Quarterly Report: 2012, July - September (Q1), Koyuk

Community:
Koyuk 
Staff:
Iura Leahu  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Koyuk 
Population:
347  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
10/26/2011 
Community Sanitation Overview:
The City of Koyuk operates the water and wastewater system and maintains a central watering point for residents to haul their own water by the washeteria. There is a sewage lagoon. The Koyuk Public Water System (KPWS) plant has severely deteriorated within the last several years and upon an inspection completed by CRW Engineering Group, LLC the building was declared unsafe. In response, the city council adopted a resolution stating that the city council 'desires to accept the Sanitation Facilities Improvement Plan' dated August 2010. The city council has been working with the Alaska Native Tribal Health Consortium, (ANTHC) to undertake major improvements to the Koyuk water, wastewater, and solid waste utility. ANTHC has subcontracted CRW Engineering Croup, LLC (CRW) to prepare the sanitation plan. CRW proposed a three-phased construction plan. The first phase would involve the construction of a new water treatment plant and washeteria, the study of a new water resource and insulation of water storage tank roof at an estimated cost of $3.6 million. The second phase would consist of building a new water source, residential water and wastewater services, well access trail and well house and transmission line upgrades at an estimated cost of $1.4 million. The third phase would deal with improvements to the lift station, wastewater collection system and removal and replacement of the existing lagoon lines at an estimated cost of $969,000. The City of Koyuk hired a grant writer to research and apply for available grants.  
RUBA Status & Activities This Qtr:
On August 9, 2011, Nome RUBA staff traveled to the City of Koyuk to perform an onsite RUBA assessment of the water and wastewater utility. Throughout the visit, utility and city staff worked closely with RUBA staff to complete the assessment. In spite of the serious issues related to the plant's structure, Koyuk Public Water System (KPWS)staff continued to provide safe water to the community. With the exception of three essential indicators, Nome RUBA staff found that KPWS is compliant with all essential indicators. The city council and utility staff made efforts to comply with the collection policy outlined in the Code of Ordinances. In the past, utility staff decided to accept verbal promissory notes from delinquent customers. However, these approaches only led to increasing uncollected user fees. In response, the city council and utility staff offered delinquent customers to sign payment plans. In addition, the city council will begin disconnecting those delinquent customers, who do not make payments as agreed in the payment plans by October, 2011.  
RUBA Activities for the Coming Qtr:
In October, Nome RUBA staff will travel to the City of Koyuk to present the results of the RUBA assessment to the city council and utility staff. The City of Koyuk has not met all of the essential capacity indicators. RUBA staff will address those deficiencies and work with the city council and utility staff on finding solutions to those issues.
Scores:
 
Essential Indicators:
24 of 27
Sustainable Indicators:
26 of 27
Total Score:
50 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 of Koyuk includes all budgets of public utility services in the overall city budget. As a whole, the FY12 budget is balanced and contains all expected revenues and expenditures. According to the water and wastewater budget, the utility expects to receive at least $121,032 in revenues from user fees comprised of residential and commercial customers. The utility expenditures are expected to be of $179,568. Without using other funding sources, the deficit would be $58,536. What made the deficit so large was the fuel related expense. The utility has spent about $55,283 on fuel; one of the highest expense incurred by the utility following the salary expense. Historically, the city did not include the fuel expense in the utility budget because the fuel was subsidized by the city council using grant funding, such as the Community Benefit Sharing and Norton Sound Community Benefit grants. This fiscal year, the fuel expense was included in the utility budget which significantly increased the deficit. This year's deficit is subsidized with grant funds. Historically, the utility has not been able to receive the budgeted revenue due to lack of enforcement of its collection policy. For example, in FY11, the utility budgeted to collect $111,800 in revenue, but by the end of FY11 the utility only received $104,371 in revenue, $7,429 less respectively. On the other hand, last year's expenditures rose above those budgeted. For instance, the utility budgeted expenditures in the amount of $110,229 in FY11, but the total expenditures by the end of FY11 were of $ 120,075, a $9,846 increase in expenditures. In spite of the historic deficit problem, the utility is current as of August 2011 in all of its electricity bill payments, bulk fuel and water quality testing service payments and other bills. Between user fees and other revenue sources, the utility has been able to cover the repair and replacement costs, like new water pumps. According to the August monthly financial report, the utility's year-to-date expenditures are below those budgeted. The August monthly financial report does not show the year to date revenue. However, a hand written note on the margins of the financial statement shows that the utility operated at a profit of $5,066 in the month of August. The utility bookkeeper prepares the monthly water production, water usage and other utility related reports by using the reports received from the water plant operator. The utility clerk presents those reports to the city clerk who in turn hands them to the city council at the regular monthly meetings. The utility is current with all its utility bills, including electric bills. All payments are made on time.

