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

Community:
Wales 
Staff:
Iura Leahu  
DCRA Regional Office:
Nome regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
2/13/2014 
Entity:
City of Wales 
Population:
150 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
1/30/2014 
Exp Date:
2/13/2016 
Last Updated:
4/17/2014 
Community Sanitation Overview:
The City of Wales owns, operates, and manages Wales Water System. The city operates two groundwater wells which were drilled in 2001. A water transmission line transports raw water to the water plant where raw water is filtered and treated. The washeteria and the water plant are located in the same building. Residents haul treated water from a 500,000 gallon storage tank at the washeteria. Some residents use untreated water from the Village Creek. Almost all residents use honeybuckets, and very few homes currently have plumbing. The city runs a honey bucket haul system. The school and clinic are served by piped water. There are two wastewater systems: one for the school and the other for the teacher's housing and clinic. A master plan to implement a piped system has been completed. The Village Safe Water Program secured funds to conduct a feasibility study to evaluate treatment alternative to remove naturally occurring uranium and fluoride from the two groundwater wells and build a new water plant and washeteria. CRW Engineering Group, LLC provided the city with a Water Treatment Plant & Washeteria Design Analysis Report in June, 2013. A Wales Water Utility Business Plan was prepared by Michael L. Foster & Associates, Inc. The plan identified the following proposed upgrades to the water system: new surface water source intake facility and infiltration gallery; new combined water treatment plant and washeteria facility; new on-site wastewater disposal system; waste hear supply from the Alaska Village Electric Cooperative; new supply and return piping between the existing water treatment plant and the proposed; new service boxes for the school, clinic, teacher housing. Building a piped water and wastewater system is not being considered at this time. There is no permit for the landfill.  
RUBA Status & Activities This Qtr:
This quarter, RUBA staff performed an on-site RUBA assessment of management capacities of the water and wastewater utilities managed by the city of Wales, identifying several unmet essential and sustainable indicators. In response, the city council requested the city clerk draft a RUBA work plan with tasks and deadlines aiming at improving the management capacities of the city. The city council has been active in setting up a new financial system, paying off debt accumulated in the last two years, and restoring essential services, such as the honey bucket hauling service. The city council recently hired a new city clerk; RUBA staff introduced the clerk and the alternate city clerk to a new manual financial and accounting system and provided them with on-site assistance with job functions twice this quarter. The city clerk has provided RUBA staff with monthly financial reports and copies of the meeting minutes of the city council, which serves as the utility board. The State of Alaska’s Village Safe Water Program (VSW) is managing the Water Treatment Plant and Washeteria projects. This quarter, the VSW Project Engineer traveled to Wales to present the 65 percent complete design of the new water treatment plant and washeteria, and to discuss an archaeological field investigation, site control issues and findings, and a plan of action. The city council has been in contact with the project engineer to hash out details on future cost projections, site control, design of the new building and other problems. 
RUBA Activities for the Coming Qtr:
The coming quarter, RUBA staff will maintain telephone and email contact with the city staff and city council to finalize the RUBA work plan and adopt it by resolution. RUBA staff will also develop a schedule for a utility-related ordinance codification project and finish setting up the city’s personnel system.
Scores:
 
Essential Indicators:
22 of 27
Sustainable Indicators:
15 of 27
Total Score:
37 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.
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.
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.
No A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Wales adopted its FY14 budget and a copy was submitted to the Division of Community and Regional Affairs, Community Aid and Accountability Section as required. The water and wastewater system consists of the Wales Water System, water plant, washeteria, and honey bucket hauling service. The enterprises section of the city budget lists the revenue sources used to cover the costs of operating and maintaining Wales Water System, water plant, and washeteria. RUBA staff and the city clerk recalculated the expected revenues for the next six month of the FY14 budget cycle and estimated a total of over $27,800 in revenues. Expenditures were also recalculated and it is expected that the water and wastewater system in Wales will need over $34,300 to cover operating and maintenance costs, generating a deficit of at least $6,500 over the next six month of the FY14 budget cycle. Although the utility budget appears to be realistic showing a comprehensive list of expenses, the budget is not balanced. The honey bucket hauling budget, referred to as the ‘wastewater utility’ in the ordinance, is not balanced; revenues are $1,500 and expenditures over $30,500. RUBA staff and the city clerk recalculated expenditures for the next six month of the FY14 budget cycle, and it was estimated that the honey bucket hauling service will cost approximately $11,300 over the next six months. No revenues were calculated because the city has just begun to send out bills to customers using the honey bucket hauling service. The city council will have to subsidize both the water and wastewater service over the next six month. The city clerk and the alternate city clerk are responsible for preparing and submitting monthly financial reports to the city council. Last quarter, the city clerk provided the council and RUBA staff with a list of revenues and expenditures pertaining to the water plant and washeteria. However, the city and its utilities should develop monthly financial reports that compare actual year-to-date revenues and expenses to the budget. This quarter, RUBA staff worked with the city clerk on creating such a monthly financial report and presented it to the council. The February and March 2014 monthly reports compare revenues and expenditures to the budget. According to the most recent invoices from the electric utility, the water plant and washeteria are current in paying their electric bills. The water plant and washeteria have an adequate fuel supply. The city is part of the Norton Sound Economic Development Corporation bulk fuel purchase program. The city ordered 8,000 gallons of heating fuel for the year and most of it is used to heat utility facilities. Since the city, water plant, washeteria, and the honey bucket hauling service have not used monthly financial reports, it is unknown whether the year-to-date (YTD) revenues and expenditures are balanced. The water operator provides monthly reports on the operation and maintenance of Wales Water System, water plant and washeteria. The city council does not use the budget amendment process when necessary.

