Tiny Diking District 2 gets a clean audit and a scolding

EVERETT — The state auditor has scolded a tiny special district in Snohomish County for not filing annual financial reports as required.

And leaders of Snohomish County Diking District 2 aren’t happy about it, contending it’s a “cumbersome” requirement.

“To put that burden on such a small district with such a small budget is unreasonable,” said Ruth Brandal, of Everett, one of the district’s three commissioners. “I just think some really small entities should probably be exempt. How much risk or harm is there to the public?”

A 1909 state law requires every local government to file a financial report with the State Auditor’s Office within 150 days of the end of the particular district’s fiscal year. Those reports are supposed to detail the flow of money from local governments, and document how those entrusted with spending are making their decisions.

It has proven difficult for many of the state’s 1,931 fire, sewer, diking, drainage, cemetery and other special purpose districts to fully comply. More than 700 failed to do so in 2011 and 2012, dropping to 611 in 2013 after the agency stepped up its assistance to local officials, according to a report issued in January 2015.

As those outreach efforts have continued and broadened, the number of non-filers has tumbled. It was 123 for the 2016 fiscal year.

Snohomish County Diking District 2 was among them. In fact, the district hasn’t filed a report since 2008.

Brandal said she knows what the law requires “but I think it’s an undue burden.”

The district has roughly a dozen property owners and encompasses 500 acres of farmland on the east side of Ebey Slough near the U.S. 2 trestle, she said. She said they exist to maintain dikes and are accountable to each other.

She said not much money is involved — an estimated $25,000 in collections a year — and no cash goes through the hands of commissioners.

The county collects the taxes and disburses the money upon the written request of the board, ensuring every transaction is recorded, she said. They typically submit less than 15 vouchers for payments a year, she said.

“We know it can be challenging. We totally understand,” said Kathleen Cooper, the agency’s assistant director for communication. “Our office cannot exempt governments from the requirements. That’s why we want to be able to help them.”

Commissioners have been told they do not have to file electronically and have been offered help to complete the work, she said.

But state auditors ran out of patience earlier this year.

The diking district had not filed an annual report for nearly a decade, and ignored public scoldings in 2011 and 2014.

So the agency sent a team to Snohomish County to audit the district’s operations for 2014, 2015 and 2016. When they finished examining the books and reviewing the records, they found its financial affairs in order. The agency then billed the district $2,280 bill to cover its cost.

“In most areas we audited, district operations complied with applicable requirements and provided adequate safeguarding of public resources,” they wrote.

Nonetheless, they issued a finding for the district’s failure to file annual reports.

“Not filing the financial reports hinders transparency … (and) efforts to compile financial and statistical information used by the state Legislature and others,” they wrote. “We recommend the district allocate the attention and resources necessary to establish internal controls to prepare and submit a timely annual report in accordance with state law.”

That triggered a strong response from district commissioners.

With no staff, equipment or office, “we would need to allocate precious funds to purchase electronic equipment and software that would need only be used for the once-a-year report,” they wrote.

Over time, and at some expense, the equipment would need updating.

“This is an unreasonable expectation,” they wrote. “Time, resources, and effort would be better spent investigating larger jurisdictions.”

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.