RAYMOND, Miss. -- Rural water systems in Mississippi face some daunting challenges when it comes to upgrades and improvements. Funding ranks at the top of those challenges.

Fortunately, almost 200 of the state’s rural water systems were able to take advantage of grant funds made available by the American Rescue Plan Act, or ARPA, of 2021 -- characterized by the Mississippi State Department of Health as a once-in-a-lifetime opportunity to make much needed upgrades, which will help systems remain sustainable into the future.

A total of $404 million was granted to 193 systems through the grant program, said Kirby Mayfield, CEO of the Mississippi Rural Water Association, or MsRWA, a membership organization for the state’s water and wastewater utilities that provides support and training for operators, managers, bookkeepers and decision-makers.

“We still have way more systems that need funding than the 193 systems that did get funding,” Mayfield said.

So, what happens to the remaining systems that did not benefit from these funds?

Some systems could qualify for the U.S. Department of Agriculture Water and Wastewater Loan Program and the State Drinking Water Revolving Loan Fund through the Mississippi State Department of Health, Mayfield said.

Mississippi has 1,182 community water systems, more per capita than any other state in the country, and 247 of those systems serve a population of 500 or less. Rural water systems are funded solely through the user fees received from their customer bases, which for some systems is not enough to pay for needed improvements.

In addition, systems with so few customers have a hard time securing funding to make upgrades and repairs that can cost into the millions of dollars, said Jason Barrett, interim director of the Mississippi State University Water Resources Research Institute, or WRRI.

“We have some systems in the state that have just 200 connections,” said Barrett, who is also an associate Extension professor of water and wastewater systems with the MSU Extension Service. “To make the kinds of improvements that most of those systems need, they will be in financial dire straits. There are no financial incentives for a lending agency to finance the kind of upgrades needed.”

Consolidation of small systems is an option to be able to make the long-needed upgrades that two or more systems should undergo but cannot afford on their own.

“For example, let’s say System A and System B, which are located in close proximity to each other both need upgrades,” Barrett said. “If they merged, they would have a much more financially feasible situation.

“They could drill a new well at a cost of $500,000. With the combined customer base, they could afford to cover $250,000 and support the remaining $250,000 in debt. A lending agency is much more inclined to help when they are not supporting the entire debt,” Barrett said.

About 28 of the 193 systems that received ARPA funding consolidated. Those 28 systems turned into 14.

Barrett estimates that one-fourth of Mississippi’s rural water systems would benefit from consolidation. Part of the WRRI’s mission is to help rural water systems make such decisions, and Barrett’s intent is to begin studying how to help systems understand their options and make decisions.

“We need to get an idea of where we are right now,” Barrett said. “How many systems can or should be consolidated? We need to look at that from a financial and geographic perspective, to name a few parameters. There are some vast benefits to having one administrative body, one physical system and one financial pot.”

He said his goal is to begin research once some positions at WRRI are filled. These projects will help answer these questions and provide data that will help everyone involved -- from water system administrators and members to the Mississippi Legislature -- make sound decisions about the future sustainability of these systems.

“In Mississippi there is no legislation that dictates how systems consolidate or merge,” Barrett said. “That is another part of our job at the WRRI – we need to put this data together to help the legislature understand how to best address the situation.

“Unless the legislature creates laws that dictate how systems consolidate or merge, every situation will be different. Each system will have to review the data and vote on how they will handle it,” Barrett said.

In Mississippi, all nonprofits operate under the Mississippi Nonprofit Corporation Act of 1996, which dictates how certain decisions are made.

“What people don’t realize is that when systems are contemplating a merger, all of the system’s members must vote on that decision,” said Mayfield. “Two-thirds of the customers who get water from that system must vote yes for the merger to happen. The board alone can’t make that decision.”

Mayfield has made numerous presentations to the legislature to help them understand that having systems abide by the same set of determining factors and rules for consolidation will benefit the members and help systems continue to serve their members into the future.

Along with WRRI, the MSU Extension Center for Government and Community Development, or CGCD, is a longtime partner of the MsRWA and provides critical services, including training for rural water system administrators and employees. In the mid-1990s, the legislature passed a law that required rural water system boards to complete training that helped them better manage their systems. That training is administered through Extension’s CGCD.

“We’ve really seen that help boards make better decisions about finances in particular,” Mayfield said. “It helped them understand that they must run the systems like a business.

“The data the WRRI can provide for us in this situation is critical in helping both the legislature and rural water systems make these important decisions they face about consolidation,” he said.