Quarterly Report: 2014, July - September (Q1), 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:
598  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
10/10/2013 
Community Sanitation Overview:
The City of Kake is a community of 598 people on the northwest coast of Kupreanof island. This first class city is a traditional Tlingit village, with an economy based primarily around fishing, logging, and subsistence. Kake's water source is surface water from Alpine Lake, and is piped eight and a half miles to the water treatment plant, which then supplies 173 service connections in the community. In the case of an emergency, a secondary water source, Gunnuk Creek, is also available. There are several lift stations throughout the community, and wastewater is collected then undergoes a rudimentary treatment process before being discharged offshore. The City of Kake operates and manages the following utility services: Class 2 treated and piped water (173 service connections); Class 1 treated and piped wastewater (174 service connections); Garbage pick-up and landfill; and Harbor. The city also operates other enterprises including rock sales, rental of equipment and operators, and septic pumping. 
RUBA Status & Activities This Qtr:
RUBA staff traveled to the City of Kake this quarter to assist with improvements to several RUBA indicators, including amendments to the FY14 budget, writing up the city's hiring process, creating an organizational chart, and creating the relevant resolutions to enact these documents. This effort resulted in the city meeting the sustainable indicators related to job descriptions and written hiring process. While the organizational chart is prepared, it has not yet been adopted by the city council. RUBA staff attended committee meetings and assisted with matters of codification, harbor ordinances, financial documents, and improvements to the water utility collection rate. RUBA staff also assisted with the completion of national forest receipt applications, and single audit compliance. RUBA staff also used the visit to assist in training the city administrator on running the upcoming regular election of the council (the decision-making body for the water utility), and met with ANTHC staff to discuss upgrades currently in progress on the water distribution and wastewater collection systems. The city is currently without a city clerk and bookkeeper, and has an interim bookkeeper standing in. The city administrator is taking the role of city clerk presently. RUBA staff provided remote assistance and training around matters of conflict of interest, completing the Consumer Confidence Report on time, creating a tax exempt card for seniors, drafting a commercial water service agreement, drafting a land sale non-code ordinance, drafting a sales tax delinquency letter, oaths of office, impacts of the Affordable Care Act on small municipal governments, lien records, annexation questions, procurement policies, and public business ownership questions, as well as several questions pertaining to elections procedures. Unfortunately, the city has fallen behind on QuickBooks data entry, and as a result is no longer meeting indicators related to monthly financial reports and YTD revenues and expenditures, as it is not able to estimate these numbers at this time. 
RUBA Activities for the Coming Qtr:
The city was previously meeting all essential indicators. However, the utility is currently without a city clerk, and has an interim bookkeeper in place, and there is concern that some things, such as financial reporting, may fall behind. Financial reports were provided to the council in July, but have not been provided since, as the QuickBooks file fell behind around this time. An interim bookkeeper has been hired and is bringing the file up to date now. RUBA staff will travel to the community upon hiring of a new clerk and/or permanent bookkeeper to assist with training; and will request a QuickBooks hotline visit is appropriate for the new bookkeeper. RUBA staff will also provide remote assistance on continuing improvements to sustainable indicators.
Scores:
 
Essential Indicators:
25 of 26
Sustainable Indicators:
19 of 27
Total Score:
44 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 city council, which is the decision-making body for the water utility, functions on the state fiscal year, and adopted the FY14 annual budget in May 2013. Budget estimates were based on the FY13 budget and actuals, and the FY14 budget proposal included details such as dollar change and percent change. The budget was balanced and realistic, though the finance committee has requested the budget be broken down into more specific categories, which is currently being undertaken by city staff and will be introduced at the next council meeting as a proposed amendment to the FY14 budget. The budget breaks down the water and wastewater finances into a utility enterprise fund, which also includes garbage. The FY14 budget anticipates collecting 181 percent more water/wastewater customer fees in FY14 than in FY13, mainly owing to the relinquishment of PFDs for delinquent customers, and the anticipated enforcement of the utility's collection policy, including shutting off delinquent water customers until payment is received or a payment plan is in place. Indeed, utility staff have identified the location of all customer shut-off valves throughout the community, and anticipate installing valves at properties which do not already have them. This was the first step toward enforcement of the shut-off policy. Shut-offs are scheduled to be commenced this quarter. The city bookkeeper provides a profit and loss budget versus actual report to the finance committee, which meets before all city council meetings to review finances, then provides a full report at the regular council meeting. The bookkeeper and city administrator (who serves as the utility manager) both attend the finance committee meeting, and provide verbal reports, as well as written reports when requested. However, this practice has not taken place since July, as the bookkeeping data entry has fallen behind due to the loss of the city's bookkeeper. An interim bookkeeper is in the process of bringing the books up to date. Kake's electricity is provided by the Inside Passage Electric Cooperative (IPEC). IPEC bills the city monthly with a break-down of services provided to different buildings and areas, such as wastewater lift stations, water treatment plant, city buildings, etc. The bookkeeper logs each itemized bill into the QuickBooks accounts payable system, then creates the check payment for the full amount, which is then signed by the city administrator and submitted for payment. Evidence of billing and payment were provided at the time of the assessment. The City of Kake purchases its fuel from Kake Tribal Corporation as needed, and budgets sufficiently annually for fuel. Kake Tribal Corporation receives fuel by barge once per month, which is sufficient to provide all necessary fuel to the community. A water utility rate study conducted by RUBA staff in early 2013 concluded that the water utility costs $75.88 per customer. The city distributes this cost at a higher rate to commercial than residential or elder customers. Subsequent to the rate study, the city council adopted a scenario to increase the water utility rate gradually over the next four years, at a rate of 25% per year for residential customers and 35% per year for commercial. Therefore, on July 1, 2013, the residential rate increased from $36 per month to $45 per month; and the commercial rate increased from $40 per month to $54 per month. By the fourth year, the residential rate will be $87.89 per month and the commercial rate will be $132.86 per month. Assuming a near-100 percent collection rate, this will sufficiently cover the cost of the water utility at its current cost. (These charges include garbage pick-up and landfill haul.) Until such a time as customer payments fully cover the cost of the water utility, the city utilizes Community Revenue Sharing and Payment in Lieu of Taxes to subsidize its water utility.

