NMPRC Staff Report Suggests KCEC Reforms

(See Lorraine Coca-Ruiz’s commentary on the new TMS budget below.)

Today PRC hearings begin on KCEC’s request for a rate increase in Santa Fe. Below Taos Friction summarizes the testimony of the NMPRC’s utility economist, John Reynolds, which 42-page report plus supplementals, can be found on the PRC website. We have printed out and read the analysis and recommendations. Much of the report confirms what this reporter and activists, as well as a few candid board members, have been saying for years.

Just as CEO Reyes told Coop critics of diversification a year ago that KCEC should have raised propane rates a few years earlier to avoid losses, so the board of trustees and management should have asked for an electric rate increase earlier. Technically, the Coop is  in “default” with its lenders, according to the report quoted below.

The KCEC has fought the members request for a hearing by spending hundreds of thousands of dollars of the members’ money, creating divisiveness in the community, and pitting employees against consumers. Indeed, a majority of members probably support a rate increase, suggested by the PRC utility economist. But members want, as the utility economist suggests, board reforms and transparency, not spin and lies.

According to economist Reynolds, “The history of KCEC’s operating results since 2004 suggests Kit Carson is clearly suffering the impact of the economic recession that has prevailed since 2008.” Further, “Since 2008, Kit Carson has been operating in an environment of declining—sharply in 2009—kilowatt hour sales and relatively flat number of consumers served and revenues.” And, “At the end of 2010, Kit Carson had about $48 million and $13 million in loan balances outstanding with RUS and CoBank, respectively” (KCEC’s major lenders). Reynolds states, “Given staff’s calculation that KCEC’s operating ratios have been below the required minimum for two calendar years, Staff believes that Kit Carson is currently in technical default (my bold) of its loan agreement with RUS.”

Staff recommends, “residential customer charge be $17/month, or $7 or 70% more than the current rate of $10/month.”

Staff finds that “In 2009, Kit Carson’s board expenses were $197,958” and that “Kit Carson’s expenses were higher than average” (for coops).

Staff found that KCEC had invested $10 million in Propane, Telecommunications, and the Command Center.

In summary, staff recommends customer charge to be $17 per month and that KWh rates should be increased by $0.00765 kWh across the board to generate $1.7 million in additional residential revenue.

As well, “Budgeted expenses should be reduced to $155,299” for the board. And “Further, Kit Carson should examine ways to reduce board expenses by considering a clear “per diem” travel reimbursement policy, if there is none, as well as alternatives to travel such as online or web attendance at meetings and conferences.”

And, “Kit Carson should file a revised GDP that includes the Command Center.”

And “Kit Carson should enhance transparency about where its members patronage capital is invested by proving a breakdown in its allocation statements of where among its regulated and unregulated activities it is invested. Historical information about this breakdown should also be provided.”

The PRC staff recommendations surely can be seen as objective, outside the baliwick of Taos politics, and ultimately reasonable. But the board and management need to come clean about diversification and travel. The KCEC elephant in the room is the $60 million Broadband expansion–another project that has never been presented in detail to the membership. Kit Carson’s record on diversification is sad and we fear the Broadband project will resemble the poor investments of the past.

TMS Presents Padded budget with loopholes
PED approves budget with adjustments

By Lorraine-Coca Ruiz

According to Public Education representative the TMS school budget has been approved with modifications; they have instructed Superintendent Rod Weston to make an operational fund permanent budget transfer of $400,000 into the classrooms. Apparently some of the line items was increased or padded. For example, the amount for legal fees was doubled. (It could be that more lawsuits are in progress.) In addition there was an increase in the full-time equivalents (FTEs) that’s puzzling to me. Whose salaries were being increased or were that to cover all the secretaries that have newly been hired?

That’s what you call a padded budget.

PED also recommended that that the Super, do a budget adjustment to transfer Entitlement Idea B Federal Stimulus account #24206 for the amount of $420,000- to cover expenditures in the operational fund until the money runs out in September 30, 2011, which is the end of the federal fiscal year.

That’s a budget loophole.

At a June 17th special meeting the 2011-2012 District Budget Document was approved by a 4-1 vote. Board member Stella Gallegos voted against approval. Board member David Chavez, Zack Cordova, Jason Silva, Thomas Tafoya, voted yes upon the recommendation of Rod Weston. Unfortunately, without accountability the board can do as they wish. Mr. Tafoya said he had been informed by Melissa Sanchez, PED Budget Analyst for TMS that the district budget was a good working budget.

That’s just budget voodoo.

It’s frightening when elected leaders make such an irresponsible budget decision. However, I can say with certainty, that whatever interest group or constituency they are serving, it was not our children.

PED recommended that all those with pink slips return to work. However, the superintendent told them that he was going to hire seven teachers.

Rod Weston eliminated 37 employee positions unnecessarily, instead of making the fiscally responsible decision in adjusting his salary and those salaries of the highly paid administrators. A minor 1% adjustment would have softened the blow of these draconian cuts.

I warn you that while the budget process has been difficult for the past two years, it will be even more painful for fiscal year 2012-13. If nothing changes, deficits are projected for at least another five to six years and possibly beyond that. I have no idea how the superintendent plans to address the looming budget shortfalls that are projected for the mid-year.

Parents, students and the community need to be aware of the challenges ahead, and they need to be prepared to take an active role in speaking out about what’s important to them in our schools. If you want athletics, if you want band, if you want whatever’s not required by law to continue to be funded by our budget, then your support is needed. Parents have to get involved in the budget process and let their voices be heard.

Declining enrollment also impacts the budget because state funding is calculated in large part based on numbers of students. Since the high school will no longer have a Spanish speaking councilor, the Mexican National students will not have the services they deserve.

The high school will now have an executive secretary for the councilors.

The federal programs secretary will now have a secretary.

I’ll be watching