United States
Environmental Protection
Agency
Assessing
Water System
Managerial
Capacity
March 2012
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Office of Water (4606M)
EPA 81 6-K- 12-004
March 2012
http://water.epa.gov/drink
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ACKNOWLEDGEMENTS
This document reflects the comments and insights contributed by a variety of
individuals and organizations. In particular, EPA would like to acknowledge the
members of the Managerial Capacity Workgroup whose efforts provided
substantial contributions to this document.
Adrienne Harris, EPA HQ
Alan Roberson, AWWA
AndyCrossland, EPA HQ
Angela Buzard, Wichita State EFC
Art Astarita, RCAP Solutions, Maine
Ashley Lucht, Vermont
Bob Dunlevy, EPA Region 7
Bridget O'Grady, ASDWA
Cathy Tucker-Vogel, Kansas
Don Lee, Idaho
Ghassan Khaled, EPA Region 3
Heather Himmelberger, New Mexico
EFC
Joy Barrett, RCAP
Julie Smoak, Kentucky
Loralei Walker, Washington
Maria Lopez- Carbo, EPA HQ
Mary Hoover, Indiana
Mary Love Tagert, Mississippi State
University, SE-TAC
Megan Marsee, New Mexico
Michelle Moustakas, EPA Region 9
Scott Schoenfeld, Nevada
Shadi Eskaf, University of North Carolina EFC
Sonia Brubaker, EPA HQ
Susan Butler, New Mexico EFC
Jeff Butensky, EPA Region 1
Tonia Biggs, EPA Region 6
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DISCLAIMER
The information presented in this document represent opinions of individual
workgroup members and not official EPA opinions. This document is not
intended to be a regulation; recommendations contained within this guide are
not legally binding. Any changes in implementation of state programs are purely
voluntary and must comply with legally binding requirements.
TABLE OF CONTENTS
Acknowledgements i
Disclaimer ii
Table of Contents ii
Fo rewo rd i i i
Background on State Capacity Development Program Implementation 1
The Capacity Development Program - Ensuring Water System Capacity 1
Measuring Managerial Capacity 2
Considerations in Assessing Water System Capacity 3
Three Approaches for Assessing Technical, Managerial and Financial Capacity.. 4
Developing and Using Managerial Indicators in Capacity Assessments 5
Things to Consider as States Use Managerial Capacity Indicators 5
Example Managerial Capacity Indicators 6
Managerial Capacity Resources 29
CapCert Connections Document Library 29
Capacity Development Contacts 29
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FOREWORD
In September 2010, the U.S. Environmental Protection Agency (EPA) hosted the
National Capacity Development/Operator Certification Workshop in Dallas,
Texas, with 1 50 participants representing EPA Headquarters and Regions, states,
third- party technical assistance providers, other federal agencies, academics and
utility associations. The participants at the workshop wanted to continue the
exchange of ideas, best practices and lessons learned after the workshop ended,
as well as to collaborate to overcome challenges they identified as barriers to
greater sustainability of small public water systems and further efficiencies of
state programs. Participants identified a need for more information and
resources to assist small systems in the development of managerial capacity.
Following the national workshop, EPA brought together a group of interested
attendees to further evaluate and describe best practices in evaluating and
building managerial capacity.
This document is a reflection of the discussions held over the course of a year
by this group of individuals. It was developed to provide ideas on assessing
managerial capacity for those involved in the Capacity Development Program,
including EPA Headquarters staff, EPA Regional staff and state staff. In addition,
this document may be informative to the staff of other programs (e.g., Drinking
Water State Revolving Fund) who help public water systems (PWSs) attain and
maintain technical, managerial and financial (TMF) capacity. The information
contained in this document may not apply to every state program or every
drinking water system within a state, but can be used to begin thinking about
how managerial capacity can be assessed.
The workgroup acknowledges that it's not possible to completely isolate
technical, managerial and financial capacity components. They are an inter-
related set of knowledge, skills and resources that together make a system
successful. Examples in this document emphasize financial and technical
aspects of capacity that are intertwined with managerial capacity. The
workgroup considers managerial capacity to be the cornerstone of this
relationship. Without knowledgeable, resourceful and responsible decision-
makers, water systems cannot build and maintain strong capacity.
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BACKGROUND ON STATE CAPACITY
DEVELOPMENT PROGRAM IMPLEMENTATION
Measuring managerial capacity isn't as straightforward as measuring
compliance with a maximum contaminant level (MCL). Many states have
expressed the challenge of assessing managerial capacity of water
systems. This section gives a brief background on the Capacity
Development program with a focus on managerial capacity.
The Capacity Development Program - Ensuring
Water System Capacity
The 1 996 Safe Drinking Water Act (SDWA)
Amendments emphasize a holistic
approach to the protection of public
health and prevention of drinking water
contamination. The Act's provisions for
Capacity Development provide a
framework for EPA, states and water
systems to work together to ensure that
systems acquire and maintain the
technical, managerial and financial (TMF)
capacity. State Capacity Development
programs consist of:
1. New Systems program in which the
state ensures that new Community
Water Systems (CWSs) and Non
Transient Non Community Water
Systems (NTNCWSs) demonstrate
adequate TMF capacity;
2. Developing and implementing their
capacity development strategies to
assist existing Public Water
Systems (PWSs) - CWSs, NTNCWSs
and Transient Community Water
Systems (TNCWSs) - achieve and
maintain TMF capacity; and
3. Assessing TMF capacity for systems
applying for Drinking Water State
Revolving Fund (DWSRF) loans.
- Ability to
plan for, achieve, and maintain
compliance with applicable drinking
water standards. The three components
of capacity are: technical, managerial
and financial.
-Ability of a
water system to conduct its affairs in a
manner enabling the system to achieve
and maintain compliance with the Safe
Drinking Water Act (SDWA)
requirements. Managerial capacity refers
to the system's institutional and
administrative capabilities.
- Process of a
water system acquiring and maintaining
the knowledge, tools, and resources to
demonstrate it can provide safe and
reliable drinking water now and into the
future.
