Quarterly Report: 2011, January - March (Q3), Kake

Community:
Kake 
Staff:
Glen Hamburg  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Kake 
Population:
497  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
5/4/2011 
Community Sanitation Overview:
The City of Kake is located on the northwest coast of Kupreanof Island along Keku Strait, 38 air miles northwest of Petersburg and 95 air miles southwest of Juneau. The city operates a Class 2 water treatment, Class 1 water distribution, and a Class 1 wastewater collection system. System classifications are determined by the State of Alaska's Department of Environmental Conservation Division of Water based on the type of components found in a treatment plant and the number of connections served by water distribution and wastewater collection systems. In addition to these services, the city provides refuse collection, recycling, and hazardous waste disposal. The Inside Passage Electric Cooperative (IPEC), an independent nonprofit corporation, provides electrical services to the city with three diesel-fueled generators.  
RUBA Status & Activities This Qtr:
RUBA activities this quarter were aimed at providing continued training during city staff turnover, updating the city's municipal code, and addressing the utility's collection rate concerns. RUBA staff travelled to Kake on February 17-20 to provide RUBA orientation and training to the newly-hired city clerk. The clerk, who plays a critical role in the administration of the city's utility systems, was brand new to municipal government processes. In a total of ten hours of training, the clerk and RUBA staff covered numerous introductory topics essential for fulfilling statutory duties and insuring that the city's utility department and overall governing structure function effectively. Three Kake representatives, including two council members and the utility's bookkeeper, were also able to attend a 32-hour RUBA Elected Officials Management for Rural Utilities training in Klawock from March 7-11. Another aim of RUBA staff this quarter was to continue progress on updating the Kake Code of Ordinances (KCO). The city's code has not been properly codified in more than twenty years and many provisions relating to utilities, personnel, public lands, and elections are out-of-date. In February, RUBA staff was able to present a retyped draft code to the city in both print and electronic format. This draft will be reviewed by city officials with RUBA staff in the coming months. On January 1, 2011, the City of Kake officially handed over utility billing responsibilities to the Alaska Native Tribal Health Consortium (ANTHC) billing program, a utility assistance program. ANTHC now sends out all of Kake's utility bills each month and collects customer payments on behalf of the city. The first month of ANTHC billing assistance showed a significant decrease in the number of utility bills being paid on time and full. However, those numbers have since improved. Throughout the quarter, RUBA staff continued to provide advice to the city on ways to improve its utility bill collection rate.  
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff will work with city officials to fully update the Kake Code of Ordinances, address unmet essential and sustainable indicators, and provide necessary training to city staff as requested.
Scores:
 
Essential Indicators:
26 of 27
Sustainable Indicators:
16 of 27
Total Score:
42 of 54

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
No 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 Kake adopted its FY11 budget on July 30, 2010. However, this budget required an amendment shortly thereafter in order to adopt more realistic projections for outside funding and building rental revenue. The amended budget projects that water, sewer, garbage, and landfill expenditures will outweigh the revenue these utilities generate by approximately $147,000. No specific interfund transfer is provided in the FY11 budget to fill this gap. Rather, utility cost overruns are folded into the city's general finances which are supported by state revenue sharing and federal government grants/payment in lieu of taxes (PILT) funds. The city's March 2011 financial reports indicate that actual utility revenues year-to-date budget projections by $3,929.77. Billing reports from ANTHC show utility bill collection rates for February and March at 117% and 94%, respectively. These figures, however, are due mostly in part to new utility bill collection policies implemented by the city in May 2010 and include back payments from utility customers. Continued implementation of the city's new collection policy and continued monitoring of the city's finances will show more meaningful trends in the amount of revenue generated by Kake's utilities. The city still faces the challenge of collecting nearly $340,000 in unpaid utility bills and establishing a utility rate structure that covers the true cost of service. The Kake Code of Ordinances requires that monthly financial reports be prepared by the bookkeeper for the council and include a summary statement, a reconciliation statement, and a statement of expenses. Monthly financial reports are indeed being prepared, though because the city was late in adopting its FY11 budget, budget vs. actual financial statements do not clearly outline whether year-to-date revenues and expenditures for the utilities are on target. When compared to the FY10 budget, the FY11 budget provides for significant increases in funding for operator training, treatment supplies, equipment maintenance, and testing. However, the budget does not plan for repair and replacement costs or facility maintenance. The FY11 budget allocates sufficient funding for the city to continue purchasing fuel from Kake Tribal Fuel (KTF). KTF receives fuel shipments as needed (about once a month) and stores it in four 20,000-gallon tanks and eight 10,000-gallon tanks. The utility's last water/wastewater electric bill was paid in full in March and they are not behind in any other payments.

