Quarterly Report: 2014, April - June (Q4), Kasaan

Community:
Kasaan 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
Yes 
Agreement Date:
9/11/2012 
Entity:
City of Kasaan 
Population:
75 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
6/10/2013 
Exp Date:
9/11/2014 
Last Updated:
6/19/2014 
Community Sanitation Overview:
Kasaan is located on the east side of Prince of Wales Island 30 miles northwest of Ketchikan. Drinking water is derived from Linkum Creek, treated at a Class 1 facility, and piped to residences and community facilities. Wastewater is directed to an ocean outfall without treatment. The water and wastewater utilities are owned, operated, and managed by the City of Kasaan. The city also provides a solid waste collection service, bringing garbage to a landfill in Thorne Bay, as well as providing fuel distribution and sale services.  
RUBA Status & Activities This Qtr:
RUBA staff answered questions related to unemployment taxes, budget amendment procedures, Open Meetings Act disclaimers on e-mails, city sales taxes, records retention, codification, personnel hiring procedures, and employee reimbursement procedures. Additionally, RUBA staff reminded utility staff to complete the 2013 CCR by July 1 to remain in compliance and provided links and information about the process. 
RUBA Activities for the Coming Qtr:
RUBA staff will provide on-site assistance in the coming quarter if requested, and will continue to assist the utility remotely to ensure management practices are sustained and improved.
Scores:
 
Essential Indicators:
25 of 26
Sustainable Indicators:
26 of 27
Total Score:
51 of 53

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
Yes The utility has adopted a balanced realistic budget.
Yes Monthly financial reports are prepared and submitted to the policy making board.
Yes The utility is current in paying all water/wastewater electric bills.
Yes The utility has on hand a year's adequate fuel supply or it has a financial plan to purchase an adequate supply.
Yes The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
Yes The utility is receiving revenues (user fees or other sources sufficient to cover operating expenses and Repair & Replacement (R) costs.
Yes YTD revenues are at a level equal to or above those budgeted.
Yes YTD expenditures are at a level equal to or below those budgeted.
Yes A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Kasaan adopted its FY15 budget June 17 after a first reading on May 20. The budget includes FY14 estimated actuals and anticipated FY15 figures. The budget is separated into revenues, administration and finance, bulk fuel, garbage, parks and recreaction, post office, apartment, streets and roads, VPSO, EMS, fire, water, and individual grants. The FY15 budget is an improvement on the FY14 budget in that some items, such as workers compensation and communications, have been appropriately divided between departments, rather than fully expensed to administration. The city anticipates $6,000 more in revenue in FY15 than FY14. The mayor hopes to raise rates in the coming month or two, but will adopt a budget amendment taking off the additional $6,000 if he is unsuccessful at raising the rates. The utility appropriately anticipates more expenses in FY15, including significant increases to repair and maintenance and testing. The utility treasurer provides financial reports to the council at all regular meetings, including a balance sheet, profit and loss comparing budgeted and actual amounts, and a written narrative report. The water operator also provides reports monthly to the council and the utility manager, the mayor, attends all regular council meetings to provide any additional information needed. Budgeted amounts appropriately reflect an expected marginal increase in revenues from user fees and increases in certain expenses such as payroll, electricity, fuel, maintenance, and internet that will come partly from the community’s new water treatment plant being brought online. Reductions were made in travel expenses from FY13 to FY14. As of June 12, 2014, 84 percent of the anticipated revenue for water was received. This not likely to increase substantially before the fiscal year end. However, only 71 percent of anticipated expenditures were spent. The total water utility deficit is approximately $5,000, easily covered by a transfer from general fund revenues such as Community Revenue Sharing and Payment in Lieu of Taxes (PILT). The city last raised its water rates in 2008 and is currently undergoing a water utility rate study to consider increasing water rates in order to cover the costs of the new treatment plant. The city charges its 19 regular residential customers at a rate of $60 per month for sanitation services and five senior customers at a rate of $40 per month. Seven commercial/school customers are charged $70 per month and one non-profit customer is charged $25 per month. From December 2012 through June 2013, the utility averaged a monthly utility bill collection rate of 94 percent. Some of the past-due customers on the books no longer live in the community, though the city continues its efforts to collect the amounts they owe. The City of Kasaan receives fuel shipments by road from Petro Marine, as needed. When the company is driving through the area, they will often stop to top off the city's tanks. The city then distributes fuel to the rest of the community, charging a slightly higher rate than what it paid. The city sufficiently budgets each year for all fuel-related needs. Electricity is provided to the city by Alaska Power and Telephone Company; RUBA staff has confirmed that the city’s payments to the electric company are current.

