MUNICIPAL UTILITY OPERATIONS INTERNAL CONTROLS AND BEST PRACTICES

Transcription

1 MUNICIPAL UTILITY OPERATIONS INTERNAL CONTROLS AND BEST PRACTICES

2 Florida Government Finance Officers Association (FGFOA) Annual Conference May 31 June 4, 2014 Orlando World Center Marriott MUNICIPAL UTILITY OPERATIONS INTERNAL CONTROLS AND BEST PRACTICES Presentation by Ingrid Gaskin-Friar Wednesday, June 4, a.m. 9:40 a.m. City of Melbourne Website

3 I II Introduction - Leadership Key Internal Control Over Utility Function III City Code Chapter 32 IV V VI VII VIII IX X XI Bill Samples and Billing Rates Critical Financial Reporting Consideration Sensitive Issues Facing Local Utilities; Refunds Mandatory Hook-up Application Process Helpful Tips on How to Enhance Collections i. Cut Off Policy ii. Opportunity to Increase Payment Questions and Answers Appendix Material: Speaker s Bio & Sample Bills

4 FGFOA Speaker Presentation: MUNICIPAL UTILITY OPERATIONS INTERNAL CONTROLS AND BEST PRACTICES

5 Section I Introduction

6 LEADERSHIP A) Wren, J.T. (Ed.). (1995). The Leader s Companion: Insights on Leadership Through the Ages. New York: Free Press, p.70. Water: The wise leader is like water. Consider Water: Water cleanses and refreshes all creatures without distinction and without judgment; Water freely and fearlessly goes deep beneath the surface of things; Water is fluid and responsive; Water follows the law freely. Consider the Leader: The Leader works in any setting without complaint, with any person or issue that comes on the floor; the Leader acts so that all will benefit and served well regardless of the rate of pay; the Leader speaks simply and honestly and intervenes in order to shed light and create harmony. From watching the movements of Water, the Leader has learned that in action, timing is everything. Like Water, the Leader is yielding. Because the Leader does not push, the group does not resent or resist.

7 B) The City of Melbourne bills approximately 58,000 utility customers monthly. Staff address 8,000 to 10,000 calls monthly. The City utilizes Tyler, MUNIS CIS-software for its utility billing. Water and Sewer rates increased by an average of 7% in this fiscal year, in accordance with a five-year rate plan approved by Melbourne City Council in May The water and sewer system budget is proposed to increase by $1,897,846 from this past year. Total water sales: $24,000,000 Sewer charges: $18,000,000 Note: The City of West Melbourne utilizes the City s bulk water sales at the inside City rate. The City of West Melbourne utilizes 9% of the City of Melbourne s water sales.

8 Section II Internal Control: Internal Controls Over Utility Functions

9 Administering a System of Internal Control is Ultimately the Responsibility of Everyone in an Organization SOURCES Personnel Systems Procedures

10 PERSONNEL: Professional staff usually possess a university degree in accounting, business administration, or finance and has pertinent experience for the position. Paraprofessional staff with some formal studies for the position that allows for minimum supervision. Clerical staff with little or no formal studies, but has been trained in the procedures.

11 Finance Director PROFESSIONAL STAFF Customer Service Manager Financial Systems Administrator

12 PARAPROFESSIONAL Utility Billing Specialist

13 Chief Accounts Clerk Senior Accounts Clerk CLERICAL STAFF Accounts Clerks Accounts Clerks Part Time or AARP Switchboard Operator

14 STAFFING RESPONSIBILITIES RELATING TO CUSTOMER SERVICE CALLS: Four (4) Accounts Clerks provide cashiering function in conjunction with Customer Service at the front office. Chief Accounts Clerks and Senior Accounts Clerks assist with Customer Telephone calls in conjunction with other daily assignments. Utility Billing Specialist addresses customer complaints transferred from staff, prior to forwarding to the Customer Service Manager. Financial Systems Administrator is responsible for all technological improvements/upgrades and month end closing. Customer Service Manager addresses customer complaints that are forwarded from the Utility Billing Specialist, Director of Finance, and City Manager/Council. Finance Director assumes the customer complaint, if the customer refuses to speak with the Customer Service Manager. City Manager delegates customer complaints to Director of Finance and/or Customer Service Manager for resolution. 99 % OF CUSTOMER ISSUES ARE ADDRESSED AT THE STAFFING LEVEL

15 SYSTEM: System Reliance integrity of data transferred to accounting Safe and Control Environment key access, strategically placed cameras.

