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GLIN==> Sewage Funding Needs, Audit Report

   Attached to this email is the executive digest for the audit report
listed below:

  #7660101 - Sewage Funding Needs

The executive digest and the complete audit report can be viewed or
downloaded in Adobe Acrobat file format from our Internet site at:

If you wish to obtain a hard copy of the entire audit report, you can
call us at (517) 334-8050, or FAX us at (517) 334-8079,
or send an email to QawweeJ@state.mi.us, or send a written request to:

            Office of the Auditor General
            Victor Center, Sixth Floor
            201 N. Washington Square
            Lansing, Michigan 48913

Include your name, address, and the specific reports wanted in your

Please direct any questions or comments to George Naylor at

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General


This report, issued in May 2002, contains the results of our performance 
audit of Sewage Funding Needs.

This performance audit was conducted as part of the constitutional 
responsibility of the Office of the Auditor General. Performance audits are 
conducted on a priority basis related to the potential for improving 
effectiveness and efficiency.

Michigan municipalities operate approximately 840 sanitary sewer collection 
systems and 435 wastewater treatment plants (WWTPs). The first sanitary 
sewer collection system was installed in 1836 and the first WWTP began 
operation in 1940. Many of the sanitary sewer collection systems and WWTPs 
in use were constructed during the 1960's, 1970's, or before and are 
nearing the end of their useful lives.

During the 1970's, large federal grants supported the construction of a 
very significant amount of sewer infrastructure. These federal grant 
programs have been phased out and were replaced in 1988 with a state 
revolving fund (SRF) program. Since the SRF program began in Michigan, 
requests for loans have exceeded the amount of funds available. The gap 
between funds available and loan requests has widened significantly in 
recent years. Loan requests for 2001 totaled $436 million, with 
approximately $274 million being available for loans. The amount of federal 
funds contributed to SRF has diminished from a high of $92 million in 1993 
to $57 million in 2001.

Audit Objective: To determine how much annual funding, on the premise of a 
20-year funding plan, will be needed for Michigan municipal sewage 
treatment systems to upgrade and expand to meet their residents' needs.

Conclusion: We estimate that the annual funding needed for 20 years ranges 
from $334 million to $530 million a year.

Audit Objective: To determine how much funding will be needed for Michigan 
municipalities whose residents currently rely on septic systems but are 
likely to need to convert to a municipal sewage treatment system.

Conclusion: Because the municipalities that we contacted did not have any 
firm plans to convert areas served by septic systems to a centralized 
sewage system, we did not project a cost for this type of conversion. The 
municipalities recognized that there might be a large number of areas with 
failing septic systems that would need to be converted. However, they 
currently do not know the extent of the problem.

Our audit scope was to examine the Department of Environmental Quality's 
program and other records related to sewage needs and sewage discharges; 
sewer infrastructure needs studies that the Southeast Michigan Council of 
Governments and the Michigan Municipal League/Public Sector Consultants, 
Inc., compiled; and plans that selected municipalities had prepared 
regarding future sewer infrastructure needs and estimated expenditures. Our 
audit was conducted in accordance with Government Auditing Standards issued 
by the Comptroller General of the United States and, accordingly, included 
such tests of the records and such other auditing procedures as we 
considered necessary in the circumstances.

Our audit methodology included review of data that the Department of 
Environmental Quality maintains regarding SRF loan activity and sewage 
discharges; review of the sewer infrastructure needs studies that other 
groups have compiled; and discussions with local municipalities regarding 
their plans for sewer related repairs, refurbishing, and expansion.

This page was created on May 14, 2002.

Alex J. Sagady & Associates  http://my.voyager.net/~ajs/sagady.pdf

Environmental Enforcement, Technical Review, Public Policy and
Communications on Air, Water and Waste/Community Environmental Protection

PO Box 39,  East Lansing, MI  48826-0039
(517) 332-6971; (517) 332-8987 (fax); ajs@sagady.com

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