MANAGER’S REPORT
12/11/2019
Budget Position Report
Due to a rather serious mistake on my part, the financial position is not quite as it appears.
When Brumfield invoiced us for the new connection on the highway and the water main crossing on Alder Grove, they included all of the traffic control on the Alder Grove invoice. Normally that would not really be a problem. In this case, both projects were being fully or partially reimbursed, so we needed to know how much traffic control went with each project.
I requested revised invoices from Brumfield. All well and good.
The mistake on my part was that I neglected to pull the first invoices from Accounts Payable. I further neglected to fully review all the payments to Brumfield, therefore missing the double payment.
In my defense, the dollar amounts were enough different that they did not stand out as double payments and, rather than issue revised invoices with retained invoice numbers, Brumfield issued entirely new invoices, so there were no duplicate invoice numbers. It was also an overall expensive month so a high claims request was expected. Couple that with Brumfield sending all of the invoices for all of the Summer projects in one envelope and a crazy November, I simply got overwhelmed.
The upshot is that we have a $41,766.68 refund check coming from Brumfield. So November is actually quite a bit better than it appears from the financial statement.
Having said all that, Revenues for November were $119,942.15. This number is somewhat misleading. Actually, it is quite misleading. In November we had quite a bit of activity transferring funds from one account and/or fund to another. So some of the Revenue dollars reflect fund and account transfers rather than actual dollars in the door.
Expenditures were $197,309.49. So, officially, we spent $77,367.34 more than we brought in. Bearing in mind that the expenditures are overstated by $41,766.68. Which will be reflected in December’s revenues. Still, even considering the coming refund, we spent $35,600 more than we brought in. The same caveat applies here as to Revenue. The very high number of expenditures is impacted by fund and account transfers. Not actual money going out the door. However, the spread between the two, Revenue and Expense, remains the same because what is an expense in Fund will show up as Revenue in another.
Contributions to the deficit include:
Annual Insurance Premium
Brumfield’s Summer of invoices
Projects (a large part of which is being reimbursed)
Reynvaan Roof Recoat
The November USDA Payment
Treasurer’s Report:
The Treasurer’s Report is enclosed. There seems to always be a discrepancy between the Fund Page (Page 1) and the Cash Account Page (Page 2). The wild card is the EFT clearing account, and I don’t know how to fix that.
The short version is that we have $588,390 to operate and maintain the water system. Which is less than last month. That is not the trend we want to see, but it is only the trend for November. December should look much better.
Monthly Utility Totals
The December 1st billing totaled $59,137.18. Total receivables were $90,532.97. See the Monthly Utility Totals Report.
Collections
November 1st we billed $76,317.46 and collected $72,416.47. We collected 94% of what we billed.
Claims Request
I was hoping that we could get the claims request signed early and delivered to the County. However, because I did not request a large enough budget adjustment last month, we need another resolution increasing the expenditures budget to cover December.
This increase is in the budget only. It does not involve the movement of any actual cash. The adjustment is necessary to cover the high expenses we experienced in November. I have requested Scott to prepare a resolution increasing the regular maintenance budget from $660,709 to $770,710. Actually, we are only off our budget by a little over $12,000, but the County bunches all of our operating expenditures into one line item, which includes the USDA payment and any interfund transfers we make.
Rate Study
This project is moving along. Jim and I have discussed some parameters and assumptions as it moves proceeds.
It is Jim’s opinion that we should budget for a standing $1 million in the contingency reserve, rather than the $700,000 I originally proposed. His thinking makes sense. Our franchise with the Washington State Department of Transportation requires that any time that a break indicates deterioration of the Highway 12 water mains, that the mains be moved to the extreme edge of the right-of-way. The franchise allows us to replace between fire hydrants, a distance of 640 feet. Such a replacement could easily approach the $1 million figure. I am renaming the Contingency Reserve to the Major Repair Reserve. I may actually set that fund up and transfer excess funds into it at the end of each year. It would then appear as a separate line item on the Treasurers Report.
I should have a standard detail prepared for the replacement of a water main between fire hydrants. There is quite a bit of detail involved in that project.
New Regulations
There is growing concern regarding Perflourinated Compounds. These are compounds that are used in the several manufacturing processes (including teflon coatings, carpet and other common items), and in fire fighting chemicals.
