Quarterly Report: 2014, October - December (Q2), McGrath

Community:
McGrath 
Staff:
Glen Hamburg  
DCRA Regional Office:
Anchorage 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of McGrath 
Population:
315 (2012 DCCED certified estimate) 
Assessment Status:
Assessment Completed 
Assessment Date:
2/19/2013 
Exp Date:
 
Last Updated:
12/20/2013 
Community Sanitation Overview:
McGrath is located in Alaska’s Interior Region 221 miles northwest of Anchorage and 269 miles southwest of Fairbanks. The City of McGrath operates a piped water system that serves nearly all 178 households; a few homes have individual wells or haul water. The Federal Aviation Administration (FAA) branch in McGrath operates its own water system. The majority of the community’s residents use individual wastewater tanks, while a limited city wastewater system serves approximately 34 homes. Funds have been requested to expand the piped wastewater system to the 144 houses and businesses currently utilizing their own individual wastewater tanks. There is also a washeteria owned and operated by the city. McGrath is poised to begin substantial upgrades of its water treatment plant with design and engineering phases of this project already complete. Erosion control is a critical issue, as the water treatment facility is located next to the river. The cost of moving the facility would triple the costs of the upgrade. The city has applied for funding to complete their erosion control project, ensuring the integrity of the water treatment facility. 
RUBA Status & Activities This Qtr:
New RUBA staff began working with the community on December 2. Since then, RUBA staff has advised utility staff and the utility’s governing body, the city council, on concerns of conflict of interest and nepotism. RUBA staff has also verified the city’s employment security tax filings and deposits, its workers’ compensation insurance coverage, and utility operator certifications, while also reviewing available financial reports and council meeting minutes to ensure that essential and sustainable indicators are being met. RUBA offered this quarter to provide any additional utility management assistance needed. 
RUBA Activities for the Coming Qtr:
RUBA staff will coordinate with city officials to determine the possibility of an on-site visit in the coming quarter and will continue to provide any advice and assistance necessary.
Scores:
 
Essential Indicators:
23 of 26
Sustainable Indicators:
26 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.
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
No 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 McGrath’s fiscal year follows the State fiscal year running from July 1 to June 30. The city’s balanced and realistic FY14 budget was adopted timely by non-code ordinance on July 1, 2013. The budget compares projected income and expenses next to FY13 budget and actual figures. Piped water utility revenues and expenses are appropriately separated from other city functions, as are wastewater revenues and expenses and washeteria revenues and expenses. The city projects to spend approximately $288,000 on piped water utility expenses, but to collect $230,000 in revenues. 78 percent of these water revenues are to come from user fees, while the remaining revenues are subsidies sourced from the State’s Community Revenue Sharing program. The wastewater utility is expected to generate $49,000 in revenue during FY14, but to cost the city more than $52,000. The roughly $3,000 deficit will be covered by other city revenue sources. The washeteria plans to see a net profit of more than $3,000. A review of meeting minutes shows that the financial reports are provided to the city council, the utility’s governing body. However, it is unclear whether the financial reports provided to RUBA staff this quarter are the same reports received by the council members. If they are, there are line items which may not give the council a full understanding of the financial situation of the utility each month and actual values are not appropriately compared to budgeted amounts. The minutes also show that verbal managers reports are also provided to the city council each month and that financial matters are given appropriate consideration.

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
The utility has adopted a collections policy which is outlined in Title 13, Chapter 4 of the McGrath Code of Ordinances. The city provided RUBA staff with a sample water utility bill who then verified that they contain the appropriate information. Customers are billed on a regular basis in accordance with established billing policies. The city uses QuickBooks Pro 2012 to track all financial transactions of the utility and other city finances, including accounts payable and payroll. The city maintains a comprehensive and organized chart of accounts that address appropriate line items. Purchases for the utility are discussed between the administrator and lead operator to confirm the purchase is necessary and also to identify if funds are available in the budget. Decisions outside of budgetary line items are made based on the determination of necessity and available general funds.

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 City of McGrath has not given RUBA staff authorization to request federal tax information this quarter as requested, so it is not possible to verify that federal tax filings and deposits are current. However, the State’s Department of Labor and Workforce Development confirmed on December 17, 2013 that the city is current with its employment security (ESC) tax filings and deposits, and the city is not listed on the September-October 2013 Lien Watch.

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
RUBA staff confirmed on December 20, 2013 that the city has a valid workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA). The city also has an employee handbook that addresses hiring, evaluation, personnel files, a 90-day probationary period, promotions and transfers, and other necessary personnel matters. The city encourages employee training, as evidenced in council meeting minutes authorizing utility employees to travel to trainings, and by reasonable budget allocations for travel and training costs.

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 McGrath owns and operates the sanitation utilities in the community. It has adopted ordinances addressing service standards for the water utility and clearly stating what and how those services are to be provided. The McGrath city council members are active in policy making for the utility and enforces those polices, as evidenced through a review of council meeting minutes and the customer user fee income levels. The city administrator acts as the utility manager and the utility foreman reports to the city administrator. The city administrator has over six years’ experience with the City of McGrath and has completed various RUBA program utility management trainings. The administrator has been awarded the 2005 Alaska Water and Wastewater Management Association (AWWMA) System Manager of the Year and has been recognized by Tanana Chiefs Council for outstanding dedication to the McGrath Water System. The utility foreman has three plus years of experience and has been with the city for the last year. There are two water operators employed by the city and recognized by the State’s Department of Environmental Conservation. One of these operators holds Water Treatment Level 2 and Water Distribution Level 2 certifications, both expiring at the end of 2015. The other operator is certified to operate a small water system until the end of 2014 and holds provisional water treatment certification valid until the end of 2015. The bookkeeper has been at the position for over two years, is a certified municipal clerk with the Alaska Association of Municipal Clerks, and also has attended clerks training presented by Alaska Municipal League (AML). The council meets at least once each month and meeting notices are posted in accordance with Alaska’s Open Meetings Act.

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
In addition to the utility foreman, there are two water operators employed by the city and the information provided in the Organizational Management section of this reports demonstrates that they actively work toward maintaining necessary certification. Utility employees hold regular safety meetings and have a safety manual on hand. The utility has not had any significant outages due to management issues. The utility maintains a monthly preventative maintenance checklist for the water utility. The checklist includes maintenance of the river pump, inspection of chemical feed pump and injection point for fluoridation, inspection of chemical feed pumps for chlorination system and clearing sediment, inspection of tank farm valves, alarm panel battery backup system and pressure relief valve in the boiler. The City of McGrath has a current Consumer Confidence Report on file at the utility and is not on the October 2013 Significant Non-Compliance list. The utility has an inventory control list and critical spare parts list; copies have been provided to RUBA staff.