MANAGER'S REPORT
08/07/2019
County Auditor
I put out a request to WASWD membership on the process and experiences regarding districts issuing their own checks. I received quite a few responses, but I am still not entirely clear as to the next steps.
We may want to approach the County Treasurer (and perhaps include the Auditor) with a frank discussion of our position. I would be comfortable being included in the conversation, but commissioner lead would be most appropriate.
Budget Position Report
County reports did not arrive in time to produce a reconciled Budget Position Report. I have included an unreconciled report and it is ugly. The numbers will be very close to the reconciled numbers. A few hundred dollars each way.
July was a very expensive month. The invoices arrived for the repairs to the Hirschbeck Booster Station and the installation of the new VFD for the Well #5 pump. And we purchased the replacement truck.
Revenues for July were $63,278.44. Operational expenditures were $74,013.34, thanks to Hirschbeck and Well #5 which total $30,324.07. The truck is accounted for as Capital Replacement. The total for the truck, including taxes was $30,950.83.
So expenditures exceeded revenues by $41,685.73. Year to date Revenues are $446,715.46. Year to date expenditures are $423,369.48. So for the year we are ahead by $23,345.98.
We are 58% through the year and have collected 55% of projected revenue and spent 59% of budgeted expenditures.
I keep hoping for a breather, but we still have the Highway 12 project hanging over our heads.
Treasurer’s Report:
County reports did not arrive in time to reconcile accounts.
2020 Budget
I have included two proposed budgets for your consideration. One assuming a 6% rate increase, the other a 12% increase. Comments about the rates will follow.
Most of the expense line items are what they are. Budget levels have either been held steady, adjusted based on past experience, or adjusted according to hope-for expenditure restraint or anticipated increased costs.
A few deserve comment.
I always include 6% in Salaries and Wages for you to work with in terms of compensation levels. That money can be applied to wage increases, or increases in benefits. If we were to consider a PEBB retirement benefit we would need about 15% of gross wages for Ken and Mick added to Benefits just for that benefit. That would increase the Benefits line item from $23,745 to $34,348. It would decrease the contribution to reserves by about $10,600. That would assume no wage or salary increases.
I am awaiting a quote from the Washington Counties Insurance Fund for health insurance. That is who is carrying our dental insurance. If the health insurance is as good, from every standpoint, as the dental insurance, it may well be worth switching.
We have expended quite a bit of money on software in 2018 and 2019. I am determined to avoid acquiring any new software in 2020. If successful in that objective the actual 2020 software expenditures should be about half of what I have budgeted. The higher budget proposal is in anticipation of the unexpected.
Admin Fees & Services covers our payments to the County for their treasury services. If we start writing our own checks, we may attempt to renegotiate that payment. See comments on writing our own checks.
Travel has been given a bump to cover the anticipated costs of my efforts to encourage the legislature to consider developing grant programs for major infrastructure projects for small districts. Small districts, especially those outside the I-5 corridor, tend to be an independent lot and getting them all behind a common initiative may be somewhat like herding cats. So I will be doing some traveling.
Parts and Supplies always ends up being a wildcard. While this line item includes the cost of chlorine, the real driving force is the repair of failing service laterals. For awhile it appeared we had gotten ahead of the curve in terms of failing service laterals. That has not been the case for 2019 and the Parts and Supplies line item will almost certainly exceed the budget by a considerable margin. I have assumed that 2020 will not be much different than 2019 and have increased that line item accordingly.
For Projects I have proposed that we address all of the Reynvaan issues. That would be controls, the booster station pump house, and the extension down the hill. I would also like to incorporate the Reynvaan booster station into SCADA. See comments on Rates, below.
Contribution to reserves is always a major objective. Leaving out water main replacement, our reserves have improved considerably over the last few years. But we mustn’t get complacent. Leaving out the Highway 12 project, we could contribute about $60,000 to reserves in 2019. Of course, that project is the wildcard. We have about $128,500 left in the Projects line item for 2019 after spending about $21,450 on the Highway 12 project. So that project may not suck up all of our reserve contribution for 2019. In which case we should consider the Reynvaan set of projects. If, however, we have to dip into reserves to meet our budget as a result of the Highway 12 project, we should consider scaling back the Projects budget, perhaps not even tackling any projects in 2020 with the objective of replacing what we have may have drawn out of reserves.
We could adopt a budget that includes Projects, but choose not to implement any projects if the Highway 12 project takes too big a bite out of reserves.
Which brings us to Rates. The two proposed rate increase alternatives assume that percent increase in revenues. To really achieve that we would need to raise both the base rate and the usage rate. At our current $2.15 per 100 cubic feet, I believe we are at the upper limit of a defensible usage rate. I am proposing that we not increase the usage rate for 2020. So a 6% increase in the base rate may not deliver a full 6% increase in revenues. Without a full rate study, which is not in my schedule for 2019, nailing down the expected revenue increase is a bit difficult. I plan to conduct a full rate study in 2020 in time for budget discussions for 2021.
The 2019 increase was substantial. Though we have received very little negative comment, I am of the opinion that, barring any major surprises and avoiding any major line item increases, we should limit the increase to 6%. In July the average payment was $115.51.
