Quarterly Report: 2014, October - December (Q2), Larsen Bay

Larsen Bay 
Jedediah Smith  
DCRA Regional Office:
Gov't Type:
Second Class City 
Kodiak Island Borough 
Agreement Date:
City of Larsen Bay 
89 (2012 DCCED certified estimate) 
Assessment Status:
Assessment Completed 
Assessment Date:
Exp Date:
Last Updated:
Community Sanitation Overview:
Water is supplied from two sources, a reservoir and a well that supplies a 200,000 gallon tank. The well is classified as a groundwater under the direct influence of surface water. A water supply line is also connected to the penstock of the hydroelectric plant and used a majority of the time to reduce utility expenses to both the service plant and the customers. All 40 homes are connected to the piped water system. A community wastewater tank with an outfall line serves these homes, and the majority of them are fully plumbed. Weekly refuse collection services are provided. The community incinerator is currently unusable and all refuse is deposited at the landfill site. A water treatment plant project from Village Safe Water (VSW) is complete.  
RUBA Status & Activities This Qtr:
RUBA staff traveled to the community of Larsen Bay on December 10 for the purpose of conducting a RUBA Assessment of Management Capacity Indicators of the water utility. Upon arrival, RUBA staff discovered there were numerous issues that needed to be prioritized before conducting the assessment. The FY14 budget had not been entered into QuickBooks and the clerk could not produce a budget vs. actual report. RUBA staff assisted the city clerk in entering the budget and provided instruction on how to produce the report. Further investigation of the QuickBooks file indicated a number of misclassified entries. RUBA staff assisted the clerk in correcting these entries. RUBA staff was also informed that the city had not submitted the annual Power Cost Equalization annual report to the Regulatory Commission of Alaska (RCA), and several monthly reports required corrections. Additionally, the city had recently received a letter from the RCA indicating PCE payments would be suspended due to insufficient reporting. The city relies on the PCE payments to subsidize the water utility maintenance, operations and delivery. RUBA staff assisted the assistant billings clerk with correcting the monthly reports as well as producing the annual report and submitting the most current fuel report. Prior to departure, RUBA staff met with the mayor and with one member from the city council to reaffirm the importance of receiving monthly budget reports and offered to attend the next scheduled city council meeting in January to further explain the importance of financial reports to the council. On December 2, The Larsen Bay City Clerk requested information on employee cell phone use. Currently, the City of Larsen Bay is paying for several employees, including water utility employees, cell phones but has no policy covering use or access. RUBA staff provided the clerk with the State of Alaska's cell phone policy and committed to assisting with a similar framework for Larsen Bay, if requested by the council. Additionally, the clerk requested information on travel policies and procedures and required reporting. Larsen Bay City Code does not specifically address council member travel reports or reimbursement rates. RUBA staff recommended more specific language that addresses both employee and council travel policies and sent the clerk examples of each. On October 15, Larsen Bay city clerk Teressa Muller contacted Anchorage RUBA staff regarding the federal employment tax filing. RUBA staff advised the clerk how to file the 941 quarterly report. RUBA staff also provided information for an upcoming RUBA Elected Officials for Rural Utilities training and encouraged the clerk to identify a council member in the community to apply for the course.  
RUBA Activities for the Coming Qtr:
The RUBA Assessment of Management Capacity Indicators is currently expired. Before the next assessment is complete, RUBA staff recommends the city clerk submit monthly financial reports to the city council that indicate budget vs. actual expenditures and income. These reports will allow the council to make more informed decisions regarding the city’s income and expenditures. Additionally, RUBA staff recommends presenting the city council with an accounts receivable aging summary to show all past due accounts and amounts owed. Further, RUBA staff advised the city staff to pay careful attention to the data entered into the monthly Power Cost Equalization reports in order to avoid delays in payments and to ensure accurate record keeping. RUBA staff will travel to the community in January to assist with the above issues as well as end of the year and quarterly employment tax issues. Additionally, RUBA staff hopes to address the Larsen Bay City Council regarding the importance of regularly reviewing financial reports.
Essential Indicators:
21 of 26
Sustainable Indicators:
17 of 27
Total Score:
38 of 53


Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
Yes 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.
No Budget amendments are completed and adopted as necessary.
Finances Comments
A review of the city's budget v. actual report year to date indicate a 55 percent collections rate for the electric utility. The city relies on the electric utility revenue to subsidize the water utility maintenance, operations and delivery. Other city enterprises also show substantial delinquent accounts, indicating the city might not be on track to meet anticipated revenue for the year. RUBA staff plan to visit the community in January to assist the clerk in compiling the appropriate financial reports and delivering them to the Larsen Bay City Council.

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.
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
The city uses QuickBooks Pro 2012 for all accounts payable and receivable transactions, as well as to run reports. The city accounts receivable report shows all transactions for the water and wastewater utility for all customers. The city accounts payable report shows no accounts to be paid currently. When the city receives cash, the customer is offered a receipt and the data is then entered into QuickBooks following the transaction with the ledger/receipt number. Every Monday, the city deposits the cash into the bank account. A chart of accounts lists all current assets, liabilities, and equities for the City of Larsen Bay. Currently no monthly bank reconciliations are being completed. All purchases are routed from the employee to the mayor for approval, then to the clerk for processing.

Tax Problems

Essential Indicators
Answer Question
No 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
On December 17, the IRS notified RUBA staff that the City of Larsen Bay was not in compliance with tax filings or payments. Larsen Bay is missing a filing form 941 from the first quarter of 2013. Additionally, the City owes employment taxes for the fourth quarter of 2012 and the second and third quarter of 2013 and that the balance due account is currently assigned to automated collections. The Department of Labor and Workforce Development, Employment Security Divisions reported on December 17 that the City has not filed a tax report for the third quarter of 2013. Larsen Bay is not listed in the September-October 2013 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.
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
The city has an insurance policy with Alaska Municipal League Joint Insurance. The policy is posted as required. A copy of the personnel policies was provided that has sample job descriptions, evaluation, and hiring processes. The probationary period for employment is 30 days. Employee personnel files are kept in a locked file cabinet in the city clerk's office. These files each contain an I-9, job application, and all appropriate employee and employer correspondence.

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.
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 Larsen Bay is the owner/operator of the water and wastewater utility. The ordinances are updated as needed and those ordinances are followed in regards to collection policies. The primary operator is part-time as he is both the water/wastewater and electrical operator; he is scheduled to be at the pumphouse for two weeks and other operators cover the remaining weeks in a month. The city clerk oversees all the bookkeeping for the utility; the billing clerk receives and enters all incoming transactions into QuickBooks, though at the time of this report, the community was experiencing turnover in the utility billing department. The organizational chart is in the personnel policy manual and includes all employees; the city clerk and billings clerk are listed in a separate branch under the mayor. The organizational chart does reference Title 29 and regulatory agencies in separate branches above the city council. On a visit to the community in December, RUBA staff learned the Larsen Bay City Council had not met since October, and was therefore not able to make informed decisions regarding the finances and collections rate of the utility.

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.
No The utility has completed and distributed its "Consumer Confidence Report".
Yes 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
There is an operations and maintenance manual for the existing pumphouse. The new pumphouse is complete and a updated operations and maintenance manual will be provided by Alaska Native Tribal Health Consortium (ANTHC) staff. The ANTHC still holds the title to the water treatment facility. The city has a monthly safety meeting with the water/wastewater/electric operators. There have been no major outages. The water utility is operating at a level proposed. The water utility is subsidized by the electric utility and the city owned grocery store. The last CCR on file is the 2009 CCR. The water utility is not on the July 2013 SNC list. The city does not have an inventory control list as there is a new plant that has been completed, is operational and awaiting conveyance. There is no record of a critical spare parts list with the city.