The Office of Drinking Water and the Department of Ecology have found a way to require testing for these chemicals without having to go through the normal rule-making process. We can expect to see the testing requirements sometime in 2020. We have no idea how much that testing will cost.
The good news is that GHCWD#2 was included in the Federal Environmental Protection Agency testing program for these compounds under the Unregulated Contaminant Rule back in 2015. At that time the District’s wells tested “Non-Detect”. In all probability we will need to conduct an initial round of testing once the state processes are fully in place. If the results fall below the State Action Level (which they probably will) we will qualify for some kind of testing waiver.
In other news…the Total Coliform Rule revisions are about to be finalized. Nothing in the new rule should have much impact on the district unless we experience an acute (e.coli present) failure. Not on my watch.
The disaster management requirements are still somewhat in process. I have the FEMA guidance for disaster management for water and waste water utilities, but it is highly concentrated on response and recovery rather than physical plant planning. The planning sections in the guidance focus on planning the response and recovery activities.
Operational Issues
Full Cost Budgeting.
Highway 12 Cast Iron Pipe Replacement
Contract documents are being prepared. We will put it out to bid, but we won’t start construction until next Spring.
Maintenance Activity:
Usual daily/weekly/monthly maintenance activity. See attached report.
At one point I thought we were ahead of the curve for service lateral repairs. Not the case. Right now we are fixing service laterals almost every day.
Jim has asked about the status of our failed VFD. The manufacturer has temporary suspended their inspection program pending some re-organization. Our unit is wrapped and sitting on a shelf at American Pump pending implementation of the manufacturer’s program.
Contractor Repairs
Repaving previous repairs.
As-Builts
I have not had time to pursue information about the Flo, Inc. program.
Highway 12 Meters
I think we are ready for full implementation. The 01/01/2020 billing will determine our readiness.
New Connections
None
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.
Some time that could have been devoted to shop organization has been used up preparing the site for the new south side fence.
Training/Certifications.
Both Kenny and I have classes scheduled early in the year. In addition, with my role as a committee chair I will be attending the WASWD Spring Conference.
We have identified a preparation class for Mick. We will sign him up after the first of the year.
Safety
We have a mini safety meeting every morning.
Vehicles
Service Truck: No issues.
F-150: Gone
Pickup Truck 1: No Issues
Pickup Truck 2:No issues.
Shop Site South Fence
The fence has been installed. Our cost was just over $2,500.
Filing System
On going.
Fire Station
Work on the water main through our shop site should have started by the time you read this. We have all the materials to install the fire hydrant. The fire district’s contractor will provide the tee. We will install the hydrant.
Reynvaan Light
Circuit breaker is locked.
Grant Funding Pursuit
No targeted activity in November. It will get much busier after the first of the year. As noted, I will be attending the WASWD Spring Conference and will be button holing contacts and recruiting committee members at that conference.
I will also be contacting our local state representatives and attending at least one WASWD Section 2, 3 and 4 meetings early in the year. Section 1 is Eastern Washington. I will attend one of their meetings in late Spring or Summer.
A piece of good news, the 2020 Fall Conference will be held in Suquamish. I will probably still stay at the conference site, but it will mean a lot less travel to and from. I can go up there the day of registration and come home immediately after the last session. That cuts two nights off my overnight stay.
Capital Asset Management
This has been fully integrated into the Rate Study, or vice versa. We still have no firm strategy for water main and reservoir replacement.
Emergency Response Plan
In reviewing our plan (which appears up to date) I noticed that it was never formally accepted by the commissioners, which is a requirement of the planning process.
So I have included a copy of the plan in your packets. The plan can be accepted and signed at the meeting.
Disaster Management Planning
I have begun reviewing the FEMA documents related to disaster management for water and waste water utilities. I will have a copy of the guidance at the meeting for your information.
Isolation Valve Exercise Program
On hold due to inadequate 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
No longer relevant. This will disappear next month.
Shop Insulation
I have some concerns. I will discuss at the meeting.
Long Distance Service Laterals
We had another the situation. The two customers on Devonshire Road east of Katon Road have very long service laterals. One of those customers contends that, since the service lateral is not on her property, she should not be responsible for it.
She may be at the meeting.
Still open to ideas.
Respectfully Submitted:
Reg Hearn
General Manager