Oak Lodge consolidation saving $711K a year
A report published by the Oak Lodge Water Services District (OLWS) shows the actual cost savings of consolidation are greater than was predicted nearly three years ago when officials began advocating to combine local water and sewage districts with overlapping boundaries.
In May 2016, voters in Oak Lodge water and sanitary districts approved consolidating the two utility districts to create efficiencies of scale that promised to save the districts at least $425,000 annually and improve customer service. An Oct. 16 report shows a $418,284 reduction in annual personnel costs have accounted for most of the more than $711,000 in yearly savings.
"Many cost savings have already been gained," said Kelly Stacey, OLWS finance director. "The rest will be realized by the coming fiscal year."
Personnel savings came from reduced staff time spent in managing just one billing and collections system and one front desk for customer reception, along with overall district management no longer having to support two elected boards and annual budgeting processes.
Two general-manager positions were merged into one, and not replacing two other retired staff resulted in much of the personnel savings.
A surprising drop in personnel budget came from reduced per-employee expenses for health care and other job-benefit costs. Sarah Jo Chaplen, OLWS general manager, said the reduction was largely due to better-than-expected health insurance rates for a larger risk pool.
OLWS Board President Nancy Gibson was impressed by the report's findings.
"It is a tremendous pleasure to see we have done what we said we would do," Gibson said.
Joint customer billing, a combined website, a unified financial system and a single financial audit are producing another $292,822 in annual savings due to the consolidation's reduction in materials and services costs.
With all of the savings representing about 8 percent of the district budget, OLWS has been able to keep the promise made to voters that annual rate increases would only go up by approximately the rate of inflation. These rate increases go to "build capital reserves for infrastructure projects, pay for deferred maintenance, and offset future pension increases," Chaplen said.
An unknown factor in OLWS's future is its ability to move its headquarters to the former water-district building, where its new vacuum truck doesn't fit into the garage. Chaplen said space already is tight there for equipment, not to mention room for future growth and disaster response.
Original consolidation plans included moving all administrative and field staff into a renovated OLWS headquarters at the former water-district building, 14496 S.E. River Road, and selling the former sanitary-district headquarters a block away at 14611 S.E. River Road.
With elected board members wanting to make sure that operationally OLWS is able to do its job for the next 30 to 50 years, the situation has Chaplen asking, "Can we really do what we want to do with the former water-district site?"
OLWS has signed on with Cushman & Wakefield, a full-service commercial real estate company, to advise on planning and disposition of land and buildings. The district is in the process of selecting an architect to complete a detailed space-needs study for current and future conditions to be used by Cushman & Wakefield to provide the district with options for its future headquarters.
Oak Lodge officials also promised voters that they would pursue converting the district's governmental structure to an authority to protect assets from encroachment by Gladstone and Milwaukie as the adjacent cities expand their boundaries.
Chaplen said there will no active work on forming an authority underway until OLWS completes its consolidation and captures all projected cost savings.
"To become an authority, OLWS needs to first demonstrate a track record of cooperative action, effective planning and efficient service delivery as a combined entity," Chaplen said.
More infomation on consolidation cost savings is at oaklodgewaterservices.org.