Budget Considerations Operator Training and Certification Programs
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- Reynard Bryant
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1 Budget Considerations Operator Training and Certification Programs Problem, challenges, needs The Operator Training and Certification Programs (OTCP) have a long history with various departments of the State of Michigan and now reside in the Water Bureau (WB) of the Michigan Department of Environmental Quality (DEQ). It is a fundamental principle of environmental and public health protection that wastewater and drinking water treatment facilities must be properly operated and maintained. To achieve this objective, the citizens of this state expect individuals operating these systems to have adequate training and certification. The OTCP are administered by the Operator Training and Certification Unit (OTCU) in the WB, DEQ. In FY2009 approximately $300,000 was available from the General fund, but this funding as been eliminated for FY2010. These General Fund dollars supported most of the WW Operator Certification program. The Drinking Water (DW) Operator Certification program is funded through Operator Certification set-aside. Currently this funding source is stable; however there is no guarantee that it will be continued indefinitely. The OTCU program budget for FY2010 is approximately $1,144,000 with $695,000 from Operator Certification set-aside of the Drinking Water Revolving Fund (DWRF), $91,000 from Wastewater (WW) operator training fees, and $358,000 from the EPA Section 106 grant. For 2010, the reduction in General Fund dollars has been bridged by WB by reallocating parts of the EPA Section 106 Grant, which is used to fund National Pollutant Discharge Elimination System (NPDES) compliance activities. However; there will be no additional monies from this source in subsequent years because of competing priorities and reductions in other funding sources. The challenge for OTCU is to determine what, if anything, should be done to replace the General Fund dollars that have been eliminated and the EPA Section 106 dollars that will be eliminated after FY2010. Currently, there are three major operator certification programs administered by the OTCU within DEQ under various statutes: Part 31, NREPA Industrial Wastewater Treatment (IWW) Part 41, NREPA Municipal Wastewater Treatment (MWW) Act 399, Safe Drinking Water Act (SDWA) Drinking Water Treatment & Distribution There is no Federal requirement for the state to conduct a certification program for either of the wastewater programs; however there are requirements for these certification programs within state law and rules. Regarding the drinking water program, state law and rules apply plus if EPA determines a state does not have a satisfactory drinking water operator certification program, they may withhold 20% of the state s annual DWRF appropriation, which amounts to approximately $9 million in FY2010 that would not be available for low interest loans and to support various program activities like source water protection. There are other certification programs administered by OTCU under the IWW program: Confined Animal Feeding Operations (CAFO), Storm Water Industrial (SWI) and Storm 1
2 Water Construction (SWC). The DW, MWW and IWW certification programs function in conjunction with their respective Advisory Boards. The advisory boards are established by Statute (DW) and Rule (DW, MWW, IWW). These boards are appointed by the director to assist the department in the examination of individuals to assess their competency to operate DW distribution systems and DW and WW treatment plants and related facilities. There are three administrative components to the OTCU programs: Operator Training, Operator Certification and Technical Assistance. Operator Training is provided to the municipal wastewater operators, industrial wastewater operators and drinking water operators. The objective of these training programs is to provide operators with educational tools that will enable them to better operate their systems. Additionally, Continuing Education Credits (CECs) are required for DW and MWW operators to renew their certifications. The IWW, CAFO, SWI and SWC certifications have no CEC requirements for renewal. One of the duties of the MWW and DW Advisory Boards is to review, and evaluate for approval consideration, submitted courses for CEC s. Within the certification program, applications are reviewed; exams are formulated, proctored and graded; certificates are issued; databases are maintained; and certifications are renewed. There are CEC requirements for both the DW and MWW operator certification renewals. OTCU tracks DW CEC s for the operators and provides this information on the OTCU website. Due to budget concerns, MWW operator CEC s are not tracked by OTCU except for classes that are put on by DEQ and are approved for both DW and MWW CEC s. Technical assistance is also provided by the OTCU to MWW and IWW operators by Wastewater Specialists. DW technical assistance is primarily provided by other WB staff in district offices and in Lansing, and to a lesser extent by OTCU staff. Technical Assistance for SWI, SWC and CAFO operations is provided exclusively by WB district staff. OTCU Staff Currently there are nine Full Time Employees (FTE s) in the OTCU including 1-Program Manager, 1-Unit Secretary, 1-Training/Certification Engineer, 2-Wastewater Specialists, 2-Environmental Quality Analysts, 2-Department/Environmental Techs. Each staff person has duties and responsibilities in areas of operator training & certification; some have additional responsibilities in providing technical assistance to DW, WW plant/facility operators and managers. A breakdown follows: Activity Full Time Employee (FTE) Training items 3.10 Arrange/coordinate training facilities; set training calendar Assemble/Prepare Power Points & course materials Conduct course/seminar pre-registrations & confirmations Invoice preparation & follow-up Maintain & update CEC database; grade course quizzes Order & pack training materials & provide on-site reg. Prepare/mail course certificates Review/revise training materials Course instructor/speaker 2