Accounting Systems

Essential Indicators
Answer Question
Yes The utility has adopted a collection policy and actively follows it.
Yes The utility bills customers on a regular basis.
Yes An accounts receivable system is in place which tracks customers and reports past due accounts and amounts.
Yes An accounts payable system is in place.
Yes The payroll system correctly calculates payroll and keeps records.
Yes A cash receipt system is in place that records incoming money and how it was spent.
Yes The utility has a cash disbursement system that records how money was spent.
Sustainable Indicators
Answer Question
Yes A chart of accounts is used that identifies categories in a reasonable, usable manner.
Yes Monthly bank reconciliations have been completed for all utility accounts.
Yes The utility has a purchasing system that requires approval prior to purchase, and the approval process compares proposed purchases to budgeted amounts.
Accounting Systems Comments
The utility's collection policy is outlined in Chapter 2 of the city’s municipal code. According to that policy, bills are mailed out in the first week of each month, by the fifth of the month. Customer payments are due to the city upon receipt and are considered to be delinquent upon the next billing cycle. Delinquency notices are delivered to a customer’s residence within 10 days of their account becoming delinquent and if payment is still not received within 15 days thereafter, their services are turned off. Delinquency notices are signed by the mayor on brightly colored paper and the city keeps a duplicate copy. The delinquent customer must pay their delinquent account before water service is restored. The city utilizes the QuickBooks program to track all utility finances and accounting processes, including the accounts receivable and payable systems, the chart of accounts, and payroll. All paid staff maintain a daily timesheet of hours, which the mayor (or council member if the mayor is unavailable) approves. The city clerk/treasurer then looks through the timesheets, inputs the data into QuickBooks, and processes all withholdings and payments. Cash is rarely disbursed by the city, generally only when the city gives customers change. Cash receipt and cash disbursement are both tracked with a cross-check system. All incoming cash is recorded in a daily registration form and in QuickBooks. The city treasurer typically receives such cash, then the mayor double checks all incoming and outgoing cash. Copies of receipts, which are all in numeric duplicate, or checks are also stapled to the back of the daily registration form. The city treasurer completes bank reconciliations for all accounts on a monthly basis using QuickBooks. The city has recently streamlined it's purchase/payment request process, using one purchase request form, to be signed by the treasurer, who indicates proof of funds available and codes the expenses to a specific budget category, and the mayor, as well as including other relevant information. This process shortens the length and paperwork involved in the previous process, without losing accountability and segregation of duties. Large purchases go to the city council for a resolution of support. Currently, there is not a specific dollar amount requiring council approval. However, the city is considering amending their ordinances to require council approval for purchases over $1,000.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
Yes The utility is current on filing tax reports.
Yes The utility is current on making tax deposits.
N/A If there are any past due tax liabilities or recorded tax liens, a lien release has been issued or a repayment agreement has been signed and repayments are current.
Tax Problems Comments
The utility uses the QuickBooks system to calculate and track, and the Electronic Federal Tax Payment System (EFTPS) to pay and report payroll tax liabilities. The State of Alaska granted employment security (ESC) tax clearance for the City of Kasaan on May 30, 2014. The IRS confirmed federal tax compliance on June 2, 2014.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
Yes The utility has adopted and uses a Personnel Policy, which has been reviewed by an attorney, AML or Commerce for topics and language.
Yes The utility has adequate written job descriptions for all positions.
Yes The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
Yes The utility has an adequate written hiring process.
Yes The utility has personnel folders on every employee that contain at least: I-9, Job Application and Letter of Acceptance.
Yes The utility has a probationary period for new hires that includes orientation, job training/oversight, and evaluations.
Yes The utility provides training opportunities to staff as needed and available.
Personnel System Comments
The City of Kasaan has a workers’ compensation insurance policy through the Alaska Municipal League Joint Insurance Association (AMLJIA) valid until June 30, 2014 and proof of coverage is posted in all regular work sites. The city maintains an employee handbook, which has been reviewed by both AMLJIA and RUBA staff and last updated on July 16, 2013. The handbook covers hiring procedures, employment statuses, records, benefits, timekeeping and payroll, work conditions and hours, leaves of absence, conduct and discipline, and other essential topics. Job descriptions and a personnel evaluation process are also detailed in the handbook. The evaluation process includes a three-month introductory period, followed by a written evaluation, which is then placed on the employee's file. Evaluations take place every year on the anniversary date of hire. The evaluations review an employee’s strengths and needs, as well as a work plan agreed to the previous year. Pay raises are also linked to evaluations. The city's hiring process starts with a posting for at least two weeks of any open jobs. Applications are accepted and the mayor conducts interviews and checks references. After hire, employees receive a copy of the employee handbook and must sign the first page as evidence of having read and understood the policies within it. They are also given a letter of acceptance which includes information about their position, employment status, wage, and benefits. Employee packets and files include an I-9, the signed employee handbook, and a copy of their driver's license, job application, evaluations, and any written disciplinary actions. All employees receive on-the-job training and are also encouraged to obtain certifications as needed. Employees are also encouraged to attend conferences and trainings as they are available, as evidenced by several employees having attended RUBA trainings. Employees’ participation in these trainings is detailed further in the ‘Organizational Management’ section of this report.

