Quarterly Report: 2011, April - June (Q4), Hydaburg

Glen Hamburg  
DCRA Regional Office:
Gov't Type:
First Class City 
Agreement Date:
City of Hydaburg 
Assessment Status:
Assessment Date:
Exp Date:
Last Updated:
Community Sanitation Overview:
The City of Hydaburg is located on the southwest coast of Prince of Wales Island, 45 air miles northwest of Ketchikan. It is connected by paved road to several other cities on the island. Water is derived from the Hydaburg River, treated, and piped throughout the community. Funds have been requested to construct a new dam to increase the water supply. Piped gravity sewage is treated at a secondary treatment plant with an 800-foot outfall to Sukkwaw Strait. More than 95% of homes in Hydaburg are plumbed. The city operates a Class 2 water treatment system, a Class 1 water distribution system, and a Class 1 wastewater collection system. These system classifications are determined by the State of Alaska's Department of Environmental Conservation Division of Water based on the type of components found in the treatment plant and the number of connections served by the water distribution and wastewater collection systems. Alaska Power and Telephone Co., based in Skagway, owns and operates diesel power systems in Hydaburg and Craig, which provide electricity to many Prince of Wales Island communities. 
RUBA Status & Activities This Qtr:
This quarter, RUBA staff assisted the City of Hydaburg in resolving federal tax filing problems and in reviewing its monthly utility service rates. Following that review, the city requested RUBA assistance in conducting a utility rate study to see that user fees, when matched with general fund subsidies, are sufficient to cover operating expenses as well as repair and replacement (R and R) costs. RUBA staff worked with the city administrator to schedule an on-site visit to the community this summer in order to conduct that study and in the meantime has drafted a utility expense worksheet to be completed by utility staff. That worksheet will guide utility staff in calculating all associated annual utility expenses, including operations, maintenance, and R and R costs. Additionally, RUBA staff has worked to schedule training and job orientation for Hydaburg's interim city clerk. The former city clerk, as well as the accounts receivable clerk, resigned in May, leaving the city with minimal permanent staff support to manage its utility functions and day-to-day municipal operations. The city administrator has worked to ensure that there is no lapse in sanitation service in the community during the transition and RUBA staff has been available to provide any assistance requested. 
RUBA Activities for the Coming Qtr:
RUBA staff is planning to provide on-site training and orientation to the interim city clerk in the coming quarter and to conduct a utility rate study with the help of the city administrator and the utility operator. RUBA staff will also continue to guide the city through the budget adoption process and to complete all necessary Payment in Lieu of Taxes (PILT) and Community Revenue Sharing Program documentation before the respective deadlines. Once the FY12 budget has received a public hearing and adopted by the city council, RUBA staff will note the progress in the community's RUBA Assessment.
Essential Indicators:
24 of 27
Sustainable Indicators:
22 of 27
Total Score:
46 of 54


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.
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.
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.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
Though Hydaburg's municipal code stipulates that the city's fiscal year follow the calendar year January 1 through December 31, in practice, the city uses a fiscal year running from July 1 to June 30. The FY11 budget was adopted by a non-code ordinance on July 20, 2010. The city's FY12 budget, however, has not been yet been adopted by the city council. The proposed FY12 budget is slated for a public hearing and final reading at a July 2011 council meeting and, if adopted, will set forth the city's utility financial plan for the coming fiscal year. Until then, all budget-specific indicators have been marked 'No.' The FY11 and draft FY12 budgets are divided into separate funds with each fund listing proposed revenues and expenses. The funds include a general fund, a capital project fund, a harbor deferred maintenance fund, a water sewer upgrade fund, a water-sewer-garbage fund, and a harbor and docks fund. Though the budgets compare the proposed budget amounts to the previous year's adopted amounts, neither includes a comparative statement of actual expenditures and revenues for the preceding fiscal year as recommended by RUBA staff and required by Hydaburg Municipal Code. Recent city council meeting minutes show that financial information is being reported on a monthly basis. Monthly financial statements include a balance sheet and a budget versus actual profit and loss. Electricity is provided by the Alaska Power and Telephone Company of Skagway. 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. The city also has two 275-gallon fuel tanks for heating fuel which are located at city hall and the water treatment plant. The city has allocated adequate funds in the budget to purchase heating fuel from Petro Marine as needed (typically, every one to three months). The city council, as the governing body, is fully aware that user fees do not produce sufficient income to cover utility operating expenses or repair and replacement costs. It has been a general practice for the city to subsidize the utility's operating expenses and repair and replacement costs through other sources. The adequacy of the subsidy and the council's willingness to supplement the water, sewer, and garbage funds is evidenced through a $31,000 general fund transfer into the FY11 utility budget and the allocation of $50,000 from the FY11 Community Revenue Sharing payment. FY11 revenues and expenses remained in line with budgeted projections throughout the year, with the council regularly reviewing the budget and making amendments as necessary. The last budget amendment was adopted by the council on July 20, 2010. A review of city council meeting minutes for the last year shows that the mayor, administrator, city clerk, and public works foreman routinely provide both written and verbal reports on operational and financial issues concerning the water, sewer, and garbage utilities.