3 Certification Items 4.40 Arrange/coordinate exam facilities Receive/file exam & renewal applications Review/evaluate exam & renewal applications Work with SMEs on exam question item database Prepare/administer/score certification exams Maintain/update CEC database On-site exam proctor Order/pack examination materials Prepare/mail exam certificates Review courses for Adv./Cert. Board CEC approval Prepare/attend & participate in Adv./Cert. Board meetings Technical Assistance Items 0.45 Provide direct on-site technical assistance to DW/WW Provide telephone consultations for DW/WW operations Provide telephone consultations for DEQ district staff Database Administration 0.03 OTCTS or WW database system administration Clerical Back-Up Support 0.05 Provide back-up support to WB clerical staff Unit Management 0.70 Supervision & management of OTCU Total 9.00 Fundamental Questions There are three fundamental questions with respect to meeting OTCU s budgetary challenges for FY Should the Operator Training and Certification programs be eliminated? 2. Should all or portions of the program be divested by DEQ to outside organizations with OTCU retaining oversight? 3. Should the programs be continued in a similar format as in the past, with current funding supplemented by alternate funding? To address these questions and the challenges presented, a stakeholder workgroup was formed. Table 1 lists the workgroup. Included are representatives from many sectors of Drinking Water and Wastewater Certification Operations. 3
4 Table 1 Name Organization Representing Don Link Mannik & Smith Drinking Water Adv. Board Louise Lieberman Retired from DWSD Municipal WW Cert. Board Henry Hatter General Motors Industrial WW Cert. Board Larry Thomas YCUA Municipal WWTP - Large John Dowson Highland Treatment Municipal WWTP - Private Todd Luks Elhorn Engineering Drinking Water - Private Frank Knowles JBS Packerland Packing Industrial WWTP - Medium Rich Beardslee City of Kalamazoo Drinking Water - Large Jenny Crawford Consumers Energy Industrial WWTP - Large Tracy Miller Delhi Township Industrial WW - Wet Weather The Workgroup met four times in spring 2009, discussed the fundamental questions and budgetary challenges faced by the OTCU and unanimously concluded that: o o All aspects of the OTCP should be retained by OTCU in recognition that the state has a legitimate role in certification and that it can do so at less cost to stakeholders. An alternative funding source to continue the OTCP within OTCU, if necessary, should be sought and should include fees for exam applications and/or examinations. Benefits to Public Whether or not there is an OTCP, people will still need to drink water and flush their toilets. Complexity of treatment systems (DW and WW) has increased over the years. Water treatment has complex DW and WW treatment processes and regulations requiring constant oversight by knowledgeable and well trained operators. During the workgroup discussions, the importance of the OTCP to the residents of Michigan was raised. One of the major responsibilities of all of the programs overseen by the OTCU is the protection of public health. Compliance with public health and drinking water standards should be in the forefront of a certified operator s mind when treating and distributing water for public use and consumption. According to the current data available, 7,588,276 people in the state of Michigan are served by municipal DW systems, with 78% of them receiving their drinking water from systems using surface water where treatment is critical in providing a safe and potable product. As of the 2004 Michigan Clean Watersheds Needs Survey, 75.3% of Michigan s total population is served by a Centralized Wastewater Treatment Facility. During that same time period the percent of Michigan s population that was being served by greater than secondary WW treatment, increased from 15.5% to 61.6% and the number of facilities providing secondary and greater than secondary treatment went from 111 in 1972 to 324 in These numbers show an overwhelming majority of Michigan s population that are served by public water systems and centralized wastewater systems. The certified wastewater operators deal with compliance with NPDES permits and groundwater discharge permits. The NPDES permits are written to protect the receiving streams. These permits include protection for aquatic life ("fishable") and recreation 4
