Perfecting policies

What do you do when a customer reports a large water leak? Who is in charge of making sure the nightly deposits are made at the bank? What happens when a developer wants to add a subdivision that may tax your water system’s capabilities?

All of these questions should be answered in your water system’s policies. Policies are the rules and regulations that serve as a guide for the water system, its employees, its customers and everyone associated with that system. Various policies should govern everything from what fees are charged to whom to how board members are chosen to how the money is managed.

In this special two-part edition of eBulletin, we’ll delve into what kind of policies you should have and give a general idea of what should be covered. In the next issue, we’ll continue our policy discussion and offer ways to make sure your policies stay current.

Policy writing 101
If you’re like most water systems, you already have a written set of policies. But are the policies current? Do they address every issue you’ve had or every issue you may expect? Are they readily available to view by your employees and your customers if requested? Some systems may not even have written policies on everything. You may be doing things because that’s the way they’ve always been done.

Every water system, no matter how large or small, should have a written set of policies that cover all aspects of the water system, its finances, its business practices and its officials. You never know when or how an issue might arise, and in the legal world, “this is how we’ve always done it” doesn’t make the cut.

Written policies protect you as well as your customers, employees and board members. They ensure that fairness is maintained on all sides throughout any process, plus they provide guidelines to ensure any action is done within local, state and federal laws.
So how do you write a set of policies? Start by doing some research. Get an idea of what you need by checking out the policies of your neighbors. Gather a committee to brainstorm these polices. You should include board members, water system employees including the operator or supervisor, and maybe even a couple of other employees, such as those in charge of finances or customer service.

Don’t expect the job to be done in one night. Because these policies will govern every aspect of your water system, it likely will take weeks, if not longer, to move from the brainstorming stage to adopting the final copy.

Once you have the ideas for your policies, you’ll need to compose a draft of each set of policies. Most systems have Customer Service Policies, Financial Policies, Governance (or Board and Personnel) Policies and Standard Operating Procedures, which basically serves as a checklist for day-to-day activities as well as what to do in emergencies. Your drafts need to be clearly written and arranged, and you’ll want to check with local, state and federal laws to be sure they’re in compliance.

It’s a good idea to test these draft policies, or at least let them be reviewed by those that would be affected. After all, the actual person who handles the bill collections may know of something that needs to be done each day that’s not in your policies, or they may know that what’s outlined won’t work because a city ordinance forbids it. Draft reviews and testing are important because they’ll help fill in any holes you may have.

Once all the kinks have been worked out, you’ll want to make sure your policies are readily available to everyone. If possible, provide each employee a copy of the new policies. Also, be sure to keep a hard copy available to anyone who needs to see it. This can include customers, who can view the written policies either by appointment or simply upon request, whichever you decide. Nowadays, you can even post your policies online on your web site, if you have one. This will make it easy for the customer to know his rights. At the same time, the customer may not be able to say he had no way of knowing about a policy if the set of policies are readily available for public viewing.

Finally, make sure your employees not only read the policies, but practice them as well. Train them on the policies within the first few days of distribution, so they not only can follow them but also can inform customers about any changes.

Creating new policies will take some time, but in the end they will be worth it. Having such written policies will provide protection all the way around should it be necessary.

Saying What’s What
Written policies should have broad coverage, but they shouldn’t be broadly written. In other words, they should cover every aspect of the water system, but they should do so with specific details.
Because these policies, in part, are meant to provide legal protection, certain steps should be taken to ensure they would hold up in court.

The first step for each set of policies would be to list your definitions. You’ll want to define any term that could lead to confusion throughout the document. For example, define what constitutes a customer (“a person paying for the services provided by the water system”) or what System refers to in your policies (“The XYZ Water Association will be referred to as System for the purposes of this document.”). What is the “Point of Use”? What defines the term “Service Area”? Basically, if the definition can be argued during a dispute, then define it in your policies. A customer may say you’re responsible for a leak outside his house, and if your policies state that you’re only responsible to the “point of use” without defining what that is, the customer can argue that as a “gray area.” But if your policies clearly state that “point of use” is the point on the customer’s land where the water is used by the customer or the land’s occupants, then you’ve eliminated that gray area and the argument. Defining the terms further solidify what is your responsibility and what isn’t. At the same time, these definitions also protect the customer, because it helps them to understand terminology with which they may not be familiar. They’ll be able to understand better that they’re responsible for the leak at the outside faucet, but you’re responsible for the leak outside their water meter. That knowledge can lead to faster repairs and more money saved on both sides.

Customer Service
It’s vitally important to get the customer service policies written with clarity and detail. These policies define your basic role – to deliver water from your system to your customer’s home or business. They will describe your role and your customer’s role and will lay out exactly what is expected from both. The policies will cover a variety of topics and situations, and they may require frequent updating as new or unusual situations arise.

You’ll want to start by explaining the water agreement that you’ll have customers sign, and you’ll want to summarize these policies within that water agreement or provide a copy of the policies themselves. You’ll want to describe the types of services you provide, how you provide them and to whom.

