Quarterly Report: 2012, April - June (Q4), Gambell

Community:
Gambell 
Staff:
Iura Leahu  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Gambell 
Population:
677  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
7/26/2012 
Community Sanitation Overview:
The City of Gambell has operated a piped water and wastewater system since the 1990s. The water source is a shallow aquifer at the base of the Sevuokuk Mountain. According to a report released by the WHPacific in 2011, 'the existing water treatment system uses obsolete bag filters which do not meet EPA surface water treatment standards.' In response, the Division of Water together with ANTHC under the ARRP program secured funds and began to upgrade the system in 2011. The upgrade consisted of installing a new filtration system and major water plant replacements. Other recent upgrades included upgrades to the lift stations and construction of a 1.3 million-gallon water storage tank. One hundred twenty-one residential homes and thirteen public and commercial buildings are now connected to the piped water and wastewater system. Forty-three homes in the original town site are not connected to the piped system and their residents haul water and use honey buckets.  
RUBA Status & Activities This Qtr:
This quarter, Nome RUBA traveled twice to Gambell to finalize the QuickBooks installation and training contract. During the visit, RUBA staff and the contractor worked together with the utility clerk in entering all payrolls, customer payments, checks and deposits. The utility clerk received training in filing tax reports, making invoices, receiving payments, making deposits, entering and making bill payments, reconciling bank statements, fixing customer accounts and using the Electronic Federal Tax Payment System (EFTPS). The utility clerk was trained in setting up an annual budget in QuickBooks and creating profit and loss budget versus actual reports. The QuickBooks contractor trained the utility clerk in setting up a memorized report list, which will help the clerk print a number of reports for the city council and other agencies such as the RUBA program. Also during this quarter, Nome RUBA staff, the QuickBooks contractor, the Village Safe Water (VSW) engineer, Debra Addie, and the Remote Maintenance Worker (RMW), Chuck Simon, made short presentations to the city council, the utility clerk, and two water operators. RUBA staff presented the city council with a sample action plan. The intent of the action plan is to assist the city council and utility staff increase their management capacities and enable them to manage, operate, and maintain the public water and wastewater utility as efficiently as possible. RUBA staff discussed each task in the action plan with the goal of ensuring short and long term financial, accounting, tax, and organizational sustainability. RUBA staff stressed the importance of developing and adopting the strategic action plan during the next regular city council meeting.  
RUBA Activities for the Coming Qtr:
Nome RUBA staff offered to be available for further onsite visits and assistance upon request.
Scores:
 
Essential Indicators:
18 of 26
Sustainable Indicators:
21 of 27
Total Score:
39 of 53

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
Yes The utility has adopted a balanced realistic budget.
Yes Monthly financial reports are prepared and submitted to the policy making board.
No The utility is current in paying all water/wastewater electric bills.
Yes The utility has on hand a year's adequate fuel supply or it has a financial plan to purchase an adequate supply.
No The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
No The utility is receiving revenues (user fees or other sources sufficient to cover operating expenses and Repair & Replacement (R) costs.
No YTD revenues are at a level equal to or above those budgeted.
No YTD expenditures are at a level equal to or below those budgeted.
Yes A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The Gambell Water Treatment System's FY12 budget was adopted by the deadline. The council has recently adopted the FY13 budget and it lists all revenues and expenditures. The utility's revenues are $221,520 and expenditures are $196,330, including $10,594 in washeteria expenditures which are part of the overall utility budget. However, the indicated expenditures do not include fuel expense. For many years, the city council has heavily subsidized the utility. The city council has used the Norton Sound Economic Development Corporation Community Benefit appropriation to fund the utility. The city council voted to continue appropriating subsidies to the utility. In the last fiscal year, the city council set aside $80,500 to purchase fuel for all city facilities. This year's fuel expense will be approximately the same. The utility has sufficient fuel to last until the next fuel delivery. For many months, the utility clerk has not provided monthly financial reports comparing year-to-date revenues and expenditures to the budgeted funds. However, the regular meeting minutes for the month of June 2012 indicated that the utility clerk provided the city council with such a report. The clerk's report also included total water use for the month of May, fuel used and the remaining amount of fuel. According to the most recent invoices (June, 2012) from the electric utility (AVEC), there are past due amounts totalling $14,781. However, the utility clerk sent a payment to AVEC in June. According to the most recent available financial report (June 2012), year-to-date expenses exceed revenues by $31,549. This report includes the last six months from January 1, 2012 to June 30, 2012. The utility does not receive sufficient revenues from user fees to cover operating expenses and repair and replacement costs. However, the city council provides the utility with subsidies or borrows money to assist it in difficult financial times. The year-to-date revenues are not at the level equal to or above those budgeted and the year-to-date expenditures are not at a level equal to or below those budgeted. In June 2012, the utility clerk, who is also the utility manager, provided the city council with a verbal monthly report on the operation and management of the utility.

