MANAGER'S REPORT
06/12/2019
Budget Position Report
May utility revenues were $59,148.01. In addition, we collected $3,800 towards the General Facilities Fund. So far this year we have collected $314,395.27, which is 39% of projected. Since we are 41% through the year, we are a bit behind in collections. But we haven’t been through Summer yet.
We spent $37,757.89 on operations, which leaves a $21,390.12 contribution to reserves. However, that is a little misleading. Even with the USDA payment, expenditures are 38% of the budget. So we are on a good track there.
The USDA payment was made in May from the #2 Bond (Non Voted) Fund. In the past, the County has transferred the payment amount from the General Maintenance Fund to the #2 Bond (Non Voted) Fund and that fund then carries a zero balance. I have typically not tracked that fund because it always has a zero balance. I may need to change that.
This time, the County did not take the payment from General Maintenance. So it does not show in the Budget Position Report. But the #2 Bond (Non Voted) Fund now has a negative balance of $25,197.00. So I will request that money be transferred from the General Maintenance Fund to the #2 Bond (Non Voted).
I have queried Scott about the possibility of just making the USDA payment from the General Maintenance Fund through the claims request process and eliminate the hi-diddle-diddle with the inter-fund transfer.
Treasurer’s Report:
This report is still unbalanced. The totals on pages 1, 2 and 4 should all agree. Page 2 does not agree because of the EFT clearing account. I think I can fix that, but it involves going back and doing fresh reconciliations from January forward. I simply have not had time to do that.
The bottom line is we have $623,355.55 to operate, repair, and maintain the water system.
2020 Budget
I am continuing to refine the numbers as we get a better picture of 2019. I have done some historical research in an effort to predict, with some degree of accuracy, what our revenues for 2019 will be given the current trend and adjusted for historical trends.
The Five Year Budget Comparison report details what I am predicting so far. Given the current trends and adjusted for historical trends, I think that 2019 revenues will be about $788,200, which is about $19,000 less than originally predicted. We will have a better picture of 2019 revenues as the year goes on.
As I did last month, I did my best prognostication leaving out projects and reserves. Next month’s meeting we will need to start looking at this a lot closer.
My desire is to see how this year shapes up before picking projects for next year. We had to dip into reserves last year, and I think it inadvisable to have to do that again this year. So far it looks like the budget is under considerable pressure this year. That may be alleviated somewhat if actual revenues exceed the above prediction.
See the separate discussion on rates.
The big question mark for 2019 is the cast iron pipe replacement on the west end of the system. How much that ends up costing will have an impact on what we can do in 2020.
Monthly Utility Totals
See the Monthly Utility Totals report. On June 1st we billed Section 2 $69,019.54. Total Accounts Receivable for Section 2 on that date were $84,603.07.
As noted above, during May we collected $67,889.16 of the $109,143.22 owed the District by Section 1 customers on May 1st.
Collections
Situation
I am of the opinion that we need to revisit our collection policies and procedures. The new billing and cash receipting modules have given me a much clearer picture of collection results, and I think improvements are in order.
As an example, at the beginning of May we billed Section 1 $76,991.63. The total receivables for Section 1 at the beginning of May following that billing were $109,496.76 . We collected $67,889.16 in utility payments. So we collected 58% of the money due the District from Section 1 in May.
The previous month, April and Section 2, was only slightly better. We collected 60% of the outstanding receivables.
Our collection activities are quite lenient. Our “late notices” are the following cycle’s bills. So, if someone misses the 30th of the month due date, they do not receive a late notice until they receive the next bill, over a month later.
Shut off notices are not issued until the third billing. So someone in Section 2 who missed payment for the February, April and June billing cycles would receive a shut off notice along with the third billing cycle bill. The notice is for one week. So someone needs to be six months past due before shut off.
The third situation revolves around what amounts to abandoned properties or properties that have been foreclosed and are now bank owned. Some of the banks keep up the water bill, others do not. Our policy states that as long as a property has a working service connection, they are subject to the base rate. We have some properties with truly breath taking past due balances.
Discussion/Recommendations
I don’t know if sending out mid-billing-cycle late notices would generate enough revenue to justify the cost. I am researching that cost. For the June billing we assessed $2,563.22 in late fees. Total past due accounts amount to $25,631.72, of which $10,045.68 is out one billing cycle. It is doubtful that a late notice would have appreciable impact on accounts out two or more billing cycles. At the moment I don’t know the cost of sending out the late notices, and, obviously, how much of the past due would be received as a result. There is a valid argument for spending the late fees on collection costs.
I think that letting past due balances accumulate for seven months before a shut
off notice is issued is a problem. Not only does it push the revenue out that far, it doesn’t really do the customers any favors. Obviously, customers who let the bill get that far out, barring unusual circumstances, are not managing their money well. Someone who misses the second billing cycle due date owes $194.04. Someone who misses the due date for the third billing cycle owes $338.04 under the current process.