- Procedure
used to evaluate the technical,
managerial and financial capacity of
public water systems.
.
- Key information that
states to assess water systems'
rengths and weaknesses.
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Measuring Managerial Capacity
Managerial capacity is defined in the Guidance on Implementing the Capacity
Development Provisions of the 1996 SDWA Amendments (EPA 816-R-98-006, July
7998) as:
The ability of a water system to conduct its affairs in a
manner enabling the system to achieve and maintain
compliance with SDWA requirements. Managerial capacity
refers to the system's institutional and administrative
capabilities."
Key issues and questions that can help in assessing managerial capacity include:
> Ownership accountability. Is the system owner(s) clearly identified? Can
the owner be held accountable for the system?
> Staffing and organization. Are the system operator(s) and manager(s)
clearly identified? Is the system properly organized and staffed? Do
personnel understand the management aspects of regulatory
requirements and system operations? Do they have adequate expertise to
manage water system operations? Do personnel have the necessary
licenses and certifications?
> Effective external linkages. Does the system interact well with
customers, regulators and other entities? Is the system aware of available
external resources, such as technical and financial assistance?
States have learned how challenging assessing adequate managerial capacity
may be. For this reason, many state programs have supplemented the list of key
issues and questions described above to better assess managerial capacity in
practice. Some of these include the following:
> Inclusion of short- and long-term planning principles;
> Establishing level of service goals;
> Protecting the health of customers;
> Communicating with elected officials and regulators;
> Maintaining recordkeeping procedures;
> Clearly defining roles and responsibilities;
> Establishing budgeting methods;
> Ongoing training for board members/governing entities; and
> Minimizing water loss.
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CONSIDERATIONS IN ASSESSING WATER
SYSTEM CAPACITY
Capacity assessments are an essential way to provide a consistent,
standardized method of determining water system capacity. This
section gives an overview of some approaches to assessing capacity.
State Capacity Development programs are responsible for assessing new
systems' and existing systems' TMF capacity. Forms, checklists and
questionnaires are commonly used tools to evaluate and measure the capacity of
water systems. These tools:
• Can vary in length and style depending on the goal of the assessment.
• May be implemented through the state's Capacity Development program,
or through existing means of collecting information, such as sanitary
surveys or planning documents.
• Often include technical, managerial and financial (TMF) sections.
• May include a scoring component to show relative capacity levels among
multiple systems.
The Managerial Capacity Resources section of this document includes examples
of state assessment models. Different states may look at different indicators to
evaluate a system's managerial capacity. When reviewing the examples, states
should review the entire assessment as one state may include an indicator in the
managerial capacity section and another state may include a similar indicator in
their technical capacity or financial capacity sections.
Isolating any of the capacity components is counter- productive as they are an
inter- related set of knowledge, skills and resources that should be employed
together for a system to be successful. Managerial capacity indicators serve as
the cornerstone of this relationship and many times a technical or financial
capacity shortcoming is related to insufficient or poor management of a water
system.
The approaches in the table below can be used alone, or in combination with
each other or other approaches, depending on a state's program goals. While a
state can use the approaches to assess TMF capacity, it should consider the role
that managerial capacity plays as the state determines which one(s) to use.
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THREE APPROACHES FOR ASSESSING TECHNICAL, MANAGERIAL AND FINANCIAL CAPACITY
Maintaining a
Statewide Baseline and Evaluating
Performance
Identifying a method to evaluate baseline
performance measures, that can be
updated and used to measure
improvements, can:
• Highlight assistance activities and
approaches that work and those that
do not work.
• Provide a snapshot so that types of
assistance most needed can be
targeted, allowing for more strategic
allocation of resources.
• Give the ability to collect standardized
data across multiple systems.
• Be used as a means to prioritize
individual systems for assistance.
Identifying Assistance Needs
for Individual PWSs
^^^^^^^^^^^^^^^^^^^^^l
Identifying the assistance needs for an
individual public water system can:
• Pinpoint the specific types of
assistance needed by a particular
system.
• Provide an opportunity to clarify the
state's expectations to systems and
convey long-term system
sustainability goals.
• Help systems recognize the
importance of being aware of, and
accountable for, their operations.
• Help identify those systems that
chronically fail to attain or maintain
TMF capacity.
Completing DWSRF
Capacity Assessments
Completing capacity assessments for
potential DWSRF recipients can:
• Help meet SDWA requirements for
granting DWSRF loans by
documenting the procedure used to
evaluate the TMF capacity of
systems applying for DWSRF funds.
• Assist in increasing the institutional
knowledge of the TMF capacity for a
subset of the state's systems -
those who are applying for DWSRF
loans.
When updating the original statewide
baseline or creating a new baseline:
• Develop and distribute hardcopy or
online assessments.
• Consider using scoring metrics to aid
comparability across multiple
systems.
• Follow- up with systems to boost
participation.
• Implement a data management
system to organize data.
• Look at other state baseline
approaches for ideas.
• Measure the impact of efforts through
year- by- year data comparison.
When identifying systems in need of TMF
capacity assistance and their assistance
needs:
• Utilize knowledge through direct
contact with systems,
recommendations from public water
supply assistance providers, and/or
funding agencies (DWSRF, etc.).
• Follow up with information and
assistance targeted at the needs
highlighted in the assessment.
Explain that continued failure to
meet TMF standards can jeopardize
potential future DWSRF funding.
When evaluating the capacity of
systems seeking DWSRF assistance:
• Use a standard capacity assessment
form, list or questionnaire for every
system applying for DWSRF funds.
• If a system is found to lack TMF
capacity, incorporate language into
DWSRF loans detailing the "feasible
and appropriate" changes in
operations that must be made to
improve TMF capacity.
• Incorporate post-award
assessments to measure the
effectiveness of the DWSRF
assistance in maintaining or
improving a water system's
capacity.
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DEVELOPING AND USING MANAGERIAL
INDICATORS IN CAPACITY ASSESSMENTS
Once states have identified which approach or combination of
approaches meets their needs, it is important that they identify the
key information that will allow them to assess a system's strengths
and weaknesses. In this document, EPA refers to these pieces of
information as indicators. This section provides example indicators
that can be used when looking at the managerial capacity of a water
system.
