Quarterly Report: 2012, January - March (Q3), Diomede

Community:
Diomede 
Staff:
Iura Leahu  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Diomede 
Population:
107  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
5/1/2012 
Community Sanitation Overview:
The City of Diomede and Diomede Joint Utilities are responsible for the management of a seasonal washeteria serviced by a septic system and seepage pit, water treatment plant and 434,000-gallon steel water storage tank/watering point. The water tank is fed by water drawn from a mountain spring that is then filtered and chlorinated at the water treatment plant prior to being stored in the tank. The tank capacity is usually insufficient in the spring each year and residents are forced to melt snow and ice for drinking water. All homes use honey buckets, the waste of which is dumped on the beach in the summer and on pack ice in the winter. The local clinic is connected to the washeteria septic system. In September 2011, CRW Engineering Group, LLC prepared a Business Plan for Water Storage Tank Improvements. The City of Diomede, with funding and technical assistance through the Alaska Native Tribal Health Consortium (ANTHC), plans to construct an additional 350,000 gallon treated water storage tank. The tank will provide additional water storage throughout the winter and spring so that the community does not run out of water.  
RUBA Status & Activities This Qtr:
This quarter Nome RUBA staff traveled to the City of Diomede to complete the RUBA assessment of management capacities, provide financial management assistance to the city administrator, and address the city council members in a special meeting. Nome RUBA staff was not able to complete the RUBA assessment of management capacities because Diomede Joint Utilities does not have permanent utility employees. The part time employees have been on the job for a short period of time and they were not able to provide the required documents to Nome RUBA staff. The City of Diomede has had a difficult time holding monthly city council meetings and managing the city office and its departments. The city council is also the utility board which should oversee the water and wastewater system. The regular city council meetings have been irregular at best and often no quorum was present to hold such meetings. As a result, many resolutions and other important city documents which required city council approval have been postponed for many months. However, in January 2012 the city administrator returned to work at the city office. Following the recommendation of Nome RUBA staff, the city administrator finalized the municipal elections of October 2011. A run-off election was not held because no write-in candidates were interested in participating in the run-off election. Four residents were appointed to the city council to serve until the next regular election, when a successor shall be elected to serve the balance of the term. On March 8, the city council held a special meeting which had on its agenda the reorganization of the city council, adoption of a resolution certifying the annual Certified Financial Statement of Revenues and Authorized Expenditures for the Year Ending June 2010, approval of Norton Sound Economic Development Corporation (NSEDC) Community Benefit Sharing appropriations and the State Community Revenue Sharing funds. At the meeting, a new mayor, vice-mayor and treasurer were appointed. In addition, the city council discussed the employment needs at the city office and Joint Diomede Utilities. The city council decided to close down the fuel management department and ordered the city administrator to immediately post job announcement notices for three city positions. Many residents of Diomede attended the special meeting and had the opportunity to express their views and concerns. Nome RUBA staff also assisted the city administrator in the preparation of the annual Certified Financial Statement of Revenues and Authorized Expenditures for the Year Ending June 2011 and creation of monthly financial reports.  
RUBA Activities for the Coming Qtr:
Nome RUBA staff will continue to provide assistance to the city council and utility utility staff.
Scores:
 
Essential Indicators:
10 of 26
Sustainable Indicators:
10 of 27
Total Score:
20 of 53

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.
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.
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.
No A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
Last quarter the city council adopted the FY12 city budget. The prior utility manager prepared the utility budget and submitted it to the city council in May 2011; however, the city council did not approve the budget until 6 months later. All revenues and expenses are included in the water and wastewater budget. According to the budget, the utility projected $21,000 in revenues and $43,337 in expenditures for this fiscal year. The deficit is $22,337, which is over fifty percent (50%) and unsustainable over the long-term. Other water and wastewater related utilities, such as the washeteria, on the other hand, projected to receive $46,000 in revenues and $44,765 in expenditures. Since Diomede Joint Utilities has not had a utility manager since the resignation of the prior utility manager in August 2011, the current financial situation of the utility is not known. Neither city staff nor utility staff provided Nome RUBA staff with year-to-date revenues and expenditures reports or monthly managers report. Nome RUBA staff is not aware of whether the utility is current in paying water/wastewater bills. On August 31, the utility was delivered a year's adequate fuel supply. According to the acting mayor, the city council will subsidize the utility budget using State of Alaska Community Benefit Sharing and Norton Sound Community Benefit grants. According to the utility operator, the city office appropriates funds if the utility needs to cover repair and replacement costs. However, the current budget does not include a line item for such costs.

