburse costs, with the amount based on employees’ salaries.

The new method would be more complicated, he said, based on a combination of administrative costs, overhead and service costs calculated each year with a more formal time-keeping system.

Under the new system, about $980,000 would be transferred between funds for fiscal 1995-96, according to city documents.

Maughan said he is pleased that the city has addressed the issue but is still frustrated by the lack of documentation between 1980, when the water system was acquired by the city, and now.

“They haven’t been able to prove that the transfers were made only to reimburse costs,” Maughan said.

Nault said the city stands by its determination that a formal investigation was unnecessary, for the past transfers were not excessive and were made in accordance with city policy.

Councilman Jim Potts said he would like to see an outside investigation into the matter “so it doesn’t look like were trying to cover anything up.”