Quarterly Report: 2013, January - March (Q3), Angoon

Community:
Angoon 
Staff:
Lynn Kenealy  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Angoon 
Population:
466  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
4/22/2013 
Community Sanitation Overview:
The City of Angoon operates and manages the following utility services: ' Class 2 Water Treatment System ' Class 1 Water Distribution System ' Class 1 Wastewater Collection System ' Water to School ' Garbage Pick-Up and Disposal The City of Angoon is the only permanent settlement on Admiralty Island, located on the southwest coast of the Kootznahoo Inlet. Angoon is 55 miles southwest of Juneau and 41 miles northeast of Sitka. The city operates a Class 2 water treatment system, a Class 1 water distribution system, and a Class 1 wastewater collection system. Angoon's drinking water is derived from Auktah Lake, treated, and distributed to the community. Piped wastewater is processed at a secondary treatment plant that flows to a city-run lagoon. The city collects garbage twice weekly from all residents and disposes at a municipal landfill located about two miles from the city. 
RUBA Status & Activities This Qtr:
RUBA staff traveled to Angoon this quarter to conduct a water utility rate study. The study found that the utility's revenues are low, causing a shortfall of approximately $106,238 per year, subsidized by other sources of income such as Community Revenue Sharing, PILT, and Shared Fisheries Tax. Currently the utility charges customers $32 per month for water and wastewater and has a collection rate of approximately 26 percent. With a 100 percent collection rate, in order to break even, the utility would need to charge all customers $57.81 per month. RUBA staff presented the findings, as well as the RUBA assessment, to the city council in a public work session. RUBA staff also assisted Angoon utility staff remotely with several policy development and procedural issues including creating a new personnel policy and procedures manual, general personnel questions, creating a city administrator position, holding public meetings, special elections questions, tax exemption questions, Shared Fisheries Tax and PILT resolutions, and water line repairs. RUBA staff assisted city staff with resolving state tax delinquency issues, which have been resolved and the city is now meeting all state tax requirements. RUBA staff also worked with city staff on resolving federal tax delinquency issues, though this is yet to be resolved. RUBA staff drafted an organizational chart, and took feedback from the council, incorporating the requested changes. 
RUBA Activities for the Coming Qtr:
In the upcoming quarter, RUBA staff will be working with the council on adopting the drafted organizational chart and making other improvements to RUBA indicators. RUBA staff will be visiting the community in June accompanied by a QuickBooks Hotline representative to continue instituting improvements to the utility's QuickBooks file and processes, and to train new staff on using the QuickBooks system. RUBA staff will also be available to provide any other remote assistance as necessary.
Scores:
 
Essential Indicators:
20 of 27
Sustainable Indicators:
14 of 27
Total Score:
34 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.
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
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.
No Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Angoon passed its FY13 budget on June 26, 2012. This budget itemizes revenues and expenditures for July 1, 2012, through June 30, 2013. The budget estimates receiving $26,000 for water and $12,000 for wastewater through the course of the fiscal year. These estimates are slight under-projections based on actual revenues from FY12, leaving the city with sufficient room in case collections are lower in the coming year than the previous. The FY13 budget improves upon the previous year's budget by itemizing categories such as payroll taxes into separate budget categories (such as administration, wastewater, water, etc), rather than lumping the full amount under administration. While the FY13 budget does detail all categories of revenues and expenditures, there are a number of categories in which budgeted amounts are not realistic. For instance, the city expended over $8,000 in FY12 on wastewater-related materials and supplies, but only budgeted $2,000 for FY13 in the same category. Additionally, there are a number of categories labeled 'Other' with no further explanation or detail. Some of these numbers and categories are in need of amending and specifying, in order to ensure the budget is clear, thorough, and accounts sufficiently for all revenues and expenditures throughout the fiscal year. The city has completed budget amendments in the past to reflect unanticipated changes in revenues and expenditures. There have been discussions about adopting budget amendments for FY13 as needed, though no amendments have been received. From the financial reports provided by fiscal staff in February 2013, water and wastewater revenues are currently exceeding projected revenue for the year, indicating a much higher amount of water revenues than originally budgeted. Expenditures are approximately in line with budgeted amounts. However, expenditures for the water and wastewater utilities still exceed revenues substantially, and the city does not specifically account for a source of subsidy in their budget, though they verbally report that the shortfall is subsidized by Community Revenue Sharing, which in FY13 total $168,211. The city council is the decision-making body for the water utility. City fiscal staff provides financial reports to some, but not all city council meetings. The budget versus actual report provided to the council in January 2013, was not comprehensive, or accurate when compared with the budget vs. actual report produced directly from the QuickBooks file. Because the city's QuickBooks account is currently under repair (see next section for details), fiscal staff cannot create meaningful financial reports directly from the city's QuickBooks file. Staff instead create a document in Excel reflecting budget and actual numbers in all budget categories, feeding in the appropriate numbers from QuickBooks. However, the reports currently being provided are not comprehensive, and it is not possible to identify where the numbers are coming from. The utility's manager is the city mayor. The mayor provides manager's reports to every council meeting, both in writing and verbally. Angoon receives diesel-generated electricity from the Inside Passage Electric Cooperative (IPEC). The city has paid all bills to date. The city has adequately budgeted for electricity and fuel, estimating higher expenditures for FY13 than for FY12. The city maintains a 200 gallon fuel tank, which is filled by Angoon Oil and Gas as needed. Angoon Oil and Gas maintains a 4,000 gallon fuel tank, and receives shipments from Petro Marine via barge as needed, and does not report having any difficulty getting shipments when needed.

