Quarterly Report: 2014, April - June (Q4), Angoon

Community:
Angoon 
Staff:
Ryan Wilson  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
8/30/2012 
Entity:
City of Angoon 
Population:
438 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
12/21/2012 
Exp Date:
8/30/2014 
Last Updated:
6/26/2014 
Community Sanitation Overview:
Angoon is located about 55 miles southwest of Juneau and 41 miles northeast of Sitka. It is the only permanent settlement on Admiralty Island. Angoon's drinking water is derived from Auktah Lake, treated at a Class 2 treatment plant, and then delivered to customers by a Class 1 piped distribution system. Wastewater is taken by a Class 1 collection system and processed at a Class 1 treatment plant. These systems are owned and operated by the City of Angoon. The city also collects garbage twice weekly from all residents and disposes at a municipal landfill located about two miles from the community. 
RUBA Status & Activities This Qtr:
RUBA staff traveled to Angoon twice during this quarter. In April, RUBA staff trained the newly-hired city clerk and finance personnel on issues pertaining to utility management, including meetings, elections, codification, ordinances and resolutions, reconciliation, and budgets. RUBA staff also met with the mayor and council members to discuss issues concerning personnel policies, sales tax, and utility rates and collections. A follow-up visit was conducted in early June to further discuss utility bill collections, and to assist in addressing deficient utility management indicators. Work was done to assist the community with tax compliance issues, new utility ordinances, and help the community with their consumer confidence report requirements. Throughout the quarter, RUBA staff assisted the city on a number of occasions with financial reports, business licensing and sales tax, state and federal tax compliance, office procedures, and budgeting. The City of Angoon has made progress in its efforts to increase the percentage of people who pay their utility bills; however, that rate is still only 53 percent. There is an ongoing project to restructure their utility ordinance. Currently, the city ordinance does not accurately reflect the circumstances of the community, namely the inability of the community to use shut-off valves as a mechanism to enforce water/wastewater utility payments, which is the prescribed method in the existing ordinance. Their current rate for utilities is about one third of what it would take to break even. Due to these circumstances, the community continues to draw from other revenue sources in order to maintain and keep operational their water/wastewater utilities.  
RUBA Activities for the Coming Qtr:
RUBA staff will continue working on restructuring the utility ordinance with the city. Arrangements have been made to travel back to Angoon and work with the city staff, and council on ways to incentivize and enforce utility payment. There are several methods being discussed by the community and RUBA staff that could effect members of the community who do not pay their utility bills, including PFD garnishment, reduction of other city services, a prohibition on land exchanges, and requirements to install shut-off valves, and more. RUBA staff is considering the option of traveling with QuickBooks Hotline Specialist toAngoon in order to help with some of the accounting and finance issues, as well.
Scores:
 
Essential Indicators:
21 of 26
Sustainable Indicators:
14 of 27
Total Score:
35 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.
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.
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
Angoon's budget operates on a fiscal calendar running from July 1 to June 30. Currently, the city is working to adopt the FY15 budget. RUBA staff has worked at length with the finance personnel to draft the FY15 budget, supplying the community with templates and other reference materials. In early June, during a RUBA visit to the community, RUBA staff inculcated to the community that they will have to hold a special session, at least five days after their regularly scheduled monthly meeting, in order to adopt the budget before July 1. The city gave no reason for RUBA staff to believe they will not meet those requirements to pass the budget before July 1. The city council is the decision-making body for the sanitation services in Angoon. City fiscal staff provides financial reports at some - but not all - city council meetings. Because the city's QuickBooks account is currently under repair, fiscal staff cannot create meaningful financial reports directly from the city's QuickBooks file each month. In the recent past, staff instead created a document in Excel reflecting budget and actual numbers in all budget categories, feeding in the appropriate numbers from QuickBooks. That has seemingly changed in recent months. Monthly financial reports do not reflect on the budget. There is limited information about revenue and the reports are not as detailed as they need to be in order for the council to make sound financial decisions. The most recent financial report provided to the council was for May 2014. There were several discrepancies in that report, including a significant misrepresentation of the amount of sales tax received by the city. As stated previously, the monthly financial reports do not reflect the budget, therefore there is no way to know what portion of the budget had been used up from the fiscal year's appropriations, nor is there a means to determine accuracy of the revenue estimations based on the monthly financial reports. However, after review of financial documents provided to RUBA staff, there has been an effort to show revenues and expenditures in comparison to the budget, which indicate sufficient revenues to cover operating expenses. But these are not actually included in the monthly financial reports provided to the council. 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 FY14 than for FY13 (the FY15 budget has not been completed as of this date, as mentioned previously). 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. Angoon Oil and Gas reports no 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 water service discontinued or will be referred to a collections agency. Currently though, the city does not have the practical ability to shut off individual customers’ water connection and is not sending delinquent customers to collections agencies. Therefore, they are not actively following the policy. The council is nonetheless in the process of exploring alternative options for dealing with delinquent customers, including a possible forgiveness plan and reward system for paying customers. The city bills customers on a monthly basis for water, wastewater, and garbage services. Present rates are $20 per month for water, $12 per month for wastewater, and $10 per month for garbage, with a 50 percent discount 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. The most recent assessment of the city's water collection rate put them at approximately 53 percent. It should be noted that this rate has fluctuated from as low as 26 percent to as high as 62 percent. The utility's revenues are still too low, causing a significant shortfall every year that must be filled by other sources of income such as Community Revenue Sharing. Even with a 100 percent utility bill collection rate, the city would need to be charging all customers more than $57 each month just for water and wastewater service in order to break even. The City of Angoon uses QuickBooks to track all customers and past due accounts and systems are in place to calculate and track payroll, cash receipt, cash disbursement, and purchasing. For payroll, employees clock in and out of work at the city office using a timecard. They then transfer this information onto a time sheet at the end of each pay period. The employee and mayor sign the timesheet and then 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 computers used for managing finances. The computers do not always network correctly, so the utility’s QuickBooks file often gets split into two different versions. 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 as well, making it very difficult to generate meaningful financial reports. A RUBA QuickBooks contractor 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. Finance personnel have been actively working to do reconciliations and RUBA staff has assisted in these efforts, but they are still behind, which might be contributing to the discrepancies in their finances.

