Quarterly Report: 2014, January - March (Q3), Hydaburg

Community:
Hydaburg 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
First Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
10/29/2012 
Entity:
City of Hydaburg 
Population:
405 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
9/18/2012 
Exp Date:
10/29/2014 
Last Updated:
4/17/2014 
Community Sanitation Overview:
The City of Hydaburg is located on the southwest coast of Prince of Wales Island, 45 air miles northwest of Ketchikan. It is connected by paved road to several other communities on the island. Water is derived from the Hydaburg River, treated, and piped throughout the community. Funds have been requested to construct a new dam to increase the water supply. Piped gravity wastewater is treated at a secondary treatment plant with an 800-foot outfall to Sukkwaw Strait. More than 95 percent of homes in Hydaburg are plumbed. The city operates a Class 2 water treatment system, a Class 1 water distribution system, and a Class 1 wastewater collection system. These system classifications are determined by the State of Alaska's Department of Environmental Conservation, Division of Water based on the type of components found in the treatment plant and the number of connections served by the water distribution and wastewater collection systems. Alaska Power and Telephone Co., based in Skagway, owns and operates diesel power systems in Hydaburg and Craig, which in turn provide electricity to many Prince of Wales Island communities, including Hydaburg. 
RUBA Status & Activities This Qtr:
RUBA staff visited the City of Hydaburg in February 2014 to provide assistance to financial staff on several issues, including coding all revenues and expenditures to budget items. RUBA staff provided a budget amendment format. RUBA staff also provided an Excel document through which the city will be able to easily input all revenues and expenditures by month and prepare a budget versus actual comparison. RUBA staff also assisted with drafting several amendments to the city's personnel policies and procedures manual, an ATM policy and procedures document, and a technology use agreement. RUBA staff met with council members to discuss several RUBA indicators during the visit as well. This quarter, RUBA staff also assisted city staff with tax compliance issues, and hosted two utility finance personnel in Juneau for the RUBA Financial Management for Rural Utilities training. Finally, RUBA staff attended the Sanitation Deficiency Systems meeting, where Hydaburg was discussed. Professionals coordinated at the meeting to assist the city in ensuring water operators are certified and improving monitoring and reporting by water operators. The city is in need of several upgrades to their wastewater system. 
RUBA Activities for the Coming Qtr:
RUBA staff is scheduled to visit the city again in May, and at this time will assist city staff in FY15 budget drafting and adoption, and with ensuring coding and financial reporting is up to date and consistent. RUBA staff will also provide remote assistance as requested.
Scores:
 
Essential Indicators:
23 of 27
Sustainable Indicators:
21 of 27
Total Score:
44 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.
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.
Yes 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 City of Hydaburg adopted its FY14 budget by non-code ordinance on June 18, 2013. The overall budget is balanced. The budget is divided into separate funds: a general fund, a water-wastewater upgrade fund, a water-wastewater-garbage fund, and a harbor and docks fund. Each fund compares all anticipated revenues and expenses for the fiscal year alongside actual figures from the preceding fiscal year, as required by the Hydaburg Municipal Code. Though the adopted budget does specifically indicate interfund transfers, utility staff have explained that Community Revenue Sharing (CRS) monies in the general fund are indeed subsidizing other city funds, including those supporting sanitation services. The FY14 water-wastewater-garbage fund budget anticipates $121,540 in income from monthly user fees, although only $105,305 was received in FY13. Anticipated expenses total $257,747, while the utility expended $282,172 in FY13. Lower expenses are anticipated for FY14 due to the elimination of overtime for utility employees. The budget does not indicate any money from other fund balances being transferred to cover the anticipated net loss. Utility bill collection rates have improved over the past year and the council increased their rates from $40 to $80 each month in November 2012 based on a rate study conducted by RUBA staff. The rates increased from $40 to $80. This increase will help meet the costs associated with providing sanitation services in Hydaburg, but will not cover the entire cost and the city will need to continue to subsidize those services with CRS funds. The utility fund budget includes line items for the primary operator's salary and benefits, repairs and maintenance, travel, water treatment and testing supplies, emergency parts, vehicle gas, electricity, telephone, and various other expenses. However, the city also employs a second, part-time operator whose salary and benefits are not budgeted in the utility fund. This salary is accounted for in other departments such as Public Works or Wastewater and Garbage. Monthly financial reports are not being provided to the council members in the meeting packet. Year-to-date figures cannot be accurately compared to what has been budgeted until the QuickBooks files are fixed. However, the mayor, city administrator, public works foreman, treasurer, and clerk all routinely provide both written and verbal reports on operational and financial issues concerning the sanitation services the city provides. The city is current on paying its electric bills. The city has two 275-gallon fuel tanks for heating fuel which are located at city hall and the water treatment plant. Funds have been allocated in the budget to purchase heating fuel from Petro Marine every one to three months.

