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

Community:
Saxman 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
Second Class City 
Borough:
Ketchikan Gateway Borough 
Agreement?
Yes 
Agreement Date:
8/25/2011 
Entity:
City of Saxman 
Population:
411 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
9/4/2013 
Exp Date:
8/25/2013 
Last Updated:
4/2/2014 
Community Sanitation Overview:
The City of Saxman is located on the west side of Revillagigedo Island, two miles south of Ketchikan on the South Tongass Highway. Water for the community is derived from a reservoir, then treated and stored in a 128,000-gallon tank. The city operates a Class 2 water treatment system, a Class 1 water distribution system, and a Class 1 wastewater collection system. 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 a treatment plant and the number of connections served by water distribution and wastewater collection systems. All homes in Saxman are fully plumbed. While the majority of wastewater is treated at a public treatment facility with an ocean outfall, a few homes utilize individual septic tanks. Refuse is collected by a private company and disposed of at the Ketchikan landfill. Electricity is provided by Ketchikan Public Utilities. 
RUBA Status & Activities This Qtr:
This quarter RUBA staff visited the City of Saxman in order to conduct a water/wastewater utility rate study. The utility's new Miex treatment system has been online for over six months now, and the city wished to identify any additional expenditures in order to re-assess user rates. The assessment did identify additional expenses, and therefore recommended rate increases. These proposed increases were then presented to the city council for consideration. RUBA staff also provided remote assistance around several questions including water rates in the rest of Southeast Alaska and council vacancy questions. The Alaska Native Tribal Health Consortium (ANTHC) requested from RUBA staff documentation of the city's collection rate. RUBA staff confirmed that collection rate to be 101 percent, allowing the city to be awarded an additional point on a Sanitation Deficiency Systems grant application. The city's assistant finance officer attended the RUBA Financial Management training in Anchorage in March. Finally, RUBA staff attended a Sanitation Deficiency Systems providers meeting in which the city's utility was discussed. Professionals at the meeting coordinated metering and wastewater collection system assistance for the city. 
RUBA Activities for the Coming Qtr:
In the coming quarter RUBA staff will continue working with city staff on rate increase suggestions to the council, suggesting training for utility staff, and improvements to the two remaining sustainable RUBA indicators.
Scores:
 
Essential Indicators:
26 of 26
Sustainable Indicators:
25 of 27
Total Score:
51 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.
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 Saxman adopted its FY14 budgets by non-code ordinance on July 10, 2013 for the fiscal period beginning July 1, 2013 and ending June 30, 2014. The ordinance comprises three separate, independent budgets for the city's general fund, the water and wastewater systems, and the municipally-owned and operated Saxman Seaport. In all three budgets, projected revenues are equal to proposed expenditures. The water and wastewater budget identifies revenue including a transfer-in from the general fund to subsidize the cost. There is sufficient general funds revenue to accommodate this subsidy. The utility's budget identifies expenditure categories including operator wages, payroll taxes, worker's compensation insurance, chemicals, testing, utilities, licensing, travel, and maintenance costs. Having a separate utility budget allows the city to ensure that revenues generated from user fees are sufficient to cover all utility-related costs. The city has projected that utility costs for FY14 will total $143,428.12. This figure realistically includes all associated expenses, such as the purchase of fuel from Andres Oil in Ketchikan as needed on a 'keep full' contract, travel and per diem costs to send operators to necessary trainings, and a reserve for potential water and wastewater maintenance costs. User fees are sufficient to cover most of these operating costs and a subsidy of $6,000 from the city's general fund is needed to cover the remaining costs. The city has 86 customers receiving piped water and wastewater services. Those customers are divided into residential customers who pay a combined, uniform flat rate of $65 each month ($45 for water services and $20 for wastewater services) and commercial customers who pay a flat rate of $375 each month ($225 for water service and $150 for wastewater service). These rates were last adjusted in 2009. RUBA staff conducted a rate study in January 2014, and identified a higher level of expenditure than previous estimates, mainly owing to the new Miex treatment system. Utility staff will recommend a rate increase in order to cover the additional costs. In the interim, there is sufficient general funds transfer to cover the additional cost of the Miex system for FY14. Finance staff prepare monthly profit and loss reports for the city council that compare actual month-to-date and year-to-date amounts with budgeted revenue and expenditure. The reports clearly indicate the percentage of funds already expended in each line item and the amount remaining for the remainder of the fiscal year. As of February 28, 2014, 58 percent of the fiscal year completed, the utility has received 62 percent of expected revenue and expended 69 percent of expected expenditures. This revenue does not include the $6,000 budgeted transfer from the general fund, as this will only be transferred if needed. Therefore the revenue from users and fees have been higher than anticipated. Some expenditure categories are over-budget, including payroll, bank charges, and truck maintenance. Budget amendments will be introduced to accommodate the over-expenditures. Despite these over-expenditures, the utility does not anticipate going over-budget in FY14. Ketchikan Public Utilities provides electrical service to the City of Saxman. RUBA staff reviewed service statements and found that the utility is current in paying all of its electric bills.

