Quarterly Report: 2014, April - June (Q4), Port Heiden

Community:
Port Heiden 
Staff:
Celeste Novak  
DCRA Regional Office:
Dillingham regional office 
Gov't Type:
Second Class City 
Borough:
Lake and Peninsula Borough 
Agreement?
No 
Agreement Date:
 
Entity:
City of Port Heiden 
Population:
118 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Pending 
Assessment Date:
4/11/2014 
Exp Date:
4/11/2016 
Last Updated:
6/30/2014 
Community Sanitation Overview:
Port Heiden is located on Bristol Bay 424 miles southwest of Anchorage on the Alaska Peninsula. Residents obtain their drinking water from private groundwater wells and dispose of wastewater in private wastewater tanks. The City of Port Heiden provides a wastewater tank pumping and haul service, with each resident's tank pumped annually and the waste transferred by truck to a local wastewater lagoon. The city also provides a solid waste collection and disposal service, manages a Class III landfill, operates a diesel-generated electrical power utility, and sells gasoline, diesel, and heating fuel. 
RUBA Status & Activities This Qtr:
RUBA staff travelled to Port Heiden twice this quarter. On a visit in April, RUBA staff conducted a utility management assessment, held a workshop with council members to draft utility employee job descriptions, researched the determination of a default judgment with the Alaska Energy Authority (AEA), and verified that federal tax payments have been made as required. The visit also allowed RUBA staff to assist the city in codifying utility-related ordinances, advise in the preparation of monthly financial reports and meeting agendas, begin developing an employee handbook, and help draft employee letters of acceptance. On an April visit, RUBA staff assisted utility staff in drafting an FY15 budget ordinance, reconciling bank accounts, and addressing other issues in the city’s accounting system so that the utility can produce meaningful monthly financial reports. RUBA staff also led a city council workshop during this visit to review draft utility ordinances, additional revisions to the city’s municipal code, and the need to ensure payment for utility services. Further, RUBA staff provided training in the creation of job descriptions, helped to draft a staff organizational chart and corresponding resolution, and verified that monthly utility staff safety meetings were being held. In the balance of the quarter, RUBA staff advised the utility in the legal disposition of city property, researching permitting requirements, and developing a records retention system. Port Heiden’s city administrator successfully completed the RUBA Financial Management for Rural Utilities training in Dillingham this quarter, as well. 
RUBA Activities for the Coming Qtr:
In the coming quarter RUBA staff will continue to advise the city in the development of a realistic budget, the preparation of monthly financial reports, and the formal adoption of the collections policy the city already implements. RUBA staff will also further communicate with the city’s workers’ compensation insurance provider to complete an employee handbook, and will assist in the formal adoption of the handbook, as well as the draft organizational chart and job descriptions, by resolution.
Scores:
 
Essential Indicators:
18 of 25
Sustainable Indicators:
9 of 25
Total Score:
27 of 50

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.
Yes 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
The City of Port Heiden follows the State of Alaska fiscal year running from July 1 to June 30. The FY14 budget was adopted two months late by non-code ordinance on August 30, 2013. The budget ordinance compares FY13 actual income and expenses to FY14 budgeted amounts. According to budgeted figures, the city plans to receive in FY14 more than twice as much as it received in FY13 for wastewater pumping service income, and roughly four times the income in solid waste collection income this year than the year before. The city has in fact received more than the amount of income it originally expected to collect for these services by this point in the fiscal year, demonstrating that its initial income estimates were reasonable. Yet while the city also planned to spend much less on personnel costs this year than the previous year, reports show that the city has spent well more on personnel than it planned to by this point in the fiscal year. This shows that planned FY14 reductions in personnel costs – one of the city’s largest expenditures – was not realistic. There have not been discussions to amend the budget ordinance to provide for these higher labor costs. Because the budget and available financial reports do not account for each service’s income and expenses separately as enterprises, it is not clear whether income for those services are sufficient to cover all their associated expenses. RUBA staff has assisted the city in reconciling accounts and ensuring utility payments and expenses are classed correctly so that meaningful financial reports can be produced from the city’s QuickBooks file. However, there is no evidence that the council receives financial reports at monthly meetings. The city administrator/clerk/treasurer, who serves as utility manager, does not routinely give a written or verbal report to the council, as required by Chapter 2.4 of the city’s code of ordinances. The city owns and operates the community’s electric utility and appropriately bills itself for its own electrical usage. RUBA staff inspected electrical invoices and found that it is payments are current. The city receives barge shipments of bulk fuel and stores it at a local fuel farm for its own use and resale. The city has relied on a bulk fuel loan to pay for these shipments until it is paid by customers throughout the year for the fuel it sells them. The city's bulk fuel loans are currently in default.