Things to Consider as States Use Managerial
Capacity Indicators
As outlined in the previous section, different approaches can help states address
different scenarios and solve different problems. As states develop indicators,
they may want to consider the following:
Where to start? When beginning to think about managerial indicators, a good
approach is to start with what is readily known. State staff can examine the
range of systems in their state, and their strengths and weaknesses. What data is
available to assess managerial capacity? Does "institutional" knowledge about
certain types of systems exist that can achieve assessment goals?
What is the best way to collect the information? Are special surveys
needed? Can questions be incorporated into the state's Sanitary Survey program?
Are other state- wide agencies already collecting data for other purposes that
may be accessible for improving managerial capacity? Can a data specialist bring
together information that already exists?
How easy is the indicator to measure? Can a simple question be asked to
get a concrete answer? Or, are there many aspects to the indicator? For example,
asking if a system uses and regularly updates an asset management plan is
different from asking if the system has inventoried the parts of its system. Both
questions can be useful.
Is the indicator more objective or subjective? Asking on a capacity
assessment questionnaire for the rate a system charges is objective. Asking if
rates cover the full costs of providing water is less objective. Asking if a system
believes it has strong financial capacity is subjective. Each can serve a purpose in
helping states determine system managerial capacity.
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What type of ownership structure is used? When using indicators to assess
the managerial capacity of water systems, the ownership structure of the
systems and the regulatory environment that they operate under should be
considered. Government- owned water systems may operate under different
financial regulatory requirements than privately- owned water systems or not-
for- profit systems, and there are varying forms of ownership structures within
these broad categories. The different types of ownership structures provide
varying strengths and challenges for system administration, and sometimes may
impose restrictions on what systems can do due to the laws that govern these
systems.
Example Managerial Capacity Indicators
Indicators are used to help identify strengths and weaknesses of systems and
can be used to measure improvements in water system capacity. The indicators
below represent what the workgroup thinks are some of the most important
indications of managerial capacity, but are by no means all- inclusive. These
indicators include:
Governing Body Transparency
and Accountability
Governing Body Training
Water System Staff Training
Water System Planning
Asset Management Programs
Budgeting
Rates
Reserve Accounts
Water System Policies
Compliance
Water Loss (Non- revenue
Water)
Customer Education/Support
While these indicators extend through the
inter- related concepts of TMF capacity, their
roots can be found in managerial capacity.
The indicators selected for this chapter are
cross- referenced with the three managerial
capacity elements found in the Guidance on
Implementing the Capacity Development
Provisions of the Safe Drinking Water Act
Amendments of 1996 Quly 1 998).
The Safe Drinking Water Act encouraged
flexibility in implementing the Capacity
Development program and promoted the
notion that the program can be
implemented in various ways to achieve the
overall goal of providing safe and reliable
drinking water now and into the future.
Ownership accountability
• Governing Body Transparency and
Accountability
• Water System Policies
Staffing and organization
• Water System Staff Training
• Governing Body Training
Effective external linkages
• Customer Education/Support
• Water System Planning
• Asset Management
• Budgeting
• Rates
• Reserve Accounts
• Compliance
• Water Loss (Non-revenue Water)
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Symbols Guide
The symbols in this document
help illustrate the inter- related
approach to water system
capacity. These symbols indicate
if the indicator can typically be
considered a:
Managerial
Indicator;
Managerial and
Financial Indicator;
Managerial and
Technical Indicator;
Managerial, Financial
and Technical
Indicator.
These examples can help provide an
indication of the managerial capacity
that a system has. The examples can
be used to begin a discussion about
which indicators will be helpful in
determining the systems that may
benefit from capacity development
assistance.
Under each of these indicators, there
are sample ways of how the
questions could be asked to get the
full "story" of the system. It is also
important to remember the following
when looking at the indicators:
> Follow up with water systems
on the actions of each
indicator to build on their
strengths and use as
examples for other systems;
> Help develop a plan of action
for the moderate capacity
indicators;
> Provide technical assistance
for the systems with weak
indications of managerial
capacity as those are the
systems most in danger of
being non-viable. If states
are unable to provide direct
assistance, they may want to
consider referring systems to
third- party technical
assistance providers; and
> The knowledge and
experience of state staff will
be helpful in complementing
the indicators that are used
to assess managerial
capacity. Those who are
assessing managerial
capacity should consider that
there can be exceptions to
the rule.
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Governing Body Transparency and Accountability
The governing body of a water system must be both transparent and
accountable. A governing body is the group of people who formulates and/or
approves policy and directs a water system (e.g., board, commission, council).
Information flows from the governing body to the customers and staff, and
from the customers and staff to the governing body. This two- way
communication is crucial to good decision- making.
Strong
Managerial
Capacity
INDICATOR
Customer
participation in
governing body
meetings
The governing body
holds regular
meetings that
customers can
attend.
Open meetings
held by
governing body
Staff
communication
with governing
body
Customer
communication
with governing
Meetings of the
governing body are
open to customers
and staff. Advanced
notice of meetings is
provided.
An operational and
financial report are
presented by staff
and reviewed by the
governing body each
meeting^
body
There is a public
comment period on
the agenda at all
meetings of the
governing body.
Open records
provided by
governing body
Meeting minutes and
other records
required by law are
accessible to
customers and staff.
ASSESSMENT
Moderate
Managerial
Capacity
The governing body
holds meetings on an
as- needed basis.
The governing body
has procedures for
open meetings, but
does not follow them.
Notice of meetings is
inadequate.
Operational and
financial information is
provided by staff to the
governing body upon
request.
There is a public
comment period at
some but not all
meetings of the
governing body.
Meeting minutes and
other records required
by law are
inconsistently
maintained, or not
accessible to
customers and staff.
Weak
Managerial
Capacity
The governing body
does not hold
meetings. Not all
seats on the
governing body are
filled.
The governing body
does not hold open
meetings.
There is poor
communication
between the
governing body and
staff.