16 Procedures Linked to Accounting: Reconciliation of Customer Deposits Refund after 12 months of good payment history Categorization and Summarization of Water Sales Residential and Commercial Sales Accounts Receivables Batch report posted to General Ledger Bank Statements Monthly reconciliation

17 Cash Collections: Safeguarding of assets covered cash drawers with keys and related cash bags Segregation of duties Independent verification internally outside of accounting Audit of records prior to posting Revenue division Authorization and approval process Retrieve funds drop box multiple staff Bank deposit preparation Revenue division Law enforcement assistance bank deposit

18 Utility Service Initiation: Collection Water and Sewer impact fee collections Engineering department Building and Code department Utility Billing and Collections populate User defined field with receipt and amount paid

19 Meter Reading: Routes are read daily Download and import routes daily Verify meter reads Return for read verification

20 Meter Inventory: Purchasing purchase orders Warehouse storage AMR meters AMR with ADE capability Residential meters held in stock Compound meters order as needed

21 Customer Billing: Three Billing Areas: Melbourne, Eau Gallie, Beach Bill by routes (Cycles 1 4) Weekly billing Outsource billing Verification of samples Post to General Ledger

22 Section III City Code Chapter 32

23 City of Melbourne Utility Billing City Code City Manager: (Reference City Code Sections below) MELBOURNE CITY CODE Sec Administrative Adjustments to Utility Bills MELBOURNE CITY CODE Sec Authorized to provide adjustments to Water Bills MELBOURNE CITY CODE Sec Sewer Service Rate

24 Section IV Bill Samples and Billing Rates

25 Residential Customers Water and Sewer Security Deposit ¾ inch meter - $ City Code Sec Security Deposit * Water and Sewer Security Deposits vary by size of meter or number of units for multi-family establishments and by city ** Commercial customers -2 ½ times the average monthly bill at same location *** Sewer security deposits vary by city METER SIZE WATER COST SEWER COST ¾ $43.00 $ $ $ ½ $ $ $ $ $ $1, $1, $1, $2, $3, or larger To be negotiated

26 City Code Sec Construction Meter Water Sales: A customer may tap a fire hydrant for construction use only with permission from the City and after placing a meter deposit and payment for the water used based on volume registered by the meter. METER SIZE DEPOSIT AMOUNT ¾ inch $ inch $ inch $1, Deposit is refunded when the meter is returned.

27 1. View a Typical Bill Charges: Water Sewer Garbage Recycling Yard Trash 2. Advisory Notes on back of utility bill: City of Melbourne water, sewer, garbage, recycling and yard trash, reclaim water City of Melbourne water, Brevard County sewer, garbage, recycling, yard trash, and utility tax City of Melbourne water, City of Cocoa Beach sewer City of Melbourne water, City of Palm Bay sewer (Lakes of Melbourne) City of Melbourne water, City of West Melbourne sewer* Late Fee, Shut Off Fee, Lien Fee are also included on the bill Bills include a Shut Off date where applicable *The City of West Melbourne utilizes the City of Melbourne s bulk water sales at the inside City of Melbourne rate.

28 TWO TYPES OF BILLING Regular paper bills via U.S. Mail E-Bills Billing Functions are outsourced with AXIS Bill due date: Late Fee Applied: ACH Bills with bank draw: Final Bills: 25 th day of the cycle 26 th day of the cycle 25 th day of the cycle Security deposit credit refunded

29 SAMPLE RESIDENTIAL ACCOUNT COMPUTATION Each week of month is a regular billing period for 12,000 to 16,000 Bill Accounts. Approximately accounts are finaled monthly. * Waste Management Contract ** Funds utilized to manage Recycling Division AMOUNT RATE CALC. TOTAL Water Base Charge (inside) $7.58 Water Consumption 8,000 Gallons $ $ Sewer Base Charge (inside) $11.21 Sewer Consumption 8,000 Gallons $6.49 $51.92 $63.13 Utility Tax (none) Garbage * $6.50 Recycling/Yard Trash * $4.07 Sanitation Service Charge ** $.27 Shut Off Charge Late Fee 1.5% Minimum $30.00 $5.00

30 *Waste Management Contract ** Funds utilized to manage Recycling Division Shut Off Charge $30.00 Late Fee 1.5%, Minimum $5.00 AMOUNT RATE CALC. TOTAL Water Base Charge (inside) 14 ERCs $7.58 $ Water Consumption 112,000 Gallons $ $ Sewer Base Charge (inside) 14 ERCs $11.21 $ Sewer Consumption 112,000 Gallons $6.49 $ $ Utility Tax None Garbage * 89 units $6.50 $ Recycling/Yard Trash * 89 units $4.07 $ Sanitation Service Charge ** 89 units $.27 $24.03 Shut off Charge*** SAMPLE COMMERCIAL ACCOUNT COMPUTATION Late Fee 1.5% Min. $5.00 Total Bill $2, *** Call Commercial Customers or use Door Knocker

