Quarterly Report: 2014, April - June (Q4), Chignik

Community:
Chignik 
Staff:
Celeste Novak  
DCRA Regional Office:
Dillingham regional office 
Gov't Type:
Second Class City 
Borough:
Lake and Peninsula Borough 
Agreement?
No 
Agreement Date:
11/22/2005 
Entity:
City of Chignik 
Population:
92 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
6/24/2013 
Exp Date:
11/22/2007 
Last Updated:
6/30/2014 
Community Sanitation Overview:
Chignik is located on the south shore of the Alaska Peninsula in the Lake and Peninsula Borough. The City of Chignik operates the community’s water and wastewater utilities. The community derives its water from a well and from the Indian Lake reservoir. The reservoir, which the city owns rights to, has a 14-foo-high dam and a 7,700-foot long pipeline that delivers water to the treatment facility where the water plant filters out turbidity with gravel filters. Chlorine is added to disinfect the water before it is pumped into the 200,000-gallon storage tank. Fifty-four homes and several commercial facilities are connected to the system. The system is classed as a small water treatment system. The city also owns and operates the Chignik Wastewater Treatment Facilities under permit 2003DB0096-1011. The maximum volume of this system is 86,400 gallons per day. Five lift stations move the wastewater into community septic tanks at the end of the treatment process; discharge into the ocean occurs on the outer edge of the mixing zone, via an outfall line. The city operates a Class 3 landfill in the community and provides garbage hauls from city owned dumpsters placed throughout town that residents dump into.City officials advised RUBA staff that the 30-year old water treatment plant may need repairs/replacement in the future. 
RUBA Status & Activities This Qtr:
This quarter RUBA staff traveled to the City of Chignik to evaluate codification of the city's utility-related ordinances, recommended ordinance amendments, develop disposition lists, begin establishing a records retention system, advise in the development of a personnel evaluation system, and review the utility's financial records. RUBA staff also used the trip to provide training to the city council on the utility bill collection policies, conflict of interest, executive sessions, operator certification requirements, Community Revenue Sharing, certified financial statements, annual audits, and other utility management-related topics. Also this quarter, RUBA staff clarified for Chignik's city clerk/treasurer that executive sessions of the city council are to be listed as an item on the agenda for the council's regular meeting. The executive session is a portion of the public meeting in which members of the public are temporarily excluded for reasons permitted in the Open Meetings Act. RUBA staff advised Chignik's city clerk on how to contract with someone to search and apply for grants. RUBA staff recommended the city begin by reviewing its comprehensive plan, considering projects needed to achieve the plans goals, and then identifying specific grants which could help fund those projects. Once those grants and their conditions have been reviewed by the city, the city could contract with someone to apply for and administer them. Further, RUBA staff recommend each grant have its own separate contract specifying terms the contractor will be paid. RUBA staff strongly advised that the city consider the costs it will have to pay this contractor, and the longer-term, recurring costs associated with any service/facility started with grant funds. RUBA staff confirmed that the City of Chignik is in compliance with its ESC obligations. Chignik's city clerk asked RUBA staff for assistance contacting an entity to repair downed satellite service to the community. RUBA staff provided the clerk with Alaska Public Broadcast Company, Inc. (APBCI)'s technical assistance and hotline. APBCI is owned and funded by the State, and provides communication services, including satellite service, to rural communities. The City of Chignik's water utility has been removed from DEC's Significant Non-Complier (SNC) list. The utility was listed on the SNC list earlier this year for failing to sample distribution chlorine residuals. Now that the utility has conducted required samplings, and is off the SNC list, the utility meets one additional sustainable indicator of its utility management assessment. 
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff intends to check in on the offer to provide any necessary technical assistance in regard to codification of ordinances and adhering to their ordinances regarding council meeting schedules. RUBA staff will also provide further guidance on utility collections policy and options for enforcing it, as well as eliminating past debt. Further, RUBA staff will consider performing an assessment to begin the process of correcting any deficiencies to become RUBA-compliant in the future, in anticipation of submitting grants for upcoming water treatment plant repair/replacement.
Scores:
 
Essential Indicators:
21 of 26
Sustainable Indicators:
21 of 27
Total Score:
42 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.
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.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Chignik follows the State’s fiscal year running from July 1 to June 30, and adopted their FY15 budget in May, 2014. However, the FY14 budget shows expenses exceed revenue by over $5,000 and the council had to adopt a budget amendment ordinance on June 7, 2014. The FY15 budget was adopted with the same revenue expectation, which may not be realistic given the loss of the first run of fish in June, 2014, and with it, the loss of the fish tax revenue, which subsidizes sanitation services. It adopted its FY14 budget timely by non-code ordinance on June 8, 2013. The budget compares projected income and expenses alongside actual FY13 values, which helps to ensure that FY14 figures are realistic. Water and wastewater functions are budgeted as an enterprise separated from other city business. In FY14 the city expects to spend roughly $53,000 on water and wastewater expenses, including payroll, taxes, insurance, testing, facility electricity and fuel, travel, supplies, and freight. It plans to collect $62,000 in water/wastewater user fees and for the city’s general fund to supply an additional inter-fund transfer of $10,000 to the water and wastewater enterprise, leading to a net water/wastewater income of more than $18,000 this fiscal year. Monthly financial reports comparing actual year-to-date (YTD) revenues and expenses to the budget are created and included in the agenda packets for council members at their monthly meetings. A verbal financial report is also given to the council and is documented in the meeting minutes. A review of the financial reports shows that nearly all expense appropriations in the water/wastewater enterprise budget exceed their budgeted amounts for this point in the fiscal year, and that utility has received less in revenue than it anticipated receiving by the end of January 2014. The city owns and operates the electric utility and makes the appropriate journal entries from the water/wastewater utility to pay its electric bills. When budget amendments are needed they are made, that transfer funds to line items that need the funds. The utility does not fund maintenance, repair, or replacement.

