Quarterly Report: 2014, January - March (Q3), 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 Department of Labor Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
6/10/2013 
Exp Date:
9/11/2014 
Last Updated:
4/17/2014 
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 traveled to the City of Kasaan this quarter to train the new city clerk/treasurer, who was hired in January 2014. RUBA staff engaged in training exercises with the clerk in the areas of codification, ordinance formatting, resolution formatting, records retention, budgeting, and financial reporting. RUBA staff also assisted with several QuickBooks issues, including coding, inputting the budget, and shortening the chart of accounts. RUBA staff assisted with drafting budget amendments which are hoped to be introduced to the council at the next council meeting. FY15 budget considerations were also discussed. RUBA staff also discussed segregation of duties in a two-person office, preventative maintenance plan, safety manual, and other RUBA indicators. This quarter, the city has streamlined its purchase/payment request process, using one purchase request form, to be signed by the purchaser, treasurer, 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. RUBA staff provided assistance with several questions related to personnel, records retention, the hiring process, payroll, taxes, ordinances versus resolutions, and general utility finance. RUBA staff conducted a water/wastewater utility rate study for FY14 thus far, and identified that the city currently has a 90.3 percent collection rate. This collection rate will award the utility one additional point on upcoming Sanitation Deficiency Systems grants for which the utility has applied. Finally this quarter RUBA staff attended the Sanitation Deficiency System meeting, during which Kasaan's utility was discussed. Discussions particularly focused on water meters, wastewater sludge disposal issues, and general high cost per customer issues in the community. 
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff will continue working with the clerk/treasurer on improvements to the QuickBooks file, budget amendments, and preparations for the FY15 budget. RUBA staff will encourage utility staff contact the QuickBooks hotline for further assistance, and work closely with RUBA staff and the mayor on producing meaningful financial reports to the council, once the financial figures are accurate and meaningful.
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 FY14 budget two months late on August 20, 2013. The delay in adoption was due to several disagreements among council members regarding portions of the budget to cut in order to ensure the budget is balanced. In the previous year, amendments were made appropriately when necessary. The city's FY14 budget is detailed and appropriately separated by department. Water and wastewater service revenues and expenses are formatted in the budget as an individual city enterprise. The expenses are further separated out into categories such as personnel services, travel, facility expenses, supplies, equipment, and other, and include sub-categories within each category. The city's general expenditures, such as personnel and electricity, are divided and allocated between departments in the budget to provide the most accurate possible proportioning of each department’s associated responsibility for that expenditure. The overall city electricity cost, for example, is divided up among departments according to their proportionate use. 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 February 2014, year-to-date numbers are on track. Fifty-six percent of anticipated revenue, has been collected, and 34 percent of anticipated expenditures met. 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 EFTPS system to pay and report, payroll tax liabilities. The State of Alaska granted employment security (ESC) tax clearance for the City of Kasaan on March 4, 2014. The IRS confirmed federal tax compliance on March 17, 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.