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
Utility billing statements are sent out to customers on or around the 26th day of each month. The statements include the customer's name and address, the amount due for water and wastewater services, previous statement balances, late fees, net balances, and the due date. Accounts are considered past due if customers do not pay their bill by the 15th day of the month following the statement period. Customers have the option of submitting their payments by mail, in person to the finance clerk during business hours, or by placing it in a secure drop box in the front of city hall at any time of day. Additionally, the utility is set up to receive customer payments by Visa, MasterCard, Discover, and American Express credit cards. The credit card payment surcharge is not passed on to any specific customer, but rather is folded into the overall administrative expenses of the utility. The finance officer reports, however, that the majority of customers pay by cash at city hall. The city has adopted and actively enforces an effective collections policy. In accordance with the ordinances adopted by the city council between 2002 and 2009, past due customers are first mailed a delinquency notice reminding them to make their payment. A late charge of the highest legally allowable interest rate will be assessed and due on any amount 30 or more days in arrears on the 25th of each month. Past due customers who have not signed a repayment agreement (which can include the voluntary assignment of Permanent Fund Dividends) within 90 days are referred to the Ketchikan Credit Bureau for collections and are disconnected from service. According to the utility's aged trial balance account summary, only two utility customers are in 'disconnected' status and approximately nine percent of customers are more than 90 days past due. Frey accounting software is used for utility billing, accounts receivable, accounts payable, and payroll. This software encompasses three integrated modules: the Cubic utility billing and control system, the Chips payroll system, and the Bucs general fund accounting system. The finance officer has reported that together, these systems are sufficient for the utility's accounting needs. The software subscription includes 24-hour live technical support which the city can utilize for operating assistance when needed. Customer payments are first manually entered into a triplicate receipt book that records the customer's name and address, the date, the payment amount, what the payment was for, the form of payment, and who the payment was received by. Payment information is then recorded in the computerized accounting software. The software can clearly identify which customers are current in their payments and which are 30 days, 60 days, or 90 days past due. The city does not currently give cash disbursements. A utility collection rate study was completed in March, 2014 and concluded that the utility has a 101 percent collection rate for the past seven months. The finance officer reconciles the city's bank accounts on a monthly basis. RUBA staff has received copies of the city's water/wastewater account reconciliation for June 2013. The separate credit card account is set up to receive credit card payments received from customers for utility and seaport services. The city then transfers deposits made into this account to the appropriate enterprise fund.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
Yes The utility is current on filing tax reports.
Yes 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
The City of Saxman uses Windows-based Frey accounting software to accurately calculate, track, and report its payroll tax liabilities. The Alaska Department of Labor and Workforce Development Tax Division confirmed on March 4, 2014 that the city is compliant. There are no past IRS tax liabilities. Taxpayer advocates confirmed IRS tax compliance on March 17, 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.
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
All city employees are covered by an Alaska Municipal League Joint Insurance Association (AMLJIA) workers' compensation insurance policy. That policy is effective from July 1, 2013 until July 1, 2014 and covers work-related accidents and occupational diseases up to the Alaska statutory limits for each occurrence. Proof of coverage is posted in all areas of employment, including the city hall, the community hall, and the water treatment plant. RUBA staff verified that the city is current in its payments to AMLJIA and that adequate funds have been allocated in the city budget for payments over the remainder of the fiscal year. The city implements a well-established personnel management system with the city administrator and the city council's personnel committee continually reviewing personnel matters. A personnel policy handbook was formally adopted by the city in 2005 and is required to be read by every employee. The handbook covers a broad range of topics, including recruitment, selection, the hiring process, transfers, promotions, under-fillings, demotions, work hours, pay, benefits, leave, holidays, career development, conduct, grievances, and performance reviews. The personnel policy also requires a 90-day probationary period for new hires in which an employee is provided orientation and is closely observed by the supervisor. At the end of the probationary period, copies of a performance report completed by the supervisor are to be given to the employee and filed in the employee's personnel file. Chapter IV, Section 1 of the City of Saxman Personnel Policy requires that formal utility employee performance evaluations be conducted not only at the end of the 90-day probationary period, but annually. A new employee performance evaluation is in the process of being adopted by the city and will be used in future evaluations. The city administrator/clerk does keep the personnel committee apprised of all personnel-related issues. Comprehensive written job descriptions, however, have been adopted by the city for each utility operator and clearly define position titles, certification requirements, supervisors, qualifications, work hours, and duties. These job descriptions are included in the utility staffs personnel folders, along with Employment Eligibility Verification Form I-9s, W-4s, new hire packets, copies of certifications, and disciplinary warning memos. They are currently looking at improving their employee job description. The city continues to budget for and provide training opportunities to utility staff as needed and available. The city administrator/clerk has attended business administration, financial planning, and municipal clerk training courses and is planning to attend personnel management training this fall. She is also active in the Sanitation Deficiency System (SDS) program. The financial manager has attended the RUBA financial, planning, and personnel training along with a Municipal Clerks class. Utility operators are consistently provided the opportunity to undertake certification training and examinations and remain in contact with Alaska Native Tribal Health Consortium (ANTHC) engineers for onsite training with new equipment and attended the RUBA organizational training. One council member attended the RUBA elected officials training. Funds have been allocated in the city's FY14 budget for travel and per diem for future training.

