SLO County could rejoin IWMA after embezzlement scandal. What does that mean for ratepayers?

San Luis Obispo County could rejoin the Integrated Waste Management Authority, a countywide organization that oversees compliance with state regulations for recycling and solid waste disposal.

After an embezzlement scandal and disagreement over a Styrofoam ban, the San Luis Obispo County Board of Supervisors voted to leave the IWMA in 2021.

The move became one of the notable disputes between the competing forces on the board and is the latest example of the new majority undoing decisions made by the previous conservative bloc.

This means the county is now responsible for making sure garbage collectors in unincorporated areas of the county follow state mandates.

The transition out of the IWMA didn’t impact garbage collection rates, but the county had to use taxpayer dollars to cover the cost of creating its own oversight program, according to a staff report.

If the county continues to use its own program during fiscal year 2023-2024, it will have to pay $783,333 out of its general fund or increase rates, the report said.

After the IWMA hired new staff and changed its accounting practices, the new board majority asked county staff to look into returning to the agency.

On Tuesday, Oct. 31, the board will vote on whether or not to re-join the IWMA.

What would happen to garbage collection rates?

Garbage rates will increase by 2024 whether or not the county rejoins the IWMA.

However, those rates will increase by a smaller amount if the county returns to the waste management organization, according to IWMA executive director Peter Cron.

In addition to paying garbage collection fees, ratepayers are also charged solid waste compliance fees, which fund the county’s efforts to comply with state mandates for recycling and waste collection.

If the county rejoins the IWMA, the solid waste compliance fee rate will increase from 2% to 4.4% of the garbage collection fee, according to a county report.

If the county continues to be its own provider, however, the fee will jump to 8.1%, the report said.

Currently, the waste removal fee for a 64-gallon garbage can costs between $30 and $70 per month depending on where the ratepayer lives in SLO County.

The solid waste compliance fee adds between 30 cents and $1.40 to the total haul-away cost, according to the report.

If the county rejoins the IWMA, that fee will increase to between $1.32 and $3.08 for a 64-gallon garbage can.

If the county doesn’t join the IWMA, the fee will rise to between $2.43 and $5.67 per month, the report said.

According to Cron, the IWMA will likely lower its rates if the county rejoins.

“It’s scale economics,” Cron said. “We get more people paying into the pot, and the workload won’t be monumental because we’ve already got a lot of the framework in place.”

Cron would expect a “seamless” transition in service from the county to the IWMA, he said.

“We operate on ratepayer money, so there’s a fiduciary responsibility for us to do it as good as we can to limit any impact that would be on a ratepayer,” Cron said.

The county hired three new staff members to replace the IWMA’s services, but one of those positions is now vacant, according to San Luis Obispo County Public Works Director John Diodati.

If the county returns to the IWMA, it will likely eliminate the vacant position and move the other two employees to other divisions of the county Public Works Department, Diodati said.

How did IWMA address embezzlement, lack of transparency?

After a tumultuous few years, the IWMA improved its accounting and oversight practices, according to Cron.

The San Luis Obispo County District Attorney’s Office started investigating allegations of fraud at the IWMA in 2018, which resulted in charging former IWMA board secretary Carolyn Goodrich with embezzlement and destruction of records in 2021.

The Board of Supervisors voted 3-2 to leave the IWMA shortly after the charges were filed.

Goodrich stole a total of $13,054 from the IWMA from 2014 to 2018.

In 2022, a court sentenced Goodrich to two years of felony probation, 60 days in San Luis Obispo County Jail and 100 hours of community service, according to SLO County Assistant District Attorney Eric Dobroth.

She returned the stolen money to the IWMA, he said.

“She was also ordered not to engage in work involving the handling of money or handling of financial transactions during the term of her probation,” he wrote in an email to The Tribune.

In September 2021, the District Attorney’s Office released a report on its investigation, which found that former employees of the IWMA keep poor financial records and showed a “lack of transparency.”

However, they didn’t commit fraud, according to the report.

According to Cron, the IWMA improved its financial practices after the embezzlement scandal.

Now, the IWMA discloses every expense to its eight-member Board of Directors each month, he said.

“They see every penny we spend and every penny we bring in,” Cron said.

Additionally, at least two people must approve every expense at the agency.

“I can ask someone to buy me a pencil, but I can’t buy the pencil,” Cron said. “There’s multiple sets of eyes on every transaction.”

None of the IWMA’s current employees worked at the agency when Goodrich stole money, according to Cron.

These new practices increase transparency and are designed to prevent another employee from stealing from the agency, he said.

“To say that it would never happen again is probably wrong because you never want to say never,” Cron said. “But it will be challenging for someone to conduct a transaction that somebody didn’t have peer review over.”

Where do SLO County supervisors stand on the IWMA?

The change in approach to the IWMA by the Board of Supervisors reflects the shift in power now that Bruce Gibson, Dawn Ortiz-Legg and Jimmy Paulding hold the majority.

In 2021, the board’s remaining conservative members, John Peschong and Debbie Arnold, and then Supervisor Lynn Compton voted to leave the IWMA.

The pair said they’d like to see if the IWMA improved its accounting practices before voting to rejoin the agency.

“I’ve lost confidence in the organization,” Peschong told The Tribune on Friday. “I’m really interested in hearing from them, if they’ve solved these problems.”

The pair also opposed the IWMA’s ability to create its own policy.

In 2019, the IWMA Board of Directors passed a ban on the sale of polystyrene, the material used in Styrofoam cups and foam take-out containers.

Peschong called the polystyrene ban “government overreach” on Friday, and Arnold agreed.

The IWMA board is made up of representatives from the cities and unincorporated areas of the county.

Arnold said city officials shouldn’t be able to make decisions for unincorporated areas of the county as they often have different interests.

“City council members banding together could make laws over unincorporated areas of the county,” Arnold said. “I always thought it was really wrong.”

Now, however, the IWMA is not allowed to craft its own policies — it can only implement state policy, Cron said.

Supervisors Gibson and Ortiz-Legg voted to stay with the IWMA in 2021.

Ortiz-Legg thought the county could have fixed the IWMA’s accounting practices without leaving the agency, which would have saved the county money.

“This breakaway was an expensive approach to probably a problem that could have been solved otherwise,” she told The Tribune on Friday.

In the meantime, Ortiz-Legg said, “The IWMA has really shaped up” and is well equipped to serve the county.

Ortiz-Legg and Gibson support rejoining the IWMA because it would save ratepayers and the county money.

“You want the government to be as efficient and cost effective as possible, and the IWMA is that,” Gibson said on Friday. “We have people who can do the same thing, but why duplicate effort.”

Supervisor Jimmy Paulding was not available for comment as of Tuesday afternoon but has expressed support for rejoining the IWMA at previous meetings.