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
A June 2014 aging summary shows that 53% of the water/wastewater customers have delinquencies from billings more than 30 days ago, while a June 2014 balance sheet shows nearly $15,000 in water/wastewater accounts receivable. A review of recent council meeting minutes indicates the governing body is interested in enforcing utility bill collections; however, the relevant essential indicator in this section has been marked ‘No’ until the city can demonstrate that is now actively enforcing its adopted utility bill collections policy. The utility bookkeeper uses QuickBooks Pro 2013 for financial recordkeeping processes, including payroll. The bookkeeper is proficient in the use of QuickBooks and all payroll records are up to date. The utility clerk writes a receipt for any income received. A copy of the receipt is kept in a permanent receipt book. At the end of the week, new data from the receipt book is entered into the utility's computerized accounting system. All payments by the city are made by check. Every check includes an amount, an expense account to be charged, and a description of what the payment is for. Copies of paid invoices are kept in vendor files. The utility's chart of accounts identifies all asset accounts (un-deposited funds, bank accounts, and accounts receivable), all liability accounts (current, long-term and payroll liabilities), and fund balances. Income and expense accounts are identified in a manner that matches the income and expense line items in the budget. Bank reconciliations are current. The utility does not require purchase orders for proposed purchases. Rather, there is only a verbal understanding that all purchases that exceed $1,000 require the approval of the mayor.

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.
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 city uses the QuickBooks Pro 2013 accounting program to accurately calculate, track, and report payroll tax liabilities. The IRS's taxpayer advocate confirmed on June 13, 2014 that the city is in compliance with federal tax filing and deposit requirements. The city is also current with its employment security tax payments as of June 13, 2014, and is not listed in the April-May 2014 Lien Watch report.

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.
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 Notice of Insurance is posted in plain view in the city offices. According to the Notice of Insurance, workers compensation insurance is provided by the Alaska Municipal League Joint Insurance Association from June 30, 2014 to June 30, 2015. A check of the Division of Workman's Compensation website on June 30, 2014 confirmed the policy is in effect. A copy of the city's personnel policies, prepared by AML-JIA and adopted by resolution, is on file with RUBA staff. Job descriptions are up to date and expressly outline the utility employee's required duties. RUBA staff has copies of the job descriptions for the utility on file. The city does have a written evaluation process. Employees state they have not been formally evaluated annually. The hiring process is described in the utility's personnel policies adopted October 14, 2006. Personnel folders are current and available for all employees. The probationary period or introductory period for new hires is three months, as described in the personnel policy. New hires are supposed to be evaluated at the end of the introductory period.

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.
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 utility ordinance, adopted in August 2011, identifies the city as the owner and operator of the utility. Council meeting minutes were provided to RUBA staff and confirm that the council reviews policies and rates on an annual basis and makes changes as needed. The city's mayor serves as the administrator, developing and overseeing the utility budget, supervising the utility operator and the utility clerk, and providing monthly reports to the utility’s governing body. The utility bookkeeper has held the position for a number of years and is experienced on the job. She is competent and maintains all of the accounting systems in a professional and organized manner. The Department of Environmental Conservation recognizes two sanitation utility operators in Chignik. The primary operator is provisionally certified in water treatment, water distribution, wastewater collection, and wastewater treatment. These certifications expire at the end of 2015. The backup operator has no certification. The city has an organizational chart that is updated as needed. A copy of the organizational chart is on file with RUBA staff. Records of city council meetings provided to RUBA staff indicate that the city conforms to Alaska’s Open Meetings Act as required. As noted in the accounting section of this report, the council doesn't enforce their own collections policy and has a low record of payment in the community, with approximately 53 percent not paying utility bills.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
No 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".
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
The utility states a preventative maintenance plan was developed by the Remote Maintenance Worker (RMW), though a copy was not available and RUBA does not have a copy on file. The mayor spot checks the utility on a routine basis and receives verbal updates weekly from the operators. The utility does not have a safety manual on file and does not participate in or holds safety meetings. RUBA staff received a copy of the 2012 CCR certificate. The utility is no longer on the SNC list as of April, 2014. To prevent unnecessary outages the utility maintains an inventory control list and a critical spare parts list, both on file with RUBA staff.