Your customer service policies should cover more than just what is expected or allowed. They also need to cover what isn’t allowed or expected.

You need to let your customers know they can’t split or reroute water lines or provide “free” water to anyone other than themselves. You need to let customers know that while they have the right to privacy, your workers have a right to check meters and make any repairs necessary, even if they have to enter the customer’s property. And you definitely need to define what constitutes a “late” payment and the consequences for paying late or not paying at all. (You’ll also need to describe what your system should do in those cases to collect or cease service, but that will be covered in your standard operating procedure policies later.)

These policies may be among the most disputed, so they need to be the most concise. Be as specific as possible. Don’t just say “water will be cut off if payment is not made in a timely manner.” What’s timely for you may be too long or short for someone else. Instead, say something like, “shut-off notifications will be sent out if payment is not accepted by the System’s main office by 5 p.m. on the due date listed on the customer’s statement.” The customer then has a specific time, date and place. The same rules should apply to your shut-off policies. Don’t just state “service can be shut off 10 days after shut-off notices are mailed.” Make sure the shut-off notices have a specific date on them, and note that in your policies. “Service may be shut off or terminated if payment is not made to the System’s main office by 5 p.m. on the date listed on the shut-off notice.” You can add to that statement “or 20 days after the original due date,” if you want to further clarify the time period and protect yourself in case the customer says they never received the shut-off notice.

These ideas should serve as a springboard for creating your water or wastewater system’s policies. These rules will define what you do and how you do it, as well as what you expect or don’t expect from your customers. They serve as a guide for you, your customers, your employees, your board members and anyone else associated with your water system. They also help you keep track of what works and doesn’t work for your system, so you can operate in the most efficient manner possible. Finally, these policies will protect your system and your customers.

The Board
If your water system is a private corporation rather than a municipal entity, then chances are you already have at least a basic set of Governance Policies in the form of By-Laws, which are required as part of the Articles of Incorporation. However, your By-Laws may not cover all the details as a full set of Governance Policies, so it wouldn’t hurt to write your own separate policies. The Governance Policies are guidelines for your system’s Board of Directors that will cover how the Board forms, conducts business and interacts with water system employees and customers.
Here are a few suggestions for your Governance Policies:

• Board of Directors – This should include establishing the board and describing its function, including the role it will fulfill; annual meeting times; the number of board members and length of their terms; qualifications and duties; conflicts of interest; minimum required attendance; compensation and resignation or replacement.
• Officers – This should include officers recognized by the board; their election process, term lengths and consecutive terms allowed; resignation, removal and vacancies.
• Committees – Address any standing (“permanent”) or temporary (“ad hoc”) committees and how to organize them.
• Employees – Explain the minimum employee positions a board must hire and its responsibility for writing, reviewing and revising job descriptions.
• Meetings – This should cover how meetings are conducted; times and locations; public notice; special meetings; agenda preparation; the minimum number for a legal majority or quorum; how meetings are conducted; minutes keepers; public comment time and reports required for each meeting.

The Bills
Once the Board is squared away, it’s time to tackle a big topic – money. How your system handles its finances should be outlined in detail in the Financial Policies, sometimes called the Financial Management Policies. These policies are important because they are needed to meet the Financial Capacity requirements set forth by the U.S. Environmental Protection Agency.

Here are suggestions to get you started on Financial Management Policies.

Planning and Budgeting – This should cover long- and short-term planning; the budget process; revenue and expense categories; financial reserves and maintaining a Debt Services Reserves; how reserve accounts will be maintained; how budgeted revenues and expenditures should be monitored; and how the Board will handle budget adjustments based on the review of monthly statements. 

• Accounting and Cash Management Policies – This should cover disbursement of expenses covered in the annual budget; in what order expenses will be paid; who has the authority to take on debt; a Chart of Accounts that classifies all assets, liabilities, costs, revenues and other transactions on a consistent basis; how source documents should be handled; management of the system’s assets; documentation, preparation and maintenance of financial procedures; interest-bearing accounts; check authorization and disbursement; recording and managing of cash receipts and petty cash; monthly financial reports to the Board; how long records will be kept; and “fixed assets” versus “supply.”
• Purchasing Policies and Purchase Requisition System – This should include purchasing policies; how routine expenses are handled; whether purchases are required to be in the annual budget and whether Board approval and a budget amendment will be required for emergency purchases; an outline for typical goods or services purchase procedures; the types of purchases requiring Board approval; opening a charge account and maintaining its records; conflicts of interest; emergency purchases to restore service; and out-of-pocket purchases.
• Compensation and Payroll – This should include an anti-discrimination clause; payment procedures for employees’ salaries, including “paydays” and what happens if a payday falls on a weekend or holiday; pay periods and normal work weeks, including meal and other break times; time reports and what should be included in them, such as starting and quitting times, lunch breaks, paid vacation and absences and overtime; overtime compensation and salary reviews and changes.

The People
We have rules for the Board and the finances, so it’s time to come up with the rules for the employees. Personnel policies are important even if you only have a couple of employees in your system. They not only protect your employees by providing written guarantees, but they also protect your system by making employees aware of what is expected and what could happen if those expectations aren’t met.

