Quarterly Report: 2006, April - June (Q4), Shishmaref

Leroy Seppilu  
DCRA Regional Office:
Gov't Type:
Second Class City 
Agreement Date:
City of Shishmaref 
Assessment Status:
Assessment Date:
Exp Date:
Last Updated:
Community Sanitation Overview:
The City of Shishmaref operates a central watering point, a water truck delivery service, multiple watering points and a washeteria. They also provide a honey bucket service. The City Council is the policy making body for the utilities. Water is derived from a surface source; it is treated and stored in a new tank. Shishmaref is undergoing major improvements, with the construction of a flush/haul system and household plumbing. Nineteen HUD homes have been completed, and 71 homes remain. The new system provides water delivery, but the unserved homes continue to haul their own water. The City hauls honeybuckets and the new flush tanks. The school, clinic, friendship center, city hall and fire hall are connected to a sewage  
RUBA Status & Activities This Qtr:
A four-day on-site visit was made by Nome RUBA staff on May 9-12 at the request of the city council. While there, RUBA made a compilation of the total debts owed by the city since that has been a major issue with granting and project agencies. RUBA also trained the city bookkeeper, Jennifer Demir, how to keep payroll records and complete IRS Form 941 quarterly tax report and the ESC quarterly tax report. RUBA also met with the city council to discuss payroll issues and made recommendations to freeze temporary hires and to lay off non-essential employees as the city is having difficulty meeting payroll each pay period by as much as 75%. We also discussed the city's total debt. It has gone down to approximately $165,000 from $225,000 a couple of years ago, but the city keeps accumulating payroll tax debts. On top of that, the city had its gaming licenses suspended. It has managed to get them back after the total earned and spent were balanced and other gaming requirements were met. 
RUBA Activities for the Coming Qtr:
RUBA would like to make at least two trips to the community to continue implementing the training to the clerks and bookkeeper. We would also like to continue trying to lower the total gross wages each quarter so that the city can 'afford' to meet payroll and deposit taxes on time. We will need to figure out how to pay off the electric bill before the city's buildings are cut off. We will also need to try to order fuel for next winter as purchasing fuel using as-needed basis is very expensive and can hardly be afforded by the city. RUBA would like to work with the Remote Maintenance Worker to get the city off the SNC list. I would also like to get the inventory list started so that the city can sell parts and equipment it does not need. We can use some of the money to pay off debts.
Essential Indicators:
16 of 27
Sustainable Indicators:
13 of 27
Total Score:
29 of 54


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.
No The utility is current in paying all water/wastewater electric bills.
No 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
Nome RUBA staff has made recommendations several times to the city to lower its expenses in its submitted budget so that it can be balanced. The city also has past due electricity accounts to its electricity provider, Alaska Village Electric Coopeartive (AVEC, Inc.), of over $11,000. AVEC has been threatening to cut off electricity if a payment plan is not signed. The city is also purchasing fuel from the local store at as-need basis. It spends about $6,000 a month on fuel for its infrastructures, including the washeteria and the water treatment plant. It has had difficulty with purchasing fuel as it has run out of money to buy the fuel. The city cannot purchase fuel in bulk because fuel vendors refuse to deliver fuel unless it is paid in full. The utility has been able to function on its own as water is delivered to its customers and the individual septic tanks are emptied only when the customers pay in advance for the service. It is basically a money maker, but the city spends its profits to pay other expenses from the other departments, such as payroll, heating fuel, electricity, etc., so it is not able to put the funds into a savings account for future replacement of equipment and parts. A very basic financial report is made monthly by the bookkeeper and lists only what is received and spent. She feels comfortable with it and refused to make improvements on it. The city council has never made budget amendments when needed.

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.
No 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.
No 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 has collection policy for past due water/sewer utility customers in the utility ordinance. However, almost all the customers have to pay in advance to have water delivered to their water tanks and to have their septic tanks emptied. RUBA staff taught the bookkeeper how to complete the quarterly tax reports. The bookkeeper recently attended a basic Quickbooks Pro (QBP)training held in Nome. We hope there will be a more advanced QBP follow-up training that she can attend to continue her RUBA training. It will make a huge difference and will help the city keep better payroll records. RUBA set up a basic payroll recordkeeping system using Excel spreadsheet with auto-calculations and deductions for payroll. The bookkeeper also has started to make monthly bank reconciliations for the city's accounts.

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.
No 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
RUBA has set up an accurate payroll recordkeeping system using Excel spreadsheet. We will use this until the bookkeeper learns to use payroll portion of QBP. RUBA staff worked with the bookkeeper to catch up with quarterly payroll tax reports and Shishmaref is now caught up with them. However, the city continues to exceed its payroll expenses and has difficulty meeting payroll by as much as 75%. Despite advice by RUBA to make major cutbacks, especially on payroll, the city's gross payroll continues to be high. The last total payroll was about $8,500 and the city could only pay about $2,500 of it. The city has past repayment agreements signed with IRS, but has been unable to follow them.

Personnel System

Essential Indicators
Answer Question
No 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.
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.
No The utility provides training opportunities to staff as needed and available.
Personnel System Comments
The city does not have workers' compensation and insurance because it cannot afford one. In fact, the city owes money for its current workers' compensation and insurance since it can't afford to pay or make monthly payments. The city does not have written job descriptions for its utility operators. Most of the employees have to continually beg for wage increases instead of following the personnel policy procedures for evaluation. Most of the employees request to go to trainings only when they hear about them from outside sources.

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.
No The utility has an adequately trained manager.
Yes The utility has an adequately trained bookkeeper.
No 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 clerk was not at work when RUBA staff came to town to provide training to the bookkeeper, city clerk and utility clerk. The clerk had gone to Nome for medical reasons. RUBA staff had informed the city well in advance of the planned trip. One of the water treatment plant operators is certified to Water Treatment 2 and the other one is Operator in Training (OIT) certified. The OIT certified operator was recently released of his duties because of slackiness at work. The council has not yet hired a replacement.

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 utility clerk has mentioned that the operators do not make Operations and Maintenance reports to her or to the council. No safety manual is available other than the one made by a sanitation contractor some years ago. No safety meetings are held. The operator does not provide status reports and only does so as needed. The utility is up to date with CCR. The utility is on the SNC list for Long Term 1 (LT1) OR Surface Water Treatment Rule (SWTR)-Filtered and Stage 1 violations. The utility does not have an inventory control list or a critical spare parts list. In fact, while RUBA was in the community, this was discussed with the council to sell non-essential city owned property and that an inventory needed to be made, we couldn't achieve this as the operators couldn't do it for some reason. The bookkeeper had tried to have them do it to no avail.