Featured Video: Formulate Great Rates

Formulate Great Rates: A webcast on setting rates in small-community utilities (Part 1) from RCAP on Vimeo.

Contracting a Certified Water Operator

Many small systems across the nation depend on the services of a circuit rider, also known as a contract operator. In fact, according to an article by Lori Moore, Compliance Specialist at Colorado Department of Public Health, contract operators make up an incredible 33 percent of the total number of certified water professionals who supervise public systems!

Contract operators can help ensure regulatory compliance for less complex systems that do not need a full-time operator, they can respond to emergencies, attend sanitary surveys or help fill-in when a full-time operator cannot be found in the area. 

Whatever the reason, it is important to know how to select a contract operator, and then once selected, how to communicate effectively with them. The Pennsylvania Department of Environmental Protection has recently published such a guide, outlining the responsibilities of both the responsible official/owner and the certified water operator. The guide also includes a contract operator interview tool and topics for developing terms of a contract.

Pennsylvania isn't the only state offering guidelines for developing a contract. For example, here is Vermont’s Department of Environmental Conservation list of suggested information and requirements to include and the Illinois Environmental Protection Agency has it's own guide as well. Many states also offer lists of current certified contract operators, like this one. 

Once selected, communication with the operator is key to developing a successful relationship. Because the work contract operators do is immensely valuable, especially these days, establishing clear expectations can go a long way for everyone involved. 

It’s a bird, it’s a plane, it’s a DRONE!

So you are thinking it is about time to inspect the outside of your water tanks and above ground assets. According to the Illinois EPA, a water storage tank should be inspected at least every 5 years, so it just may be that time again.

You are probably familiar with the traditional tools for condition inspections such as ladders, scaffolding, harnesses, cherry pickers, helicopters, ROVs, divers and cameras. But these days, you can add another tool to your toolbox: unmanned aerial vehicles (UAVs), or more simply, drones. Drones can offer a safer and possibly more cost-effective method of visualizing the condition of a utility’s facilities. Certainly, these “eyes in the sky” can take a visual inspection to an entirely new level – literally.   

There are clear benefits to using drone technology. According to this Wall Street Journal article, researchers believe the use of drones could cut utility costs and improve worker safety, both for routine inspections and for surveying damage after disasters. Plus, set up and operating costs can be less expensive – initial drone systems can be had for as little as $6,000. Drones can also be used to supplement your GIS program for asset management and to map assets in remote and rural locations.

Yet there are some drawbacks as well. Depending on state and local ordinances and laws, there may be height and line of sight regulations as well as special training/licensing requirements for operators.

Interested in finding out more?

There will be a technical session on using drones at the 2017 APWA Public Works Institute in California in September. And the NCAWWA is offering a session at their 2017 Institute, also in September. Can’t wait until September? The Operator Training Committee of Ohio is offering a training in a few short weeks.

Ready to give it a try?

NJ Water Association offers a drone service for asset management purposes, emergency response planning, tank inspections and more. Their drone and operator are both registered with FAA to maintain compliance with FAA Part 107 requirements.

Funding for Water Infrastructure Improvements

Paying for maintenance and upgrades to your utility is no small task, and the U.S. Government Accountability Office estimates the cost of replacing water and wastewater infrastructure in rural communities could be almost $190 billion in the coming decades. It’s unlikely a single source can meet your costs, and smart financing will instead require a mix of external funding, capital planning and rate setting to meet your goal.

External funds

The U.S. EPA provides a thorough starting point for finding external funding sources. Federal funding for water infrastructure includes:

• U.S. Environmental Protection Agency’s Clean Water State Revolving Fund and Drinking Water State Revolving Fund
• U.S. Department of Agriculture’s Rural Development Water and Environmental Program
• U.S. Department of Housing and Urban Development’s Community Development Block Grants
• U.S. Economic Development Administration’s Department of Commerce Economic Development Administration

There is also funding available at various agencies designated specifically for water and wastewater utilities dealing with declared federal disasters, or those seeking funds for proactive planning and design.

Funding options at the state level vary, but the Environmental Finance Center Network maintains a list of funding sources by state. The lists will include the last date of update, basic information on how to apply, and staff contact information to learn more.

Finally, there may be local or private foundation grants available, depending on your situation.