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 an adopted collection policy that is contained in Title 13 of the Hydaburg Municipal Code. In February 2010, the city council committed to enforcing collections on utility bills and discontinuing water service to past due customers. This increased effort has produced a stable source of income for the utility. Because the city continues to receive back payments from delinquent utility customers, the collection rate for the period July 2010 to the end of February 2011 was 127%. The city's contracted auditor reported to RUBA staff this spring that this rate will likely slow as customers resolve large outstanding balances. RUBA staff has not been able to receive collection rate figures from the city for the month of June. QuickBooks Pro is used for the city's accounts receivable, accounts payable, and payroll processes. The account receivables system documents customer payments and reports past due accounts with the corresponding monetary amounts. An aging report includes a list of all customers, the total amount each customer owes, and whether a customer is 1-30 days, 30-60 days, 60-90 days, or over 90 days past due. A cash receipt log is used to record incoming cash payments and checks not accompanied with an invoice. In addition to this log, the customer is provided proof of payment with a written receipt. The city uses three different receipt books to separate funds and places account codes on all receipts to ensure incoming cash payments are recorded properly. The city's purchase order system requires the review and signature of either the city administrator or the mayor. To prevent overspending, the approving official compares the purchase request against remaining FY11 appropriations prior to approval. The city administrator reports that all bank accounts have been reconciled.

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). The Internal Revenue Service's taxpayer Advocacy Office has confirmed that Hydaburg is current in its federal tax deposits and that the IRS has no liens against the city. The Alaska Department of Labor and Workforce Development confirmed on June 16, 2011 that all state tax payments are current as well.

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 the Alaska National Insurance Company. The policy is effective from July 1, 2011 through June 30, 2012 and covers work-related accidents and occupational diseases up to the Alaska statutory limits for each occurrence. Proof of coverage is posted in accordance with state statute at City Hall, the harbormaster office, and the water treatment plant. The personnel policy was last reviewed and updated by the city council in January 2010. That policy includes a written hiring procedure with a six-month probationary period for new employees. All job descriptions are up-to-date and expressly outline each employee's required duties. Records relating to employees are kept in a personnel file. These files are strictly confidential and the city intends to purchase new fire proof locking cabinets for their storage. RUBA has staff reviewed the personnel files on a sample-basis and found them to be well-organized and containing all necessary documents. The city provides training opportunities when outside sources of training funds are available. Two city staff members attended a 32-hour Utility Clerks training in April 2010 and the city has requested further training assistance for its newly-hired city clerk this summer.

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.
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.
No 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 community's water and wastewater utilities and the city council is the utilities' governing body. A review of six months of meeting minutes indicated that the council is generally engaged in decision-making on behalf of the utilities. However, the city council struggled to establish a quorum in June and has yet to hold a public hearing on its FY12 budget ordinance. The council is scheduled to convene a meeting in July to hold that public hearing and adopt the FY12 budget as required. Until the FY12 budget has been adopted, the indicator related to the city council being active in policy making has been marked 'No.' Usually, the council meets on the first and third Tuesday of each month and holds special meetings and additional work sessions as necessary. The city complies with Alaska's Open Meetings Act by posting meeting notices at least five days in advance in three public places. 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 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 day-to-day bookkeeping duties are shared between an interim city clerk and the city administrator. An accounting contractor from Aurora Corporate Enterprises provided the city staff with bookkeeping and accounting training until May of this year. The contractor also trained staff in the preparation and presentation of financial statements to the city council. In addition to formal operator training courses, the Hydaburg's water operator is receiving ongoing hands-on training from a remote maintenance worker (RMW).

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".
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 of Hydaburg has one full-time operator and one part-time operator. The full-time operator has the following endorsements from the State of Alaska Department of Environmental Conservation (ADEC): Water Treatment Provisional Expires 12/31/2012 Water Distribution Provisional Expires 12/31/2012 The full-time operator is working towards becoming fully certified and has already met the necessary continued education unit (CEU) requirements. As of October 2010, the Hydaburg public water system is no longer listed as a 'Significant Non-Complier' with the Environmental Protection Agency. Further, in September of 2010, ADEC rescinded the boil water notice that had been in place since October of 2008. The utility completed and distributed its Consumer Confidence Report (CCR) as required by the Safe Drinking Water Act on February 2, 2010. In the previous two years, the utility had failed to distribute the required Consumer Confidence Reports. The utility included both 2008 and 2009 water testing data in the current CCR to address this deficiency. 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.