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 Saxman owns and operates the community's water and wastewater systems. Ordinances giving the city the necessary authority to operate these systems have been adopted. The seven-member city council is the city's governing authority and the utility's policy-making body. The council holds regular meetings as required by Alaska Statutes Title 29 on the third Wednesday of each month. To comply with Alaska's Open Meetings Act, the city consistently posts notice of each meeting at least five days in advance at the city hall, the tribal office, the seaport, the South Tongass Service building, and the Cape Fox Corporation building. Meetings are also advertised in the Ketchikan Daily News and on three public radio stations. Each notice indicates the type of meeting to be held, as well as its location, date, and time. The city council is active in policy-making for the utility, as evidenced in the six months of council meeting minutes reviewed by RUBA staff and the eight years of utility-related ordinances passed by the council. The meetings minutes show that council is provided with utility manager reports, briefings on ongoing utility upgrade projects, staffing and financial issues, training requests, and concerns of the public. The minutes also show that municipal acts, including resolutions and budget amendments, are adopted as necessary and in accordance with standard rules of parliamentary procedure. City staff have requested a rate study to be done by RUBA staff to assess the cost of the new plant and to raise rates if needed. Provisions within the collections policy are strictly enforced; customers are assessed late fees, referred to collections, and disconnected from service as required. The city administrator/clerk functions as the utility manager. The administrator/clerk has worked for the city for approximately six years and is appropriately trained to oversee the day-to-day operations of the utility. She has attended personnel management, business administration, financial planning, and municipal clerk training courses and is active in the Sanitation Deficiency System (SDS) program. The administrator/clerk provides written monthly reports to the city council and holds staff meetings with the utility operators each Monday. The city's finance officer oversees the utility's financial and accounting systems. The city's finance officer has worked for the city for about four years and has significant financial experience from the public and private sectors. The utility's payroll, billing, accounts receivable, accounts payable, and tax filing systems are all operated successfully and the utility has not seen any serious financial or accounting errors under her watch. The finance officer has attended personnel management, financial management, planning, and the clerk's RUBA training. The assistant financial officer has attended the financial RUBA training. The utility operator is certified at level one for the water distribution system classifications and is currently working towards level two for the water treatment system. The backup operator is currently working towards provisional certification. The State of Alaska's Department of Environmental Conservation, Division of Water has rated Saxman's water treatment system at the Class 2 level based on the plant's various components. The city's water distribution and wastewater collection systems are rated as Class 1, though this level is determined by the number of connections served. The city utilizes an organizational chart that clearly indicates levels of authority and the relationship between supervisors and subordinates. The organizational chart appropriately places customers (residents of the City of Saxman) at the top of the chart, followed by the city council, the city administrator/clerk, and then the utility operators. The chart is in keeping with the true, adopted management structure of the city.

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.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
As noted in the Organizational Management section, the utility operators are working towards adequate certification at the classification level of the city's water treatment and distribution systems. Both operators continue to meet the Department of Environmental Conservation's continued education unit (CEU) requirements on time and receive onsite training and assistance from ANTHC engineers. A new water treatment plant is now in place. A preventative maintenance plan was included in the operations manual for the older equipment and an updated preventative maintenance plan relative to the new system will be on hand as well and is being carried out by the utility operator. City staff attends monthly safety meetings put on by AMLJIA. Everyone signs in and this documentation is faxed to AMLJIA. This benefits the city via insurance discounts as well as 'safety dollars' that the city can spend on safety equipment. Resources explaining general safety practices such as lifting and common workplace hazards are available on-site. The utility manager also meets at least weekly with the operators, makes routine spot checks of facilities, and receives verbal reports from utility staff addressing any issues of concern, including safety topics. The utility has annual fire safety inspections conducted and is considering the installation of protection fences around its fuel tanks. Saxman's sanitation facilities have not suffered any major outages due to management issues and continue to operate at the proposed level of service. The utility continues to distribute its Consumer Confidence Reports with the 2012 report released in 2013. The community's water system uses surface water, which, if inadequately filtered, may contain disease-causing organisms. With the new water treatment system in place, the old boil water notice is no longer an issue. The utility is anticipating tapping into a new water source to meet the growing needs of the community. Though the operators have kept some critical spare parts on hand, they have not maintained an inventory control list or a complete critical spare parts list for the current water treatment system. City staff are currently working with ANTHC staff to develop necessary parts lists relevant to the new equipment.