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.
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's collection policy, as adopted in 2012, specifies that delinquent customers will either have their water service discontinued or will be sent to collection agencies for collections. However, the city does not currently have the ability to shut off water to individual customers and are not currently sending delinquent customers to collections agencies. Therefore, they are not actively following their policy. However, the council is in the process of exploring alternative options for dealing with delinquent customers, including a possible forgiveness plan and a possible reward system for paying customers. The city bills customers on a monthly basis for water, wastewater, and garbage services. Current rates are $20/month for water, $12/month for wastewater, and $10/month for garbage, with half-off rate for elderly customers over 62 years of age. Bills are sent out at the beginning of the month and are due by the end of the month. Payments can be received in cash, check, money order, or by credit card. According to the water/wastewater aging summary, 74 percent of water/wastewater customers are 90 days delinquent on water bill payments. This includes customers owing anywhere from $60-$7,000 for back water/wastewater bills. It is not currently possible to calculate the financial collection rate, as the city's QuickBooks file is not up to date. RUBA staff conducted a water utility rate study in January, 2013, and identified that the utility's revenues are low, causing a shortfall of approximately $106,238 per year, subsidized by other sources of income such as Community Revenue Sharing. Currently the utility charges customers $32 per month for water and wastewater, and has a collection rate of approximately 26 percent. With a 100 percent collection rate, in order to break even, the utility would need to charge all customers $57.81 per month. An accounts receivable system is in place, using the QuickBooks program, to track all customers and past due accounts. Accounting systems are in place to calculate payroll, cash receipt, cash disbursement, and purchasing. Employees clock in and out of work at the city office using a timecard. Employees then transfer this information onto a time sheet at the end of each pay period. The employee and mayor sign the timesheet; the accounts payable staff processes the timesheet and makes payments. Cash received and disbursed in the city office is processed by the accounts receivable and payable clerks, including a duplicate receipt system and the QuickBooks. There are purchase order and check request forms which each employee must complete in order to make purchases. Purchases under $500 are signed off by the mayor, and purchases over $500 must be approved by the city council majority. There are technical issues between the two financing computers, and as the two computers do not always network correctly, the QuickBooks file often gets split into two. When this happens, the accounts receivable staff has to retroactively update the city's main QuickBooks file. There are a number of other errors on the file, which leads to meaningful financial reports being difficult or impossible to produce directly from the file. A RUBA QuickBooks contrator is working with financial staff on correcting these errors, and ensuring the QuickBooks file is kept up to date and accurate in the future. Monthly bank reconciliations are not being completed as the QuickBooks file is being corrected and monitored. The last bank reconciliations completed were through July, 2012. Therefore, reconciliations are currently delinquent, potentially causing problems with ensuring all finances are in agreement and accurate.

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 utility calculates and tracks payroll tax liabilities through the QuickBooks accounting program. The city was calculating liabilities incorrectly, as it had not factored in new tax rates. However, this has since been corrected. The city currently owes the IRS for tax liabilities dating back to March 2012. The IRS also reports that they have not received quarterly reports for the third or fourth quarters of 2012. Therefore, the city could not be granted tax clearance as of March 18, 2013. The city was granted state tax clearance on March 19, 2013. The city has no liens or past liabilities.

