Quarterly Report: 2010, July - September (Q1), Kake

Community:
Kake 
Staff:
Lawrence Blood  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Kake 
Population:
536  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
11/6/2009 
Community Sanitation Overview:
The City operates a water treatment, water distribution, and a piped sewer system. Almost all households are fully plumbed. Kake provides refuse collection, recycling and hazardous waste disposal. The Tlingit-Haida Regional Electric Authority operates three diesel-fueled generators in Kake. Electricity is provided by Inside Passage Electric Cooperative. 
RUBA Status & Activities This Qtr:
The City is experiencing serious cash flow problems and projected FY10 expenses exceed projected revenues by over $100,000. RUBA staff discussed ways the City could possibly increase revenues and decrease operating costs. The Council recently had to layoff nearly 20 full and part-time employees. Juneau RUBA staff continues to provide Kake with assistance in updating their utility ordinance and other financial management issues.  
RUBA Activities for the Coming Qtr:
RUBA staff will assist utility staff with collecting the necessary data for a rate analysis and work with the water committee on possibly revamping the customer classifications. The council has set a goal to achieve a 81% collection rate by the end of the year. Other RUBA activities for the coming quarter will include: 1) Assist the budget committee in making recommendation to the council on how to close the budget gap. 2) Continue to provide support for increasing collection rates and pursuing delinquent water utility accounts.
Scores:
 
Essential Indicators:
24 of 26
Sustainable Indicators:
12 of 27
Total Score:
36 of 53

Finances

Essential Indicators
Answer Question
Yes All revenues and expenses for the utility are listed in the utility budget.
No 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.
No The utility is receiving revenues (user fees or other sources) sufficient to cover operating expenses.
Sustainable Indicators
Answer Question
No The utility is receiving revenues (user fees or other sources sufficient to cover operating expenses and Repair & Replacement (R) costs.
No YTD revenues are at a level equal to or above those budgeted.
No YTD expenditures are at a level equal to or below those budgeted.
No A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
City staff is concerned about the increasing cost for electricity and the direct and indirect affects it has on the City's ability to provide utility services. Electricity is provided through Inside Passage Electric Cooperative (IPEC) at $0.61 per kilowatt hour (KPH)before PCE is applied. Direct energy costs make up an increasing share of the total operating costs for the water and wastewater utilities, increasing 33% over the last two years and accounting for nearly 15% of the overall operating cost. The community has a bulk fuel facility owned by Kake Tribal Corporation which is comprised of propane, gasoline and diesel storage tanks sufficient to meet the community s needs. The City has adequate funds available and purchases fuel as needed. The governing body is fully aware that user fees do not produce sufficient income to cover operating expenses or repair and replacement (R and R) cost. The Council has not adjusted the utility rates since May 1991. It has been a general practice for the City to use other sources, such as the general fund, to subsidize utility operating expenses. The community does not have adequate savings for unexpected repairs and equipment replacement.

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.
No 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 City of Kake has an adopted collections policy contained within the Public Utilities Ordinance. Utility bills are sent out on a regular basis and the City is focusing its efforts on enforcing payment on delinquent accounts. An earlier lack of follow-up and enforcement on delinquent accounts created a large number of aged accounts and a very poor collection rate. With the extra effort in enforcing the collection policy, the City will optimistically see an improvement in their collection rate over the next few quarters. City staff reports numerous difficulties in using the QuickBooks program and has little confidence in the reliability and accuracy of the financial reports. The account receivables system documents customer payments and reports past due accounts with the corresponding amounts. Bank reconciliations are not normally performed in QuickBooks. The City depends upon bank statements and the online banking service to determine available balances. The City provides utility services to the local population at the following rates: Residential Water = $18.00 per month Residential Wastewater = $6.00 per month Residential Garbage = $12.00 per month

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 City of Kake uses QuickBooks Pro to calculate, track, and report payroll liabilities. The City was released this quarter from a 2008 Employment Security Tax (EST) lien. This represented the only recorded and active lien against the City of Kake, which is now free from all lien related debt.

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.
No The utility has adequate written job descriptions for all positions.
No The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
No The utility has an adequate written hiring process.
No 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 carries workers compensation insurance through AML/JIA. The policy runs from 07/01/09 through 06/30/10. The policy covers work-related accidents and occupational diseases up to the Alaska statutory limits for each occurrence. A copy of the workers compensation policy is posted in accordance with state statute at the following locations: City Hall, Water Treatment Plant, and Liquor Store. Kake has a written personnel policy; however, the policy has not been reviewed in several years and is not routinely used by the employees. The City does not have a formal written hiring process, however, usually requires a 90 day probationary period for most new hires. Job descriptions and a formal evaluation process are not a high priority. There are personnel folders for most current municipal employees which contains different levels of required and recommended documentation. The utility provides adequate training to its employees. Employees are encouraged to attend annual water/wastewater conferences, UTM courses and other specialized training when funds are available.

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
No 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 water utility operator successfully completed a provisional water treatment class and certification exam this quarter. The City Council normally meets monthly; however, has had some problems meeting in the summer due to the of availability council members. The Council complies with open meeting requirements and is generally informed on the status of the utility.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
Yes The utility has a preventative maintenance plan developed for the existing sanitation facilities.
Sustainable Indicators
Answer Question
No 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.
Yes 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".
No The utility is not on the "Significant Non-Complier" (SNC) list.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
The City operates a level 2 water treatment, and level 1 water distribution and wastewater collection systems. The operator has a preventive maintenance plan for the sanitation facilities and a safety manual contained within the utility operations manual. The utility operator consults with the Mayor on a regular basis and provides written status reports. The utility completes and distributes its Consumer Confidence Report (CCR) in compliance with State and federal regulations. As of the latest Significant Non-Compliance list (2/11/09), the City of Kake was listed for non-compliance to the Stage 1 Disinfectant/Disinfection By-Product Rule and Surface Water Treatment Rules. The City s last monitoring violation for Stage 1 was in May 2008. This problem was corrected when the water treatment plant received an upgrade consisting of IFE turbidimeters. Even though the system has not had a Stage 1 monitoring violation since May 2008, it will take 12 months of no additional violations to return to compliance for Stage 1. The system did received an additional violation due to the high HAA5 results and must continue to collect monthly samples for TTHMs / HAA5s. The operator maintains an adequate level of supplies and some spare parts for the utility, however does not maintain an inventory control or critical spare parts list.