There is no public
comment period at
any of the meetings of
the governing body.
Meeting minutes and
other records required
by law are not
maintained.
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Examples of questions for use in a questionnaire:
Are regular meetings held by the governing body and are they open to the
public?
Are meeting minutes and other records made available to customers and
water system staff?
Is there an organizational chart for the governing body with clearly defined
job duties?
Does the governing body review and update policies/ordinances related to
water system operations regularly?
Potential follow- up actions
If the system is not following a state's open records and/or open meetings
regulations, provide them with specific information regarding these laws.
Encourage both the governing body and the management staff to communicate
more formally and frequently.
Governing Body Training
A properly- trained governing body understands the water system it oversees,
and its roles and responsibilities as a governing body. Even individuals who
have served on the governing body for a long time can benefit from continuing
education on water system management, since treatment technologies,
regulations and management best practices change over time.
Training can take many forms with materials utilized at an onsite location or
online methods. The suggested indicators for governing body training can be
tailored to include a defined number of credit hours, a time frame (e.g., the last
3 years), or specific topics (e.g., SDWA regulations, applicable state laws and
regulations, financial management).
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INDICATOR
Governing
body training
Strong
Managerial
Capacity
At least a majority of
governing body
members have
attended training on
water system
management.
ASSESSMENT
Moderate
Managerial
Capacity
Less than a majority of
governing body
members have
attended training on
water system
management.
Weak
Managerial
Capacity
No governing body
members have
attended training on
water system
management.
Examples of questions for use in a questionnaire:
How many members of the current governing body have attended training
on water system management?
If at least one member of the current governing body has attended water
system management training, when was the most recent training attended?
What does the water system management training consist of? What topics
are the members of the governing body being trained on?
j
Potential follow- up actions
State staff can offer to deliver presentations on governing entity responsibilities
and drinking water basics at regular meetings. If states know of opportunities
for members to attend relevant trainings offered by others, registration
information can be provided to them.
Water System Staff Training
All of the water system staff associated with owning, managing, operating and
maintaining a public water system have a responsibility to keep up with changes
in drinking water regulations and changing water quality science. Without
adequately trained personnel, the most advanced technology and regulatory
compliance cannot reliably deliver safe drinking water. Educational
opportunities are offered by a variety of organizations with training courses
ranging from entry- level courses to specific topics. Classroom training such as
seminars, workshops and certification- specific curriculum are typically available
as well as site- based, hands- on training that is tailored to the needs of the
water system.
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The suggested indicators below can be tailored to include a defined number of
credit hours, a time frame (e.g., the last 3 years), or specific topics (e.g., SDWA
regulations, applicable state laws and regulations, financial management).
INDICATOR
Staff training
Strong
Managerial
Capacity
Guidelines and
funding are in place
for all staff at a water
system to have
regular training at
defined time
intervals.
ASSESSMENT
Moderate
Managerial
Capacity
Staff attend job-
related training that
they specifically
request and training
requests are granted
sporadically.
Weak
Managerial
Capacity
Training is generally
not requested or
granted.
Examples of questions for use in a questionnaire:
Describe how on- going training is handled for operators and other staff.
How are appropriate trainings communicated? Who suggests the trainings -
the managers or the operators? How often do operators, managers or other
staff go to training? Who are the typical trainers used and where are the
trainings usually held?
Is the level of on- going training for personnel adequate?
Does the system plan for staff training costs on an annual basis?
Potential follow- up actions
If a system could benefit from additional operator training, state staff may want
to consider coordinating with colleagues in the state Operator Certification
program to identify possible training opportunities. Staff can also reach out to
local technical assistance providers regarding opportunities for training, if
needed.
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Water System Planning
Short- and long- term planning is central to building a system's capacity.
Comprehensive planning includes many standards of practice (SOP) elements
such as an operations and maintenance plan, source/wellhead protection plan,
emergency plan, and water security and resiliency plan. Some of the information
contained in the plans below is required for systems serving greater than 3,300
customers. However, it is important for systems of all sizes to plan for their
daily activities as well as emergency situations.
This indicator is primarily managerial since the governing body is responsible
for planning and/or approving activities, but since planning is a comprehensive
process that involves the operations and financing of the system, technical and
financial capacity concepts are closely tied to this indicator.
INDICATOR
Operations
and
maintenance
(O&M)
planning
Source/
wellhead
protection
planning
Strong
Managerial
Capacity
Water
resources
management
planning
System has a complete,
up- to- date O&M plan
that another certified
operator could follow if
the operator leaves or
is unavailable.
Water supply and
demand are regularly
monitored. Long-term
supply and demand
projections are
updated regularly, and
upcoming capacity
issues are being
addressed.
System actively uses an
up- to- date plan that
addresses source
and/or wellhead
protection.
ASSESSMENT
Moderate
Managerial
Capacity
System has an O&M
plan, but it's not
complete or up- to-
date.
Water supply and
demand are
occasionally
evaluated. Projections
for supply and
demand are several
years old.
System has developed
a plan, but it is out of
date or not fully
used/understood.
Weak
Managerial
Capacity
System has not
documented any
O&M activities.
System is unaware of
current water demand
or supply levels.
System has no
projections for supply
and demand, or
projections are more
than 1 0 years old.
System has not done
any planning in this
area.
(Continued on next page)
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(Continued from previous page)
INDICATOR
ASSESSMENT
1 Strong
Managerial
Capacity
Moderate
Managerial
Capacity
Weak
Managerial
Capacity
Emergency
and disaster
preparedness
planning
Water
shortage
(drought
management)
planning
System has a governing
body- approved written
plan addressing how to
ensure continuity of
service and business
continuity during or
how to resume service
soon after an
emergency or natural
disaster.
Considerations may
also include:
• How to plan for
reserve
equipment
Mutual aid
Personnel and
communications
with critical
customers and
the public
System has a governing
body- approved written
plan identifying steps
to take to encourage
water conservation
during water shortage
periods (e.g.,
droughts). The plan is
tied to measureable
water supply levels.
System has an
informal plan that is
not written or
approved by the
governing body.
