Quarterly Report: 2014, January - March (Q3), Koyuk

Community:
Koyuk 
Staff:
Iura Leahu  
DCRA Regional Office:
Nome regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
4/11/2013 
Entity:
City of Koyuk 
Population:
342 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
8/26/2013 
Exp Date:
4/11/2015 
Last Updated:
4/17/2014 
Community Sanitation Overview:
The City of Koyuk owns, manages, and operates Koyuk Public Water System (KWPS). There are three active wells in Koyuk. The utility consists of the water treatment plant, washeteria, and a centralized watering point which residents haul their water from. The utility also 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. The 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 a 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 Koyuk’s water, wastewater, and solid waste systems. 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, building 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 and wastewater collection system, as well as 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:
RUBA staff assisted the city this quarter in determining how part-time and on-call staff accrue personal and holiday leave, according to the city’s personnel policies. RUBA staff also assisted city staff and the council in progressing on its effort to revise and fully codify utility-related chapters of the city code; the council has now adopted a revised and reorganized Title 1, and has held its first reading on Title 2. In the new issue scheduled for publication in the summer of 2014, the code will be organized by subject matter under an expandable three-factor decimal numbering system which is designed to facilitate supplementation without disturbing the numbering of existing provisions. Throughout the quarter, RUBA staff maintained email and phone contact with the utility clerk/manager and the city administrator. 
RUBA Activities for the Coming Qtr:
This coming quarter, RUBA staff plans to provide on-site management training to the utility clerk/manager. RUBA staff will also continue working with the city clerk, utility clerk/manager, and city council on codifying Titles 3 and 4 of the code of ordinances, which relate to the successful management of sanitation utilities in the community.
Scores:
 
Essential Indicators:
22 of 26
Sustainable Indicators:
27 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 Koyuk Public Water System (KPWS) formally adopted an FY14 budget and mailed a copy to the Division of Community and Regional Affairs. The budget estimates revenues of $163,092 and expenditures of $159,103. The list of items in the operating expenditures section of the budget is comprehensive and allocates funds towards personnel services, facility expenses, supplies, equipment, and parts. 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. The city council held a joint meeting with other local organizations to discuss raising user fees by 35 percent, but no decision has been made to increase the rates. For many years, the city council provided subsidies to the utility. This fiscal year, the city council made a decision not to subsidize. The utility clerk prepares monthly financial reports and presents them to the city council on monthly basis. Excel spreadsheets are used to create monthly financial reports which compare actual year-to-date revenues and expenditures to the budget. According to the monthly financial reports from the months of December 2013, January and February 2014, the utility has paid its electric ($810), telephone ($520), payroll ($1,785) and other bills. The City of Koyuk is part of the Norton Sound Economic Development Corporation Bulk Fuel Program and has ordered a year's supply of fuel through this program. Traditionally, the year-to-date revenues from residential and commercial customers and the local school have varied month to month. In some months of the year, year-to-date revenues are at the level equal to or above those budgeted, but other months' year-to-date expenditures go below those budgeted. For example in December 2013, year-to-date actual revenue exceeded budgeted amounts by $1,900, though in January, it was below budgeted amounts by $3,161. Expected revenues again surpassed budgeted amounts in February. Year-to-date expenditures fluctuate month to month as well.

