Quarterly Report: 2012, April - June (Q4), 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:
7/26/2012 
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. There is a wastewater 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 the 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, building a well access trail and well house, and transmission line upgrades at an estimated cost of $1.4 million. The third phase would accomplish 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:
This quarter RUBA staff provided on-site utility management assistance to the utility staff, city staff and members of the city council during a three-day visit to Koyuk, May 14 to 16. The council requested technical advice on codification of local ordinances and training in ordinance writing. RUBA staff met with the city council on two occasions during the visit and discussed a plan on how to codify ordinances. During these meetings, the city council informed RUBA staff that it made a decision not to subsidize the water and wastewater utility this fiscal year. The current rate structure does not collect sufficient funds from user fees to provide for a balanced annual budget. As a result, the council requested a rate study be conducted to determine the true costs for running the system and establish equitable user fees. To prepare for the rate study, RUBA staff worked with the utility clerk on gathering information on water production and use, types of customers, number of customers, collection rate and utility revenues and expenses. The rate study will be finalized in approximately two months. In spite of the serious issues related to the water plant's structure, KPWS staff continued to provide safe water to the community this quarter. The washeteria was closed for a few months because the building is no longer safe to be open to the public. However, due to several families that rely on the services provided by the washeteria, the city council decided to reopen it.  
RUBA Activities for the Coming Qtr:
Nome RUBA staff plans to travel to the City of Koyuk to work with the city clerk on revising Koyuk's Code of Ordinances and completing a rate study. A meeting with the city council has also been scheduled.
Scores:
 
Essential Indicators:
18 of 27
Sustainable Indicators:
23 of 27
Total Score:
41 of 54

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
No 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
Yes 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 City of Koyuk has not adopted the FY13 budget. However, the city clerk reported that the budget was introduced and a public hearing is to follow soon thereafter. Typically, Koyuk Public Water System is included in the overall city budget. Based on the version of the budget introduced to the city council, the utility's revenues amount to $126,000 and expenditures are $165,490- a $39,490 deficit. The city council made a decision not to subsidize the utility. The city council requested that the city staff conduct a rate study in order to make an informed decision on setting up new user fees in order to balance the budget without using other sources of revenue. What made the deficit so large was the fuel related expense. The utility forecasts spending about $53,625 on fuel; this is one of the highest expenses 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 Revenue Sharing and Norton Sound Community Benefit grants. This fiscal year, the fuel expense was included in the utility budget, significantly increasing the deficit. Historically, the utility has not been able to receive the budgeted revenue due to lack of enforcement of its collection policy. This problem persists. The utility is not current on its electricity bill payments, payroll payments, and other bills. The utility has had a very difficult time with employee turnover, especially, the utility clerk position. Several utility clerks have left the position in the last year. Typically the utility clerk prepares and submits QuickBooks monthly financial reports to the city clerk. In turn, the city clerk converts the QuickBooks generated monthly financial reports to an Excel spreadsheet format which compares actual year-to-date revenues and expenditures to the budget. The city clerk submits those reports to the city council on a monthly basis.

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 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. Due to employee turnover, the utility did not send out monthly invoices on a regular basis. 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 receivable data generated by QuickBooks reports show that in April, May and June the revenues fluctuated. The June report shows that the utilitys' expenditures were above revenues by $6,537. The utility uses QuickBooks for accounts payable and payroll accounting. 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. The checks are then 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.
No 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 July 2, 2012 the Internal Revenue Service's taxpayer Advocacy Office reported that the utility is not in compliance with Federal Tax Deposit requirement. However, IRS has no liens against the city. The utility 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 July 2, 2012.

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, 2013. This is a comprehensive insurance which covers work-related accidents and occupational diseases as per 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, and grievance procedure. City's personnel folders are well-organized and contain all necessary I-9 forms, IRS forms, acceptance letters, records of disciplinary actions and performance evaluation. The utility provides orientation, job-training, oversight and performance evaluation. The utility also provides outside training opportunities. The prior utility clerk attended Financial Management for Rural Utilities training in Nome in April 2011, and the new utility clerk and the water operator completed the Organizational Management for Rural Utilities class in November 2011 in Nome.

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
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 acts 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. 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 KPWS. The utility bookkeeper acts as the utility manager. The bookkeeper attended and successfully completed Organizational Management for Rural Utilities training in Nome in November 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.
No 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 (expiration 12/31/2014), Water Treatment 1 (expiration 12/31/2014), Wastewater Collection 1 (expiration 12/31/2014) and Wastewater Treatment Provisional (expiration 12/31/2014). 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 production, 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 or 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 utility did not complete its Community Confidence Report (CCR). The utility 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.