Quarterly Report: 2013, July - September (Q1), Koyuk

Community:
Koyuk 
Staff:
Iura Leahu  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Koyuk 
Population:
347  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
10/31/2012 
Community Sanitation Overview:
The City of Koyuk owns, manages and operates Koyuk Public Water System (KPWS). There are three active wells in Koyuk. KPWS consists of the water treatment plant, washeteria, and a centralized watering point for residents to haul their own water. KPWS has a 200,000 gallon water storage tank. The system currently supplies water through two buried arctic pipe main water loops. KPWS uses a gravity wastewater collection system, a lift station and a wastewater lagoon. KPWS water plant and washeteria have severely deteriorated within the last several years and upon an inspection completed by CRW Engineering Group, LLC the building was declared unsafe. In response, the city council adopted a resolution stating that the city council 'desires to accept the Sanitation Facilities Improvement Plan' dated August 2010. The city council has been working with the Alaska Native Tribal Health Consortium, (ANTHC) to undertake major improvements to the Koyuk water, wastewater, and solid waste utility system. ANTHC has subcontracted CRW to prepare the sanitation plan. CRW proposed a three-phased construction plan. The first phase would involve the construction of a new water treatment plant and washeteria, the study of a new water resource and insulation of the water storage tank roof at an estimated cost of $3.6 million. The second phase would consist of finding a new water source, biulding residential water and wastewater services, building a well access trail and well house, and transmission line upgrades at an estimated cost of $1.4 million. The third phase would accomplish improvements to the lift station, wastewater collection system and removal and replacement of the existing lagoon lines at an estimated cost of $969,000. The City of Koyuk hired a grant writer to research and apply for available grants.  
RUBA Status & Activities This Qtr:
On August 6, 2012 Nome RUBA staff traveled to the City of Koyuk at the request of the city council to assist Koyuk Public Water System in conducting a rate study in order to identify the revenues and costs associated with running the system. At an earlier visit of RUBA staff, the city council reported that a decision was made to stop allocating subsidies to the utility. Without such subsidies the utility would run a significant annual deficit. The city council will require a rate study to determine a fair and equitable distribution of user fees to manage the deficit. This study will analyze the utility's annual revenue requirements, the costs of providing water and wastewater services to Koyuk customers, and the development of fair and equitable rates to meet expenses related to ongoing operations, maintenance and capital improvement projects. In order to develop fair and equitable rates, RUBA staff worked with the utility clerk, city clerk and water operator on gathering information on the historical and current revenues and expenditures related to the operation and maintenance of the utility system. RUBA staff gathered information regarding the current customer base, including residential customers, small commercial customers and the local school, which is one of the largest water and wastewater user in the community. In addition, RUBA staff reviewed past ordinances discussing the water and wastewater system, past user fees, earlier rate studies, water treatment plant fuel usage, and monthly water production for period 2008 to 2012. RUBA staff plans to release the rate study within a month. RUBA staff also toured the city-run wastewater lagoon, two well houses, and the lift station. RUBA staff observed that the lagoon liner had several bulges and that the fence surrounding the lagoon was damaged. It was also observed that the pump at one of the Oksinulik well houses was not working due to electrical problems. The water operator reported that an electrician was contracted but has not traveled to the community yet. The nonoperational pump does not seem to affect the current water needs of the community.  
RUBA Activities for the Coming Qtr:
Nome RUBA staff plans to travel to the City of Koyuk to present the rate study to the city council. RUBA staff will work with the city clerk, utility clerk and city council on codifying the city code of ordinances.
Scores:
 
Essential Indicators:
21 of 27
Sustainable Indicators:
22 of 27
Total Score:
43 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.
Yes Monthly financial reports are prepared and submitted to the policy making board.
No 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.
No The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
No 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
The City of Koyuk has adopted the FY13 budget on July 25, 2012. A copy of the approved budget was submitted to the Division of Community and Regional Affairs. Typically, the Koyuk Public Water System (KPWS) budget is included in the overall city budget. KPWS revenues are estimated to be $126,000 and expenditures are $165,524, a $39,524 deficit. In the past, the city council provided subsidies to KPWS. However, the city council made a decision not to subsidize KPWS this fiscal year. The city council requested that city staff conduct a rate study in order to make an informed decision on setting up new user fees in order to balance the budget without using other sources of revenue. What made the deficit so large was the fuel related expense. KPWS forecasts spending about $53,625 on fuel; this is one of the highest expenses incurred by the utility following salary expense. Historically, the city did not include the fuel expense in the KPWS budget because fuel was subsidized by the city council using grant funding, such as Community Revenue Sharing and Norton Sound Community Benefit grants. This fiscal year, the fuel expense was included in the utility budget, significantly increasing the deficit. Historically, the utility has not been able to receive the budgeted revenue due to lack of enforcement of its collection policy. This problem persists. The utility is not current on its electricity bill payments, payroll payments, and other bills. The utility has had a very difficult time with employee turnover especially, the utility clerk position. Several utility clerks have left the position in the last year. Typically the utility clerk prepares and submits QuickBooks monthly financial reports to the city clerk. In turn, the city clerk converts the QuickBooks generated monthly financial reports to an Excel spreadsheet format which compares actual year-to-date revenues and expenditures to the budget. The city clerk submits those reports to the city council on a monthly basis.

