Study Butte Water Supply Corporation Out $470,000

The Study Butte Water Supply Corporation will loose $470,476 in federal grants, due to problems associated with Brewster County Audits. The loss of funding is not due to any action or inaction on the part of the water supply company, but upon accounting problems Brewster County had, dating back to 2015.

Study Butte Water Supply Corporation
The Study Butte Water Supply Corporation will lose over $470,000 in current federal Community Development Block Grants, due to problems with Brewster County’s annual audits for 2014 and 2015. The county and agencies it sponsors, such at this water supply and the Marathon Water Supply Corporation, are ineligible for the federal funds until September 2021. Photo: John Waters

According to meetings and letters between the Texas Department of Agriculture (TDA), which administers the federal Community Development Block Grants (CDBG), and Brewster County, the county is now ineligible to receive the funding for a period of five years, beginning on September 30, 2016, due to county audits for 2014 and 2015.

According to documents obtained by the Gazette, under the Texas Public Information Act, on September 1, the Texas Department of Agriculture informed the County:

“As we discussed during our meeting with you last week, the Texas Department of Agriculture (TDA) cannot accept the Single Audit (SA) reports from Brewster County (for fiscal years 2014 and 2015.)…Those reports were unacceptable because of the disclaimer opinions in the county’s CPA reports for both years, as was detailed to our letter to the county, dated June 2, 2017… Per your CPA firm, the Disclaimer Opinion is because: Substantive procedures were not sufficient to support opinions as a result of the lack of internal controls and the lack of supporting documentation. As such, we were not able to quantify the financial effect of any misstatements…As a result of this delinquency, the County in ineligible to receive TDACDBG grants for a minimum of five years, beginning September 30, 2016, the date the 2015 SA was due.”

Over the last decade, Brewster County has received over $2.5 million in CDBG grants. From these, Study Butte water would have received over $1.43 million, if the current $470,474 grant is included. The county also received over $856,000, in CDBG ,for first-time sewer service to South County residents. Residents of Marathon have also benefited from the grants with funding for the water supply system and road improvements.

In the last four years, the Study Butte water system has received $459,900 in such grants.

Brewster County Judge Eleazar Cano has reached out to state and federal legislators including Congressman Will Hurd and has pleaded his case for leniency.

In November of last year, Hurd announced $230,000 in grants for the Marathon Water Supply from the Environmental Protection Agency Project Development Assistance Program, which is administered by the Border Environment Cooperation Commission.

The Gazette has contacted Hurd’s office to see if such funding is available for Study Butte and is awaiting a response.

According to a letter sent on July 17 from Cano to TDA Commissioner Sid Miller and Compliance Auditor John Arce, prodding them for background information:

“I was sworn into office on January 1, 2015. At that time, there were several other elected officials that took office, one of which was our county Treasurer Ruth Staton. I am the first to admit that 2015 was an extremely difficult time for Brewster County as a whole….In May of 2015, GRP [Gibson Ruddock Patterson] shared with our Treasurer and me, via tele-conference, the lack of progress being made in preparation of our 2014 audit. It was during this tele conference that I was first made aware of the severity of our financial issues. As the year progressed, the severity of the conditions worsened to the point where I filed a petition [August, 2015] to have the Treasurer removed from office.”

After Cano filed that petition of removal, County Attorney Steve Houston declined to pursue the litigation against treasurer Staton.

In documents never before made public, and obtained by the Gazette in a separate Texas Public Information Act request, in January of 2016, Houston had drawn up a fifteen-count Original Petition For Removal seeking Staton’s removal from office. Days before Houston was ready to proceed with the removal, on January 6 Staton announced her resignation from office effective January 31

Although the Study Butte Water Supply Corporation is out the $470,474, board president Dr. Sam Bottenfield was optimistic, stating, “It won’t incapacitate us. It would have been nice. If we can work through this current grant we will be a lot better.” Bottenfield was referring to a $168,638 CDBG grant to make improvements to the water tank and reverse-osmosis system.

The TDA has informed the county that the grant will remain in effect, provided the county supplies bank statements and cancelled checks, verifying receipt and disbursement of grant funds, before October 1. Brewster County Auditor, Treva Watson confirmed this task was completed by the County Treasurer.

The TDA also recommended the county request an extension of the grant before September 14. Cano confirmed the extension was filed on September 11. The extension is to April 13, 2018.

Dave Fricker, former board president of the water supply company, said he thought the loss of CDBG grants was “a disaster.”

Fricker said while he was board president and having difficulty with federal grants, he sent a Certified Letter to President Obama and quickly received a response from Vice President Joe Biden. Federal funds were soon flowing. Fricker suggested the water board pen a letter to President Trump or Vice President Pence, seeking assistance. Added Fricker, “Politically, they don’t want to be known as turning peoples’ water off.”

This article originally appeared in our October print edition.

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