Having said all that, for a variety of reasons, I recommend the 6% increase. Of that 3% allows for increased costs and 3% is additional contribution to reserves.
We might consider a higher rate increase to include projects and contribute to reserves. I am reluctant to do that without a formal rate study.
If the new collections policy works as intended, some of increased costs should be covered by increased collections.
I would really like to reconfigure the rate structure. But that would be both risky and unpopular.
Monthly Utility Totals
See the Monthly Utility Totals report. The billing for Section 2 June and July (August 1 billing) was $63,706. Minus credit balances plus past due accounts receivables were $86,427.91.
Of the $131,783.03 the district was owed on July 1st by Section 1 customers, $79,357.53 was paid by the July 30th due date. See the Utility Payments Received report. So 60% of balances owed were paid.
I have hopes that the new collections policy and procedures will improve the collections situation. Having so much money out in past due accounts is not fair to all those in the community who pay their bill on time.
Collections
As stated above, the district collected 60% of the balances due at the beginning of July. The new policy is set for implementation on the first of September.
Operational Issues
None
Highway 12 Cast Iron Pipe Replacement
WSDOT has approved the application with the provision for a soils characterization.
The next step is to get the soils characterization completed. I am awaiting the contract from the geotech.
Reynvaan Reservoir
I have communicated with Rognlins. It has occurred to me to communicate directly with the coatings company, which I will probably have done by the time of the meeting.
Maintenance Activity:
Usual daily/weekly/monthly maintenance activity. See attached report.
Contractor Repairs
Ridgeview Drive. This repair, to a service lateral, required a road crossing. We attempted to affect the crossing by pulling new service laterals through. That didn’t work and we ended up ditching across the road.
Hill Road. A service lateral repair that also included a road crossing. We were able to pull the new line. No need for trenching.
As-Builts
I have learned that NWS, Inc. has a GIS capability. Neither of the other firms interested have the in-house capability, though all can work with the County. This capability allows the tracking of a great deal more information and makes it more readily available to the district, as well as the county.
I will devote more time to this project once the Highway 12 project is about wrapped up.
Well Site Fence
I have issued a notice to proceed to the fence company and we have cleared grass and brush away from the fence. No sign of activity yet.
They need to get started soon or we will have to do some more mowing.
Highway 12 Meters
Installation is complete. Getting the remote part implemented has presented some challenges.
New Connections
6602 Olympic Highway. The application to WSDOT has been approved. Brumfield has been notified and provided a copy of the approved application.
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.
Nothing in July.
Safety
We have a mini safety meeting every morning.
Vehicles
Service Truck: No issues
F-150: Replaced, but still on site. We are getting the logos removed bit by bit.
S-10: Replaced, but still on site.
Pickup Truck: No Issues
Pickup Truck 2:
No issues. The truck is outfitted except for the lettering. It has been ordered.
Shop Site South Fence
On hold.
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
Completed. The Military Department has signed all the document. I am just awaiting the originals so that we can sign them.
LeMay Project
The ribbon cutting and barbeque were a great success. This project is now completed.
Fire Station
Site work has started. We are learning new things about the internal water distribution.
The site work company was looking for a spoils site. I offered the low areas in the well site. They were delighted and have committed to smoothing out the existing and their contribution and compacting the loose fill areas.
The construction is causing us some problems. We don’t have access through the fire district property. That is no problem for our vehicles, but we can’t get big trucks in for deliveries. I need to work on that one. For one delivery we parked the H.D. Fowler truck out on Pioneer and ferried the parts in using one of the pickup trucks. It was cumbersome, but it worked. That won’t work for deliveries of rock.
Reynvaan Lower Pump House
See budget discussion.
Grant Funding Pursuit
I will be presenting a request for activation of the Small Districts Committee at the WASWD board meeting on August 26th. I have attached a copy of my presentation.
Capital Asset Management
I have expanded the Projects List into a very preliminary Capital Replacement Plan. Ideally, this preliminary outline should be expanded to indicate how much money the district needs to devote to capital replacements each year.
Making that expansion has felt a lot like an exercise in futility since so many items are past their critical date.
There are other items that classify as “projects” but are not necessarily capital replacement items. Updating and organizing the as-built information falls into that category.
As part of the next year’s rate study I will work in future capital replacement projects and make an attempt at budgeting in projects that are past due. But it won’t be pretty, from a proposed rate standpoint.
Disaster Management Planning
Jim and I encountered the customer who made the initial contact regarding availability of grant funds at the LeMay ribbon cutting. He provided some new paths to follow as well as promising to provide some additional motivation to the local officials.
Isolation Valve Exercise Program
This is another Sanitary Survey item. It has been on my to-do list since 2012. Getting this organized is dependent on having good as-built information.
Future and/or On-Hold Programs
Email Bills
Online Bill Pay (way down the list. Customers can pay bills online through their bank)
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
We had the situation. Fortunately, the leak turned out to be on the served customer’s property. We repaired it in order to prevent any possibility of a problem.
Respectfully Submitted:
Reg Hearn
General Manager