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
The city charges $127.75 to pump residential customers’ wastewater tanks 1,000 gallons in size or less and $175.20 to pump larger residential tanks. The school pays $350.00 to have its wastewater tank pumped and commercial customers pay $250.00. These charges are automatically placed on customers’ AMPY pre-pay card systems, along with fees for solid waste collection and electricity. With this system, customers are not able to receive electrical service if the fees for the other services have not been paid. Full fuel service costs are not charged to AMPY accounts, though the city has been taking 10 percent of the money customers pay to have put on their AMPY accounts and putting it toward the customers’ delinquent fuel balances. While this policy has been effective in ensuring the city receives payment for wastewater pumping, solid waste collection, and electrical service, and a portion of past-due fuel fees, the policy not been fully written down or formally adopted by ordinance or resolution. The city has also not been able to significantly reduce its fuel service accounts receivable, despite the 10 percent payment charge and monthly invoicing; RUBA staff calculated that the city is owed nearly $50,000 from residential customers alone for fuel service. The city administrator/clerk/treasurer, with the help of the city’s part-time temporary office assistant, uses QuickBooks to track accounts receivable and accounts payable, and to process payroll. Customer payments are first recorded in a carbon-copy receipt book, and then noted in the QuickBooks file. Purchase order forms are only used for large purchases and city staff do not refer to the budget before making purchases. RUBA staff has verified that as of June 2014 all accounts have been fully 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.
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 administrator/clerk/treasurer uses QuickBooks to calculate and track payroll tax liabilities, and the Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits. RUBA staff has personally inspected four months’ EFTPS transaction records and found that all federal tax deposits are current. The State’s Department of Labor and Workforce Development (DOLWD) confirmed on June 13, 2014 that the city has made all required employment security tax (EST) payments as well. The city is not listed on 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
No 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.
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.
No 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
RUBA staff confirmed on June 19, 2014 that the City of Port Heiden has a valid workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA) and verified that proof of coverage is posted as required by state law. Chapter 2.9 of the Port Heiden Code of Ordinances (the Code), titled ‘Personnel Policy Requirements’ addresses employee promotions, nepotism, hiring preferences, job classifications, terms of hire, leave, travel, performance evaluations, probationary periods, grievances, progressive discipline, and other standard personnel topics. However, the ordinance, which was adopted back in 1980, is never referenced and its provisions never enforced. Employee evaluations are not conducted, a written hiring process is not followed, and there is no formal probationary period for new hires. Relevant indicators of this section have therefore been marked ‘No’. At the city’s request, RUBA staff has helped the city contact its workers’ compensation insurance provider for assistance developing a new employee handbook, and has offered to provide any additional guidance necessary reviewing and adopting the handbook formally. While the city lacks up-to-date job descriptions for all positions, RUBA staff has assisted in drafting them and will provide further advice to see that they are adopted and utilized. The city maintains organized personnel files for all positions in a fire-proof cabinet in the city office. RUBA staff confirmed each file contains a W4, an I-9, pay stubs, and copies of certifications and job applications when available. However, the files do not contain letters of acceptance, or any other documentation indicating employees understand the terms of their employment; the relevant indicator has been marked ‘No’. RUBA staff has assisted in drafting letters of acceptance which will be completed once up-to-date job descriptions are available. The city encourages employees to obtain relevant training and certifications whenever available, as evidenced by the city allocating roughly $4,000 for travel in training in its FY14 budget, and by the employee certifications detailed in the following section of this report.

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.
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.
No The utility has adopted the necessary ordinances (or rules and regulations) necessary to give it the authority to operate.
Sustainable Indicators
Answer Question
No 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
The City of Port Heiden owns and operates the wastewater pumping and haul equipment, and all equipment and facilities for its other services. However, there are no written policies governing those services, either in the city’s code of ordinances or other documents. RUBA staff is working with the city to draft appropriate ordinances. While the city actively collects fees for wastewater pumping services by including the service charges on customers’ prepaid AMPY accounts, as described earlier in this report, it does not effectively collect for fuel services, which directly impact the viability of its sanitation services. The city council serves as the utilities’ governing body. According to the city code, it is to meet on the first Tuesday of every month at 5:00pm. However, a review of available meeting minutes shows that the council is often unable to establish a quorum on these days, so either reschedules the meeting for another day in the month or simply postpones the meeting until the following month. No meeting, regular or special, was held in March 2014. When meetings are held, they may be at a time during the day that is different than what was originally advertised in the posting meetings notice. Meeting notices, agendas, and minutes do not always include information required by the Open Meetings Act. The city administrator/clerk/treasurer serves as the utility manager and bookkeeper. He has completed RUBA’s Clerks Management for Rural Utilities, Elected Officials Management for Rural Utilities, and Planning Management for Rural Utilities trainings, as well as a RUBA-sponsored QuickBooks course. Other city staff and officials have also attended RUBA trainings as well. The wastewater operator holds necessary license endorsements and is adequately trained. The city has not adopted an organizational chart that reflects its current structure or includes all current positions. However, RUBA staff has agreed to help draft an organization chart once employee job descriptions are finalized.

Operation of Utility

Essential Indicators
Answer Question
N/A 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.
N/A The utility has completed and distributed its "Consumer Confidence Report".
N/A 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 City of Port Heiden does not provide sanitation services requiring operator certification or the distribution of an annual Consumer Confidence Report (CCR), nor services which could be listed on the Significant Non-Complier (SNC) list. Indicators related to these matters are therefore marked ‘N/A’. Utility staff nonetheless attend job-related trainings as needed and available. The city administrator/clerk/treasurer communicates with utility staff daily, receiving reports of needs or problems as they arise. He also visits utility sites, including the city shop where the wastewater tank pumper is parked and the wastewater lagoon, at least once per month. Utility staff participate in monthly telephonic safety meetings with the city's workers' compensation insurance provider. Staff operate the wastewater tank pumper without difficulty. The power plant was not operational for five days this winter when poor weather prevented the city from receiving necessary parts by air. However, this issue did not affect the provision of sanitation services in the community and the city continues to provide wastewater pumping and haul services as it has proposed. The city has maintenance manuals for its power plant, but not for the wastewater pumping equipment. City officials have expressed to RUBA staff their intentions to develop a daily vehicle and equipment maintenance schedule to be used by city staff. The city does not keep inventory control or critical spare parts lists.