Quarterly Report: 2012, April - June (Q4), Kake

Community:
Kake 
Staff:
Lynn Kenealy  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Kake 
Population:
579  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
7/26/2012 
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 staff provided assistance in a number of areas over the past quarter, including with questions of designated authority, staff resignations, quorum and voting at city council and utility management meetings, and disposal of city property. The city adopted a new collections ordinance this quarter, and hopes to begin enforcing it shortly. Upon enforcement of the new collections ordinance, associated indicators will switch to 'yes', reflecting improved sustainability of the water utility through consistent collection of revenue to fund the utility. The city and utility clerk attended a Clerks Management for Rural Utilities 32-hour training in April, 2012 and the city manager and a council member completed the Planning Management for Rural Utilities 32-hour training in May, 2012. The city has also passed its FY13 budget, based on actuals from FY10, FY11, and FY12, and noting the dollar and percentage change year-to-year. The planned quarterly visit to the community to work on RUBA indicators did not occur, due to unavailability of city staff. 
RUBA Activities for the Coming Qtr:
Juneau RUBA staff has scheduled travel to the community in the coming quarter. RUBA staff will seek evidence of the fully adopted FY13 budget and financial documents as provided to the city council's regular meetings, to evidence that the city is meeting these indicators. Financial management and QuickBooks training will be provided to city staff who are taking over bookkeeping responsibilities while their regular bookkeeper is absent from the city. RUBA staff will continue working with the community on improving their essential and sustainable indicators, and to support financial management practices in the temporary absence of their bookkeeper.
Scores:
 
Essential Indicators:
22 of 26
Sustainable Indicators:
16 of 27
Total Score:
38 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.
No 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.
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.
Yes A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The FY12 budget appropriately separates sanitation service finances into a 'Water, Wastewater, and Garbage Removal Enterprise Fund.' This fund budget includes detailed line items for all the associated costs of utility operations in Kake including chemicals, water testing, electricity, and insurance, as well as the salaries, taxes, and workers' compensation insurance coverage for the utility operators. While projected revenues from user fees are insufficient to cover all these expenses, the budget clearly indicates a subsidy of $62,525 (nearly 30% of the utility budget) transferred from the general fund to balance. Repair and replacement (R and R) costs are not budgeted, though the city manager has proposed the installation of a for-profit shower and laundry facility at the community hall, the revenues of which will be dedicated to an R and R reserve fund for the utility. A separate fund is used to budget for water and wastewater revenues and expenditures. The city's actual revenues for FY12 are significantly lower than initially budgeted. Therefore, the city has budgeted for FY13 based on the actual amount of revenues. However, expenditures were equally lower than expected for FY12, and the FY13 budget reflects this reality. The city council has passed budget amendments when necessary through FY12. In FY13, The city continues to budget slightly more for items such as fuel and maintenance, in consideration of possibly higher fuel costs year-to-year. Fuel is purchased as needed from Kake Tribal Fuel, who receives fuel shipments about once a month and stores it in four 20,000-gallon tanks and eight 10,000-gallon tanks. They report no shortage problems. A review of the city's monthly payments to the Inside Passage Electrical Cooperative (IPEC) shows that the city is current in paying its water/wastewater electric bills and that all eligible community facility accounts are receiving Power Cost Equalization (PCE) credit. The bookkeeper has been temporarily absent from the city and city staff has been unable to access the most recent QuickBooks file in order to generate up-to-date financial reports. However, in previous quarters, council members received reports of utility finances at monthly meetings in order to monitor these finances. The reports included a balance sheet and budget versus actual profit and loss statement, in addition to a verbal utility manager's report.

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.
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
On January 1, 2011, the City of Kake transferred its utility billing responsibilities to the Alaska Native Tribal Health Consortium's (ANTHC's) Billing Assistance program. Since then, ANTHC has been in charge of billing all Kake utility customers and collecting payment on behalf of the city. The Billing Assistance program costs the City of Kake $300 each month, though ANTHC does not assist with collection efforts or assume responsibility for any late or unpaid bills; that liability remains with the city. May 2012 collection rates dropped to 61%, though the over-all year to date remains 84%. The collection policy requires delinquent utility customers be disconnected after a period of non-payment. Yet because the city lacks necessary curb stops to shut off all delinquent customers, the disconnection provisions of the policy may be impossible to fully enforce. The city has therefore drafted an updated utility bill payment policy to replace those in Title 54. The new policy includes repayment agreement procedures, incentives for prepayment, reconnection fees, and the authority to refer delinquent customers to a collections agency. Though the new policy is being enforced, it was not formally adopted by the council until recently, and evidence of adoption has not yet been provided. ANTHC utility bills include the customer's name and address, a description of the utility services provided, the amount due, the due date, and past due balances. While these statements break down the individual cost of water, wastewater, and garbage services, customers cannot pay for each service separately. ANTHC accepts payment by personal check or by Visa, Mastercard, or Discover credit cards over the phone. The city's bookkeeper utilizes QuickBooks software to manage the accounts payable and payroll processes. The bookkeeper is also in charge of monthly bank reconciliations and maintains the purchasing system. In that system, purchases are requested using a formal purchase order form and then reviewed for funding availability before receiving approval by the city manager. Though the general appropriateness of each purchase is considered, no department or account codes are used. Rather, it is up to the bookkeeper to determine which account to charge from a detailed chart of accounts. The chart of accounts includes easily-identifiable account names and a description of that account's type. After a purchase has been made, the vendor's invoice is matched to the approved purchase order form. Cash disbursements are recorded in a check register that notes the date, purpose, and amount. As the utility's bookkeeper is currently absent from the city, monthly bank reconciliations are not being undertaken. However, RUBA staff will be training city staff on this process in order to fill in temporarily.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
No The utility is current on filing tax reports.
No 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 accounting software to accurately calculate, track, and report its payroll tax liabilities. On June 12, 2012, the Alaska Department of Labor noted that state tax payments were not current. The city has been informed of this and is working to resolve the issue. The IRS reported that form 941 was not submitted for the 3rd quarter in 2011, which the city is also working on resolving. There are no past tax liabilities or recorded liens.