5 ("swimmable"), but also for all other uses of the receiving waters, including agriculture, public and industrial water supply, and navigation. Trained and certified operators are capable of making critical operational decisions to maintain compliance with numerous laws and regulations and to protect public health and the environment as well as the complex treatment facilities they operate. Protection of Michigan s Natural Resources and Environment Michigan s economy has traditionally depended heavily on automobile manufacturing, agriculture and recreation which are all dependant on water resources. Trained and certified operators are important to sustaining the current quality of the Great Lakes and the corresponding quality of life they provide. The protection of Michigan s natural resources that are achieved by proper operation and oversight of drinking water and wastewater systems will help safeguard recreation and tourism in these hard economic times. The residents of Michigan have also invested billions of dollars in drinking water/wastewater infrastructure construction and improvements. It would be irresponsible to stop or decrease the proper oversight of these investments. Certified operators must obtain and maintain the training, education and experience to provide the necessary oversight. Preventing an environmental or public health catastrophe costs far less then fixing one after the fact. For example, *in May 2000, drinking water contaminated with E. coli and campylobacter bacteria was distributed to the residents of Walkerton, Ontario, Canada. Seven people died and more than 2300 became ill. An official inquiry was conducted into the incident. Many recommendations were made in the hope of preventing a disaster such as this from ever happening again. Specifically addressed by these recommendations was the need for training and certification for the operators whose failures were considered to have contributed significantly to the public health exposure during this event. Subsequently, new operator training and certification regulations under the Canadian Safe Drinking Water Act were promulgated. **A study released in November 2001 and reported by the CBC, concluded that the Walkerton water tragedy cost at least $64.5 million. $9 million of that went to fix the town s water system and another $1.5 million was spent to supply clean water to institutions. (*Walkerton and the O Connor Inquiry. A website maintained by the Government of Ontario **CBC News Indepth: Walkerton) Workgroup Analysis Fundamental question 1: Should the Operator Training and Certification programs be eliminated? A conclusion of the workgroup was that the program was valuable and should be continued. The OTCP provides the public with a high level of confidence with respect to their drinking water and the safety of the surface waters and the acceptability of groundwaters. Protection of Michigan s natural resources is equally important to our residents as well as our economy. Fundamental question 2: Should all or portions of the program be divested by DEQ to outside organizations with OTCU retaining oversight? 5
6 The workgroup identified areas in the enabling statutes and rules that reference the Board of Examiners and/or the department. Table 2 examines the MWW Law and Rules regarding operator certification. A review of the DW and IWW law/rules would yield similar results. Table 2 Law Rule Who? Oversight? Funded? Cost? 1. Board No Yes DEQ DEQ Prescribed Yes 2. Classification Yes Yes DEQ DEQ Prescribed Yes 3. Eligibility Yes Yes OPEN DEQ Prescribed No *** (Education/Experience) 4. Examination Yes Yes OPEN DEQ Audit No *** Establish basic criteria-basic level of performance. 5. Issuing Certificate Yes Yes DEQ DEQ Prescribed No *** (How long is it good for?) 6. Renewal Evaluation No Yes OPEN DEQ Audit provide No *** (Assessment process) oversight 7. Revocation Yes Yes DEQ/BOARD DEQ Prescribed Yes 8. Reciprocity No Yes OPEN DEQ Audit No *** 9. Course Approvals No Yes BOARD No Yes 10. Appeals Yes Yes DEQ/BOARD DEQ Prescribed Yes An analysis of this information was conducted during the stakeholders meetings, with the following questions and issues discussed. Who? Under the current statute/rules, must DEQ be the only entity to perform this duty? Could the duty be performed by an entity outside of DEQ or the State of Michigan (SOM)? Items in the column denoted as DEQ have been identified as functions that must be performed by SOM or DEQ. OPEN denotes items that could be done outside of SOM or DEQ. Oversight? It was determined that, except for Course Approvals, under the current statue/rules SOM or DEQ are integral to the activity, having either a prescribed function/role or would need to provide oversight and audit of such activities in order to maintain the integrity and uniformity of the program. Funded? - Can this activity be completed within existing DEQ funding? YES means that activity is a function of DEQ, but not required to reside in OTCU. NO means an OTCU activity, currently funded with General Funds. Cost? - Can activities scheduled to lose General Fund support, be funded with no additional cost to another organization or entity? Are there entities/organizations available to provide OPEN services? None have been identified by the workgroup. An organization would need to build a program from scratch. 6
