HomeMy WebLinkAboutStaff Report 4.A 01/04/2010~ w
CITY OF PETALUMA, CALIFORNIA ~ °
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. ~, _- X . AGENDA II;L y .,_r_ .. January 4, 2010
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A~enda.Title: Adoption of a Resolution Authorizing the Allocation of ~ ' r 1Vleetin~ Date:
-Accounting Assistant lI,-Utility Billing Position. January 4, 2010
' ~ ~ ~ ~ Meetin; Time: 7:00 PM
,~Cate~Ory.: -^ Presentation ^ Appointmenf§ :^ Consent- ^ Pu61ic Bearing ^ Unfinished Business
New Business
Department:. Director: Contact, Person: Phone Number:
Finance/Water Resources Sandra Sato/Michael Sandra Sato 778-4352
& Conservation Ban
'Total'Cost of Proposal or Project: Nante of Ftind:
The estimated cost to fund afull-time Accounting Assistant .Wastewater and Water Funds
hI through the end of the fiscal year is $2""1,000. The .Account Number:
estimated annual cost for the position is,$63;000. Funds Funds.6600 & 6700
will need to be appropriated from the Wastewater and Current Pndiing"Balance: Projected per
Water Funds. Adopted Budget:
Wastewater Fund $19,712,416
Water Fund $ 5,402,184
R"ecommendations It is recommended that the City Council take the following action:
Adopt a Resolution authorizing the allocation of an Accounting Assistant II position in the Finance Department,
to support the conversion from bi-monthly to monthly utility billing.
1. ^ First reading of Ordinance approved unan-nously, or with unanimous vote. to allow posting prior to second reading
2. ^ First reading. of Ordinance approved with-out unanimous vote: Ordinance has been published/posted prior to second
reading; see Attachment
3. ^ Other action requiring special notice: Notice'has been given, see Attachment
Summary Statement:
The recommended action authorizes. the" allocation of an Accounting, Assistant II position. The Council has
indicated interest in converting to monthly utility billing. Staff has investigated options for doing so, in a manner
that minimizes implementation costs. .Increased frequency of billingimpacts "staff workloads, and postage and
materials costs. Staff proposes to .convert two part-time positions into one' full-time position, to more efficiently
address projected increases in workloads associated with monthly billing activities. To keep the need to just one
addtiorial•full-time position; staff recommends the use of a remittance processing machine. This machine can be
operated by General 'Services' staff; with minimal supervision by existing staff. Upgrading to an automated
phone sys"tem is expected to reduce staff time needed to address customer service questions, and is also expected
to facilitate the transition to monthly billing. In order to implement .monthly billing on March 1, 2010, the new
position would be filled with a temporary hire, while a recruitment is cond"acted.
Attachments to Agenda Packet Item:
Resolution
Reviewed by Finance Diirector: ~ Reviewed by City Attorney: A rov d b 1Vlana er:
Date: ~ Date: Date: ?i -O
Rev..# 2 ,r I as "'Date Last Revised: •1'2=29-09 File: s;/agenda/2010-01-04 accounting asst water
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CITY ®F ~ETAI.,UMA, CALIFORNIA
JANUARY 4_,2OlO
AGENDA 12EPORT .
FOR
ADOPTION OF A RESOLUTION TO AUTHORIZE THE ALLOCATION OF AN ACCOUNTING
ASSISTANT II -UTILITY BILLING. POSITION, TO IMPLEMENT UTILITY BILLING
ON A MONTHLY BASIS
RECOMMENDATION:
It is recommended that the City Council adopt the attached resolution authorizing. the
allocation of an Accounting Assistant II in 'the Finance Department, to support the
conversion from bi-monthly to monthly utility billing.
2. BACKGROUND:
Prior to 1987, when utility billing was converted to a bi=monthly schedule, water and
wastewater utilities were billed on a monthly basis. The City Council has indicated
interest in re-establishing a. monthly billing cycle as a means of mitigating the
difficulties some customers have budgeting for a utility bill that includes 60 days of
service. This approach may provide such customers with some relief, and would align
the City's billing practices -with other utilities such as gas, electricity, cable and
telephone.
3: DISC~ussloN:
The goal of switching to monthly utility billing. is to assist: customers in managi~n~g~ their
utility budgets. Because the :meters will be read on a bi-monthly basis, customers will
not be given any more. consumption information. than. they currently receive. Instead,
the proposed monthly billing plan gives customers 30 more days to pay their entire
utility bill should they prefer to take advantage. of that option. This is illustrated in
Table 1.
Table 1
Comparison of Bi-Monthly and
Monthly Utility Billing Formats
Day Current Bi-Monthl. Billin Pro `osed~Monthly Billin
1 Billing.period begins Bilingper-iod~begins
30 Entire utility bill due and
payable 50% of utility bill due and payable
45 Potential shut off for non-
payment N/A
60 Billing period ends Remainder of utility bill due and
payable
75 N/A Potential shut off for non-payment
Under the proposal .meters will continue. to be read. on a bi-monthly basis with charges divided
into two monthly bills, due over a two month- period. The customer will be given the option to
make one payment for the entire two month period. or o pay '/z of the amount due each month. If
the customer chooses to pay half -the amount due,. they will receive a second bill for the
remaining half. This change can 6e implemented for bills issued after March 1, 2010.