Our practice regarding abandoned and foreclosed properties has been very hands-off, based on the thinking that some day someone is going to want water on the property and we are not going to provide it until all rates and fees are paid. Though I have been a proponent of that approach, as I see these new reports, I am thinking that the District would be ahead if that money were available in the District’s bank account, or at least as a tangible asset. While it is true we receive 10% on the compounded balance every billing cycle, that asset can hardly be described as “liquid”. We lien properties on a somewhat casual basis.
I propose that we make the following modifications to our collections policies and procedures:
1. Move shut-off notices from three billing cycles to two and eliminate the shut off fee.
2. Make a payment arrangement available for “first timers” on the shut off list. But only first timers.
3. Automatically lien any property that is out past the due date for the third billing cycle.
4. Foreclose on any lien on any property that is past due six billing cycles.
By adopting the above, I would hope to see the following results:
First: At shut off the amount owed (if no usage above 1,200 ft3) would be $194.04 after missing the second billing cycle due date, and assuming no shut off fee, instead of $365.84. I am of the opinion that we are much more likely to collect on the lower amount.
Second: People run into rough spots. By moving the shut off up they are much more likely to admit to the rough spot earlier, and by having the payment plan available, will have a resolution to the problem. But the option really needs to be limited to first-timers.
Third: The foreclosure option would encourage payment from those who can pay, particularly banks, or convert a rather amorphous and intangible asset (the past due amount) into a tangible asset that can be converted to a liquid asset. I know that some of these properties sit vacant for an extended period of time, but the District only needs to realize sufficient revenue from a sale to cover costs.
(Jim indicated support for this proposal before he left)
Operational Issues
See the vehicles discussion.
Highway 12 Cast Iron Pipe Replacement
The County required a permit review. That has been submitted. The engineer also had to do some topographic work and develop some inverts to satisfy WSDOT.
With the recent NWS, Inc. invoice, we have expended $11,302.80 on this project towards our budget of $100,000. I have included a copy of tracking spreadsheet in your packets.
We are still not ready to go to bid. This project will almost definitely exceed it’s budget.
Reynvaan Reservoir
Repairs are awaiting dryer weather.
Consumer Confidence Report/Newsletter
Is at DataBar.
Maintenance Activity:
Usual daily/weekly/monthly maintenance activity. See attached report.
Contractor Repairs
301 Hill Road. Service lateral repair including a road crossing.
510 Linkshire. Service lateral repair.
As-Builts
I have yet to set up a meeting with JWM&A. Berglund-Schmidt has also expressed interest. I need to get the current projects off my plate before diving into this one.
We can’t establish a valve exercise program until we have accurate as-built information.
Well Site Fence
I have an estimate to repair the well site fence. $2,801.60. I intend to go forward on this as it is a security concern.
Highway 12 Meters
Installation is complete. We believe that the programming is all done. So the first billing using the drive-by equipment will happen for the July billing. I expect bugs.
New Connections
7 Lutton Lane
30 Lutton Lane
Shop Organization
We keep looking for a window to get this job done. I am going to have to personally supervise this job if there is any hope of it getting completed.
Training/Certifications.
Kenny got some good information at his organization class. I have an asbestos class the end of June.
Safety
We have a mini safety meeting every morning.
Vehicles
Service Truck: No issues
F-150: Inoperative
S-10: Fluid leaks, destroyed interior. Essentially not in a serviceable condition.
Pickup Truck: No Issues
I believe it is time to surplus both the F-150 and S-10. The F-150 is currently inoperative. It first appeared to be a fuel pump problem. But it appears that the problem is in the electronic fuel injection. We have received many more years of service from this truck than I anticipated.
The S-10 has developed fluid leaks, in addition to the interior being almost unserviceable. We acquired the S-10 with the thought of getting three to four years of service from it. We have gotten five.
There is already a resolution to surplus the F-150, though it is over 10-years old. So another one would not be out of place.
Which brings up the replacement. I don’t think getting a second service truck is necessary. I think another Silverado 1/2-ton would be appropriate. Though I think an extended cab version would be useful for my use. The existing Silverado would replace both the F-150 and the S-10.
My field crew has suggested the new truck be four-wheel drive. The number of times that would be useful are so few that I can’t see a justification for the added cost.
I was hoping to hold this off to next year, but events are getting ahead of me.
I have a quote of $26,854.00 for an existing truck. So, by time we pay sales tax and get lights and a tool box on it, we are in the $32,000 range.
I consider this a high priority item because we don’t get the full benefit of the full time laborer with only two serviceable trucks. I have found, for my use, that an extended cab is important. So the current pick-up truck would be used primarily by the field crew while the new truck would be used mostly by the general manager.
(Jim expressed resigned support for this before he left)
Shop Site South Fence
I have a quote. It is more expensive than anticipated. I will want to wait until later in the year before I jump on this one. $7,077.44.
Alder Glen & Etc.
No news in February. Work orders are still out for the dead end lines that have not been examined.