7 OTCU currently has partial funding from EPA. Only portions of the program would need to be subsidized by the operator fees, not the entire program. One conclusion of the workgroup was that a for profit entity may lead to higher fees for those affected than if DEQ continued running the program. Such a for profit program would most likely be limited to certification only. The current OTCP includes certification, training and technical assistance. The workgroup believes that all three program aspects are critical functions. The workgroup also identified a number of questions relating to this option. How would the integrity of the program be maintained if the OPEN activities were taken over by an outside entity? What would the consequences be if the organizations performing the OPEN activities suddenly dropped one or all OPEN activities? How would/could SOM/DEQ respond to ensure that certification takes place? If portions of the OTCU program are provided by outside organizations, what type of oversight would DEQ/SOM need to provide? How could this be accomplished? How would it be funded? Who would ultimately pay for this oversight? Would this type of divestiture affect the EPA setaside monies currently received by the SOM? The program could have parts of it conducted through contract serves, but at what cost to the operator? Ultimately how would the SOM regain operational control of a program if the outside organization does not meet EPA requirements? How quickly could SOM/DEQ rebuild the program? What is the risk to public health? What is the risk to the environment? How would SOM get them back if a program did not meet EPA requirements? How quickly can DEQ get back up to speed? How long would it take to rebuild the program? How quickly could a divested portion of the program be up and running? What would be done in the interim? How would certification of operators be accomplished? The conclusion of the members of the workgroup representing the regulated community is that the dollar cost to the operator would likely be higher if an outside organization provided these services because there would likely be a profit margin to be paid. The workgroup members also noted that OTCU has a well respected and well established process, adequately staffed with competent and attentive employees. Fundamental question 3: Should the programs be continued in a similar format as in the past, with current funding supplemented by alternate funding? Alternate funding sources for the program were discussed by the workgroup. The workgroup was united in that funding sources must be renewable and reliable. Funding sources for all three components of the OTCP were discussed. Currently wastewater training fees fund almost 1 FTE. There is a provision in the WW statute that allows the WW training program to collect training fees and deposit them into a restricted fund that can be used to further fund the training program. Offering additional WW courses and increasing course registration fees a modest amount were both discussed as viable options for raising additional funds for the program. The monies generated from DW training are handled differently, utilizing a Joint Funding Agreement with the Michigan Section, American Water Works Association. OTCU does not have the authority to collect drinking water training fees in the same manner as those collected for wastewater training. The dollars generated from the DEQ/MI-AWWA Joint Funding Agreement allow WB staff to attend co-sponsored DEQ/MI-AWWA training programs and seminars. 7
8 Technical assistance is a component of the program that does not raise any revenue. OTCU WW staff provides technical assistance to MWW and IWW operators. There are currently no fees associated with this activity. Fees could be charged; however since this function is based on need, with operators calling in with questions/problems as they arise, this revenue would not be a reliable source of income and is not recommended. Technical assistance for DW operators is funded through existing federal sources, but primarily provided by WB staff outside the OTCU. Certification is the third component and one that requires the majority of the OTCU FTE s. There are currently no fees charged for certification activities. Table 3 denotes an average number of exam applications received, renewals processed by OTCU and continuing education courses reviewed by the various Advisory Boards. Table 3 Exam Applications (* includes exam) Type Ave. % SWI* % SWC* % Cafo* % DW (1-4) % DW (Level 5)* % IWW (A-1a & A- 1h)* % Ind. WW % MWW (A-D) % MWW (L2, L1, SC) % Totals % Examinations Type Ave. % DW (1-4) % IWW (1 & 2) % IWW (3) % MWW (A-D) % MWW (L2, L1, SC) % Totals % Renewals Type Ave. % DW % SWI % SWC % Cafo % 8
9 Ind. WW % Mun. WW % Totals % CEC Courses Type Ave. New Type Ave. Renewal It should be noted that there is frequently an uneven workload with respect to the certificate renewals, primarily due to the 3-year or 5-year renewal cycles that were not balanced at the program s inception. For example, in fiscal year 2011 there will be more than 3 times as many SWI renewals processed than in The CEC course review procedure is such that individuals and organizations wanting to offer a training program approved for CEC s can submit an application, which is reviewed by the respective Advisory Board. If approved, the course will need to be renewed every three years. Renewal allows the OTCU to verify that the course is still available and that the content and contact hours are still the same. All approved courses are listed on the OTCU website. Workgroup Analysis of a Fee Structure It was the workgroup s desire to keep the examination/certificate renewal fee structure reasonable for the operator and easy and efficient for SOM to administer. Options discussed by the workgroup included: One fee for the entire certification process o One fee to include Application, Testing and Renewal This fee structure is easy to administer, however it was thought by the workgroup to be unfair to the operator. Operators would be charged one larger fee at application submittal; however they would be charged the entire fee whether or not they were approved to write an exam. Separate fees for individual tasks-fees based on level of effort o Application fee - first time applicant Considered higher fees for higher level exams o Application fee prior approval o Examination fees Considered higher fees for higher level exams o Fee for certificate o Annual renewal fees 9