System has an
informal plan
addressing water
shortage periods, but
it is not written,
approved by the
governing body or
communicated to the
customers.
System does not have
a plan addressing
service during
emergencies or
natural disasters.
System does not have
a plan addressing
water shortage
periods.
Examples of questions for use in a questionnaire:
Does the system have an up- to- date Operations and Maintenance (O&M)
Plan that someone else can follow to carry out day- to- day operations and
maintenance activities in the event the operator leaves or is unavailable?
Does the system have an up- to- date Wellhead Protection (WHP) Plan that
includes the following?
• A susceptibility assessment (vulnerability assessment).
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• An inventory of potential contaminant sources in the wellhead
protection area.
• Documentation showing the water system sent assessment and
inventory findings to required entities.
• Contingency plans if contamination occurs.
• Coordination with local emergency responders for appropriate spill or
incident response measures.
Does the system have an up- to- date Source Water Protection (SWP) Plan that
includes the following?
• Watershed description and inventory, including location, hydrology,
land ownership and activities that could adversely affect drinking
water quality.
• Inventory of all potential surface water contamination sites and
activities located within the watershed.
• Watershed control measures (such as land ownership, relevant written
agreements, monitoring and documentation of activities and water
quality trends).
• System operations, including emergency provisions.
Does the system have a written Emergency Plan to handle the following
emergencies?
• Flooding
• Major line leak
• Electrical failure
• Drought
• System contamination
• Equipment failure
• Hurricanes, tornadoes, ice storms, snow storms, earthquakes,
tsunamis, volcanic eruptions
• Intentional vandalism or other damage
• Cyber denial of service or hacking
• Epidemics/pandemics
Does the system have an up- to- date contact list?
Has the system adequately assessed the condition of and remaining service
life of existing facilities and identified critical facilities that if inoperable,
would result in a water outage and/or water quality failure (in other words a
Vulnerability Assessment)?
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Potential follow- up actions
A system demonstrating strong managerial capacity for this indicator could
serve as a learning model for other systems. States may want to request
permission to use exemplary systems' planning documents as examples for
other systems to follow. Local technical assistance providers may also have
reference materials and relevant training available. Additionally, states could
explore funding options for systems to acquire necessary computer equipment
and software to implement stronger planning practices.
Asset Management Programs
A system practicing comprehensive asset management (the 5 Core Questions of
an Asset Management framework) knows what assets they have, the condition,
criticality and value of each asset, when maintenance will be needed and when
replacement of the asset should be considered and how maintenance and
replacement will be financed. Assets can include pipes, pumps, filters and other
treatment components, tanks, intakes, etc. An Asset Management Plan (AMP)
can inform Capital Improvement Plans (CIP) by providing a projection of asset
maintenance and replacement expenditures. In addition to minimizing
emergency repair or replacement incidents, AMPs and CIPs can be used to
bolster budgets and potentially justify rate increases. States may encounter
systems that have the beginnings of an AMP, but need assistance in identifying
additional components which will comprise a well- rounded and complete plan.
INDICATOR
^^m
Asset
Management
Program
Strong
Managerial
Capacity
System has a
comprehensive AMP
which includes asset
inventory, criticality
analysis, condition
assessment protocols,
criteria and timeline for
replacement, O&M and
funding source(s)
considered.
ASSESSMENT
Moderate
Managerial
Capacity
System has several
components of a
comprehensive AMP,
but is missing others.
Weak
Managerial
Capacity
^
System does not have
a comprehensive AMP.
Maintenance log may
be only record.
System asset
replacement is
reactive (as failures
occur).
15
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Examples of questions for use in a questionnaire:
Is the system implementing asset management practices (5 Core Question
framework)?
What time period does the AMP cover?
When was it last updated?
Potential follow- up actions
A system demonstrating strong managerial capacity for this indicator could
serve as a learning model for other systems. The state may want to request
permission to use AMPs as an example for other systems to follow. For a
system with moderate managerial capacity, follow- up actions may begin
with identifying deficiencies in their AMP. Software such as the Check Up
Program for Small Systems (CUPSS) or other tools can assist systems in
implementing asset management practices. State staff can work with
systems to determine if these tools are appropriate and can assist with
installation. Systems with weak managerial capacity will require more follow-
up actions. State staff can begin emphasizing the need for a comprehensive
AMP and help systems explore funding options for systems to acquire
necessary computer equipment and software to implement their AMP.
Budgeting
Budgeting is crucial to effective management of water system finances.
Budgeting consists of managing the water system's revenues and expenditures
and is typically considered an indicator of financial capacity. However, it is also
an important managerial capacity indicator, because the water system
governing body plays an important role in the budget process. Although the
draft budget may be prepared by water system staff, it should be approved by
the governing body. The governing body should also get a status report each
month comparing budget projections to actual revenue and expenditures. With
this information, it can monitor financial trends, provide oversight, and ensure
that the allocation of funds reflects the goals of the water system.
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INDICATOR
Budgeting
Strong
Managerial
Capacity
System has both annual
operating and capital
budgets that are
approved by the
governing body. The
governing body reviews
a budget comparison
each month.
ASSESSMENT
Moderate
Managerial
Capacity
System has an annual
operating budget that
is approved by the
governing body.
System lacks a capital
budget or multi- year
capital improvement
plan.
Weak
Managerial
Capacity
System does not have
an annual operating
budget.
Examples of questions for use in a questionnaire:
Are water system expenses budgeted on at least an annual basis?
Does the budget include projected capital costs? If so, how many years are
costs projected for?
Does the budget include funds for operator certification and training?
Does the governing body formally approve the annual budget?
Potential follow- up actions
If a system demonstrates moderate managerial capacity with respect to any of
these indicators, providing relevant guidance documents and tools may help it
to further improve its approach to budgeting, rate- setting and determining
appropriate reserves. Educate systems that have weak managerial capacity in
these areas on the value of financial planning. States can also consider referring
these systems to group training, or offer them one- on- one assistance.