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.
No The utility has adequate written job descriptions for all positions.
No The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
No 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.
No 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 Angoon and all utilities therein receive worker's compensation insurance through the Alaska Municipal League Joint Insurance Association, Inc (AMLJIA). Coverage was confirmed March 1, 2013. Employer's Notice of Coverage is posted in locations throughout the city where employees are stationed, including the city office. The city does not currently follow a personnel policy. The council has identified various areas in which a personnel policy is urgently needed at this time, including pay advances, job descriptions, hiring and firing procedures, employee evaluations, and many more. This is an area the council hopes to focus on in particular over the coming quarters. Personnel policies and procedures are vital for the sustainability of the water utility, in order to ensure all employees are completing the duties necessary for a water utility, and to ensure the council's employment of personnel is in line with laws and regulations. Personnel files are well organized and contain all necessary INS and IRS forms, acceptance letters, and records of disciplinary actions. The city's FY13 budget reflects budgeting significantly more money for training expenses than the FY12 budget. Additionally, the city council actively encourages employees to attend RUBA management trainings (attendance of current employees can be found listed in the following section).

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
Angoon Municipal Code Title 13 dictates the city's water and sewer utilities. Section 13.08.010 provides for ownership and operation of the water utility by the City of Angoon and provides for policy making powers. The policy-making body is the city council, which meets at least once regularly every month and complies with the Open Meetings Act in ensuring all meetings are open and adequately posted ahead of time. Currently, the council is not enforcing the utility policy, specifically with regard to collections. This is partially due to the fact that the policy in place provides for the shutting off of delinquent customers' water, while this is not in fact something the utility currently has the tools to do, lacking shut-off valves for individual customers. The city and utility are currently encouraging city staff to request and attend training specific to each employee's duties and responsibilities. The council has been particularly encouraging of sending staff to RUBA management trainings. Each training is a week-long 32-hour training, specific to an area of water utility management. The mayor, who also serves as the utility's manager, has attended the elected officials training, as has one other council member. The city clerk has attended the clerk management training. The grant administrator, who also serves in other capacities as needed such as city administrator and city clerk, has attended the clerk management training and the planning training. The accounts payable clerk has attended the week-long QuickBooks Power User training. The accounts receivable clerk has attended the same QuickBooks course, as well as the financial management training. The council has also requested a one-day personnel training to be provided on-site in the next quarter. The utility's water operator has partial certification, which will be discussed further in the following section. The water operator has attended the RUBA planning training. The city does not have a current organizational chart. The lack of an organizational chart delineating chain of command is causing some confusion among both utility staff and council members regarding responsibilities and authority. However, the council has provided revisions to a suggested organizational chart, and hopes to adopt the new chart shortly.

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
No 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.
No 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.
No 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
The Angoon water utility operator has worked for the utility for over two years. He has a provisional water distribution certificate. This needs to be upgraded to a class 1 certificate. He is actively working toward his wastewater collection class 1 certification, and treatment system class 2 certification. The water treatment plant includes an office area where all files and documents are kept. Files include an operation and maintenance manual which came with the new water treatment facility, a critical spare parts list, and regular reports by the water operators. The current utility manager has not done spot checks or requested regular reports from the water operators. It is recommended that such practices begin, in order to ensure the manager and council are aware of any issues that might come up with regard to water operations, and are ensuring that water operations are being completed to the expected level of service. While the two water operators work together very closely and discuss things such as safety and inventory frequently, there is no formal process for these items. Over-all water services are up to the expected level. There have been issues over the past year regarding power lines, but these have been resolved. The community is on the Significant Non-Compliance List for exceeding disinfectant by-products MCL levels by two points, but is getting closer and closer to meeting all requirements in order to be taken off of the list. In December 2012, the water operator completed the Consumer Confidence Report information and distributed it throughout the community, as well as providing the paperwork to RUBA staff to forward to Department of Environmental Conservation (DEC) staff. The water utility continues to be on the Significant Non-Compliance list, due to high levels of disinfectant bi-products (DBPs). DEC has reported that the system may require upgrades in order to address these ongoing issues.