Quarterly Report: 2010, January - March (Q3), Hydaburg

Community:
Hydaburg 
Staff:
Lawrence Blood  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Hydaburg 
Population:
353  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
5/10/2010 
Community Sanitation Overview:
The City operates a level 1 water distribution and wastewater collection system and a level 2 water treatment system. The Hydaburg River provides city water, which is treated and piped throughout the City. Piped gravity sewage is treated at a secondary treatment plant with an 800' outfall to Sukkwaw Strait. Over 95% of all homes are plumbed. Funds have been requested to construct a new dam to increase the water supply. The City is exploring options to improve waste disposal. Alaska Power and Telephone Co., based in Skagway, owns and operates diesel power systems in Hydaburg and Craig, which provide electricity to many Island communities.  
RUBA Status & Activities This Qtr:
The City of Hydaburg still does not have all the necessary financial and management systems in place to pass the RUBA management assessment; however, the community has made significant strides towards addressing deficient essential indicators. The City has begun the first round of water service disconnections for water, sewer and garbage customers who are seriously delinquent. Local municipal code requires a service disconnection seven days following an account becoming delinquent. However, for many years this ordinance has not been enforced which resulted in a very low collection rate and utility customers owing the city in excess of $200,000. All delinquent customers have been notified of the impending service disconnections; however, due to the vast number of delinquent accounts, the city will first start disconnecting water users who are $1,000 or more past due and do not have a service agreement on file. RUBA staff assisted the community in clearing an Alaska Employment Security Tax (EST) lien from the public record. Compliance checks with the Internal Revenue Service (IRS) and State Department of Labor showed that the City was in compliance with all State and Federal tax reporting and deposit requirements. However, the State Recorder's Office showed an active EST lien which was filed on 2/12/08. A lien release had never been recorded after the community became current with their EST liabilities. RUBA staff acquired the lien release from the State Department of Labor and ensured that the release was recorded. The City is now clear of all EST and IRS liens. RUBA staff will continue providing technical assistance and support the community in implementing the necessary changes. A follow-up RUBA assessment is scheduled in six-months to measure progress.  
RUBA Activities for the Coming Qtr:
RUBA staff will continue to work with the community in the area of financial management. RUBA staff will also continue to work with the utility on the accomplishment of identified goals along with providing ongoing technical support. The identified goals are: 1. Complete the FY10 budget and FY09 audit 2. Identify all sources of revenues for the utility. 3. Complete an accurate estimate of expenditures for the coming year. 4. Review and update the existing collections policy RUBA staff, at the request of the community, is also available for on-site assistance to provide training and assistance in improving and meeting the deficiencies identified in this assessment.
Scores:
 
Essential Indicators:
21 of 27
Sustainable Indicators:
17 of 27
Total Score:
38 of 54

Finances

Essential Indicators
Answer Question
No 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.
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.
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.
No Budget amendments are completed and adopted as necessary.
Finances Comments
The city has not yet adopted an FY10 annual budget. The budget is drafted and was scheduled to go to the council for first reading on December 8, 2009; however, the council failed to achieve a quorum and the meeting was postponed to an unfixed date. Until the budget is finalized and adopted by the council, the city does not meet any essential or sustainable indicators involving the budget. The administrator has previously made only verbal financial reports to the council on a monthly basis. Until recently, there were internal errors with the QuickBooks program which caused inaccurate information to appear on the financial reports. The city hired Tammy Stromberg, CPA of Aurora Corporate Enterprises Inc., as an independent contractor to correct the problems with the QuickBooks program. After months of working on the accounting system, the contractor reports that there are still a few problems but the accounting system is now generally accurate and useful. The city has started using three separate profit and loss statements to communicate financial information to the council on the enterprise funds, general fund, and capital projects. The administrator understands that as a condition for passing the monthly financial report essential indicator, the utility budget information must be entered into the accounting system. This will make it possible to provide budget versus actual financial reports to the council on a monthly basis. Electricity is provided through Alaska Power and Telephone Company. A visual inspection of the most recent electricity billings verifies that the city is current with all electricity accounts for the water and wastewater utilities through November 2009. The city has two 275 gallon fuel tanks for heating fuel, located at city hall and the water treatment plant. The city receives fuel deliveries from Petro Marine in Craig on an as needed basis. The city usually maintains a one to three month fuel supply however theft of fuel from the city tanks has become an increasing problem. There are locking caps on the tanks and the city attempts to keep the tanks locked however on occasion they have found the locks cut. The administrator recently replaced the locks with a higher security type which he hopes will solve the fuel theft problem. The city has adequate funds available and purchases fuel as needed. The governing body is fully aware that user fees do not produce sufficient income to cover operating expenses or repair and replacement (R and R) costs. It has been a general practice for the city to use whatever sources of money that are available to subsidize utility's operating expenses. The city has in the past had to resort to deferring payment of other city obligations to ensure the continued operations of the water treatment plant. The administrator and mayor have expressed their desire to start enforcing the city's collections policy and addressing the utility rates that have not been changed in several years. In December 2009, the mayor published and sent out a newsletter informing residents of the new utility bill collection procedures that will be imposed starting January 1, 2010. The city administrator, who also serves as the utility manager gives both verbal and written status report to the council at monthly meetings. Written reports are usually timely and comprehensive. The administrator recently completed a 44-page report identifying financial and maintenance concerns with the water, wastewater, and solid waste utilities.