Rates
Management of water systems is very dependent on the revenues received from
their customers. Water (and sewer) rates should be regularly evaluated and
adjusted if necessary to ensure that sufficient revenue is raised to pay for the
short- and long- term costs of operating and investing in the system. Rates
alone are a poor indicator of managerial and financial capacity, but the
comparison of revenues to costs, the frequency of adjusting rates, and rate
structure design choices reflect the ability of the water system staff and
governing body to manage and plan for the short- and long- term sustainability
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of the system. This includes understanding the full cost of providing service,
now and into the future and educating customers about those costs. It also
includes the development of a rate structure that best supports the system's
priorities and objectives (such as conservation, affordability, revenue stability,
etc.), preserving the system's source and reducing energy costs and wear and
tear on the system.
Strong
Managerial
Capacity
INDICATOR
Ratio of revenues
I to expenses of
the past few
years (Note: there
are several variations
of this ratio, with
varying degrees of
difficulty in extracting
kthe data)
fS
Relevance of rate
structure design
Revenues
consistently cover
the full costs of
providing safe,
reliable water,
including capital
costs.
Rate conditioning
System knows the
full cost of service,
and increases rates
regularly to keep up
with costs.
Customers are
accustomed to rate
increases and
understand the full
cost of service.
System has recently
identified their
priorities and
objectives, and
selected a rate
structure design
(base fees, uniform
rates, block rates,
seasonal rates, etc.)
that supports these
priorities (i.e., is fair
or equitable, not
discriminatory to a
class of customers,
etc).
ASSESSMENT
Moderate
Managerial
Capacity
Revenues cover daily
expenses, but do not
also cover debt
payments and/or do
not contribute to
future capital costs.
Rates are increased
only when emergent
needs arise.
Customers don't
understand the full
cost of service.
System is using a rate
structure design that
has not been reviewed
in many years, or that
contradicts its
priorities or objectives
(e.g., using decreasing
block rates when the
system is operating
near full capacity).
Weak
Managerial
Capacity
System doesn't
know the full cost
of service.
Revenues do not
cover daily
expenses.
Customers/
governing body
make it a high
priority to keep
rates low, not
considering costs
of inflation,
deferred
maintenance, etc.
System does not
charge customers
based on metered
use.
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Examples of questions for use in a questionnaire:
Do rate revenues cover the current and future costs of providing service?
How many times has the water system's rates been adjusted in the past 1 0
years?
Are the majority of customers rates based on metered water use?
When was the last time the rate structure design (base charges, uniform
rates or block rates, seasonal rate structures, etc.) was evaluated against the
objectives and priorities of the water system?
How does the water system's rate structure design support the objectives
and priorities of the system?
Potential follow- up actions
If a system demonstrates moderate managerial capacity with respect to any of
these indicators, providing relevant guidance documents and tools may help it
to further improve its approach to budgeting, rate- setting, and determining
appropriate reserves. Educate systems that have weak managerial capacity in
these areas on the value of financial planning. Refer these systems to group
training, or offer them one- on- one assistance.
Reserve Accounts
Knowing how much a water system has saved can provide an indication of how
well positioned they are to address monthly cash flow changes, emergencies
and future investments into the system. Since complexity, age of infrastructure
and unique needs can vary between systems, it's difficult to set a standard
reserve target amount. To understand a system's reserve needs, it is important
to also take into account the system's inventory of assets and approximate age
of infrastructure.
Reserve accounts or other savings accounts are often considered a financial
indicator but adoption of these accounts relies on a system's managerial
capacity. Note that this indicator may not be applicable in some systems where
reserve accounts are not allowed by a governing body and that these systems
may save in different ways.
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INDICATOR
Operating cash
reserve
:
Strong
Managerial
Capacity
System has enough
set aside to cover
expenses that occur
before all payments
come in.
Emergency
reserve
Short- lived asset
(components that
last 5- 6 years)
reserve
System has enough
funding available to
cover the most
expensive or
vulnerable
component of the
system.
•
System has funding
available to replace
short- lived assets
over the next 5- 6
years.
System has a plan in
place to finance
long- term capital
investments to the
system.
ASSESSMENT
Moderate
Managerial
Capacity
System sometimes
does not have cash
available to cover
expenses that occur
before payments
come in.
System has some
funding available, but
not enough to cover
the most expensive or
vulnerable component
of the system.
System has some
funding available to
replace short- lived
assets over the next
5- 6 years.
System will be able to
finance some, but not
all long- term capital
investments to the
system.
Weak
Managerial
Capacity
System does not
have cash available
to cover expenses
that occur before
payments come in.
System does not
have any funding
available to
respond to an
emergency.
System does not
have funding
available to replace
short- lived assets
over the next 5- 6
years.
System does not
have a plan to
finance long- term
capital investments.
System indicates
they need a grant
to cover future
costs.
Examples of questions for use in a questionnaire:
Note: Financial questions can make systems uneasy. While management may
be reluctant to share actual dollar figures, it is possible to phrase questions
in a manner that will provide relevant information, if not an actual number.
Accuracy of state assessments relies on system staff being honest in their
answers.
Does the water system have enough cash to cover monthly expenses before
all payments come in?
Does the water system have enough savings or an emergency loan
agreement in place to cover the system's most expensive component if it
should fail?
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Does the system have enough savings to cover anticipated costs over the
next 6 years for short- lived assets?
If long- term capital improvements were made to the system, which source
would be most relied on? (Water system funds, private loan, government
loan, government grant.)
Is there a plan that identifies projects and funding for long- term capital
improvements?
Potential follow- up actions
If a system demonstrates moderate managerial capacity with respect to any of
these indicators, providing relevant guidance documents and tools may help it
to further improve its approach to budgeting, rate- setting and determining
appropriate reserves. Systems that have weak managerial capacity in these
areas can be educated on the value of financial planning, and can be referred to
I group training or offered one- on- one assistance.
