Quarterly Report: 2014, January - March (Q3), Elfin Cove

Community:
Elfin Cove 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
Community Non Profit 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
Community of Elfin Cove 
Population:
39 2013 DCRA Approved Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
6/13/2012 
Exp Date:
 
Last Updated:
3/20/2014 
Community Sanitation Overview:
The Community of Elfin Cove operates and manages the community water utility, fuel dock, and electrical utility. Elfin Cove has a Transient Non-Community Class B Groundwater Only water system, as certified by the Department of Environmental Conservation (DEC), most recently in 2012. Elfin Cove has been operating the water utility since 1957 and in 1970 the Department of Natural Resources certified the water supply. In 1981, the corporation was formed; in 1982, it began paying for water rights. This same year, the community installed spring boxes for the distribution system. At the time, the water supply was a pond at the top of a hill near town. This surface water was untreated. In the early 2000's, a Village Safe Water grant funded a project to begin tapping into a ground water source near the same site of the previous surface water source. The previous surface water source remains untreated and is used to wash boats in the harbor. However, all residences and businesses in the immediate community are now connected to the groundwater source. Until about three years ago, coliform tests were frequently coming up positive. However, when the current water operator began running the utility and taking tests, the tests began coming out negative and have been negative for coliform consistently for three years now. The water operator believes that previous tests were tainted during the collection process. However, because the groundwater source is close to a surface water source, Village Safe Water (VSW) is undertaking an engineering assessment to establish whether the community's groundwater source is under the influence of surface water. If this is found to be the case, VSW will be recommending, and possibly grant funding, a water treatment facility. There are also concerns within the distribution system. Because individual residents have built their own wastewater systems, many wastewater pipes are not in compliance with EPA regulations. In some locations, wastewater pipes are laid on top of clean water distribution pipes. There is one water distribution point which is in need of serious upgrade. The community received a grant to undertake this work a few years ago and purchased pipes for the project. They were told that they could not commence installation without an engineering assessment. The old pipes used beyond this distribution point are vulnerable to backflowing contaminants into the rest of the distribution system. The corporation hopes to receive assistance from VSW engineers in order to obtain the necessary studies to complete the needed distribution upgrade. 
RUBA Status & Activities This Qtr:
This quarter RUBA staff provided answers to questions pertaining to financial institutions relationship with community association and utilities. RUBA staff also attended a Sanitation Deficiency Systems providers meeting, in which Elfin Cove was discussed, specifically related to the need for distribution system upgrades, and concerns around wastewater safety. RUBA staff also assisted in providing VSW engineers with updated population numbers, in order to add in their assessment of the community's qualification for funding. The community has a new bookkeeper, who was scheduled to attend the RUBA financial management training, but was unable to attend due to weather-related flight cancellations. 
RUBA Activities for the Coming Qtr:
RUBA staff will continue working with other professional agencies on providing management assistance and advice to utility staff. RUBA staff will also continue providing training and assistance to the utility's newly-hired bookkeeper.
Scores:
 
Essential Indicators:
23 of 26
Sustainable Indicators:
23 of 27
Total Score:
46 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 community adopted an FY14 budget in July, 2013. The budget lists realistic revenues and expenditures for the corporation as a whole, and for the water utility specifically, based on revenues and expenditures from previous years. The FY14 water utility budget closely reflects the previous year's actuals, with an additional $1,000 budgeted for electric. For the past year, financial decisions have been made at community meetings with a vote of both the board and of the community as a whole when the matter is seen to be significant or potentially controversial. The community now receives financial reports at all regular meetings of the board, including a balance sheet and profit and loss budget overview, as created on the QuickBooks program. Expenses are thus far on par with budgeted amounts. The community's treasurer provides a manager's report provided verbally or in writing. The reports specifically address water, electric, and fuel utility revenues and expenditures. As the water utility, electric, and fuel companies for the community are all owned and managed by the community, services for the water utility may be provided internally. However, the water utility does not currently need to utilize electric or fuel in any of its operations. The fuel company has a bulk storage facility on-site, and receives shipments of fuel as needed. Fuel is purchased from Taku Oil, out of Juneau, and transported to Elfin Cove by Sea Level Transport. There have been no reported shortages. Expenditures consider both operating expenses and repair and replacement costs. There is no anticipated increase to expenditures. However, revenues so far in FY13 was lower than in previous years. As revenues are made as donations at a suggested rate, and are not required, a follow-up letter requesting donations has been sent out this past month. At this time, the water utility is financially sustainable. All revenues are from voluntary yearly payments from community members. Revenues in excess of expenditures are saved in a water fund in anticipation of possible future repair or replacement needs. This money will also assist in subsidizing the water utility in the event that further donations are not made in FY14.