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.
No 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 has an adopted collection policy which is contained in Title 13 of the Hydaburg Municipal Code. The collection policy is no more than a single provision to discontinue service to any customer who is more than 60 days past due. The policy does not cover conventional utility ordinance topics such as billing dates, delinquency notices, service charges, and charges to reconnect services. In the past, the city has been inconsistent with sending out monthly bills and there has been little enforcement on past due accounts. The current collect rate calculated from July 1, 2009 through December 7, 2009 is 24.5%. Over the last few months, the utility has become diligent about billing its customers on a regular basis and has committed to enforcing collections and discontinuing service to past due customers. This increased effort will hopefully produce a stable source of income for the utility. The city is currently using QuickBooks Pro for their accounts receivable, accounts payable, and payroll. The account receivables system documents customer payments and reports past due accounts with the corresponding monetary amounts. The aging report includes all customers and shows total amounts due as well as whether it is 1-30 days, 30-60 days, 60-90 days, or over 90 days past due. The administrator and accounting contractor were in the initial stages of developing a cash receipt log to record incoming cash payments and checks not accompanied with an invoice. Along with the cash receipt log, the city recently started using two separate receipt books to provide customers with proof of payment, one for utility payments and one for other incoming funds. The accounting contractor is providing procedural training to city finance personal and is in the process of developing and implementing other internal financial controls The accounting contractor reports that all bank accounts have been reconciled through October 2009. The city uses a purchase order system, which requires review and signature by the administrator. Because the city does not currently have a FY10 budget, the administrator attempts to prevent overspending by reviewing the cash balance report before approval. The city is completely caught up on their delinquent annual financial audits and auditor's are currently working on the city's 2009 annual financial audit.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
Yes The utility is current on filing tax reports.
Yes 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 City of Hydaburg uses QuickBooks Pro to calculate, track, and report payroll liabilities and makes electronic payments using the Electronic Federal Tax Payment System (EFTPS). RUBA staff visually inspected the community's last four 941s (employer's quarterly federal tax returns) and verified electronic debits. The last four quarters' 941s were filed on time. On March 22, 2010, the administrator authorized RUBA staff to obtain federal tax information from the Internal Revenue Service (IRS) and employment security information from the Alaska Department of Labor and Workforce Development. Compliance checks with the Internal Revenue Service (IRS) and State Department of Labor showed that the City was in compliance with all State and Federal tax reporting and deposit requirements.

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
Current coverage for workers compensation insurance was verified through Alaska National Insurance Company. The policy is effective from 7/1/09 through 06/30/10. The policy covers work-related accidents and occupational diseases up to the Alaska statutory limits for each occurrence. Copies of the workers compensation policy is posted in accordance with state statute in all public buildings and in areas easily accessible to employees. The city council recently addressed several issues in their personnel policy. An updated policy has been drafted and is scheduled to be adopted at the next council meeting. The city keeps records relating to employees in a personnel file. RUBA staff reviewed personnel files on a sample basis and found that the files were well-organized and contain all the necessary employee documents. The administrator reported that all files connected with an employee are considered strictly confidential. The city has plans to purchase new fire proof and locking cabinets for document storage. The utility has a written hiring procedure with a six month probationary period for new hires. The job descriptions are up to date and expressly outline each employee's required duties. The city provides training opportunities when outside sources of training funds are available.

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.
No 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 Hydaburg owns and operates the water and wastewater utilities. The council is the formal governing body and meeting minutes verify that it is actively engaged in making decisions on behalf of the utilities. The council attempts to meet on the first and third Tuesday of each month; however they have recently had problems obtaining a quorum for scheduled meetings. The council holds special meetings and additional work sessions if necessary. The city complies with open meeting requirements and posts meetings in accordance with local code and state statutes. The manager for the sanitation utilities is the city administrator. He is adequately trained in the administration and management of the utility. Due to staffing limitations, the bookkeeping responsibilities are not well defined. The duties are generally split between the city administrator and city clerk. The administrator has attended several RUBA sponsored QuickBooks trainings and the accounting contractor is providing ongoing training to both the administrator and city clerk. When the city is financially able to do so, the city plans to hire a fulltime bookkeeper. The city currently has only one uncertified operator working on the sanitary systems. The operator has received some hands-on training from the former operator and the remote maintenance worker is providing additional training working towards the operator receiving his provisional certification. The city currently operates a level 2 drinking water system. The council has adopted all the ordinances necessary to own and operate the utility services. Title 13 of the Hydaburg Municipal Code establishes the policies and procedures for the operation and maintenance of the community water supply system. The city has an organizational chart contained it the personnel policy. The chart depicts the direct relationship between supervisor and subordinate however it does not accurately reflect the current organizational structure of the city.

Operation of Utility

Essential Indicators
Answer Question
No 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.
No 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".
No 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
The City operates the following sanitation systems: Level 2 Water Treatment Level 1 Water Distribution Level 1 Wastewater Collection The water operator has completed the Introduction to Small Water Systems, Provisional Level training but failed to pass the State certification exam. The Hydaburg public water system is listed on the most recent (2/3/10) Significant Non-Compliance List. The utility is receiving treatment technique violations for turbidity and monitoring which has resulted in a boil water notice for the community. The utility failed to provide quarterly TTHM/HAA5 samples for 1st quarter FY10. The utility has not completed and distributed its Consumer Confidence Report (CCR) as required by the Safe Drinking Water Act. The utility has a critical spare parts list but does not maintain an inventory control list. The administrator reports that the utility maintains a sufficient level of supplies and tools but due to the community's island location and dependence on air and ferry service, the current level of critical spare parts may be inadequate to prevent a service outage. The utility has experienced recent outages due to running out of polymer and chlorine.