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36 The City of Melbourne provides billing services for the following cities at outside City rates for city water and Brevard County sewer charges: City of Melbourne Beach Town of Palm Shores The City of Melbourne City of Indialantic City of Satellite Beach City of Indian Harbour Beach

37 The City of Melbourne provides billing services for Utility Taxes - charges each City a billing service fee: Indian Harbour Beach 6% Tax West Melbourne 8% Tax Indialantic 10% Tax The City of Melbourne Palm Shores 10% Tax Melbourne Beach 9.5% Tax Melbourne Village 6% Tax Notably absent: City of Melbourne customers have no Utility Tax

38 The City of Melbourne bills sanitation services for the following companies under contract: Waste Management (Back door, curbside, multi-family) for garbage, recycling and yard trash Waste Pro (Back door, curbside, multi-family) for garbage, recycling and yard trash

39 Customer Contacts: Letter Telephone Outside Drop Box Lobby Drop Box Fax Customer Walk Ins

40 Section V Bad Debt: Allowance for Doubtful Accounts

41 UNBILLED REVENUE FY13

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46 A) Write off/bad debt 1) 3 years history of write offs 2) write off as a percentage of water sales WATER SALES 2011 $26,291, $27,694, $27,579,821

47 BAD DEBT 2011 $207, $228, $128,143.18

48 PERCENTAGE OF BAD DEBT TO WATER SALES % less than 1% % less than 1% % less than 1%

49 B) SEWER CHARGES 2011 $17,536, $17,928, $18,220,110

50 RECONNECTION CHARGE $30.00 SHUT OFF FOR NON PAYMENT 3% UTILITY TAX BILLING FEE 2011 $309, $8, $315, $8, $267, $8,991

51 SERVICE FEE BROKEN METER OR CURBSTOP SERVICE INITIATION FEE 2011 $21, $165, $28, $170, $20, $164,319

52 WASTE MANGEMENT BILLING FEE $.79 PER BILL WASTE PRO BILLING FEE $.79 PER BILL 2011 $300, $13, $306, $12, $285, $14,787

53 BILLING FEES MELBOURNE VILLAGE 3% UTILITY TAX REVENUE PALM BAY (SEWER) $1.59 PER BILL 2011 $2, $7, $3, $7, $2, $7,710

54 BILLING FEES BREVARD COUNTY (SEWER) $1.59 PER BILL COCOA BEACH (SEWER) $3.00 PER BILL 2011 $382, $12, $384, $12, $366, $13,401

55 BILLING FEESE WEST MELBOURNE BILLING FEE - $0.79 PER BILL $4,981 $5,000 $5,013

56 RECLAIMED WATER SALES LATE FEES 1.5% $5.00 MINIMUM 2011 $167, $526, $175, $550, $177, $509,505

57 RECORDING FEES Administrative Fee $25.00 Recording Fee $ $27,700 $35,000 $21,973

58 Section VI Sensitive Issues Facing Local Utilities

59 REFUNDS: A) History of water and sewer adjustments B) Approval process C) Melbourne City Code Sec (d) LEAK ADJUSTMENTS: Pool Fill Pool Refill Slab Leaks Special City Manager Request SEWER CREDITS WILL NOT BE GRANTED FOR: Broken or leaky water lines where the water enters the sanitary sewer system (leaky toilets or inside faucets) Water used for irrigation Negligent use of water Undetermined use of water

60 SEWER ADJUSTMENTS YEAR NUMBER OF ACCOUNTS GALLONS IN THOUSANDTHS DOLLAR AMOUNT ,036.1 $91, ,031.5 $140, ,571.8 $113,108.70

61 WATER ADJUSTMENTS YEAR NUMBER OF ACCOUNTS GALLONS IN THOUSANDTHS DOLLAR AMOUNT ,243.5 $52, ,338.4 $57, ,178.2 $49,869.64

62 Section VII Mandatory Hook-up

63 WATER AND SEWER IMPACT FEES WATER AND SEPTIC SYSTEM WATER ONLY ANNEXATION BILL GARBAGE ONLY (TEMPORARY) MAY BILL BASED ON A FIVE-YEAR LINE EXTENSION PAYMENT PLAN INTEREST INCLUDED

64 Section VIII Application Process

65 A) Refundable Security Deposit Residential ¾ Meter B) $43.00 Water and $77.00 Sewer C) Non-refundable Initiation Fee D) Rental Lease E) Picture Identification Driver s License/Passport F) Ownership Documentation or HUD Statement G) Annual Water and Sewer Rates H) ERC Where Applicable I) ERC Computation for Multi-family & Commercial Accounts Exemption from Security Deposit: Twelve Consecutive Months of Good Pay History at a Prior Address Note: May Relinquish Capacity in Writing or After 12 Months, Pay Impact Fees or Pay Water and Sewer Base Charges

