Quarterly Report: 2011, January - March (Q3), Saint Michael

Community:
Saint Michael 
Staff:
Leroy Seppilu  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of St. Michael 
Population:
445  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
5/4/2011 
Community Sanitation Overview:
Currently, water is pumped from Clear Lake, approximately 5 miles north of the community and stored in a 1.2 million gallon water storage tank. The water is then pumped from the 1.2 million gallon tank, filtered, disinfected, and stored in a 400,000-gallon water storage tank for consumption. Wastewater is collected at the vacuum plant and pumped via forcemain to a wastewater treatment area northeast of the community. A new sanitation system was completed during the summer of 2005 to provide piped water and vacuum sewer service, and residential plumbing to the homes in the community. At present, 99% of the homes are served by the new system. A washeteria upgrade was completed in 2004 that completely renovated the washeteria. The water treatment plant is under renovation to meet compliance with the Surface Water Treatment Rule and is expected to be completed in 2007.  
RUBA Status & Activities This Qtr:
On February 28-March 2, 2011 Nome RUBA staff, Leroy Seppilu and Iurie Leahu traveled to Saint Michael, at the request of Mayor Milton Cheemuk, to review the city's finances. RUBA staff compiled and reviewed the total debt owed by the city and compared these debts to the city's current and projected revenues. It was noted that the city has not paid payroll taxes since the fourth quarter of 2008. The budgeted sales tax revenues of $147,000 are not being realized due to some businesses not functioning anymore. Only two local businesses collect and pay sales tax of approximately $75,000 a year. Other major revenue sources identified necessary to pay the current debts include an upcoming insurance claim payment and community revenue sharing funds when proper paperwork is submitted. The city council has cut payroll and RUBA staff recommended it should cut hours or close the city office until revenue sources improve. Alaska Rural Utilities Collaberative (ARUC) manages the city's water and wastewater utility and took over this management approximately a year ago at the request of Saint Michael city council. The city council acts as the utility board. Nome RUBA staff provided assistance to the city with the logistics of holding the municipal election. After the new city council members were sworn in, Mayor Milton 'Smitty' Cheemuk was re-elected by the city council as a mayor. City Bookkeeper, Gilbert Lockwood, successfully attended the RUBA-sponsored basic Quickbooks Pro training class held in Nome. The city's furnace building burned down and the city filed a claim against it through its insurance provider. At the insurance provider's recommendation, the city office was closed until an payment plan was made and agreed to. The city re-opened about a week and a half later after agreeing to a payment plan.  
RUBA Activities for the Coming Qtr:
*Nome RUBA staff will work with the city on its finances to make sure that the city stays within the budget for rest of the year and will look into the feasibility of keeping the washeteria open. This will be determined by how many people in the community use it. Most of the residents now have water and sewer services. The city loses a lot of money to keep it open. *RUBA staff will work with the city to incorporate the water and sewer ordinance, given to the city as part of the agreement to have Alaska Rural Utilities Collaberative (ARUC) manage the utility, into the city's code.
Scores:
 
Essential Indicators:
26 of 27
Sustainable Indicators:
26 of 27
Total Score:
52 of 54

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.
Yes 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.
Yes The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
Yes The utility is receiving revenues (user fees or other sources sufficient to cover operating expenses and Repair & Replacement (R) costs.
Yes YTD revenues are at a level equal to or above those budgeted.
Yes 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 city has a contract with Alaska Rural Utilities Collaborative (ARUC) to run the city's water and sewer utility department for over a year now. The water and sewer collection rate is still excellent. ARUC purchased adequate fuel oil supply to last for the next 12 months. Although the city itself (separately) may not have enough fuel oil to last through the winter since the city office has moved to an old school building. After the city-owned furnace building burned down, the city office was without electricity and water and sewer. The city filed a claim through it insurance, although it had an outstanding debt, and had electricity and some heat restored. This may proved beneficial to the city financially, as the city is now just heating the city office area and electricity restored just to the city office located in the former school. Before, the city had to heat and provide electricity to the whole school building. Just the electricity was about $6,000 a month. The city was also using up it fuel oil fast. About 29,000 gallons was ordered for the year, but the city had used up over half of it by end of September, 2010. RUBA staff has been recommending to the city council to renovate one of its smaller buildings and move the city office there.

Accounting Systems

Essential Indicators
Answer Question
Yes The utility has adopted a collection policy and actively follows it.
Yes 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
ARUC enforces the utility's collection policy. All utility customers are required to pay for the monthly water and sewer utility bills in a timely manner or they will be cut off from the city's water and sewer services. ARUC has given the city council a financial report which states there is a large water and sewer past due amount, mostly from residential customers. ARUC has been successfully making efforts to lower its water and sewer accounts receivable. This past quarter, it has collected at least 97% water and sewer utility bills. The city bookkeeper, Gilbert Lockwood, successfully attended the RUBA-sponsored Quickbooks Pro training class held in Nome.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
Yes The utility is current on filing tax reports.
Yes The utility is current on making tax deposits.
No 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
Although the city does not manage the water and sewer system itself, it has does own the utility assets and there is a tax lien filed against the city. The past due account may put some of the city owned enterprises in financial peril. Nome RUBA staff has encouraged the city to keep an open line with IRS and other vendors the city owes.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
No 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.
Yes 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
ARUC has general liability and workers' compensation coverage for the water and sewer utility system. However, the city itself was behind on payments on its current coverage. The city has made payment plans with its insurance provider and now has insurance coverage, including workers' compensation coverage.

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.
Yes The policy making body enforces utility policy.
Yes 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
The city meets regularly and the w/s utility issues are on the agenda monthly, although the management control has been handed over to ARUC. The city council hired a new city clerk and city administrator.

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.
Yes The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
The utility operators are adequately trained and are certified at the level necessary to adequately operate and maintain the system. The utility has a preventative maintenance plan on file for its water and sewer utilty system.