While this method may provide budgetary relief to some customers, it will slow cash flow. To
avoid this cash flow issue, -some agencies have used estimated billing, providing the customer
with a billing based on estimated usage, and afollow-up billing based on an actual meter
reading. In researching this issue, staff found examples where other agencies abandoned the
method because .customers had difficulty understanding their bill,, differences between estimated
and actual use were perceived as too wide; and customers often disputed the estimates. In the
City of San Diego, this approach resulted in 68% of single family accounts requiring a manual
adjustment over a 6 month period.. Customer dissatisfaction. was significant enough that San
Diego, .and several other agencies who. tried the estimated read approach, eventually went. back to
bi-monthly billing. This is why estimated reads are not proposed for Petaluma.
Billing .frequency affects staff workloads; it requires that billings be processed twice as often. It
also increases postage ,and materials costs. An increase from six billing periods to twelve will
increase costs, although it need riot mean a doubling of all costs. Staff is proposing to make the
change with a limited increase in costs, although estimates are based on an optimistic view of
what can be achieved.
A portion of the daily utility bil-ling tasks are conducted now by two part-time employees. The
part-time positions would be eliminated and.. replaced with afull-time position, which would be
available to address the .increased. workload .related to .monthly billing. In general, that workload
consists of coordinating with meter reading staff, generating and distributing two billing
statements per usage period, processing the increased .number of payments that are expected to
be made, addressing a projected increase in the number of customer service inquiries, and
maintaini_n~ customer records. This position is proposed. at the Accounting Assistant II level, but
might be able to be filled a lower level and cost, depending on candidate pool. A remittance
processing machine will reduce the. time .and workload associated with .processing payments, and
can `be: operated by General Services' staff, with minimal. supervision by existing staff.: An
upgraded-phone system that. addresses commonly asked customer service inquiries and places on
hold and .responds to calls in the order they are received will. also free up the time .needed to
support monthly billing.
An alternative to the process summarized above would be to read meters on a monthly basis. In
some ways this alternative is preferable, as it would eliminate the need to track which customers
have paid their bi-monthly readings in full and which have broken payments into two. The
Department of Water Resources and Conservation estimates that such a program with the
technology currently in use wild require hiring three more Customer Service Workers, associated
vehicles, and equipment. Operating cost increases for this alternative are estimated at $250,000
per year, in addition to one time equipment costs of approximately $60,000.
Due to cost, this alternative is not currently recommended. It is anticipated, however, that this
type of program can be implemented in the future for far less cost. The Department of Water
Resources and Conservation is currently converting from.. manual read to automatic water meters,
with approximately 3,000 meters already installed out of a total of approximately 20,000 water
meters. With a minimum of 10,00.0 automatic meters, all meters should be able to be read on a
monthly basis with existing staffing levels. Staff anticipates it will take about 5 years to reach
10,000 automatic meters.
4. FINANCIAL IMPACTS:
The estimated cost to fund afull-time Accounting Assistant II through the end of the
fiscal year is $21.,000. The estimated annual cost for the position is $63,000. Funds will
need to be appropriated. from the Wastewater and Water Funds. Following is a summary
of costs, current financing sources, and amounts needed from Water and Wastewater
Funds to support an annual program:
Costs to Convert from Bi-Monthly to 1Vlonthly Billing:
New Position -Accounting Assistant II $ 63,000
Additional Printing and,Postage Costs (114,000 bills @ estimated 49 cents each) $ 55,860
Additional costs to set up Remittance Processing Machine and Workstation $ 2;440
'hotal Costs $ 121,300
Available Funding for Position, Postage, and Supplies:
Wastewater Fund Budget Acct# 6600'.66300.6221.0 $ 700
Water Fund Budget Aect# 6700.67300.:62210 . $ 700
Water/Wastewater Fund Budget. Part-time 6700.67300.51120 $ 29,200
Subtotal Available Funding $ 30,600
New Appropriation .Request:
Wastewater Fund Budget Request $ 45,350
Water Fund Budget Request $ 45,350
Subtotal New Requests $90,700
Total Funding Needed for Change from Bi-Monthly to Monthly $ 121,300
The above calculations do not include the impact of lost interest due to slower cash flow from a
divided bill. These costs are not anticipated to be material at the present time with the current
downturn in interest rates.
A, RESOLUTION TO AUTHORIZE THE POSITION-ALLOCATION OF ACCOUNTING ASSISTANT
LI -UTILITY BILLING, AND IMPLEMENT UTILITY BILLING ON A MONTHLY BASIS
WHEREAS, customer service can be improved by converting from a Bi-Monthly to a
Monthly billing cycle; and,
WHEREAS, additional resources and appropriations must be allocated to cover the
additional costs associated with conversion from a Bi-Monthly to Monthly Billing; and,
WHEREAS, an additional Accounting Assistant IIII position is needed to handle the
increased workload; and,
WHEREAS, a portion of the additional funding can be obtained by eliminating the
existing appropriation for two part-time positions funded by the Waste Water and Water Funds;
and
WHEREAS, and revenues in the Wastewater and Water Funds provide an adequate
funding, source.
NOW,, THERFORE, BE IT RESOLVED that. the City Council does hereby
authorize a position allocation of Accounting Assistant I/II to be funded entirely from
Wastewater and Water Funds, effective. with the' adoption of this Resolution.
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