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 Koyuk Code of Ordinances outlines the city’s utility bill collection policy. The utility clerk mails water and wastewater invoices on or before the end of each month. Bills are considered delinquent if payment is not received by the 20th of the following month. This quarter, the utility clerk sent out monthly statements on time. Efforts to collect past and current amounts due were made and the utility has managed to reduce the number of residential customers with large debt. According to monthly financial reports from December 2013, January 2014, and February 2014, the residential customer utility bill collection rate was 65 percent, 37 percent, and 71 percent each month, respectively. The collection rate of commercial customers was 35 percent in December 2013, 75 percent in January 2014, and 188 percent in February 2014. Collection rates have fluctuated month to month this year as they did last year. For example, the annual FY13 residential customers collection rate was 66 percent. However, the average annualized FY13 collection rate, which included residential and commercial customers, teacher housing, and the local school, was 93 percent. Based on the last three months, the average collection rate was 122 percent, leaving the utility with a surplus of 22 percent. The last five months of the last calendar year, the utility had a deficit of 18 percent. An accounts receivable system is in place. The utility clerk uses both Excel spreadsheets and QuickBooks to track customers past due accounts and amounts. The utility uses QuickBooks for accounts payable and payroll accounting. Payroll taxes are paid via the Electronic Federal Tax Payment System (EFTPS). 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.
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 clerk 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 April 1, 2014, the Internal Revenue Service (IRS) reported that the utility is not in compliance with federal tax deposit and filing tax reports. The utility owes federal taxes for three quarters of 2012 and one quarter in 2013. The utility has not filed form 941 for third quarter of 2013. However, the IRS has no liens against the city. The Alaska Department of Labor and Workforce Development confirmed that all state employment tax payments are current as of April 2014.

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 workers’ compensation insurance policy with the Alaska Municipal League Joint Insurance Association (AMLJIA) valid through June 2014. All city employees are covered by the insurance. This is a comprehensive policy which covers work-related accidents and occupational diseases as required by Alaska Statutes. Proof of coverage is posted in the city office. Koyuk’s personnel policies were adopted by ordinance on May 1, 1989, apply to all employees of the city, and are followed by the utility. The policies address classification, compensation, salary schedule, recruitment and hiring, the workweek, pay, performance evaluations, resignation, suspension, layoffs, dismissal, disciplinary action, and grievance procedures. Personnel folders are well-organized and contain all necessary I-9 forms, IRS forms, acceptance letters, records of disciplinary action, and performance evaluation. The utility provides orientation, job-training, oversight, and performance evaluation. The utility also provides outside training opportunities. Prior utility clerks have completed the Planning Management for Rural Utilities training in February 2011 and 2013, the Financial Management for Rural Utilities training in 2011 and 2013, and the Organizational Management for Rural Utilities course in November 2011. The utility has had a difficult time with employee turnover especially in the utility clerk position. Several utility clerks have left the position in the last year.

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.
No The utility has an adequately trained manager.
No 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 Koyuk owns, manages, and operates the Koyuk Public Water System and several other public utility services. The city council acts as the utility’s policy-making body. The Koyuk Code of Ordinances describes the roles and responsibilities of the city council in relation to the operation and management of public utilities and services. Overall the city council has been enforcing the utility policies and procedures. This is demonstrated by the council working to establish new user rates in order to eliminate the deficit and to have the water and wastewater department rely on its own revenues, rather subsidies. The city council also responded to a need to upgrade and extend the current water and wastewater system. For instance, 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 the Koyuk water, wastewater, and solid waste utilities. The newly-hired utility clerk, who acts as the utility manager and bookkeeper, is in need of training. In the last two years, several utility clerks have successfully completed such RUBA sponsored trainings as Planning Management for Rural Utilities in 2013, Financial Management for Rural Utilities in 2011, and Organizational Management for Rural Utilities in 2011. Two council members have completed the Elected Officials Management for Rural Utilities training in April 2013. The City of Koyuk has an organizational chart and all city departments are listed in the chart. According to the monthly city council meeting minutes, the city council meets as required and the council complies with the Open Meeting Act for all meetings.

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
Koyuk Public Water System staff consists of two water and wastewater operators and a utility clerk/manager. The utility operators’ certifications expired on December 31, 2013, though they are on the waiting list to attend training and receive a new certificate. The operators maintain a preventive maintenance plan, which is part of the utility operations manual. The operators also maintain a written log of maintenance activities, water distribution and productions, 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 and 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 water utility completes and distributes its Community Confidence Report (CCR) and is not on the most recent Significant Non-Complier (SNC) 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.