66 Section IX Collections

67 BANKRUPTCY A) Bankruptcy Court Documentation Bankruptcy Date B) Compute Bankruptcy Amount Amount Written Off C) New Account Established Post Bankruptcy Date D) Type of Bankruptcy Chapter 7, Chapter 11, etc. E) Receivership Receiver Pays Utility Bills (legal document) Required to Change Name

68 LIENS AND COLLECTION AGENCIES A) $ Minimum Balance to Place a Lien B) Lien on Owner Account C) Probate Documentation/New Owner to Establish Service

69 LIENS Following Lien Schedule for Liens and Lien Releases Liens Gradually Increased LIENS FILED LIENS RELEASED Year No. of Liens Revenue $68, $149, $91, Year No. of Liens Revenue $57, $97, $137,667.36

70 Section X Cut-off Policy

71 Automatic Meter Reader (AMR) Meter ADE Meter with AMR Data Profile Capability: Hourly Water Consumption Program Graph Downloaded and Formatted into Word Format Manual Meters are Converted to AMRs Remote Meter Commercial/Multi-Family Units 5 Days Before Notice Posted on Premise at Individual Units Certified Letter Sent to Owner - $250 Connection Fee

72 BILLING ERRORS A) Billing Adjustments for Incorrect Reads B) Utilize the High and Low Report C) Estimated Bills Flooding, etc. D) Utilize Skipped Bill Report THEFT OF WATER A) Fraudulent Lease B) Squatters Residence C) Former Owners Renting Their Foreclosed Property D) Account in a Different Customer s Name to Avoid Existing Balance E) Accounts Left in Owner s Name

73 COORDINATION WITH CHARITIES A) Vouchers B) Shut Off for Delinquent Bills C) Utility Bill Balance No Security Deposit CUT OFF POLICIES AND PROCEDURES A) Threshold Balance Equal to or Greater than $75 B) Monday, Tuesday, Wednesday, Thursday C) Melbourne, Beaches, Eau Gallie (Schedule) D) Shut Off Date is Noted on Bill E) Shut Off a Week After date Stated on Bill; i.e., Shut Off Date 9/16/13; Shut Off 9/23/13 Approximately 900 Accounts Shut Off Monthly

74 PROCESS Check Special Condition Notes Date Generated Work Orders EFT Text Account Inquiry 900 Metered Accounts Shut Off per Month

75 # OF ACCTS ON SONP LIST MAY JUNE JULY AUG SEPT C C C C C C C C C C C C C C C C

76 MINIMUM $$$ ON SONP LIST MAY JUNE JULY AUG SEPT C $75.00 $75.00 $75.00 $75.00 $ C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $85.00 $75.00 $75.00 C $75.00 $ $75.00 C $75.00 $75.00 $ C $75.00 $75.00 $ C $75.00 $75.00 $85.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $ $75.00 $75.00 C $75.00 $75.00 $ $ $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00 C $75.00 $75.00 $75.00 $75.00 $75.00

77 Section XI Opportunity To Increase Payment

78 OPPORTUNITY TO INCREASE EASE OF PAYMENT BY: Drop Box Outside City Hall Drop Box in the Lobby of City Hall ACH Checking, Savings (Requires ACH Form) Online Payment Access - Website PAYMENT VIA PAYMENT PROCESSOR: Visa Mastercard Discover American Express ($2.50 FEE FOR INCREMENTS OF $100.00) PAYMENT VIA E-CHECK: Checking Account Savings Account ($2.70 FEE FOR E-CHECK)

79 Section XII Questions & Answers

80 Section XIII Appendix Material

81 Ingrid Gaskin-Friar City of Melbourne Customer Service Manager Ms. Ingrid Gaskin-Friar joined the City of Melbourne in Ms. Gaskin-Friar has been the City of Melbourne Customer Service Manager for the past 15 years, where she manages Utility Billing and Collections and the Revenue Division, supported by a staff of 21 employees. Prior to serving as the City s Customer Service Manager, Ingrid worked as the City of Melbourne Grants Administrator for 9 years, where she prepared grant applications and managed thousands of dollars in grant projects. Ingrid worked as a Tax Auditor with the State of Florida Department of Revenue in 1988, after holding several positions as staff accountant in the private sector and banking institutions. Ingrid received a MBA in 1993 from Florida Institute of Technology, Melbourne, FL and a BS in Public Accounting from Fordham University, Bronx, NY. Ingrid served as President of the Space Coast FGFOA Chapter from , is a Chairperson on Treasury/Debt Section Subcommittee of FGFOA School of Government Finance, and since 2005 has served as Treasurer of the Laurelwood Home Owners Association.