Quarterly Report: 2014, January - March (Q3), False Pass

Community:
False Pass 
Staff:
Glen Hamburg  
DCRA Regional Office:
Anchorage regional office 
Gov't Type:
Second Class City 
Borough:
Aleutians East Borough 
Agreement?
Yes 
Agreement Date:
5/9/2012 
Entity:
City of False Pass 
Population:
40 2013 DCRA Approved Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
2/25/2014 
Exp Date:
2/25/2016 
Last Updated:
4/17/2014 
Community Sanitation Overview:
The City of False Pass spans a narrow strait running between the western end of the Alaska Peninsula and Unimak Island in the Aleutians. It is approximately 650 air miles southwest of Anchorage. The city treats water derived from a nearby spring at its Class 1 treatment plant, stores it in two 60,000-gallon tanks, and pipes it to 22 customers. Over 80 percent of homes are fully plumbed. The city also provides diesel-generated electricity, refuse collection, landfill, wastewater pumping, and wastewater haul services. Though not currently operating, seasonal wastewater from seafood processing would normally flow directly into an outfall line. A community-wide wastewater system has been designed and funding for construction is being researched. 
RUBA Status & Activities This Qtr:
RUBA staff traveled to False Pass this quarter to conduct a utility management assessment. The on-site assessment revealed that the city does not actively enforce a utility bill collections policy, which jeopardizes the longer-term sustainability of sanitation services in the community. Written recommendations for improving this and other management deficiencies detailed in this report, along with additional offers for assistance implementing them, were provided to city staff and officials this quarter. Following the visit, RUBA staff advised the city on how to amend existing utility bill collections policies according to Regulatory Commission of Alaska (RCA) guidelines, and reviewed draft amendments. RUBA staff also explained to the city administrator/clerk, as well as the city’s assigned Remote Maintenance Worker (RMW), the importance of holding and recording regular safety meetings among all utility staff. In March, RUBA staff attended a presentation in Anchorage discussing progress on an alternative energy project in False Pass, which, once on-line, will help improve the reliability of sanitation services in the community. Further, RUBA staff invited city staff to RUBA-sponsored utility management trainings, and continued to collect and review bank statements, financial reports, council meeting minutes, equipment purchase announcements, and other documents detailing the city’s utility management practices. 
RUBA Activities for the Coming Qtr:
RUBA staff will continue to advise the city in its efforts to adopt and fully enforce a meaningful utility bill collections policy. RUBA staff will also further encourage formal safety meetings be held at least bi-weekly, and provide any other management assistance requested.
Scores:
 
Essential Indicators:
24 of 26
Sustainable Indicators:
25 of 27
Total Score:
49 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 False Pass’s fiscal year runs from July 1 to June 30 and the city adopted its FY14 budget timely by non-code ordinance on June 28, 2013. The budget realistically considers prior years’ actual income levels and expenses and appropriates funds for fuel, electricity, insurance, testing, employee travel, parts and supplies, maintenance, and elder customer subsidies (“elder donations”), as well as all payroll and payroll taxes. The city plans to receive $26,650 in water utility and solid waste service user fees this year. All of the expenses associated with providing those services, however, are broken out in different line items and are typically included with other city expenses. It is therefore not clear what the exact costs are for providing sanitation services in False Pass. Similarly, because there is not a separate budget for a utility enterprise, it is not immediately clear how much the city is subsidizing its sanitation services with income sources other than user fees, such as local sales taxes, equipment rentals, and revenue sharing from the State of Alaska and the Aleutian Pribilof Island Community Development Association (APICDA). Nonetheless, the overall city budget is balanced and on track with year-to-date income and expenses. In fact the city has received more in bed tax, sales tax, and raw fish tax revenue, as well as in landfill fees and other income sources, than it expected by this point in the fiscal year. The mayor and city clerk, who share responsibilities related to utility management, give detailed reports to the utility’s governing body at its monthly meetings. Budget amendments are adopted six months into each fiscal year, though the budget ordinance also authorizes the mayor to make transfers of 10 percent or $10,000, whichever is less, between line items. The city council is the governing body for False Pass’s utilities. RUBA staff has reviewed six months of council meeting packets and found that they include financial reports comparing actual year-to-date income and expenses to budgeted amounts. The reports also show how much each line item is over or under budget, and what percent of appropriated funds remain for that line item. The city typically receives just one bulk fuel shipment each year from Crowley, and city maintenance staff have reported to RUBA staff that the supply delivered in the fall of 2013 is adequate to meet local needs. The city generates its own electricity with a diesel generator plant, but is also exploring both tidal and wind power alternatives.

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.
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 city’s utility billing and collections policies are outlined in Title 6, Chapter 36 of the False Pass Code of Ordinances. In accordance with Section 6.36.150 of that chapter, customers are billed monthly for water and solid waste charges. Customers have the option of paying either by cash or by check, though the city is also exploring the possibility of accepting credit card payments. When income is received, the customer is properly issued a receipt. A February 2014 aging summary provided to RUBA staff shows that nearly all of the utility’s 22 customers have balances 60 days or more past due. While most of these balances reflect long-standing delinquencies, more than 30 percent of customers have not paid for sanitation services they were recently assessed. Though a utility bill collections policy has been duly adopted by the council, it is not actively enforced. The city’s utility ordinances require customers receive disconnection notices 47 days after their past due amounts have been rendered delinquent; however, these notices are not delivered and city staff report that without curb stops, it is not actually possible to disconnect any customer. Delinquent customers are not assessed late fees, referred to a collections agency, or systematically denied other city services as a means securing payment for services received. RUBA staff has advised city staff on the importance of amending its ordinances to reflect the policies which it intends and is able to enforce. The city clerk, who serves as the utility clerk, uses QuickBooks for all accounting functions, including the tracking of accounts receivable and payable and calculating payroll. The city’s QuickBooks file has an accurate record of past due accounts and a comprehensive chart of accounts. All city checks must have the signature of two council members, and all staff and officials are cognizant of the amounts that have been approved through the budget process for certain departments. While formal purchase order forms are not always used given the small size of the utility management and operations team, the primary operator seeks prior approval for purchases of more than $500 and the mayor for purchases of more than $1,000.

