Audit finds ‘egregious’ lack of spending controls, misused funds at Central Valley water district

State auditors lambasted a Central Valley water district Tuesday for providing employees with perks that included free housing, interest-free loans and credit cards used to pay for sports and concert tickets — all in possible violation of state law.

“Prevalent and severe deficiencies” were found in the Panoche Water District’s administrative and accounting controls from 2013 to 2015, according to a review released Tuesday by state Controller Betty T. Yee.

“The district’s egregious lack of spending oversight is shocking,” Yee said in a statement. “It is especially troubling in a region where effective water governance is so vital for the agricultural community.”

The Panoche Water District, spanning about 38,000 acres in the Central Valley, delivers water to western Merced and Fresno counties. The district is overseen by a five-member board of directors composed of landowners.

Although the district is funded by a customer water service charge and not state or county taxes, the district has received state loan and grant money, the controller’s office said.

Some of the most significant findings were that the district, without legal authority, gave more than $86,000 in interest-free loans to employees, provided free housing for six employees without documentation justifying the need, and permitted employees to use district credit cards for personal use.

Those credit card charges totaled more than $37,000 in personal spending by employees. From 2013 to 2015, employees used district credit cards to purchase tickets to Oakland A’s and Oakland Raiders games, tickets to a Katy Perry concert and retail goods from Ralph Lauren, Nike and Sunglass Hut.

Reimbursement collection procedures were so lax that one employee did not repay personal expenses charged to the district for nearly three years, according to audit findings.

Yee said the district lacked written policies, ignored administrative procedures and potentially violated state law.

State officials noted that the water district has documented many corrective actions it has taken or plans to take in response to the review.

Panoche board President John Bennett said the agency was “already in the process of taking actions that have resulted in the full implementation of many recommendations of the draft report and substantial implementation of the remaining recommendations,” the Fresno Bee reported.

brittny.mejia@latimes.com

Twitter: @Brittny_Mejia

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