Capital planning

As the Environmental Finance Center at the University of North Carolina-Chapel Hill states, “Long-term planning is required to schedule major infrastructure improvements and spread the capital costs over many years in order to avoid having to raise rates significantly in any one year to pay for a capital project that was unplanned.”

To that end, the center has developed resources and compiled best practice guides to help small utilities develop Capital Investment Plans and/or Asset Management Plans. These include the “Plan to Pay” tool, which uses Excel to project your fund balance (revenues, expenses and reserves), and necessary rate increases for the next 20 years.

Rate setting

Once you know your options for external funding and projected balance for infrastructure improvements, you’ll know whether and when a rate change is needed. View our past blogs on Laying the Foundation for a Successful Rate Approval Process and Tips to Help Utilities Get the Water Rates They Need.

As always, you can find additional resources in the WaterOperator.org document library, including examples specific to your state by selecting “Financial management” under Category and your location under State.

Featured Video: Lower Rio Grande Public Water Works Authority

Lower Rio Grande Public Water Works Authority from RCAC on Vimeo.

To see more resources for water utilities from RCAC, check out their Guidebooks.

Featured Video: Rural Missouri Climate Adaptation

Though it may still feel like spring, depending on where you are in the country, summer is just around the corner. And with summer comes the possibility of drought. Is your utility at risk of drought conditions? Do you know what you'd do if a drought visited your community? Occasional but severe weather events can feel hard to plan for, but not planning at all can make the situation worse. In this 2-minute video, a small rural community in Missouri talks about the planning efforts they're taking on to be prepared for drought in the future, after a particularly tough 2012. Interestingly, their plans to combat drought mesh well with their concerns about sediment in their source water supply as well.

If you'd like to learn more about climate adaptation planning for your utility, check out the tools available through the EPA's Climate Resilient Water Utilities portal, and in particular their risk assessment tool.

Featured Video: Community Onsite Options

If you live in a community with a large number of failing septic tanks, you're probably already familiar with the downsides of these systems: the damage to local water quality, the threats to public health. The smell. What you may not know is what you can do about it. Of course, one option is to convert the entire community to a conventional wastewater collection and treatment system. This prevents putting the entire community at the mercy of that one guy who just won't pump or repair his tank, and it ensures that a professional is involved in the wastewater treatment process.

But what if a conventional sewer system is logistically or financially impractical for your community? Are you stuck dealing with smelly, dirty water leaks forever? Thankfully, the answer is no. This 17-minute video discusses the opportunities offered by community onsite management systems. These systems combine the effluent from individual septic tanks into a community-wide leachfield, and often involve mandating activities such as basic maintenance and monitoring. The video includes profiles of five communities (most of them rural) that successfully rehabilitated failing septic systems and combined them into a community onsite management system.

If you're interested in learning more about septic systems and decentralized wastewater systems (which involve community-level septic options), browse our document database using the category Decentralized WW Systems. You can also visit NESC's wastewater page for more on the septic resources they collect and offer.

Featured Video: The EFC Water and Wastewater Rate Dashboards

The new year may be a time for considering budgets as well as operational challenges. But for small water utilities in particular, setting rates and managing budgets involves a complex set of social and financial issues that can feel overwhelming. Luckily, there are resources out there that can help. The Environmental Finance Center at the University of North Carolina has developed a set of free, interactive Utility Financial Sustainability and Rates Dashboards. According to the project website, these dashboards are "designed to assist utility managers and local officials to compare and analyze water and wastewater rates against multiple characteristics, including utility finances, system characteristics, customer base socioeconomic conditions, geography, and history." To learn more about how the dashboard works, you can watch their nine-part video series, beginning with the video below:

Dashboards are currently available for twelve states. (For the most up-to-date versions of these dashboards, and to check if new states have been added, use the map at the project page.)

• Alabama
• Arizona
• Colorado
• Georgia
• Northeast Illinois
• Ohio
• Massachusetts
• North Carolina
• South Carolina
• Texas
• Virginia
• Wisconsin

Even if your state is not on the list of current dashboards, it may still be interesting to check out what communities similar to yours are doing around the country. If you'd like more help working on rates and budgeting at your utility, the Rural Community Assistance Program provides technical assistance to small, rural utilities in need of both operational and administrative support. They also have a number of helpful guides aimed at supporting board members of small utilities, including this one dedicated specifically to rate-setting.

Utility finances can be difficult and complicated, but they don't have to be impossible. Find out which assistance providers near you can help you determine what's most realistic and sustainable for your utility.