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
The treasurer and city clerk have been working to increase the collection rate for the City of Hydaburg. Billing statements are processed and mailed every month. The utility administrative staff has begun reaching out to customers, showing willingness to accept partial payments if need be, and public works staff disconnect delinquent customers. As a result, they have begun to see an increase in payments over the past year. The city reports having received some complaints from customers following an increase in the monthly rates, as described in the Financial Management section of this report. All cash payments received are taken to the post office daily in exchange for money orders, all cash transactions require duel signatures, and all cash and check transactions are logged appropriately by utility staff. The treasurer and city clerk use QuickBooks software to track accounts payable and receivables as well as to process payroll. The chart of accounts, however, does follow each of the line items in the budget and should be corrected or revised when the budget is revisited. The payroll is accurately computed and monthly bank reconciliations are current. All computers in the city office are now on a shared network, facilitating accounting and other utility management processes.

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.
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
The City of Hydaburg uses QuickBooks Pro to calculate and track payroll liabilities and makes electronic payments using the Electronic Federal Tax Payment System (EFTPS). The system was upgraded in October 2012 to include the enhanced features of the federal and state tax reports. Taxpayer Advocates could not provide IRS tax clearance on March 17, 2014, due to a delinquent 941 report from September 2013. The Alaska Department of Labor and Workforce Development stated that the community was non-compliant with employment security tax requirements on March 4, 2014.

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.
No 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 a workers’ compensation insurance policy through the Alaska National Insurance Company valid until June 30, 2014. Proof of coverage is posted at the city office, the water treatment plant, and the harbormaster's office. Coverage levels are within statutory guidelines and include work related accidents as well as occupational diseases. The city's personnel policy includes a hiring procedure and a probationary period for new employees but is still vague. The city is in the process of updating the personnel policy and job descriptions. Records relating to employees are kept in a personnel file. The city provides training opportunities when outside sources of training funds are available. The city administrator, who was hired in October 2012 and who serves as the utility manager, has attended several RUBA management trainings, including QuickBooks, Planning, Personnel, and Financial. In the last three years, 14 different people have held the position of clerk/treasurer for Hydaburg. The new city clerk has attended a RUBA-sponsored QuickBooks course as well as the Clerks course. The city's new treasurer has attended the RUBA financial training. The city has shown support for other utility staff who may seek necessary training opportunities, by appropriating adequate funds for staff travel in the FY14 budget. The city administrator began holding weekly staff meetings on Mondays in order to address ongoing issues among staff and to build a team rapport.

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 of Hydaburg owns and operates the community's water and wastewater utilities and the city council is the governing body of the utility. The council meets monthly and a review of monthly meeting minutes shows that it is engaged in making decisions which affect sanitation services in the community. A rate increase recommended by utility and RUBA staff was recently adopted by the council. The city's FY14 budget ordinance was also adopted by the council on time. The city complies with Alaska's Open Meetings Act by posting meeting notices at least five days in advance in three public places. All ordinances necessary to own and operate the utility services have been adopted. Title 13 of the Hydaburg Municipal Code establishes the policies and procedures for the operation and maintenance of the community water supply system. The city administrator oversees the utility and is adequately trained in the administration and management of the utility. Hydaburg's water operators travel to and participate in relevant water treatment and distribution trainings as needed and receive continual on-site training from its assigned Remote Maintenance Worker (RMW). The city now has a trained bookkeeper who has experience in QuickBooks and with payroll. The bookkeeper is currently seeking additional training in financial management and taxes.

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".
No The utility is not on the "Significant Non-Complier" (SNC) list.
No The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
Hydaburg’s utility has one full-time operator and one part-time operator. The full-time operator is certified by the State of Alaska Department of Environmental Conservation (ADEC) with a Level 1 Water Treatment endorsement expiring December 31, 2015 and a Level 1 Water Distribution endorsement expiring December 31, 2015. He also holds a provisional wastewater collection provisional certificate which expires December 31, 2013 and a wastewater lagoon certificate which also expires December 31, 2013. The part-time operator holds both a Provisional Water Treatment and Provisional Water Distribution certificate. They both expire on December 31, 2013. Hydaburg's water utility is listed on the January 2014 Significant Non-Compliance (SNC) list for elevated levels of disinfectant by-products (DBPs), though the operators continue to work with the Alaska Native Tribal Health Consortium (ANTHC) to improve filter media and system underdrains in order to address concerns. The utility completed and distributed its last CCR as required by the Safe Drinking Water Act for the year ending December 31, 2012. The utility has a critical spare parts list but does not maintain an inventory control list. The administrator reports that the utility maintains a sufficient level of supplies and tools, and works in partnership with other communities on Prince of Wales to maintain a system that enables the communities to borrow and replace critical parts from each others' inventories. The lack of an inventory list has become an issue, as the storage facility that is used to store spare parts has been leased to another entity and some parts cannot be located.