Organizational Management

Essential Indicators
Answer Question
Yes The entity that owns the utility is known; the entity that will operate the utility is set.
Yes The policy making body is active in policy making of the utility.
Yes The policy making body enforces utility policy.
Yes The utility has an adequately trained manager.
Yes The utility has an adequately trained bookkeeper.
Yes The utility has an adequately trained operator or operators.
Yes The utility has adopted the necessary ordinances (or rules and regulations) necessary to give it the authority to operate.
Sustainable Indicators
Answer Question
Yes The utility has adopted an organizational chart that reflects the current structure.
Yes The policy making body meets as required.
Yes The utility complies with the open meeting act for all meetings.
Organizational Management Comments
The City of Kasaan owns and operates the community's sanitation utility. Authority to establish and operate the utility is set forth in the city's municipal code Section 7.02.020 and ownership is established in the city's municipal code Section 7.02.050. The city council is actively engaged in utility policy-making and enforces utility policies through city staff. The utility manager is the city mayor. The mayor attends training and conferences as needed, as do the bookkeeper and water operator. The clerk/treasurer has attended RUBA’s Financial, Utility Clerks, and Personnel Management for Rural Utilities trainings, as well as the RUBA-sponsored QuickBooks and notary public courses. The mayor has attended the RUBA Utility Clerks, Planning, Personnel, and Financial Management for Rural Utilities trainings. The primary water operator has completed water treatment and distribution training and holds Level 1 certification. The city council meets as required for one regular meeting every month, as well as special meetings and workshops as needed. The city clerk advertises council meetings in accordance with Alaska’s Open Meetings Act, posting at the post office, library, and Organized Village of Kasaan building. The city council receives reports and updates on the water utility at each regular meeting. The city maintains an organizational chart that lists all employees and delineates lines of authority. The organizational chart was updated and adopted by council resolution in June 2013.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
No The utility has a preventative maintenance plan developed for the existing sanitation facilities.
Sustainable Indicators
Answer Question
Yes The manager receives a monthly O&M report from the utility operator and routinely "spot checks" the facilities to see that the maintenance items are being completed.
No The utility has a safety manual and holds safety meetings.
Yes Utility facilities have not suffered any major problems/outages due to management issues that are unresolved.
Yes The utility is operating at the level of service that was proposed.
Yes The operator provides status reports to the manager on a routine basis.
Yes The utility has completed and distributed its "Consumer Confidence Report".
Yes The utility is not on the "Significant Non-Complier" (SNC) list.
Yes The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
There had been a preventative maintenance plan, safety policy, and operations handbook for the previous water treatment system in Kasaan; however, utility staff are awaiting a new preventative maintenance plan and safety manual from ANTHC for the new Class 2 system. Relevant indicators in this section have been marked ‘No’ until those sources are indeed on hand. Kasaan’s primary water operator is fully certified in Class 1 water treatment and provisionally certified in water distribution. The city’s new Class 2 water treatment plant has been operating since March 2013 and the operator is currently working toward the necessary Class 2 certification. A back-up operator is certified provisionally for water treatment and distribution. The water utility manager visits the water treatment plant approximately every two weeks to conduct spot-checks. Written reports are provided at least monthly to the manager and council. The utility began holding safety meetings consistently in June 2013 as a part of weekly staff meetings. The utility has adopted and participates in the AMLJIA Loss Control Incentive Program. The new treatment facility has not suffered any major problems or outages since operations began in March 2013. The previous plant also did not suffer any recent major problems or outages. Leaks have previously been a problem throughout the distribution system. However, these have since been for the most part patched, and leaks and water loss are not a significant problem at this time. The system has a leak detector to help ensure this does not become an issue in the future. The utility is up-to-date on its Consumer Confidence Reports (CCRs), and is not currently on the Significant Non-Complier (SNC) list. The water utility is in the process of integrating the Check Up Program for Small Systems (CUPSS), and had a site-visit from the program in August 2013.