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 city is responsible for billing and collecting payments for the water service, honey bucket hauling service, and wastewater disposal service used by the school, teacher’s apartments, and clinic. The city’s code of ordinances does not include a utility ordinance and no written regulations address billing and collection procedures are in place. Although billing statements are available, the city has not billed customers on a regular basis. For example, the city has not mailed the honey bucket hauling bills to customers for over six months. However, bills to honey bucket customers went out in February and March 2014. A manual accounts receivable system tracking the honey bucket hauling customer accounts and the water customer accounts is in place, but it does not properly record received payments. RUBA staff recommended changes to both the account receivable and accounts payable and trained the city clerk/bookkeeper in the use of a new cash receipts and cash disbursements system. RUBA staff assisted the city clerk/bookkeeper in setting up the NEBS Receipt System and chart of accounts as well as the 20 column Eknomik Check Register System. RUBA staff received copies of the documents for the months of February and March. A manual payroll system is in place, but the city has not correctly calculate payroll, has been late filling the necessary payroll reports and depositing payroll payments. However, this quarter the city has paid all taxes payable to the IRS and the State of Alaska, and has filed all past-due reports as required.

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.
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
This quarter, the mayor signed an Authorization to Request Federal Tax Information form, and RUBA staff submitted it to the IRS. The IRS reported that the city is deemed non-compliant with federal tax deposit requirements by the IRS, as of April 1, 2014. The Alaska Department of Labor and Workforce Development confirmed that all state tax payments and tax filing requirements are current. There is no notice of federal tax lien recorded.

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.
No 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.
Yes The utility has an adequate written hiring process.
No 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.
No The utility provides training opportunities to staff as needed and available.
Personnel System Comments
The City of Wales has a posted workers’ compensation insurance policy with the Alaska Municipal League/Joint Insurance Association (AMLJIA). This insurance coverage is effective through the end of June 2014, and pays benefits for job-connected injuries, illnesses, or death as required by the Alaska Worker’s Compensation Act. In 1985, the city adopted a Personnel Policy, and that policy has been reviewed by DCCED for topics and language. However, it appears that the city council replaced the 1985 ordinance by adopting an at-will personnel policy in 2011. At this time, the city council is investigating whether the at-will policy was adopted in accordance with the Wales Code of Ordinances. The city and its utilities do not have adequate written job descriptions for all positions. RUBA staff provided the city clerk with sample job descriptions. The city does not follow a written evaluation process that ties the job description to the evaluation. The city does not have personnel folders on every employee that contain at least I-9 form, job application, and letter of acceptance. The city and its utilities do not have a probationary period for new hires that includes orientation, job-training/oversight, and evaluation. The city doesn’t provide training to staff on consistent basis.

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.
No 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.
No 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 Wales is the owner of the Wales Water System, water plant, washeteria, and honey bucket hauling service. The city council is the policy making body of the utility and has been involved in the new water plant and washeteria development projects, actively reviewing project plans and adopting the necessary documents. However, the council does not enforce all of the utility policies. For instance, collection of payments for the honey bucket service is not enforced and the honey bucket department operates under a significant deficit, which has to be subsidized with funds from other sources. The water operator is the manager of Wales Water System, the water plant, and the washeteria. He reports to the mayor and the city council. He has the necessary training to daily operate, maintain and manage Wales Water System, the water plant, and washeteria. The city clerk acts as the city and utility bookkeeper and has the basic knowledge and skills of bookkeeping. Chapter 14 of the Wales Code of Ordinances addresses some aspects of operating and maintaining the washeteria. RUBA staff recommended the city council to update this chapter. The city council has not adopted the necessary ordinances or rules and regulations to manage, operate, and maintain the Wales Water System, water plant, and the honey bucket hauling service. RUBA staff recommended the city council and city staff adopt a sanitation ordinance to address the honey bucket hauling service. RUBA staff submitted a sample sanitation ordinance to the city clerk. RUBA staff also recommended the city council adopt a water and wastewater ordinance giving the city the authority to operate Wales Water System and the water plant. The City of Wales has an outdated organizational chart. The city council meets as required and 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.
No 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".
No 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
According to the Alaska Department of Environmental Conservation website, Wales Water System has two water operators. The primary operator has a Small Water System certificate that expires on December 31, 2014. The backup water operator has provisional water treatment and distribution certificates that expires on December 31, 2014. The utility has a preventive maintenance plan. The mayor is supervising all city departments, including the utility. The water operator provides the mayor and the city council with monthly operator reports. The reports list the fuel, electricity and water usage, as well as comments on the monthly operation and maintenance and needed critical parts. The water operator also maintains a customer monthly water usage log. A water sample report shows the date samples are taken, freight cost, airline carrier and the company analyzing the water sample. The utility operates at the proposed level of service. The utility has completed and distributed the Consumer Confidence Report in 2013. As of January 2014, the utility is on the Significant Non-Complier (SNC) list due to higher than normal levels of uranium. Village Safe Water issued a request for proposals in April 2012 for uranium treatment options. The utility maintains an inventory control and critical spare parts list.