Water System Policies
Policies enable a water system to establish its business practices regarding
personnel, contracts and customer service (e.g., billing). Policies provide a
consistent way for a system to respond to recurring situations or unusual
conditions. They provide guidance for staff as well as provide information for
customers so expectations and responsibilities are clear. Policies should be
adopted by the governing body or delineated in an ordinance and distributed to
staff and made available to customers. The size of the system and number of
staff will determine the number and complexity of the policies. Policies do not
have to be elaborate or lengthy, but they should be clear. The indicator of
capacity is how well the system does with regard to each of these issues. It is
important to measure both the system's policies and the achieved business
practices.
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TYPE OF POLICY
General policies
Personnel
Contracts
Strong
Managerial
Capacity
Customer Sen/ice -
Billing
Clearly written
policies distributed
to staff and
customers.
Policies enforced
consistently and
fairly.
Written job
descriptions with
clearly understood
job expectations;
clear policies on
;"raining, use of water
system cell phones
vehicles, and other
property.
/Vritten contracts for
operations with
clearly defined
responsibilities.
Clear information on
procedures for:
• new service;
• payment
procedures;
• late payments;
• termination of
service for non-
payment;
• collection of
past due
accounts;
• restoration of
service.
ASSESSMENT
Moderate
Managerial
Capacity
Some written policies
but not everyone is
aware of them; lax
application or
enforcement of
policies.
Some personnel
policies, but not
consistent or fairly
applied.
Loosely worded
written contracts,
expectations unclear.
Some polices but not
enforced consistently
or fairly.
Weak
Managerial
Capacity
Very few or no
policies.
No job
descriptions or job
expectations.
Only verbal
contracts.
No policy on late
payments, past
due accounts or
termination of
service; poor
collection rate.
Examples of questions for use in a questionnaire:
Is the system staffed while water is being treated or produced? How is this
handled (on- site or on- call)? Is there an alarm system to call an operator if
an emergency occurs after hours?
Do all of the positions have a written job description?
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If contractors are used, what services are they used for and what are their
duties?
How often are customers invoiced? How are bills distributed?
Does the system have a computerized billing system? Is there back- up
billing data?
Does the system have a written customer service disconnection or shutoff
notice?
Potential follow- up actions
Systems that lack capacity in this area can be educated on the advantages of
having written policies and applying those policies uniformly. Guidance can be
offered on items that should be addressed in policies. Develop and provide
example policies for small systems that they can tailor for their own use.
Compliance
Compliance is often considered a technical capacity indicator. However, a
system's compliance status and compliance history are good indications of the
strength of their managerial capacity. A system that has frequent monitoring
and reporting violations is one in which there may be a lack of training or
understanding. A system with long- term unresolved sanitary survey
deficiencies may show a lack of regard for the regulations and a lack of
understanding of the actions it will take to correct the deficiencies. A system
lacking a certified operator at the appropriate level is not demonstrating proper
support for operator training, recruitment and retention. A system that is not in
compliance for a particular contaminant does not possess sufficient managerial
capacity to change operations to fix the problem or to obtain the funding
necessary to remedy the situation. In addition, management should support
operator training and certification to ensure that the system is run by
competent and qualified individuals.
ASSESSMENT
Strong
Managerial
Capacity
Moderate
Managerial
Capacity
Weak
Managerial
Capacity
INDICATOR
Compliance with
drinking water
regulations
No compliance
issues for previous
(x) years.*
A few violations over
previous(x) years,* but
no chronic issues.
Many compliance
problems in
previous (x) years.*
(Continued on next page)
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(Continued from previous page)
INDICATOR
Certified
operator(s)
Strong
Managerial
Capacity
Certified and
correctly licensed
operator(s).
Sanitary survey
deficiencies
Sanitary survey
deficiencies
addressed or plan in
place to address
them.
ASSESSMENT
Moderate
Managerial
Capacity
Certified operator(s)
with inadequate
experience/license,
but working to
achieve appropriate
experience/license.
Some sanitary survey
deficiencies
addressed, or on a
schedule to be
addressed, but not all.
Weak
Managerial
Capacity
No certified
operator(s).
Either none or a
few sanitary
survey deficiencies
addressed.
* Determine the most appropriate timeframe.
Examples of questions for use in a questionnaire:
Have there been any compliance issues in the last (x) years and is the water
system meeting all applicable drinking water standards?
Is the operator familiar with the water system's current monitoring and
reporting requirements and schedule?
Are monitoring results on file?
Are there a sufficient number of certified operators for the water system
operations?
Is the operator in responsible charge certified at the appropriate grade for
the water treatment and distribution?
Is management familiar with the most recent sanitary survey?
Are there any items on the most recent sanitary survey which have not been
addressed or on schedule to be addressed?
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Potential follow- up actions
The capacity assessment can be used to probe into why the system has chronic
violations, lacks a certified operator or has outstanding sanitary survey
deficiencies. This information, in coordination with the compliance section of
the state's drinking water program, will help identify appropriate capacity
assistance for the system.
Water Loss (Non- revenue water)
Managerial capacity can be strengthened through the understanding and
management of water loss. Drinking water systems may experience water loss
in a variety of ways, some under their control, others not. Non- revenue water
(NRW) reflects the distributed volume of water that is not reflected in customer
billings. NRW, however, is specifically defined as the sum of Unbilled Authorized
Consumption (water for firefighting, flushing, etc.) plus Apparent Losses
(customer meter inaccuracies, unauthorized consumption and systematic data
handling errors) plus Real Losses (system leakage and storage tank overflows).
Water that has been conveyed from the source, treated to drinking water
standards then not sold equals lost revenue for the system. The loss of finished
water also puts increased pressure on the source, as additional water will be
withdrawn to make up for that which has been lost. Some NRW is inevitable and
necessary (e.g., fire suppression, hydrant flushing); however, systems should
become concerned if water loss exceeds reasonable minimal levels. At a bare
minimum, systems should track water loss monthly.
25
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Strong
Managerial
Capacity
INDICATOR
Water- Loss
(Non- revenue
water (NRW))
NRW is accurately
tracked monthly and is
below reasonable
minimal levels, or, if
above reasonable
minimal levels, a plan
to reduce is underway.