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 clerk uses QuickBooks to calculate and track payroll tax liabilities. The IRS’s taxpayer advocacy office has confirmed that the city is current with its federal tax reporting and deposit requirements. The Alaska Department of Labor and Workforce Development also granted the city tax clearance on March 21, 2014. The city is not listed on the most recent Lien 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 a valid workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA) and proof of coverage is posted as required. RUBA staff verified that this insurance expense is budgeted for and that payment has been made for the policy through to the end of the fiscal year. The city’s personnel policies are outlined in Title 9, Chapter 75 of the city’s code of ordinances. Those policies address all necessary personnel matters, including job classification, recruitment, hiring, evaluation, compensation, discipline, grievances, leave, travel, per diem, subsistence, training, and work scheduling. In accordance with these policies, new employees are placed on a 90-day probationary period, which is followed by a performance evaluation. All employees are also given an annual evaluation based on their adopted job descriptions. A copy of an employee’s evaluation, which is completed on a standardized form, is included in their personnel file, along with a completed W4, an I-9, an application, a letter of acceptance, and any certification copies. Employees are paid according to an established pay scale. Changes in the pay scale must be authorized in writing on a standardized form by the mayor and attested by the city clerk, with the form then being maintained in the employee’s file. RUBA staff reviewed the utility employee job descriptions and found that they appropriately identify tasks to be completed, the position’s minimum qualifications, pay rage, work site, hours of work, job classification, appointing authority, and supervisor. The job descriptions for those employees tasked with operating the water treatment facility require the employee hold or be able to pass the provisional water treatment exam. The primary and backup operators working with the system are already fully certified; however, the primary operator has expressed some concern that until a regular replacement is available, it is not possible to leave town for trainings. The expense associated with sending employees from the remote community to trainings also could make maintaining appropriate certification difficult. The city has, nonetheless, budgeted $2,500 for travel and RUBA staff has explained the availability of grant-funded trainings to utility staff, including the primary operator.

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
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
Title 6 of the False Pass Code of Ordinances makes clear that the city owns, operates, and manages the city’s sanitation utilities. The title also specifies what sanitation services will be provided and to whom, the service area, classifications of service, customer responsibilities, and other matters essential to establishing a clear legal and financial relationship between the utility and its customers. The city council is the utility’s governing body. In accordance with local law it meets once each month, with notices posted well in advance at the city office, the post office, and the local store. A review of six months’ council meeting minutes shows that the council actively considers utility-related issues, such as maintenance needs, system funding opportunities, and general finances. Yet as noted earlier in this assessment, the city is not fully enforcing its adopted utility bill collections policies and continues to carry significant outstanding account balances. The relevant indicator in this section has therefore been marked ‘No’ until the city addresses the outstanding balances and either fully enforces its existing collections policies or amends them to reflect other priorities. The city’s mayor, who fulfils some of the duties of utility manager, has years of experience on the job. The city clerk serves as bookkeeper while performing other utility-manager roles. The clerk has an accounting degree and has attended the RUBA-sponsored QuickBooks training RUBA utility management trainings. As noted in the previous section, the operators are fully certified. The current employee structure is illustrated in an organizational chart and a revised chart that includes a separate position the city intends to hire for soon has also been drafted.

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.
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.
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.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
The city’s primary operator is provisionally certified in water treatment and distribution, and has already obtained the required number of Continued Education Units (CEUs) necessary for re-certification. The backup operator is also provisionally certified in water treatment and distribution and is working to obtain required CEUs. The city has also recently contracted with an additional operator certified at the Class 2 level. The primary operator attends all council meetings and gives detailed reports. He also is in regular contact with the mayor and the city clerk about utility-related issues. The clerk, who supervises the operators, participates in brief telephonic safety meetings each month with representatives of the city’s workers’ compensation insurance provider. These meetings are documented and the city receives credits to purchase safety equipment for participation. However, the operators do not participate in these safety meetings and no formal safety meetings between all utility staff are held. Because the primary operator has experienced two work-related injuries in the last two years, RUBA staff has advised the mayor, clerk, and operators hold bi-weekly meetings at utility work sites to discuss safety practices and potential hazards. RUBA staff has also recommended that these meetings be documented, noting the time and location of the meetings, the participants, and the specific topics addressed. The utility has not suffered any service outages because of management problems, continues to operate at the level of service proposed, and is not on the most recent Significant Non-Complier list. RUBA staff toured utility sites and found that a year’s supply of chlorine, two years’ supply of polymer, and several extra pumps and pump repair kits are on hand at the treatment plant. The utility also has two backup generators. Having these critical supplies on hand in the remote community helps protect against service interruptions. The utility also maintains an organized utility maintenance plan, written maintenance schedule, and critical spare parts list. The city clerk ensures that Consumer Confidence Reports (CCRs) are completed and distributed on time each year. RUBA staff has recommended that the primary operator also learn to complete the CCRs in case the clerk is unavailable.