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.
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 utility calculates and tracks payroll tax liabilities with the QuickBooks accounting program. The IRS could not grant the city tax compliance on June 2, 2014, due to a small balance owed, and failure to submit 941 forms (three forms for 2013 and two forms for 2014). Recent notification from the IRS indicates that the city has failed to submit their most recent tax return for the current year. The city has not submitted W-3/W-2 forms for 2011. The city was granted employment security (ESC) tax clearance from the State’s Department of Labor and Workforce Development on May 30, 2014. The city has no tax liens.

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 has a comprehensive workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA) valid until June 30, 2014. 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 formally reviewed and adopted 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 sanitation utility; they help ensure that all employees are completing the duties necessary for a successful utility and that the council's employment of personnel is in line with laws and regulations. Personnel files are well organized and contain all necessary immigration and tax forms, acceptance letters, and records of disciplinary actions. The city council actively encourages employees to attend RUBA management trainings. A breakdown of employees’ attendance at these trainings is provided in the Organizational Management section of this report.

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 governs the city's water and wastewater utilities. Section 13.08.010 provides for ownership and operation of the water utility by the City of Angoon and 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 by ensuring all meetings are public and adequately posted ahead of time. Currently, the council is not enforcing the codified utility policy, specifically the provisions of the policy related to utility bill collections. This is partially due to the fact that the policy cannot be practically enforced as it is written; the policy requires that delinquent customers have their water services disconnected, though, as described previously in this report, the lack of necessary shut-off valves makes that impossible. The city is encouraging utility staff to request and attend training specific to their particular duties and responsibilities. The council encourages sending staff to RUBA’s utility management trainings. The mayor, who also serves as the utility's manager, has attended the RUBA Elected Officials Management for Rural Utilities training, as has one other council member. The city's Grant Administrator has attended the Personnel and Planning Management for Rural Utilities trainings. The accounts receivable clerk has attended Personnel, Elected Officials, and Financial Management for Rural Utilities courses, along with a RUBA-sponsored QuickBooks class. The accounts payable and accounts assistant clerks have also both attended that QuickBooks training. The accounts assistant clerk has attended the Personnel Management for Rural Utilities training and the former city clerk had attended Personnel and Utility Clerks Management trainings. 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 an organizational chart that reflects its current structure. 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.

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".
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
Angoon’s primary 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 Class 1 wastewater collection Class 2 water treatment certifications. The water treatment plant includes an office area where all files and documents are kept. Files contain 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. RUBA staff has recommended that such practices begin to help ensure the manager and council are aware of any issues that might come up with regard to water operations. Spot checks would also help see that utility operations are being completed to the expected level of service. There is no routine process for discussing safety issues and conducting inventory control at the utility. Generally, utility services in Angoon are being provided at the expected level. In June, the water operator attempted to complete the Consumer Confidence Report, after submission of the report DEC contacted RUBA staff and the water operator noting a few minor adjustments that need to be made to the report in order for the report to be complete. RUBA staff contacted the water operator and Mayor to encourage their active participation to remedy this problem. To date there has been no indication that the report has been resubmitted to DEC for approval, which is not due until July 1, 2014. In 2013, the city's water utility was taken off of the Significant Non-Compliance (SNC) List, and as of June 2014 remains off of the list.