Accounting Systems

Essential Indicators
Answer Question
No The utility has adopted a collection policy and actively follows it.
No The utility bills customers on a regular basis.
Yes An accounts receivable system is in place which tracks customers and reports past due accounts and amounts.
Yes An accounts payable system is in place.
Yes The payroll system correctly calculates payroll and keeps records.
Yes A cash receipt system is in place that records incoming money and how it was spent.
Yes The utility has a cash disbursement system that records how money was spent.
Sustainable Indicators
Answer Question
Yes A chart of accounts is used that identifies categories in a reasonable, usable manner.
Yes Monthly bank reconciliations have been completed for all utility accounts.
Yes The utility has a purchasing system that requires approval prior to purchase, and the approval process compares proposed purchases to budgeted amounts.
Accounting Systems Comments
The Gambell Water Treatment System's billing and collection procedures are included in the utility ordinance which was adopted in 1996. The city council reviews the utility rates on a periodic basis and the rates are published in a separate 'Schedule A' page. Nome RUBA staff has a copy of the code of ordinances. This quarter, the city council raised user fees for residential customers, small commercial, large commercial, and the local school. The monthly residential user fees were raised from $97 to $106, small commercial from $185 to $225, the lodge from $855 to $900, and the local school from 22 cents to 27 cents per gallon. However, the utility has not followed its adopted collection policy. The accounts receivable report for June 2012 indicated that there are many accounts more than 90 days past due. The utility clerk indicated that disconnect notices were sent out to over 30 customers with past due accounts. The clerk indicated that staff will attempt to get payments from the account holders and if no payments are received, those customers will be disconnected. The utility has not mailed out invoices regularly. The utility clerk indicated that she was too busy and that the billing for the last several months was combined in a single invoice. However, the accounts receivable in the old QuickBooks file was not properly set up. With the new QuickBooks file being properly set up and memorized, the utility staff indicated that the invoices will be mailed on monthly bases. The accounts payable has been also properly set up. The utility has unpaid bills, such as electric bills, unpaid payroll taxes, tax penalties, and a number of smaller amounts owed to several vendors. A large portion of the unpaid payroll tax due was paid and partial payments made to a number of vendors. However, the cumulative bill is very large and it will affect the already difficult financial situation of the utility. The utility clerk was trained to write a receipt for any income received. A copy of every receipt is kept in a permanent receipt book. The utility clerk was advised to enter the new data from the receipt book into the QuickBooks accounting system each Friday. The utility clerk uses QuickBooks created checks to make payments. The QuickBooks chart of accounts identifies all asset accounts and all liability accounts, as well as fund balances. With the assistance of the QuickBooks contractor, the utility clerk reconciled the bank account; however, monthly bank reconciliations have not been completed in the past.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
No The utility is current on filing tax reports.
No The utility is current on making tax deposits.
N/A If there are any past due tax liabilities or recorded tax liens, a lien release has been issued or a repayment agreement has been signed and repayments are current.
Tax Problems Comments
As of July 2, 2012 the Internal Revenue Service (IRS) reported that The Gambell Water Treatment System is deemed non-compliant. The utility owes federal taxes since July 2011. The utility has not filed 941 forms for second quarter of 2011. The utility clerk indicated that the utility will enter into a payment agreement with the IRS. No recorded Notice of Federal Tax Lien against the utility has been located. As of July 2, 2012 the utility is not compliant with state Employment Security Contributions. Utility staff uses QuickBooks Pro 2011 and a Microsoft Excel spreadsheet to calculate, track, and report payroll tax liabilities.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
Yes The utility has adopted and uses a Personnel Policy, which has been reviewed by an attorney, AML or Commerce for topics and language.
Yes The utility has adequate written job descriptions for all positions.
Yes The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
Yes The utility has an adequate written hiring process.
No The utility has personnel folders on every employee that contain at least: I-9, Job Application and Letter of Acceptance.
Yes The utility has a probationary period for new hires that includes orientation, job training/oversight, and evaluations.
Yes The utility provides training opportunities to staff as needed and available.
Personnel System Comments
The utility has general liability and workers' compensation coverage. The workers compensation insurance is purchased through Alaska Municipal League Joint Insurance Association, and is valid until July 1, 2012. The Notice of Insurance was posted in plain view in the utility clerk's office. A copy of the city's personnel policies, which apply to all city employees, is on file with RUBA staff. The utility follows the personnel policies in the day-to-day management of personnel. Job descriptions are up-to-date and outline each employee's duties. The hiring and evaluation process is described in the personnel policies. The utility maintains personnel files for all employees but the utility does not have a Form I-9 for each employee. The city clerk reported that the city is in the process of updating all employees' files to include the I-9. The city and the utility have a probationary period for new hires that includes orientation, job-training/oversight and evaluation, which is completed after ninety days of a hire. The city and the utility provide training opportunities to staff as funds are available. The city council has been acting as the utility board and has been involved in monitoring and managing the utility. The city council and utility staff have not enforced the policies as per the code of ordinances. The city council includes the utility in the city council meeting agendas.