Financial Accounting for Small Systems

This article originally appeared on the SmallWaterSupply.org blog in 2012 as part of the Water We Drink series, developed by the Rural Community Assistance Partnership (RCAP) and the National Environmental Services Center. Written by Certified Public Accountant Hatsy Cutshall, its ideas and tips still hold true today.

A cascade of bad economic news since late 2008 has focused nearly every citizen’s concern on finance, certainly at home and often at the public level. Many who are struggling to pay their own bills are looking to municipal leaders and asking valid questions about how their tax money is being spent.

A water or wastewater system is often the single largest asset owned by a small community. Like a homeowner with his property, all the stakeholders of those systems are best served if that asset is well managed and maintained to get the longest and best use at the lowest cost to all concerned. It is imperative that the board and the system managers understand and appreciate the value of the financial aspect of running the system. With that understanding they are then prepared to address public questions and concerns to help them understand how and why many decisions are made.

Financial management is not just about depositing cash in the bank and paying the bills. When used as part of an effective overall management strategy, it helps managers plan for the future to avoid unpleasant surprises like a compliance order or the sudden and unplanned need for significant infrastructure replacement. It also prepares management to explain to the rate-paying constituents how the decisions are made that go into setting the rates that keep the system going.

Without sound financial information, it is easy for the public to make incorrect assumptions about how much it costs to provide safe, reliable drinking water. Often, the first target for public scrutiny is the staffing expense. In response, many small system managers and governing boards are tempted to short change the accounting and finance function in favor of technical staff. By doing so, they risk problems that could cost them far more in the long run than the salary or accounting fees they have opted to avoid.

Furthermore, when a system does face the need for additional investment or maintenance costs, managers will find that there is less money flowing overall, fewer grants, and more loans. Funders are imposing stricter reporting requirements on systems to prove their capacity to manage the money they're borrowing.

There has never been a better time for small systems to take a look at their financial management and make sure it can stand up to this heightened scrutiny. In doing so, they likely will also discover ways that their financial information can help them decide how to make better use of the income and other resources for which they are responsible.

To help system managers and board members form a strategy for improving their financial management, I've compiled some ideas for how to get started. I've had the good fortune to talk with a number of technical assistance providers and other consultants who work with small systems. They've highlighted some common situations that they find when they begin work with a small system, as well as solutions that can help resolve some difficult situations.

1. Get organized! Before you can begin to create or improve a financial system you have to be able to find your expense bills, your receipts records, your bank statements, and your payroll records. Create a filing system and get your paper records in order so that when you need to refer to a document, you can find it easily. If many of your records are in electronic format, create an electronic filing system for those records, as well.
2. Review and document the system's rules and policies for income, expenses, and setting aside reserves. Read the minutes of board meetings for policies that may need to be formalized into the operating procedures. Board members and management should consider policies for handling late payments, whether to apply for a credit card, and board policy for setting aside a percentage of all fee income for capital needs reserves, to name a few.
3. Find the right person to do the accounting work. If the system has a staff member who can take on the work and is willing to learn, get him or her some training. If the system cannot afford or does not need even a part-time bookkeeper on staff, consider hiring a local bookkeeping or accounting firm to do this work on a contract basis. Ask if the contractor has staff members who are willing to attend board meetings to help managers and board members read and interpret the reports.
4. Talk to some trusted and experienced advisors about the system's accounting needs before you buy software. Often small systems buy accounting packages that are far more expensive and complex than they really need. The accounting software must be able to track the water system's activity separate and apart from that of any other government activity. If the system is small enough (e.g. 50 to 100 connections) a simple Excel spreadsheet may be able to handle all the tracking and reporting you need. For larger systems or those that are ready for a more comprehensive solution, QuickBooks is affordable and can handle most, if not all, of the accounting functions that many small systems need.
5. Build a budget. Start with the actual results of the prior year's operations and consider what is likely to change, as well as what the board and constituents wish to change and put it in writing. Once approved, enter this budget into the reporting system so that reports can compare the actual financial activity to what was expected. Comparing the two will help managers and constituents plan for the future.
6. Find and file any records you can that show how much was paid for pipe, pumps, meters, and other system infrastructure. Identify what the system owns and adopt an asset management plan. This survey of the system's physical components then informs the financial planning and budgeting process to reduce the risk of unplanned expenditures. This summary of what the system owns and how much it cost will also give you the information you'll need to record the value of the system's fixed assets on the balance sheet as required by the Governmental Accounting Standards Board (GASB) 34 rule, which addresses financial reporting requirements for infrastructure assets.
7. In addition to training the financial staff or hiring a bookkeeping firm, consider offering training for the system's board. Members of a utility's oversight board are often volunteers and may need assistance in making informed decisions and communicating the reasons for those decisions to the public. This type of training, as well as more generalized financial management training, is often offered through the state's primacy (drinking water or wastewater agency) as well as through non-profit organizations such as the Rural Community Assistance Partnership (RCAP) and the National Rural Water Association (NRWA).
8. Make sure your accounting system can track and classify income by type such as fees for water service, hookup fees, late fees, and so forth. It should also provide reports on aged receivables: how much the system is owed and how much is overdue by 30, 60, 90 or more days.
9. Classify expenses in such a way that a report reader can easily compare how money is being spent to the board's approved budget. Expense line items such as telephone, rent, electricity, salaries, supplies, and other routine costs should be created; as payments are made and entered into the system, those payments should be categorized according to their purpose. The system should also be able to provide a report on how much is owed to outside vendors and when those payments are due. This report is called an "accounts payable aging" report.
10. Record financial activity in the system regularly and often, at least once per month. If you let bookkeeping work pile up for months at a time, it is very easy to forget information that is important to the financial reports, such as the purpose of an expenditure or to which fund is should be charged. Monthly (or more frequent) reporting also helps managers see problems in time to solve them before they become more expensive to solve.

