CAW Cuts Dam Funding, Jobs & Expands CEO Power Amid Financial Crisis

BIRMINGHAM, Ala. — The board of directors for Central Alabama Water (CAW) approved a revised 2026 budget Friday that cuts overall spending by 25%, eliminating 225 positions and significantly scaling back critical infrastructure projects, including a project to stabilize the Lake Purdy Dam. The 4-2-1 vote came after a contentious meeting and amidst protests outside the utility’s headquarters.

The revised budget, a response to ongoing financial challenges, reduces CAW’s capital spending from $75.8 million to $35 million, a 54% decrease. Operating expenditures are too being reduced by 10%, from $139.9 million to $126 million. Despite the cuts, the budget avoids a customer rate increase, a practice that has develop into increasingly rare in the past decade.

Board member Sheila Tyson vocally opposed a resolution passed alongside the budget that grants CEO Jeffrey Thompson sweeping authority to make decisions without board approval. “We might as well not be here,” Tyson said after the meeting, calling the utility’s budget and board a “joke.” She questioned the rationale behind granting such power to a CEO who has overseen significant layoffs, including cuts to the utility’s water-safety testing laboratory.

CAW has been grappling with financial instability since its creation last year through the restructuring of the Birmingham Water Works Board (BWWB). A state law passed in May 2025 shifted majority board representation from the city of Birmingham to suburban areas. A lawsuit filed by city officials challenging the novel law currently prevents CAW from financing capital projects through the bond market. A recent downgrade by a global bond-rating agency further complicates the utility’s financial situation, citing weakening liquidity, aging assets, and the ongoing management reorganization.

The most significant cuts in the revised capital budget target the Lake Purdy Dam stabilization project and pipeline replacement initiatives. Funding for the dam project has been reduced from $22 million to $7.7 million. A vice president of CAW’s former consulting engineer has previously warned that the dam is unsafe and its failure could endanger lives and property within a 40-mile radius. The board had previously approved a four-year stabilization project, but CEO Thompson halted construction in January before the first phase was completed.

During Friday’s meeting, representatives from Jacobs Engineering, CAW’s new consulting engineer, emphasized the need for immediate action to address the dam’s vulnerabilities. Mark Kacmarcik, a dam engineer with Jacobs, recommended designing and constructing short-term measures to restore the dam to its pre-construction condition. Josh Crowe, a program manager for Jacobs, estimated the short-term measures could be completed by the end of July.

Funding for pipeline replacement, aimed at addressing leaks in aging infrastructure – some pipes are over 100 years old – has been slashed from $15 million to $2.1 million. CAW has previously acknowledged that approximately 40% of treated water is lost through leaks. Ray Sloan, CAW’s chief reliability officer, acknowledged the limited impact of the reduced pipeline funding but highlighted a $500,000 allocation for a leak survey to identify underground leaks in the oldest and leakiest parts of the system.

The cuts to the operating budget are largely attributed to personnel reductions. CAW laid off 135 employees last week, following earlier dismissals after the implementation of a new employee handbook and unannounced drug testing. Tyson stated that only one employee remains in the utility’s laboratory responsible for water-safety tests mandated by state and federal environmental agencies.

Approximately 45 protestors gathered outside CAW’s administrative building during the meeting, organized by the Southern Workers Assembly and the Birmingham chapter of the Democratic Socialists of America. They voiced concerns over the treatment of recently dismissed employees. State Rep. Juandalynn Givan, D-Birmingham, alleged that residents were prevented from attending the meeting due to CAW managers filling the room with staff. Givan criticized the resolution expanding the CEO’s authority, stating, “What we just witnessed here is that this board literally passed a resolution that said their CEO has all power. There is no need for this board.”

The resolution approved by the board outlines the CEO’s authority, including policy-making powers subject to board directives, the ability to appoint and remove employees, and the authority to contract for personal property and adjust salary administration plans, all within board-approved budget limits. The CEO is required to advise the board of any policy directives issued at the next meeting and provide a copy of those directives.