Carl Way/Ridgeview: Not an issue
Hemlock Park
Lois Lane Not an issue
Waverly Court Not an issue
Garden Road: Not an issue
Walthom Lane: Not an issue
Greenbriar Court
Reynvaan Court
Madow Court
Reed Lane Not an issue
Blaine Road (End) Not an issue
Larson Lane Not an issue
Fremont Drive
Silkey Court
Lake Road
Hemlock Park
Fairway Park
River Road: Replaced
Alder Glen: Will need replacement.
Fairway Terrace: Will need replacement.
Filing System
On going.
Armory
We just need to get the docs signed and notarized. The word is that the documents are circulating somewhere in the military administration.
There has been some back-and-forth between Scott and their attorney regarding easement and the bill of sale.
LeMay Project
Some glitches have developed, which I predicted, as SCADA was left to the last minute. The final process is underway. Some of the process involves an upgrade to our program apart from the LeMay project. The most efficient way to split that out is for Infinite Automation to bill American Pump (the contractor for the pump equipment) and invoice us for the upgrade. We all get a break by bundling the two processes.
With that arranged, I have accepted the transfer of ownership to the District.
Fire Station
No news in May.
Reynvaan Lower Pump House
This building continues to deteriorate. I need to start the process of planning a replacement.
Basic Specifications:
Large enough to include pump controls (8 X 10)
Conform to the WAC 246-290 pump house requirements
Concrete Floor
Floor Drain
Insulation
Moisture Resistant Paneling
Generator Transfer Switch
Thermostatically Controlled Heater
Roof Hatch
I am thinking that one of the ready-built sheds would serve with some minor modification.
This really needs to get done, but I have more pressing matters on my plate at the moment.
Grant Funding Pursuit
The kick off for this effort was the WASWD Managers’ Meeting on June 5th. It was an excellent meeting. There were a couple of other managers from what I have started calling The Outer Rim Territories (a tip of the hat to Star Wars) so I had some backup, which they provided.
Since I have been making noise, I was given the floor to present the District’s concerns. It was definitely an eye-opener for the managers from the I-5 urban corridor.
I have collected a good deal of valuable information as to next steps, and some definite supportive comments from both other managers and the WASWD Executive Director.
One of the points brought up is that any granting agency is going to want to see a workable Asset Management Plan (see below) that includes provisions for replacing infrastructure when life expectancies have been reached. A view expressed, and acknowledged by all present, is that very few public utilities are actually charging the full cost of providing services, a big component of which is the allowance for replacement costs. A great many public utility customers have been riding, and still are, on their offspring’s money.
One step that I will take is to start putting some money in our Capital Replacement Fund. We have one, but it has a zero balance. I will start with the new Clemons Booster Station.
I was very encouraged by the positive response elicited by my comments.
My next step is to make contact with legislators in a preliminary fashion. It may take some effort to get their undivided attention.
Capital Asset Management
This subject has been a hot button with the Office of Drinking Water for some time. Which is partial explanation for my concern regarding our water mains. In practice, we need to address asset management, and we need to demonstrate good faith efforts to the regulatory agencies.
Asset management, has now become a subject of concern for the State Auditor’s Office (SAO). The SAO has always examined efforts to protect assets, but they are beginning the process to examine how effectively assets are managed. The SAO has issued new guidelines on the management and enforcement of existing regulations regarding asset management and appears to be working on some new regulations.
While we kind of have an asset management plan, it doesn’t really meet existing regulations and guidelines. We currently “manage” our assets through the FIIX program. But we have not really entered all the required data into that program and the integration into the budgeting process is more than slightly casual. We have no plan in place to pay for extensive asset replacement.
There are a lot details that need to be nailed down, recorded, and managed.
We can be reasonably confident that asset management will be a much larger issue in upcoming audits than it has in the past.
Now that we have taken over ownership of the Clemons Booster Station, I am going to set up a process to transfer some portion of the revenue from the LeMay and Armory connections into the Capital Replacement Fund. That fund is in existence but currently has a zero balance.
Just another initiative to keep me from getting bored.
Disaster Management Planning
I have made initial contact and am waiting for detailed information.
Cyber Security
I have had discussions with our computer guru, Joe Sloan, and he assures me that, given the way our internal network is handling IP addresses, necessitated by the SCADA system, it is essentially impossible for an outside computer to gain access to our internal networks at this time. Cyber security is always subject to change.
Isolation Valve Exercise Program
This is another Sanitary Survey item. It has been on my to-do list since 2012.
See discussion on as-builts.
Future and/or On-Hold Programs
Email Bills
Online Bill Pay
Installation of additional isolation valves
Unfunded "Dream" Projects
Include Reynvaan Pump Station in SCADA
Probably will require new controls, which are getting due anyway
Include Hirschbeck Pump Station in SCADA
Convert SCADA Communications to Cellular, or whatever.
Long Distance Service Laterals
Any thoughts would be welcome.
Respectfully Submitted:
Reg Hearn
General Manager