Quarterly Report: 2014, January - March (Q3), Larsen Bay

Community:
Larsen Bay 
Staff:
Jedediah Smith  
DCRA Regional Office:
Anchorage regional office 
Gov't Type:
Second Class City 
Borough:
Kodiak Island Borough 
Agreement?
Yes 
Agreement Date:
2/21/2011 
Entity:
City of Larsen Bay 
Population:
88 2013 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
2/28/2011 
Exp Date:
2/21/2013 
Last Updated:
4/17/2014 
Community Sanitation Overview:
Water is supplied from two sources, a reservoir and a well connected to a 200,000 gallon tank. The well draws water 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:
On January 15, RUBA staff traveled to Larsen Bay to assist the city clerk in resolving minor issue regarding duplicate employee payroll check and assisted in filing third quarter state employment security tax report, payment, and interest and penalty payment. RUBA staff assisted the clerk in the filing and payment of the fourth quarter federal and state employment taxes. RUBA staff contacted the IRS regarding several letters that had been received at the City of Larsen Bay office. The matters of concern were regarding the first and second quarter 2013 filing of the 941 report. The IRS was requesting a 941-X for the second quarter. However, RUBA staff was able to clarify that the proper reports had been filed. The agent confirmed this information, but stated the information would not be verified in the system for between 30-60 days. The agent put a hold on the account to assure no new penalties and interest accrued. RUBA staff next assisted the city clerk in payment of past penalties and interest for late payments for the third quarter 2013. RUBA staff also worked with the city clerk to prepare financial reports for a city council meeting. The reports generated included the year-to-date budget versus actual report for the water utility, administration, public works, and maintenance and city market departments. Additionally, RUBA staff met with the Larsen Bay City Council to provide an overview of the RUBA program and explain the importance of monthly financial reports. RUBA staff cautioned against the city permitting payroll advances, noting that these advances often do not withhold federal payroll taxes, which is illegal, and do not provide accountability to the employee, who may or may not pay the money back to the city. RUBA staff present budget versus actual reports for the four city departments as well as a proposed work plan that that included tasks for the city council, city administration and RUBA staff. The city council discussed the need to reconcile its accounts. Before departing the community, RUBA staff assisted the city clerk in accounting for fuel and electricity payments for the city facilities. Entering these interdepartmental transfer payments into QuickBooks will provide better information to the council for which to make budgeting decisions in the future, particularly when it becomes time to create the FY15 budget. On January 24, the Larsen Bay city clerk informed RUBA staff that the assistant utility clerk resigned. The city has been without a full-time utility clerk since October, and billing policies are not being followed. The clerk said the city intends to advertise for and hire the position in the next few months. RUBA staff offered to review any job description and employment offer, and include language regarding obligations if the employee attends training at city expense. 
RUBA Activities for the Coming Qtr:
RUBA staff will continue to work with the city clerk to ensure monthly financial reports are presented to the council. RUBA staff plans to refine a monthly spreadsheet that will enable the council to see the city's actual expenditures compared with budgeted amounts. RUBA staff will also assist the mayor and the clerk with the FY15 budget. Further, RUBA staff will assist the clerk and the mayor in preparing budget amendments.
Scores:
 
Essential Indicators:
21 of 26
Sustainable Indicators:
17 of 27
Total Score:
38 of 53

Finances

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 aging summary of accounts receivable 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. Currently monthly financial reports are not prepared or submitted to the policy making board.

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 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. During a recent on-site visit, RUBA staff advised the clerk on documenting interdepartmental transfers for line items such as heating and electricity. RUBA staff also encouraged the clerk to reconcile the accounts, a practice that had not been completed since March 2013. 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 a 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
According to the IRS, Second Quarter 2013 filings had not been posted as of March 20. RUBA staff will remain in contact with the IRS to confirm when the correct payments and filings are posted. The Department of Labor and Workforce Development, Employment Security Division granted tax clearance on March 17, 2014. Larsen Bay is not listed in the November-December 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. Its ordinances are updated as needed and those regarding to collection policies are followed. 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. The Larsen Bay City Council is not meeting regularly as set forth in ordinance, and therefore not fully 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 an updated operations and maintenance manual will be provided by Alaska Native Tribal Health Consortium (ANTHC) staff. 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 was completed in 2009. The water utility is not on the January 2014 Significant Non-Complier (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.