10 This fee structure was deemed too complicated and increased the administration workload tremendously. Not only would the operator have to submit different fees for each task, but each fee would be different depending on whether or not they had previously been approved to write a certain level of exam as well as the level of exam applied for. It would be extremely difficult to administer within the timelines prescribed by the statutes and rules (45 days for DW and MWW and 30 days for IWW). Separate fees for application/examination and renewal o Application/Examination fees o Renewal fees The administration of this fee structure is slightly harder, but fairer to the operators as they are only paying for the portion of the process they complete. If an operator submits an application and is not approved to write an exam, they do not pay any additional fees. They would only pay an exam fee if they are approved to write an exam. At the end of a certificates renewal cycle, operators would pay a renewal fee. The workgroup explored the cost to operators by looking at several scenarios for typical operators and determined the average annual fee would be approximately $ The workgroup preferred this type of fee structure and recommended OTCU explore it further in regard to the administration process and revenue generation. In addition to all discussions about application/examination and renewal fees, the workgroup discussed and supported fees for the application and renewal of courses submitted to the Advisory Boards for CEC approval. The OTCU provides a service to the vendors who offer training programs. Course applications are processed and presented for Advisory Board consideration and a database maintained. A list of approved courses is available on the OTCU website for the operators convenience. This fee could recapture our costs for providing this service. The workgroup supported OTCU continuing to offer and administer the training, certification and technical assistance programs as they have in the past. They also support the exploration of a fee structure to meet the challenge presented by a reduction in General Fund dollars. They asserted that any fees collected from the certified operators should go into a restricted fund to be used for operator certification, training and technical assistance activities. Determination Required Alternate Funding Table 4 OTCU FY2010 OTCU Budget Funding Gap Analysis $1,143,734 Total Budget for OTCU $1,170,000 9 $130,000 each ($91,097) WW Training Revenue ($135,000) WW Training Revenue ($695,144) EPA Op Cert Set- Aside ($227,000) EPA Op Cert - Training ($348,000) EPA Op Cert - Certification ($125,000) EPA Op Cert - Multiple EPA Section 106 ($357,493) Grant 10
11 $0 FY2010 Shortfall $335,000 Gap w/ 9 FTEs $345,050 end of 1st yr $355,402 end of 2nd yr $366,064 end of 3rd yr' $377,045 end of 4th yr $388,357 end of 5th yr $400,008 end of 6th yr Table 4 compares the FY2010 OTCU budget with the expected OTCU Funding Gap Analysis. Assumptions are based upon a stable per FTE dollar amount, a robust increase in WW training revenue and a flat EPA operator certification set-aside amount. It is assumed that legislation allowing OTCU to collect application/examination fees would fix those fees for a period of five years. Because of the fixed fees and because revenues from this fee program are only projections, the required alternate funding is $400,000. It is further assumed that a fund dedicated to OTCP fees would be allowed to increase when revenues exceed expenditures in the initial years of the program with the surplus then available for later years when the annual expenditures may exceed revenues. Annually, the fund balance would be examined. After five years, the fees adjusted accordingly assuming the OTCP is to continue. Summary and Conclusion o OTCU has lost General Fund dollars o WB has provided bridge $$ for FY 2010 o OTCU will need an alternate source of funding for FY2011 o Numerous scenarios were discussed o Michigan is one of the few states that does not require application/examination or renewal fees for the OTCP o Several fee structures were considered by the workgroup o A fee structure requiring application/examination and renewal fees be placed in a dedicated OTCP fund was determined to be the best option and is recommended by the workgroup o The fee structure should include fees for training course providers offering approved training programs o A fee program with application/examination fees ranging from $50-95 for application/examination fees and certificate renewal fees of $80 is projected to generate $410,000 annually. 11
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