Accounting Systems

Essential Indicators
Answer Question
No The utility has adopted a collection policy and actively follows it.
No The utility bills customers on a regular basis.
No An accounts receivable system is in place which tracks customers and reports past due accounts and amounts.
No An accounts payable system is in place.
No The payroll system correctly calculates payroll and keeps records.
No A cash receipt system is in place that records incoming money and how it was spent.
No The utility has a cash disbursement system that records how money was spent.
Sustainable Indicators
Answer Question
No A chart of accounts is used that identifies categories in a reasonable, usable manner.
No 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
Currently, there is no utility manager or utility clerk to bill customers. The prior utility manager used QuickBooks to keep track of accounts receivable, payable and payroll records of all of Diomete Joint Utilities financial records. Financial reports used to be done using Excel spreadsheets. They were complete and comprehensive.

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
Diomede Joint Utilities (DJU) uses its own Employer Identification Number (EIN) for IRS and State's Employment Security Division deposits and reports. On March 29, 2012, the Internal Revenue Service's Taxpayer Advocacy Office reported that DJU has not filed 941 for the 3rd quarter and no deposits have been made for the 4th quarter. However, no recorded Notice of Federal Tax Lien against DJU has been reported. The Division of Employment Security Tax reported that DJU is not currently compliant with filing Quarterly Contribution Reports and making deposits. DJU did not submit a quarterly tax report for the second quarter in 2010 and the third and fourth quarter in 2009.

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.
No The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
No 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.
Yes The utility provides training opportunities to staff as needed and available.
Personnel System Comments
Diomede Joint Utilities employees are covered by an Alaska Municipal League Joint Insurance Association (AMLJIA) workers' compensation insurance policy. The Division of Worker's Compensation website confirmed that the policy is in effect. Nome RUBA staff is not aware of whether proof of coverage is posted at the DJU office or whether the city office and/or DJU is current in its payments to AMLJIA. The utility uses the city's personnel policies, which are part of the Diomede Code of Ordinances. The policies outline the hiring and evaluation process, conditions of employment, a probationary period, disciplinary and grievance procedures, and general workplace expectations. Written job descriptions for all utility positions are included in the Code of Ordinances. There is no evidence that DJU or the city follows its written personnel evaluation process, uses its written hiring process or whether DJU or the city has personnel folders on every employee and follows the probationary procedures outlined in the Code of Ordinances.

Organizational Management

Essential Indicators
Answer Question
Yes The entity that owns the utility is known; the entity that will operate the utility is set.
No The policy making body is active in policy making of the utility.
No 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.
No The policy making body meets as required.
No The utility complies with the open meeting act for all meetings.
Organizational Management Comments
Chapter 36 of the Diomede Code of Ordinances outlines the rules and policies of the public utilities. The city council 'reserves unto itself the power and authority of approve or disapprove by ordinance all budgets, rates, and the acquisition or disposal of real property.' Chapter 36 also provides that the Diomede Joint Utilities Board will manage and operate all utilities owned by the City of Diomede. At this time, the city council is the acting board. Due to some city council members being absent, the utility board was not as active as it should have been during the FY12. The city council has not met as required and has not always complied with the open meeting act for all meetings. Chapter 36 provides that the board shall appoint a manger of the public utilities. However, as of August 2011, the utility manager of DJU resigned. The city office was not able to hire a replacement and DJU does not have an adequately trained manager and bookkeeper. By ordinance, the manager prepares and manages the utility budget, oversees the water treatment operator, power plant operator, tank farm operator and assistant operators. He also prepares and provides monthly manager and financial reports to the city council.

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
No 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.
No 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.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
The water treatment plant operator attended a boiler course in Nome in March 2012. He attended a utility certification course in Fairbanks in April and October of 2011. He did not pass the exam but he is working towards taking another exam in Nome. The utility system has been on the Significant Non-Complier list for many years. Due to remoteness, the water system is late in sending out water samples and the water exceeds the Nitrate Maximum Contaminant Level and Arsenic Running Annual Average of Maximum Contaminant Level. Diomede has a small water system, which uses only one treatment chemical used to treat water. The utility provides limited utility services to the community as it is very isolated and hard to reach community.