Quarterly Report: 2014, April - June (Q4), Larsen Bay

Community:
Larsen Bay 
Staff:
Jedediah Smith  
DCRA Regional Office:
Anchorage regional office 
Gov't Type:
Second Class City 
Borough:
Kodiak Island Borough 
Agreement?
Yes 
Agreement Date:
2/21/2011 
Entity:
City of Larsen Bay 
Population:
88 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
2/28/2011 
Exp Date:
2/21/2013 
Last Updated:
7/7/2014 
Community Sanitation Overview:
Water is supplied from two sources, a reservoir and a well connected to a 200,000-gallon tank. The well draws water classified as a groundwater under the direct influence of surface water. A water supply line is also connected to the penstock of the hydroelectric plant and used a majority of the time to reduce utility expenses to both the service plant and the customers. All 40 homes are connected to the piped water system. A community wastewater tank with an outfall line serves these homes, and the majority of them are fully plumbed. Weekly refuse collection services are provided. The community incinerator is currently unusable and all refuse is deposited at the landfill site. A water treatment plant project from Village Safe Water (VSW) is complete. 
RUBA Status & Activities This Qtr:
RUBA staff traveled to Larsen Bay in June to meet with the city council during a regularly scheduled monthly meeting. During the visit, RUBA staff assisted the city clerk and the utility clerk in reconciling the checking account in QuickBooks. Financial records had not been reconciled since April of 2013. RUBA staff encouraged the Larsen Bay administrative staff to have all of the accounts reconciled by July 1 in order to be able to provide accurate financial reports to the city council in the new fiscal year. RUBA staff has been working with members of the budget committee to prepare the FY15 budget and, on June 11, the council held the first reading. The council will hold a second reading of the budget on June 25 and intends to pass it prior to the start of its FY15, which begins on July 1. During the visit, council members requested better financial reports from the city administrator. Current financial reports indicate that the revenues from water and wastewater fees are unable to support the service on its own, and the city must subsidize the utility with revenues from the city owned grocery store, power sales and fuel sales, as well as community revenue sharing. However, the city is not tracking revenues and expenditures for the city owned grocery store accurately, and utility customers have substantial outstanding debt. On an earlier visit to the community by RUBA staff, the Larsen Bay City Council signed a RUBA agreement committing to hold regular meetings, reconcile accounts and to improve collections of utility fees. It appeared to RUBA staff that few of these commitments had been fulfilled. RUBA staff stressed the importance of good financial reports and maintaining timely and accurate records. At the end of the city council meeting, a council member announced he was stepping down from his position as mayor as of June 30, citing his age and lack of energy as reasons for not wishing to continue in the supervisory position. RUBA staff encouraged Panamaroff to retain his seat on the city council until the next election to ensure stability on the council. In May, a council member sent RUBA staff a draft copy of the proposed FY15 budget. The budget included FY14 end-of-year estimated revenues and expenditures. The estimated end-of-year revenues and expenditures varied in many areas from the FY14 approved budget, including the city owned store, fuel sales, and equipment purchases for the electric utility. RUBA staff advised the council member and the clerk to reconcile the QuickBooks account in order to obtain a more accurate picture of actual year end amounts. In April, the Larsen Bay City Clerk contacted RUBA staff to inquire about the next field visit to work on the FY15 budget. Larsen Bay just finished a week-long training with Marsh Creek LLC, who installed AMPY meters for commercial customers in the community. RUBA staff told the clerk a visit to assist with the FY15 budget would not be productive unless the QuickBooks file was up to date, which includes reconciling and fuel transfer payments within city departments.  
RUBA Activities for the Coming Qtr:
RUBA staff will continue to work with the office administrative staff to ensure proper financial reports are presented to the council. Additionally, RUBA staff will work with the city clerk to ensure proper procedures are followed for the upcoming local elecitons in October.
Scores:
 
Essential Indicators:
21 of 26
Sustainable Indicators:
17 of 27
Total Score:
38 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.
No 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.
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.
No A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
A review of the city's aging summary of accounts receivable indicate a 55 percent collections rate for the electric utility. The city relies on the electric utility revenue to subsidize the water utility maintenance, operations and delivery. Other city enterprises also show substantial delinquent accounts, indicating the city might not be on track to meet anticipated revenue for the year. Currently monthly financial reports are not prepared or submitted to the policy making board.

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.
No 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 city uses QuickBooks Pro for all accounts payable and receivable transactions, as well as to run reports. The city accounts receivable report shows all transactions for the water and wastewater utility for all customers. The city accounts payable report shows no accounts to be paid currently. All purchases are routed from the employee to the mayor for approval, then to the clerk for processing. When the city receives cash, the customer is offered a receipt and the data is then entered into QuickBooks following the transaction with the ledger/receipt number. Every Monday, the city deposits the cash into a bank account. A chart of accounts lists all current assets, liabilities, and equities for the City of Larsen Bay. City administrative staff are attempting to reconcile accounts, and had completed two months worth of records during the previous on-site visit June 13.

Tax Problems

Essential Indicators
Answer Question
No 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
According to the IRS Taxpayer Advocate Service, the city owes federal taxes for the 06 and 12 periods of 2013 and has not filed a form 941 for the 03 period of 2014. The Alaska Department of Labor and Workforce Development could not grant tax clearance because the city has not filed a report for the first quarter of 2014. Larsen Bay is not listed on the state Lein Watch report.

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 has an insurance policy with Alaska Municipal League Joint Insurance. The policy is posted as required. A copy of the personnel policies was provided that has sample job descriptions, evaluation, and hiring processes. The probationary period for employment is 30 days. Employee personnel files are kept in a locked file cabinet in the city clerk's office. These files each contain an I-9, job application, and all appropriate employee and employer correspondence.

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.
No 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 Larsen Bay is the owner/operator of the water and wastewater utility. Its ordinances are updated as needed and those regarding to collection policies are followed. The primary operator is part-time as he is both the water/wastewater and electrical operator; he is scheduled to be at the pumphouse for two weeks and other operators cover the remaining weeks in a month. The city clerk oversees all the bookkeeping for the utility. The billing clerk receives and enters all incoming transactions into QuickBooks, though at the time of this report, the community was experiencing turnover in the utility billing department. The organizational chart is in the personnel policy manual and includes all employees; the city clerk and billings clerk are listed in a separate branch under the mayor. The organizational chart does reference Title 29 and regulatory agencies in separate branches above the city council. The Larsen Bay City Council is not meeting regularly as set forth in ordinance, and therefore not fully able to make informed decisions regarding the finances and collections rate of the utility.

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.
No 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
There is an operations and maintenance manual for the existing pumphouse. The new pumphouse is complete and an updated operations and maintenance manual will be provided by Alaska Native Tribal Health Consortium (ANTHC) staff. ANTHC still holds the title to the water treatment facility. The city has a monthly safety meeting with the water/wastewater/electric operators. There have been no major outages. The water utility is operating at a level proposed. The water utility is subsidized by the electric utility and the city owned grocery store. The last CCR was completed in 2009. The water utility is not on the January 2014 Significant Non-Complier (SNC) list. The city does not have an inventory control list as there is a new plant that has been completed, is operational and awaiting conveyance. There is no record of a critical spare parts list with the city.