Accounting Systems

Essential Indicators
Answer Question
No 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
The Koyuk Code of Ordinances outlines the collection policy in detail. The utility clerk mails water and wastewater invoices by the first day of each month. Bills are considered delinquent if payment is not received by the last day of the month. Based on the information from the accounts receivable, the utility had not followed the collection policy outlined in the Koyuk Code of Ordinances. Nome RUBA staff found that in July 2011, the collection rate was at approximately twenty five percent (25%). The city council and utility staff made efforts to comply with the collection policy outlined in the Code of Ordinances. In the past, the utility staff decided to accept verbal promissory notes from delinquent customers. However, this approach only led to increasing uncollected user fees. In response, the city council and utility staff offered payment plans to delinquent customers. The July regular monthly meeting minutes stated that 'all customers except for one that are past due have signed a payment plan or will be disconnected if the bill is not paid in full.' The city council stated that the utility will begin disconnecting those delinquent customers, who would not make payments as agreed in the payment plans by October, 2011. An accounts receivable system is in place. The utility clerk uses both Excel spreadsheets and QuickBooks to track customers past due accounts and amounts. The accounts payable is based on QuickBooks accounting system too. The same system is used for payroll purposes. The payroll taxes are paid via the Electronic Federal Tax Payment System (EFTPS). The utility accepts cash as payment. Cash is exchanged with checks at the local store or corporation and checks are mailed to be deposited in the bank account. Cash records are entered into QuickBooks. The utility's purchase order system requires the review and signature of either the city clerk or the mayor, depending on the amount needed to be spent. The utility clerk and city clerk report that bank reconciliations are done on a monthly basis.

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.
Yes The utility is current on making tax deposits.
Yes 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
The utility clerk uses QuickBooks to calculate, track and report payroll tax liabilities. Tax payments are made using the Electronic Federal Tax Payment System (EFTPS) bi-monthly. On September 29, 2011 the Internal Revenue Service's taxpayer Advocacy Office reported that the City of Koyuk and its public utility services are in compliance with Federal tax Deposit requirement. The IRS has no liens against the city as of September 2011. However, the city did not file 941 forms for the first, second and third quarter of 2011. The Alaska Department of Labor and Workforce Development confirmed that all state tax payments are current as of September 2011.

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.
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
The City of Koyuk has a worker's compensation insurance policy with the Alaska Municipal League Joint Insurance Association (AMLJIA) valid through June 30, 2012. This is a comprehensive insurance which covers work-related accidents and occupational diseases as per the Alaska Statutes. Proof of coverage is posted in the city office. Chapter 75 of the Koyuk Code of Ordinances describes in detail the Personnel Policies adopted by Ordinance on May 1, 1989. These policies apply to all employees of the city. The purpose of the policies is to establish 'a system of personnel administration based upon the merit principle and adapted to the requirements of the city to the end that persons best qualified to perform the functions of the city will be employed, and that an effective career service will be encouraged, developed and maintained.' The utility follows the personnel policies of the city. These policies address classification, compensation, salary schedule, recruitment and hiring, workweek, pay, performance evaluation, resignation, suspension, layoff, dismissal, disciplinary action, grievance and grievance procedure. City's personnel folders are well-organized and contain all necessary I-9 forms, IRS forms, acceptance letters, and records of disciplinary actions and performance evaluation. The utility provides orientation, job-training, oversight and performance evaluation. The utility also provides outside training opportunities. For example, the utility clerk attended Financial Management for Rural Utilities training in Nome in April 2011.

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.
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
No 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 of Koyuk owns, manages and operates the Koyuk Public Water System and several other public utility services. The city council acts as the policy making body and has been acting as the board of the utility. The Koyuk Code of Ordinances describes the roles and responsibilities of the city council in relation to the operation and management of public facilities. Overall the city council has been enforcing the utility policies and procedures. The city council also responded to the need to upgrade and extend the current water and wastewater system. For instance, the city council passed and adopted a resolution stating that the city council 'desires to accept the Sanitation Facilities Improvement Plan,' dated August 2010. The city council has been working with the Alaska Native Tribal Health Consortium, (ANTHC) to undertake major improvements to the Koyuk water, wastewater, and solid waste utility. The utility bookkeeper acts as the utility manager. The bookkeeper attended and successfully completed Financial Management for Rural Utilities training in Nome in April 2011.

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
Koyuk's Public Water System staff consists of two water and wastewater operators and a utility bookkeeper. One of the operators is certified: Water Distribution 1 Exp. 12/31/2011, Water Treatment 1 Exp. 12/31/2011, Wastewater Collection 1 Exp. 12/31/2011 and Wastewater Treatment Provisional 12/31/2011. The operators maintain a preventive maintenance plan, which is part of the utility operations manual. Both operators, the utility bookkeeper, city clerk and the city council communicate with each other in-person on a daily basis. The operators also maintain a written log of maintenance activities, water distribution and productions as well as concerns and needed parts for purchasing. The utility has a safety manual and the utility staff participate in the monthly safety meetings provided by AMLJIA. The operator indicated that the utility is operating at the proposed level of service. No major water and wastewater problems and outages due to management issues have occurred. The building itself was declared unsafe by engineers, but the utility staff responded by finding a temporary solution to fix the building. The water utility completes and distributes its Community Confidence Report (CCR) and is not on the Significant Non-Compliance List. The operators maintain a sufficient number of parts, supplies and tools. The operators also maintain an inventory and critical spare parts list. When there is need for parts, the operators inform the utility bookkeeper of the need and the city council makes decisions on the purchase.