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 Koyuk Code of Ordinances outlines the collection policy in detail. The utility clerk mails water and wastewater invoices by the first day of each month. Bills are considered delinquent if payment is not received by the last day of the month. This quarter, the utility clerk sent out monthly statements on time. Accounts receivable system is in place. The utility clerk uses both Excel spreadsheets and QuickBooks to track customers past due accounts and amounts. The accounts receivable data generated by QuickBooks reports show that in April, May and June revenues fluctuated. The June report shows that the KPWS expenditures were above revenues by $6,537. The utility uses QuickBooks for accounts payable and payroll accounting. Payroll taxes are paid via the Electronic Federal Tax Payment System (EFTPS). The utility accepts cash as payment. Cash is exchanged with checks at the local store or corporation. The checks are then mailed and deposited in the bank account. Cash records are entered into QuickBooks. The utility's purchase order system requires the review and signature of either the city clerk or the mayor, depending on the amount needed to be spent. The utility clerk and city clerk report that bank reconciliations are done on a monthly basis.

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.
Yes 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 clerk/bookkeeper uses QuickBooks to calculate, track and report payroll tax liabilities. Tax payments are made using the Electronic Federal Tax Payment System (EFTPS) bi-monthly. On October 3, 2012 the Internal Revenue Service reported that KPWS is not in compliance with federal tax deposit requirement. However, the IRS has no liens against the city. The utility did not file 941 forms for the first, second and third quarter of 2011. The Alaska Department of Labor and Workforce Development confirmed that all state employment tax payments are current as of July 2, 2012.

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 of Koyuk has a worker's compensation insurance policy with the Alaska Municipal League Joint Insurance Association (AMLJIA) valid through June 2013. All city employees are covered by the insurance, including KPWS employees. This is a comprehensive insurance which covers work-related accidents and occupational diseases as per Alaska Statutes. Proof of coverage is posted in the city office. Koyuk personnel policies were adopted by ordinance on May 1, 1989. These policies apply to all employees of the city. The utility follows the personnel policies of the city. These policies address classification, compensation, salary schedule, recruitment and hiring, workweek, pay, performance evaluation, resignation, suspension, layoff, dismissal, disciplinary action, and grievance procedure. City's personnel folders are well-organized and contain all necessary I-9 forms, IRS forms, acceptance letters, records of disciplinary actions and performance evaluation. The utility provides orientation, job-training, oversight and performance evaluation. The utility also provides outside training opportunities. The prior utility clerk attended Financial Management for Rural Utilities course in April 2011, and the new utility clerk and the water operator completed the Organizational Management for Rural Utilities course in November 2011.

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
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
The City of Koyuk owns, manages and operates Koyuk Public Water System (KPWS). The city council acts as the policy making body and as the board of the utility. The Koyuk Code of Ordinances describes the roles and responsibilities of the city council in relation to the operation and management of public facilities. Overall the city council enforces the utility policies and procedures. The city council also responded to the need to upgrade and extend the current water and wastewater system. The city council passed and adopted a resolution stating that the city council 'desires to accept the Sanitation Facilities Improvement Plan,' dated August 2010. The city council has been working with the Alaska Native Tribal Health Consortium, (ANTHC) to undertake major improvements to KPWS. The utility clerk/bookkeeper acts as the utility manager. The utility clerk attended and successfully completed the Organizational Management for Rural Utilities course in November 2011 as well as the Utility Clerks Management for Rural Utilities course in August 2012.

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.
No 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
Koyuk Public Water System (KPWS) employs two water and wastewater operators and a utility clerk/bookkeeper. One of the operators is certified: Water Distribution 1 (expiration 12/31/2014), Water Treatment 1 (expiration 12/31/2014), Wastewater Collection 1 (expiration 12/31/2014) and Wastewater Treatment Provisional (expiration 12/31/2014). The operators maintain a preventive maintenance plan, which is part of the utility operations manual. Both operators, the utility bookkeeper, city clerk and the city council communicate with each other in-person on a daily basis. The operators also maintain a written log of maintenance activities, water distribution and production, as well as concerns and needed parts for purchasing. The utility has a safety manual and the utility staff participate in the monthly safety meetings provided by AMLJIA. The operator indicated that the utility is operating at the proposed level of service. No major water and wastewater problems or outages due to management issues have occurred. The building itself was declared unsafe by engineers, but the utility staff responded by finding a temporary solution to fix the building. The utility did not complete its Community Confidence Report (CCR). The utility is not on the Significant Non-Compliance list. The operators maintain a sufficient number of parts, supplies and tools. The operators also maintain an inventory and critical spare parts list. When there is need for parts, the operators inform the utility bookkeeper of the need and the city council makes decisions on the purchase.