Personnel Policies should address everything from pay periods and work hours to grievance policies and benefits.

Here are a few suggested sections to include in your Personnel Policies:

• Purpose – Provide a purpose for the policies, an explanation of the Board’s commitment to a healthy work environment and its commitment to complying with all laws.
• Hiring and opportunities – Describe whether your system is an at-will company; state your non-discrimination policy; explain how job vacancies will be handled; and explain how employment offers will be made, such as stating whether the Board must approve all hires or who can present job offers.
• Employee status – Define classifications, such as exempt vs. non-exempt, part-time, full-time or temporary employee.
• Benefits – Explain the benefits offered by the system to its employees.
• Compensation – Much of this is already available in your Financial Management Policies, but it should be repeated here to put all the necessary information in one place for the employee. This includes information like pay periods and procedures, work weeks, overtime and salary reviews.
• Use of company property – This should include your rules for electronic resources (such as Internet use) and vehicles and equipment.
• Workplace safety – This should include employee and employer responsibility for workplace safety as well as policies on workplace violence, inclement weather and workers’ compensation.
• Employee leave – Though some of this can be addressed in benefits, it doesn’t hurt to put all of the information in one section. This should cover vacation, sick leave, paid holidays and other leave, such as bereavement leave or short-term disability, if offered.
• Employee development, performance review or grievances – Explain general expectations for employees and cover topics such as knowing job descriptions, training, performance reviews and conflict resolutions or grievances.
• Termination of employment – Not only should this include involuntary termination (firings), but it also should address resignations on the part of the employee and reductions in force through either temporary layoff or permanent releases.
• Personnel files – Finally, explain the types of files maintained for each employee, and state that the files are confidential and who will have access to the files.

The Daily Duties
Now that we’ve taken care of the customers, the Board and the money, it’s time to take care of everything else. That’s where the Standard Operating Procedures come in.

The Standard Operating Procedures collect and organize the procedures necessary to complete regular tasks, so that the tasks are standardized for anyone who performs them.

Standard Operating Procedures provide four functions: They provide consistency in tasks, no matter who performs them; they can be used as a training tool for new employees; they provide a measure for performance expectations; and the provide liability protection for the system by offering a written set of instructions for each task to minimize risk.

The Standard Operating Procedures should be written by board members, the system manager and system employees that will be affected. The Board will have the overall responsibility for the policies and should make sure all legal requirements are covered. The system manager usually is the one that compiles the procedures into one written document. The employees provide input and suggestions using their day-to-day experiences. Critical steps could be missed without their knowledge and expertise.
Here are a few suggestions of what should be addressed in your Standard Operating Procedures.

• Preventative Maintenance Procedures – Cover the steps for maintenance of wells, pumps and related equipment; tanks; fire hydrants; water mains and meter service connections. Steps should include preparation, the actual maintenance, paperwork and any follow-up activities.
• Scheduled maintenance repairs – This should include steps to take for leak repairs, equipment repairs or replacements and meter change-outs.
• Emergency repairs and water outages – This should include who contacts whom in the event of an emergency repair; chlorine cleansing and flushes; boil orders and notifications for the Department of Health (DOH) or your state’s regulatory agency; and guidance for water outages and restoration.
• Recordkeeping – This should include proper contacts and procedures for maintenance records; DOH test results and correspondence; pumping tests, surveys and engineering plans;  bookkeeping records; customer files and records; correspondence files; personnel records and insurance policies and records.
• Testing and monitoring – This should include specific steps for chlorine residual tests, bacteriological tests and other required testing or monitoring. This includes not only the steps for the tests themselves but also to whom the results should go and what paperwork should be kept and/or filed.
• Accounts receivable and accounts payable operations – This can include a reference to receivable rules in your Customer Service Policies, or they can be repeated here. This also include details on compiling bills, presenting debt reports to the Board, writing checks, getting check approval and preparing and mailing checks and other disbursements.
• Meter installations, service extension and new customer connections – Once again, the requirements as stated in the Customer Service Polices can be referenced or repeated here. This section also should cover contact with the DOH or regulatory agency; paperwork that must be completed; deposits of membership, deposit and connection fees into system accounts; and filing the Notice of Intent or Affidavit Waivers and User Agreements.
• Reporting – This should include reports that must be submitted by the water clerk each month to the Board, including compliance, maintenance and financial reports; reports on compliance with state or regional agencies; and pending claims including invoices, statements and a claims docket.

It takes a lot of time, effort and paperwork to generate a complete set of policies for a water system. In the end, though, such written policies not only will ensure your compliance with federal and state guidelines, but they also will protect your water system, your employees and your customers should any disputes or situations arise.

If you have more questions or need assistance, the Rural Community Assistance Partnership (RCAP) can help. RCAP can provide samples of policies and guidance on writing your own. You can contact your region’s affiliate for more information. Regional affiliates are available by state on RCAP’s web site at http://www.rcap.org [1].