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 utility does not have a formally documented and adopted collection policy for the water utility. However, they do have regularly-followed procedures as such. The utility sends a letter to all water utility customers once a year. This letter requests a yearly voluntary donation to the water utility account for the cost of keeping the water system in compliance with DEC regulations and for water sampling. The suggested donation for residential customers is $50, while the suggested donation for business customers is $100 or more depending on estimated usage. Checks are requested to be made out to the Elfin Cove Water Utility, to delineate donations from payments being made to the community for other utilities. In FY12, the water utility estimated a 98% voluntary collection rate. In FY13, the voluntary collection rate is so far significantly lower, and thus the corporation will be sending out a second letter requesting donations. As the currently utilized system is working effectively to collect sufficient funds to run the water utility, it is recommended that the system be written into policy and adopted by the community board. The purchasing system requires that two board members sign off on all checks prior to purchase. Purchases under $2,000 receive automatic approval for procurement by maintenance and operator staff of the community, with these two required signatures. After the purchase is completed, the community's bookkeeper closely scrutinizes all purchases and follows up on any questioned purchases. Purchases over this amount are presented to the community board for pre-approval. The bookkeeper also compares budgetted amounts with actual amounts, to ensure spending is within budgetary limits. As the water utility is a very small self-sustaining operation at present, the community also provided information regarding the fuel utility as evidence of the community's ability to manage a utility. The fuel utility is owned and managed by the community, which has adopted relevant rules and regulations. The fuel utility follows an adopted billing and collection policy, and an aging summary evidences a 100% collection rate. The community's treasurer uses QuickBooks to document and track accounts receivable and accounts payable. While the QuickBooks system does track which customers have paid toward the water system in accounts receivable, because the payments are by voluntary donation only, there is no tracking of individual customer collections rates. The utility is very rarely paid in cash, but when it is, these funds are sent to the bank for deposit, and both receipt and deposit of the cash is documented in QuickBooks. The community's bookkeeper uses QuickBooks for the payroll system as well. There are five regularly paid employees of the community: two for the electric utility, two for the fuel dock, and one for both. The fuel dock operator also functions as the water operator within his regular working hours. Additional staff may be employed on a temporary basis for specific assignments and tasks. The community conducts reconciliations on a monthly basis of all community accounts, including utility accounts. The community provided documentation from the community's bank and QuickBooks files as evidence of reconciliation for the past three months. When reconciliations are carried out, this is documented on QuickBooks and also noted in writing on statements from the bank, which are then filed and saved. The community also provided an accounts listing, which separates the accounts into accounts receivable and accounts payable types. Each utility (such as the fuel utility and the water utility) are separated within both accounts receivable and accounts payable.