Considerations may
include:
• Hydrant flushing is
metered;
• Other departments
(Parks, Fire, etc.)
are billed for their
water usage;
• Leak detection
equipment is
available and
utilized.
ASSESSMENT
Moderate
Managerial
Capacity
NRW is accurately
tracked monthly and
is above reasonable
minimal levels;
however, a plan to
reduce has not been
developed.
Weak
Managerial
Capacity
NRW is not tracked or
improperly tracked.
Examples of questions for use in a questionnaire:
Does the water system have a master meter upon entry to the distribution
system?
Does every home and business have a meter; are they properly billed according
to their metered use?
Does the water system have a regular meter replacement schedule?
Has a water audit been performed?
What percentage of water is lost to leaks?
Is a leak detection program in place? Does the water system track NRW monthly?
Is NRW being tracked properly?
What steps are being taken to address leaks in the distribution system? If NRW
exceeds reasonable minimal levels, is there a plan in place to reduce NRW?
26
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Potential follow- up actions
•
Systems can be encouraged to share their best practices for achieving an
appropriate range of water loss. An opportunity for a system to mentor a
nearby system that lacks expertise in the water loss area could be a great
learning experience for both systems. For systems demonstrating moderate
managerial capacity, state staff can assist with identifying a plan of action to
reduce NRW. Directing these systems to available funding sources for, and
give priority to, projects that address line leaks or meter
calibration/replacement could be very beneficial in their efforts to reduce
water loss. For systems displaying weak managerial capacity in water loss,
states can help to increase by emphasizing the need to track NRW, provide a
tracking spreadsheet or other tool for use by system and relate back to
actual dollar amounts lost using the formula:
Monthly NRW in gallons x cost to produce per 1 000 gallons/1 000) x 1 2 =
annual value of NRW
,.
Customer Education/Support
It is important for customers to understand the service being provided by the
water system. Customer support is the foundation upon which the system
builds support for rate increases, system upgrades, infrastructure replacement
and others. The system is also responsible for educating customers on
important issues such as compliance with new regulations, the need for water
conservation and other issues.
Consumers have a right to know what is in their drinking water and where it
comes from. The SDWA established provisions to increase customer education
and these are regulated using the Consumer Confidence Report (CCR) rule and
the Public Notification (PN) rule. Efforts to solicit customer support and provide
customer education is one indication of strong managerial capacity.
ASSESSMENT
Strong
Managerial
Capacity
INDICATOR
Public notification'
All required public
notifications are
completed and
distributed, such as:
Consumer Confidence
Reports, violations, boil
water notices, etc.
Moderate
Managerial
Capacity
Some required
public notifications
are not completed
or not distributed
effectively.
Weak
Managerial
Capacity
^^m
Required public
notifications are not
completed; system
does not know or
understand
requirements.
(Continued on next page)
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(Continued from previous page)
INDICATOR
Communication
methods
Strong
Managerial
Capacity
System has
developed effective
methods of
communicating with
customers such as:
bill stuffers,
newsletters, website,
radio
announcements, etc.
Other considerations
include if the system
participates in
community events
such as health fairs,
water fairs, etc.
Customer Service -
Complaints
Complaints are
recorded and
responded to within a
specified time frame
by assigned staff.
ASSESSMENT
Moderate
Managerial
Capacity
Some communication
with customers, with
limited use of
methods.
Minimal logging of
complaints; no staff
specifically tasked
with responding so
response in
inconsistent.
Weak
Managerial
Capacity
No or rare
communication
with customers.
No recording of
complaints; very
inconsistent
response or no
response at all.
* Public Notification (PN) and Consumer Confidence Reports (CCRs) are required under
drinking water regulations. CCR Rule requirements only apply to community water systems.
Examples of questions for use in a questionnaire:
Are customers notified prior to shutting down the system for scheduled
repairs? If so, how are they notified?
What are the typical customer complaints that the system receives?
Approximately how many complaints are there per month?
How are customer complaints handled? Are they recorded?
Have there been any CCR or PN violations?
Potential follow- up actions
Provide training/assistance to help systems comply with the PN and CCR
requirements in drinking water regulations. Consider sharing notable or creative
approaches to customer communication and education by, for example, posting
them on the state's Capacity Development web site.
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MANAGERIAL CAPACITY RESOURCES
State programs do not have to reinvent the wheel when deciding which
indicators to use to measure water system managerial capacity. States
can consider the approach they would like to use and then look at how
other states have structured their assessment questionnaires. Reviewing
what questions are used and how they are worded, and what types of
indicators are placed in the TMF sections of the questionnaire can help
states develop or modify their questionnaires. Experience and knowledge
should be leveraged to best assess managerial capacity for systems while
keeping In mind that some Indicators might be better than others
depending on the system. Access to examples of capacity assessment
questionnaires that were provided by members of this workgroup can be
found In this section.
CapCert Connections Document Library
State programs may find it helpful to see how other states have designed their
capacity assessments. Regardless of the intended purpose, capacity assessments
are generally organized by TMF categories with questions listed under each that
are used to gauge whether a system has capacity in a particular area. The
differences between capacity assessments include what questions are asked in
what sections, how particular questions are worded and if a scoring mechanism
is being used.
CapCert Connections, hosted through the Association of State Drinking Water
Administrators (ASDWA), is an online (password protected) resource for Capacity
Development and Operator Certification state coordinators. CapCert
Connections contains a Document Library that houses different state capacity
assessment questionnaires. This library arranges these questionnaires by the
purposes they are used for - maintaining and evaluating a capacity baseline,
identifying assessment needs for individual public water systems and
completing DWSRF assessments. Many times a questionnaire is used for multiple
purposes. Each questionnaire contains a narrative explaining how it is used as
well as contact information if for the state coordinator who uses the
questionnaire.
The capacity assessment questionnaires can be found on ASDWA's CapCert
Community. From the CapCert Connections page, click on either the Capacity
Assessment Questionnaires logo to go directly to the Questionnaires page or
click on the Document Library logo and look for "Capacity Assessment
Questionnaires."
Capacity Development Contacts
EPA's Headquarters and Regional Capacity Development contacts are available.
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