Organizational Management

Essential Indicators
Answer Question
Yes The entity that owns the utility is known; the entity that will operate the utility is set.
Yes The policy making body is active in policy making of the utility.
No The policy making body enforces utility policy.
No The utility has an adequately trained manager.
Yes The utility has an adequately trained bookkeeper.
Yes The utility has an adequately trained operator or operators.
Yes The utility has adopted the necessary ordinances (or rules and regulations) necessary to give it the authority to operate.
Sustainable Indicators
Answer Question
Yes The utility has adopted an organizational chart that reflects the current structure.
Yes The policy making body meets as required.
Yes The utility complies with the open meeting act for all meetings.
Organizational Management Comments
According to Title VI of the city's code of ordinances, all city-owned utility systems are the property of the City of Gambell. The code prescribes for a utility board; however, the city council has been overseeing and managing the utility. The city council and utility staff have not enforced the policies, including the collection of past due accounts, as per the code of ordinances. Although the city council has adopted a resolution raising the user fees this quarter, in the past the council has not strictly enforced utility policies. The utility does not have an adequately trained manager. The monthly management reports have not been provided to the city council. However, as per the June regular meeting minutes, the utility clerk participated in the June city council meeting and presented monthly financial reports to the council. At the meeting, the clerk presented a verbal report on the current operational, management and repair and maintenance status of the utility. Those reports presented data on the total water use, production and storage, as well as fuel use. Several meetings with representatives of the Village Safe Water Program and Alaska Department of Environmental Conservation have been held in the last several months. Both of these agencies have been closely working with the utility clerk, water operator, and members of the city council to move forward with the planned upgrades. The city has an organizational chart that needs to be updated. This quarter, the utility clerk received extensive training in QuickBooks Pro 2012 finance and accounting. The QuickBooks contractor trained the utility clerk in the use of all the necessary bookkeeping functions. After the training, the customers, vendors, employees, and payroll records as well as the accounts recoverable and payable, and all the necessary financial reporting are up to date. RUBA staff recommended the utility clerk contact the QuickBooks contractor with any question regarding finance and accounting.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
Yes The utility has a preventative maintenance plan developed for the existing sanitation facilities.
Sustainable Indicators
Answer Question
Yes The manager receives a monthly O&M report from the utility operator and routinely "spot checks" the facilities to see that the maintenance items are being completed.
Yes The utility has a safety manual and holds safety meetings.
Yes Utility facilities have not suffered any major problems/outages due to management issues that are unresolved.
Yes The utility is operating at the level of service that was proposed.
Yes The operator provides status reports to the manager on a routine basis.
Yes The utility has completed and distributed its "Consumer Confidence Report".
Yes The utility is not on the "Significant Non-Complier" (SNC) list.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
The operator holds Level 1 Water Treatment and Water Distribution certificates that expire on December 31, 2014. The operator also holds Wastewater Collection 1 and Wastewater Treatment 1 certificates that expire on December 31, 2013. According to the ADEC website, Gambell utility is classified as a class 1 in water treatment, a class 2 in distribution, wastewater lagoon, and wastewater collection class 1. The utility has an assistant water operator who is not certified. The utility has a preventive maintenance plan that was developed by an engineer. A copy of the plan is on file with Nome RUBA staff. The operator uses checklists to verify that preventive maintenance is performed. The operator submits a written monthly operations and maintenance report to the utility clerk/manager and the city council. However, RUBA staff found that a few operations and maintenance reports were missing or incomplete. In addition, according to the operator, a verbal monthly operations and maintenance report is made to the utility clerk/manager. The utility has a safety manual on file, but the operator does not participate in available monthly AMLJIA safety meetings via teleconference. The water operator reported that he has safety meetings with the assistant operator and they use AMLJIA safety meeting materials. The utility is not included on the most recent Significant Non-Compliance list (April, 2012). The utility has an inventory control list but the list needs to be updated. The utility does not have a critical spare parts list on file. According to the utility operator, the utility has the money to order and replace parts and pumps when necessary.