Accounting Systems

Essential Indicators
Answer Question
No 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
On January 1, 2011, the City of Kake transferred its utility billing responsibilities to the ANTHC, a utility assistance program. Since that date, ANTHC has been in charge of billing all Kake utility customers each month and collecting payment on behalf of the city. The billing assistance program costs the City of Kake $350 each month, though ANTHC does not assume responsibility for any late or unpaid bills; that liability remains with the city. In an effort to collect a portion of the $339,695.67 in outstanding utility bills, the city has instituted a program whereby utility delinquent customers need only pay back 50% of their account balance by June 30, 2011 before being referred to a private collections agency. This policy, however, has not been formally adopted by the city council. The city's bookkeeper is in charge of the accounts payable system and using purchase orders that are reviewed for initial approval by the utility manager. Though the general appropriateness of each purchase is considered, no department or account codes are used on the purchase orders. Therefore, it is up to the bookkeeper to determine on a case-by-case basis where to charge purchase requests. Kake's utility cash receipt system involves the bookkeeper issuing individual receipts to utility customers and recording the payments in QuickBooks. Other duties of the bookkeeper include conducting the monthly bank reconciliations (currently reconciled up to March 30, 2011) and completing payroll. The bookkeeper also maintains a detailed, alphabetical chart of accounts that clearly identifies the name of the account, the account type, and the account balance.

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.
Yes 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 Department of Labor and Workforce Development, Employment Security Division granted tax clearance on March 17, 2011 to the City of Kake, assuring that the city is current in filing state tax reports and in making state tax deposits. On March 23, 2011, the Internal Revenue Service's Taxpayer Advocate Service deemed the City of Kake in compliance with federal tax filing and deposit requirements as well. There are currently no tax liens against the city.

Personnel System

Essential Indicators
Answer Question
Yes The utility has a posted workers compensation insurance policy in effect.
Sustainable Indicators
Answer Question
No 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.
No 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 Kake has a workers' compensation insurance policy with AMLJIA valid through June 30, 2011. This policy is posted in three areas including the main bulletin board at City Hall. The city manager has begun completing an AMLJIA personnel survey for the adoption of a personnel policy for all city employees, including the utility operators. Personnel folders for the operators are already in place, though there is no set requirement for what is to be included in those files. One operator's file includes an employment contract, a leave application/report, a job description and all training certificates. The other operator's file includes an I-9, discipline letters, and a job announcement. Currently, there is no evaluation process for the two positions, either. Both files do contain an employment policy that addresses payroll, attendance, and drug testing. The city also has on hand general format job application forms, complaint forms, incident reports, and a staff schedule that was last updated on September 9, 2009.

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
Kake's utilities are owned, employed, and operated by the City of Kake. Chapter 54 of the Kake Code of Ordinances (KCO) makes clear that the city will be responsible for providing water processing and distribution, sewer collection and processing, and garbage collection. The KCO also grants the city the authority to set service rates and to collect payment. In September of 2010, the city acquired the necessary equipment and supplies to shut off water service to past-due customers. Notices posted around the community had warned customers that they had until October 1 to pay utility balances or face termination of service. Some delinquent customers were shut off and city staff then reported a dramatic increase in the utility bill collection rate. The switch to the ANTHC billing assistance program on January 1, 2011 saw that collection rate slow initially. By March, however, the rates had improved. The city manager and council are currently considering ways to ensure that any payment enforcement policies used by the city are properly adopted. The Kake City Council is the city governing body and meets publicly on the first and third Tuesday of every month. Meeting notices are posted in public locations prior to each meeting to comply with the Open Meetings Act and meetings are postponed if the notices cannot be posted at least five days in advance. While there is no utility management system in the city code, an organization chart has been adopted by the city and indicates that the city manager, Bill Lee, is the manager of the utilities. Mr. Lee has a long history of management experience from his time in the military, law enforcement, and as a city official outside of Alaska. Mr. Lee is also taking coursework towards a Masters of Public Administration. Selma Jackson, the utility's bookkeeper, is also highly trained. She has years of experience working for the City of Kake and has undertaken critical RUBA and QuickBooks training courses to be proficient in the city's accounting system. Ms. Jackson also successfully completed the 32-hour RUBA Elected Officials Management for Rural Utilities training in Klawock March 7-11, 2011. The city's lead utility operator, Clifton 'Kip' Howard, is properly certified to operate the city's Class 1 water distribution system, but is still under-certified for the city's Class 2 water treatment system and Class 1 wastewater collection system. Mr. Howard and a water operator trainee have demonstrated the ability to run Kake's utilities effectively and reliably while actively pursuing new training opportunities.

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
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".
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
Kake's two water/wastewater utility operators have not yet achieved the necessary certification level in all areas, but continue to make meaningful progress. The head operator has met Kake's Class 1 water distribution system certification requirements, though both are still under-certified in operating the Class 2 water treatment system and the Class 1 wastewater collection system. The utility manager is kept abreast of utility issues with verbal monthly reports and status reports. The utility manager also makes monthly utility facility site visits to review maintenance issues. The utility's preventative maintenance plan consists of the operators examining all equipment on a monthly basis and unloading sewer tanks every two-four weeks. The remote maintenance worker staff also assists with equipment and facility review. Consumer Confidence Reports (CCRs) are issued regularly. The operation of Kake's water utilities does face sustainability challenges. Kake Municipal Water is still listed on the EPA's Significant Non-Complier (SNC) list for its high levels of haloacetic acid (HAA5) disinfectant by-products (DBPs). Air scour upgrades have been underway in an attempt to address the problem and continued testing between January 1 and June 30, 2011 will determine whether the utility remains on the SNC list. The State of Alaska's Department of Environmental Conservation Division of Environmental Health has not identified any hardware problems causing the elevated DBP levels. Finally, while certain critical spare parts such as electric motors and sensors are kept on hand, the utility does not maintain a full critical spare parts list or an inventory control list. A safety manual is available, though utility operator safety meetings are not held.