The Nome Joint Utility System board again pressed management Tuesday over years of overdue financial audits and the absence of a current budget, with board members saying the utility needs to make its financial reporting a top priority.
The topic of the overdue financials wasn’t listed as an item on the Sept. 22 meeting agenda, but the utility’s General Manager, John Handeland, said it would be addressed during an executive session. Board member Carl Emmons motioned to add the audits and budget to the agenda, saying that the discussion should take place before the public.
“I think there’s a whole bunch of people in this town that are really curious about what the hell’s been going on, and I think we should be up front,” Emmons said.
The board unanimously approved the amended agenda.
NJUS has fallen years behind on basic financial reporting. KNOM reported in July that the city-owned utility had gone five fiscal years without producing a budget and was five years behind on its annual audits. The missing reports have had consequences including a temporary freeze on funds from the state’s Power Cost Equalization program.
At the July meeting, Handeland told the board the 2021 audit was complete and that work on audits from 2022 through 2024 was underway with help from auditing firm BDO.
Watch a replay of the meeting
On Tuesday, Handeland again said the 2021 audit was complete and that the 2022 audit was nearing completion. He said work on the 2023 audit was waiting on “final trial balance” and credit card expenses.
Emmons questioned whether falling behind on the audits could ultimately cost ratepayers money.
“I mean, nothing’s free. When you go playing catch-up all the time, it’s got to be expensive. And I think that falls directly on us,” Emmons said.
According to a financial statement shared at the meeting, the utility has spent $63,268 on audit services this year, up from $9,600 last year. An additional $45,103 has been spent on management and accounting consultants this year.
The utility’s missing budget drew similar scrutiny.
In July, Emmons called operating without a budget “insane” and asked management to produce one, even if the first version was on a “bar napkin”. At the time, Handeland told the board, “We will get a budget.”
Two months later, the board still hasn’t seen one.
On Tuesday, board member Larry Pederson asked if work on the audits was holding up the budget-making process. Handeland told the board he would take “a couple days” away from his office duties to focus on preparing one.
Emmons pushed back on the idea that the budget work needed to fall entirely on Handeland.
“If we need somebody to help, let’s hire somebody,” Emmons said. “There’s a whole bunch of people out there that are in the accounting business. We could hire somebody to put a budget together.”
Handeland then committed to producing a budget by the end of the week.
“Expect to not see a lot of me during that period,” he said. “It’s amazing what can happen between midnight and 6 a.m.”
The last time the utility board approved a budget was fiscal year 2021. Since then, several expenses have increased significantly without a new budget being approved by the board.
Based on spending through August, administrative expenses are on pace to be about 28% higher in 2026 than budgeted in 2021 — in-line with nationwide inflation over that same period according to the U.S. Bureau of Labor Statistics.
The finance officer category is projected to reach approximately $514,000 by the end of 2026 – about $194,000 or 60% more than the board-approved 2021 budget. The amount budgeted that year included both a chief finance officer (CFO) and assistant manager position.
When reached by email Thursday, Handeland said that in 2026 the finance officer category includes the CFO position and portions of the assistant manager and operations superintendent’s compensation. The amount, Handeland said, also includes benefits such as retirement and insurance.
Handeland’s compensation was budgeted at $230,000 in 2021. Based on spending through August, the position will pay approximately $310,000 in 2026, an increase of roughly 35% since 2021. Handeland said in the email that the board set a schedule for his salary “a couple years ago” and that he forgoed an increase for 2026.
Utility board Chair David Barron requested the utility’s CFO, Chris Coffman, set up a special meeting with BDO to review the audits. The utility board’s next scheduled meeting is Oct. 20. KNOM will livestream the meeting on its Facebook and YouTube pages.