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 community utilizes the QuickBooks program to calculate, track, and report payroll tax liabilities. They use the Electronic Federal Tax Payment System (EFTPS) to make federal tax payments. The bookkeeper is charged with tax liability related tasks. The State of Alaska Department of Labor granted tax clearance on March 4, 2014, with relation to employment security taxes. The IRS has also confirmed that all federal employment and excise taxes have been paid, and all appropriate forms filed, as of December 13, 2013. However, authorization was not provided in time to check IRS tax compliance for the current quarter. The corporation does not currently have any 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.
Yes 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 ocommunity is insured by Alaska National Insurance Company, as confirmed on the State of Alaska Department of Labor Worker's Compensation Database. The most recent policy information is posted in a glass case at one of the entrances to the community building. The policy was confirmed as current as of August 30, 2013. The utility has not adopted a personnel policy. There are job descriptions for the fuel dock manager, electric facility manager, fuel dock attendant, and bookkeeper. Community staff report that they undertake informal evaluations, but there is nothing formalized or in writing. There is also no adopted orientation or training/oversight process. The community board supports and encourages training of personnel, both paid and volunteer. The bookkeeper has attended two accounting courses; the bulk fuel manager has recently completed 65 hours with AVTEC in the Bulk Fuel Program; the electric utility operator has received certification as a power plant operator, and as an advanced power plant operator; the secretary attended a Clerk Management for Rural Utilities course and QuickBooks course provided by the RUBA program. The board expressed an interest in future RUBA trainings available to personnel and board members. The community's bookkeeper also retains personnel files for all employees. Each file has the applicant's original application, W2, and I-9 forms. The community utilizes the job descriptions (where available), application, and board vote outcome in lieu of a letter of acceptance. When a position becomes vacant, the job opening is posted in the glass case at the community building door, at the Elf Inn, and in the shop. Applicants fill out an application and employment paperwork, attend a meeting and interview with the community board, the board votes, and hiring is based on the outcome of votes. While this process is being practiced consistently, it has not been written and formally adopted by the board as the hiring process for the community. The bookkeeper and treasurer are to some extent cross-trained, such that when one is out of town, the other may take over appropriate responsibilities. Similar cross-training has been suggested with regard to the responsibilities of the secretary. The secretary has recently begun cross-training to help full in for the treasurer when she is out of the community over the winter months. The secretary has taken the RUBA UTM Clerk Management and QuickBooks Beginners courses.

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 community owns the water utility, as certified by the Division of Natural Resources and as evidenced by yearly payments for water rights on the community's books. The community allows itself the authority to operate the water utility in Section IV.2. of the by-laws: 'The Corporation has the authority to operate a water utility'. The community's by-laws dictate that the corporation shall have a minimum of four meetings annually, at least two in the spring and two in the fall. The community can and does have meetings more frequently than this. The corporation provided meeting minutes as evidence of the board exceeding the meeting requirements. The community also provided a sample meeting notice. Meeting notices are posted at least ten days before each meeting at the two different entrances to the community building and in the shop. Postings include the date and time of the meetings, type of meeting, and the location. Utility policies are adopted or amended at these meetings as necessary. All adoptions and amendments are made through a vote of the board, often following a straw poll vote of the attending community members. As discussed under the personnel section, training has been available for personnel, who are encouraged to seek opportunities when available. For instance, the community supported its secretary in attending a QuickBooks training as provided by the RUBA program, in Anchorage in October, 2012. The community and utility do not currently have an organizational chart reflecting utility personnel or chain of command. A draft chart has been created and introduced to a board meeting, at which numerous revisions were suggested. Revisions will be made and the chart will be introduced at the next board meeting for either further revision or approval. The Organizational Chart will better establish who is employed by the corporation, what their responsibilities are, and to whom they report.

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.
Yes The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
The water operator for the utility has been working in this capacity for three years. The present class of water facility (Transient Non-Community Class B Groundwater Only) does not require water operation certification. However, the operator expressed a willingness and eagerness to seek any required certification. The utility has a plan with regard to needed upgrading and is seeking the support of the VSW and DEC in getting engineering works completed in order to move forward. The water operator frequently provides updates to the manager and board regarding water operations, including providing verbal reports at all board meetings. The manager has also toured the facilities when necessary and when requested. The fuel dock holds safety meetings, into which it has recently incorporated matters of the water utility as well, thus meeting this essential indicator. This is evidenced in Safety Meeting minutes provided after every montly meeting. Meeting minutes include topics to be discussed, accident reviews, suggestions and actions to be made, and comments. Utility personnel complete and distribute the Consumer Confidence Report as required and the community is not on the Significant Non-Compliance List as of April, 2012. The water utility's inventory control list and critical spare parts list is shared with the fuel dock and electrical utility and is maintained by the electric utility manager.