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.
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.
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's current workers' compensation insurance policy with the Alaska Municipal League Joint Insurance Association (AMLJIA) is valid through June 30, 2012. Proof of coverage is posted in all areas of employment, including the main bulletin board at city hall. The Kake Code of Ordinances contains a personnel title outlining the job descriptions, authorities, and duties of all municipal employees. This title also provides for a hiring process, lists city holidays, and establishes sick and annual leave accrual rates. The city does not actively follow this personnel policy, however, and contradictory personnel ordinances have been passed in recent years. The city is currently working with AMLJIA to complete an updated personnel handbook which, when completed, will be adopted by reference in the city code and take the place of the outdated personnel title. The city does not yet have formal written job descriptions for its utility employees, nor a written utility personnel evaluation process. A probationary period has been applied to other city employees as they are hired, but an evaluation system isn't provided. The city does maintain personnel files for its utility operators which include I-9 forms, W4s, certifications and endorsements, leave applications, and 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 staffing schedule.

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 Kake owns and operates the community's water and wastewater systems with the necessary authority to operate these systems provided in Title 54 of the Kake Code of Ordinances. This title was originally adopted in the 1980s and amendments to it since have not been properly codified to reflect the city's current rate structure. Title 54 outlines a utility bill collections policy requiring disconnection of service to delinquent customers. In September of 2010, the city acquired the necessary equipment and supplies to conduct disconnections, though none have been imposed this calendar year. A review of city council meeting minutes and of water disconnect notices indicates that the council is actively enforcing utility policy. The six-member council holds regular meetings as required by Alaska Statutes Title 29 on the first and third Tuesday of each month. Three council members also serve on the Airport, Water, and Roads Committee, which holds regular meetings to formulate utility-related recommendations to the larger body. The city complies with Alaska's Open Meetings Act by posting notice of each meeting at least five days in advance at the post office, the grocery store, the gas station, and the community building. Each notice indicates the type of meeting to be held, as well as its location, date, and time. While there is no formal utility management system outlined in the city code, an organizational chart has been adopted by the city and indicates that the city manager is the manager of Kake's utilities. The city manager has been with the city since May 2011 and brings significant municipal expertise from his previous position as city manager for the City of Whittier. He holds a master's degree in public administration. The utility's bookkeeper is also highly trained. She has years of experience working for the City of Kake and has completed multiple RUBA training courses, including Introduction to QuickBooks, Elected Officials Management for Rural Utilities, Clerk Management for Rural Utilities, Personnel Management for Rural Utilities, and Financial Management for Rural Utilities. She has also taken a University of Alaska course in bookkeeping for small businesses and non-profits. She has also received one-on-one training from RUBA staff on preparing meeting agendas, notices, and minutes, drafting ordinances and resolutions, using Title 29 of state statute, ordinance codification, Alaska's Open Meetings Act, and preparing for municipal elections. The city manager and a council member both completed the Planning Management for Rural Utilities training in May, 2012 The State of Alaska's Department of Environmental Conservation (DEC), Division of Water has rated Kake's water treatment system at the Class 2 level based on the plant's various components. The city's water distribution and wastewater collection systems are rated as Class 1 according to the number of connections these systems serve. The primary operator of these systems holds the following certifications: Water Treatment, Level 1 - Expires 12/31/2013, CEUs met Water Distribution, Level 1 - Expires 12/31/2012, CEUs met. The operator has demonstrated the ability to run Kake's utilities effectively and reliably. A backup operator is available, though he is not certified.

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 utility operators have not yet achieved the necessary certification level in all areas. Nonetheless, they continue to receive on-site guidance from Alaska Native Tribal Health Consortium (ANTHC) engineers. The lead operator has also participated in a HAZWOPER training and various ANTHC water treatment seminars. The utility has not suffered any major outages due to mismanagement and operates at the proposed level of service. Though formal safety meetings aren't held, the utility manager is kept abreast of utility issues with verbal monthly status reports. The utility manager also makes regular site visits to review maintenance and safety issues. The utility's preventative maintenance plan consists of the operators examining all equipment on a monthly basis and unloading wastewater tanks every two to four weeks. The remote maintenance worker also assists with equipment and facility review. Consumer Confidence Reports (CCRs) are issued as required. The operation of Kake's utilities does face certain sustainability challenges. Kake Municipal Water remains on the Environmental Protection Agency's Significant Non-Compliance (SNC) list for its high levels of haloacetic acid (HAA5) disinfectant by-products (DBPs). Air scour upgrades have been completed in an attempt to address the problem, though a corrosion control study and continued testing may be required. Presently, the utility must obtain one quarter of testing without any HAA5 violations in order to return to compliance. Further, while certain critical spare parts such as electrical motors and sensors are kept on hand, the utility does not maintain a full critical spare parts list or an inventory control list.