Make the decision that financial management is as important as maintaining the plant and equipment. Whether you decide to do it to meet regulatory requirements, citizen demand, or management needs, it's a great idea!

For more information or for advice and help getting started, contact your region's RCAP office, the National Rural Water Association, or your state primacy agency that deals with drinking water or wastewater systems.

The author would like to thank the following people for their help and information in preparing this article: H.B Calvert, Karen Yates and Jan Frederick with the Midwest Assistance Program; Mary Fleming and Linda Martinez with the Rural Community Assistance Corporation; Karen Johnson and Cindy Navroli, MPA, CPA.

Emergency Planning Goes Digital

They call this the age of the internet, so it probably comes as little surprise to hear that there is a whole host of computer and mobile tools designed to make emergency and adaptation planning easier and more effective for utilities and communities.  

We’ve highlighted a few U.S. EPA tools below, but there are many more with a range of features. If you’d like support finding the right tool for your system, drop us a line at 1-866-522-2681 or info@wateroperator.org. And for those who just prefer hardcopy, click here for a list of free emergency response plan templates.  

Tabletop Exercise Tool for Water Systems

This PC-based tool contains materials to assist those interested in planning and facilitating tabletop exercises that focus on water sector-related issues. Fifteen customizable scenarios address natural hazards and man-made incidents and introduce the potential impacts of climate change on the water sector.

Water Utility Response On-The-Go

The homepage of this mobile-friendly website displays a menu of links for tracking severe weather, contacting response partners, responding to incidents, taking notes and recording damage, informing incident command, and accessing additional planning info. Some of the external links from the site are not formatted for mobile viewing, and the .pdf forms may require an Adobe Reader app if you wish to fill them out on your mobile device. However, the site overall is well organized and easy to navigate, and can be a great tool for utilities dealing with weather emergencies and natural disasters. Click here to watch a short video about the site.

Community-Based Water Resiliency Tool

The CBWR Tool is an easy way to find out how prepared your community is to handle emergencies that impact water systems and learn about tools and resources that can be used to build resilience. A summary report is provided after the self-assessment with suggestions and recommended resources for increasing resilience. Users can then navigate to the CBWR toolbox, where they can find the best tool for their needs from over 400 tools and resources. Learn more about the benefits of the CBWR tool in this A Day Without Water video.

Climate Resilience Evaluation and Awareness Tool

This risk assessment tool allows water utilities to evaluate potential impacts of climate change. The tool guides users through identifying regional climate change threats and designing adaptation plans. After assessment, CREAT provides a series of risk reduction and cost reports to allow you to evaluate various adaptation options as part of long-term planning. Visit the U.S. EPA YouTube channel for a complete introduction and videos showcasing how systems throughout the country have used CREAT to boost their preparedness.