Let’s start with a summary of the problem. City of DeKalb secretly charges its Water Fund (Water) to help compensate employees in other operational departments and divisions. Because the Water subsidies into the General Fund (GF) aren’t tracked in budgets, the expenses shown in Water budgets misrepresent the actual personnel costs of providing water to us, while the affected GF departmental budgets understate personnel costs by 10% to 40%. The distortions render DeKalb’s annual Water and GF budgets functionally useless for understanding the real costs of providing city services.
Clarification
Management is quick to point out that using the Water Fund this way is not illegal. I’ve never made that claim, although the city holds to the deception so tightly I would support a forensic audit of Water in a second if that were an option. I mean, just look at what the TIF forensic audit dug up.
The city also publicly portrays my intentions as attempts to persuade the city council to abandon the practice of subsidizing GF employees with our water bills. This is incorrect (as well as obviously unrealistic at this point in time). What I want is for the budget to a) make it easy for the average person to understand how Water helps to support the GF, and b) give people accurate information about the costs of running the Water Utility, HR, IT, Finance, and the other affected city departments.
The good news is, there’s now an existing model within the city budget that already does both: the Transportation Fund.
Transportation Fund Transparency
DeKalb’s role in local public transit has exploded over the past 2-3 years with expansions of bus service and plans for our own transit center. This means more involvement of departments outside of the transit operation. Just as Water helps compensate GF employees, so now does the Transportation Fund. What’s different is the Transportation-to-GF transactions aren’t hidden.
Transportation transparency is accomplished firstly by including in the budget narrative a table showing which GF admin staff positions are involved, the activities attributed to transit support, and how many dollars this translates to for the year. The narrative also explains an allowance for police transit patrols that will go into the GF. Both are shown on the following 2026 budget page:
The second way Transportation accounts for its compensation subsidy to the GF is with a transfer out to the GF, as seen on a line item near the bottom of the budget page shown below:
As you might guess, there is a corresponding revenue line item in the GF budget that receives the Transportation transfer.
Why Not Water Transparency?
So why is Transportation so transparent and Water isn’t? I can think of at least two reasons.
- Funding for Transportation comes primarily from federal and state grants, which can make this fund subject to special audits. Water, on the other hand, is locally funded by our water bills and under no special oversight beyond what the city council is willing to bestir itself for.
- Accounting for the Water subsidies by position would be embarrassing. The stated rationale for paying a GF employee partially out of Water is that they spend a certain percentage of their time working on water-related activities, but the justification falls apart when you look at Public Works. PW Streets Division employees are paid 40% of their compensation out of Water — are 40% of their hours really spent at water-related work? And Water Division employees are paid 40% out of the GF!
It makes more sense if you figure the goal is getting as many city employees on the Water dole as possible, to take the strain off the GF. The Water Division team will hold steady at 10 full-timers again next year. But DeKalb plans to create two new full-time positions in 2026, in the city manager’s office and in IT. The new CMO person will get paid at least 10% of wages out of Water, the new IT staff member 25% if historical allocations hold. But it probably serves the administration best to let us think water bills going up by 3.5% or more annually are about the rising cost of chlorine.
Related
In case you’d like more background on this topic, I’ve placed a short photo series about it in the City Barbs Blog Facebook Group.