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 city bookkeeper bills customers on the first of every month, with a due-date of the last day of every month. Statements and invoices include details of all utilities and services rendered, as well as clear due-dates for all bills. Accounts are considered delinquent if they have not been paid by the tenth day of the following month. At that time, the water operator places an overdue notice on the delinquent customer's door, and spray-paints a circle around the location of the customer's shut off valve. If payment is not made or a deferred payment plan agreed upon by the date specified on the door notice, water is to be shut off. At this time, shut off valves are only available on some properties. Therefore, this process is not always being carried out. However, utility staff has identified properties which do currently have shut-off valves, and as water distribution lines are upgraded by ANTHC through a recent state legislative grant, shut off valves will be installed on all properties which do not currently have valves. Other measures are in place to encourage payment of water bills, in the absence of the ability to shut off all delinquent customers. For instance, delinquent customers were given the option of signing over their PFD assignments, but those who did not sign over their PFD assignments are also having their PFD assignments relinquished without consent through the Alaska court system, in order to pay past due utility accounts. Additionally, the city is currently on a plan to increase water utility rates gradually over the next four years. Customers who have remained current on utility bill payments will have a two-year delay in the increase of their utility bill. As of early 2013, the city's water utility collection rate was 52%, subsequent to the actions discussed above being taken to increase said rate. A second collection rate study was undertaken in early September, and indicated that the collection rate remains at approximately 52%. A further collection rate study will be undertaken subsequent to PFD relinquishments. Accounts receivable, accounts payable, and payroll are tracked using the QuickBooks program, and payroll records are maintained by the bookkeeper. A chart of accounts also allows for appropriate allocations of revenues and expenditures using QuickBooks. Accounts are separated into income, expense, bank, accounts receivable, current assets, fixed assets, accounts payable, current liability, equity, income, and expense types. An accounts payable aging summary provided to RUBA staff evidences consistent and complete payment of all incoming bills, and an accounts receivable aging summary evidences tracking of all utility and other service customers and current and past-due accounts. Reconciliation of all bank accounts is undertaken on a monthly basis, and a reconciliation details report is completed and saved in QuickBooks. The city accepts credit and debit cards for payments. If cash is received, the bookkeeper writes a receipt for the customer, logs the transaction in QuickBooks, then locks the cash in a drawer. Cash disbursement is carried out in the same manner. All purchases are requested through a purchase order form, which is then approved by the city administrator. Purchase order forms include a reference number to be included on all invoices, which are then processed and reconciled by the bookkeeper, and logged in a purchase order book and on QuickBooks, where purchases are also accounted for in the budget. Any purchase over $1,000 requires approval from the mayor.

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 utilizes the QuickBooks accounting system to track payroll tax liabilities, both state and federal, and utilizes online reporting systems. The city has no current tax liabilities or liens. The State of Alaska Department of Labor verified employment tax compliance on August 29, 2013. The IRS confirmed, through Taxpayer Advocates, that the city is compliant on federal tax requirements, aside from owing payment on the msot recent quarter, not yet over-due.

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 receives workers compensation insurance from AMLJIA, and has paid for workers compensation for FY14, and posted coverage information in all main places of employment. Worker's compensation insurance was confirmed on August 30, 2013. In April 2013, the city adopted an employee handbook, drafted with city staff by AMLJIA and reviewed by RUBA staff prior to adoption by the city council. The handbook includes a cover page which employees sign in acknowledgement of receipt of the employee handbook. The handbook outlines a personnel evaluation process, which includes formal performance evaluations at the end of employee's introductory period (probationary period), then annually thereafter. Training and appropriate certification of staff is encouraged, and will be discussed further under Organizational Management below. A specific performance review form is used, which includes an evaluation of all job factors, performance appraisal factors, and a review summary listing areas of strength and areas for improvement. Most city staff are experienced (over five years in current positions) and highly proficient at their jobs. However, there is limited cross-training between city staff, and this is being recommended, to ensure operations continue in the event of a staff member becoming unexpectedly unavailable. The city adopted updated and adequate written job descriptions in August, 2013, for all positions of the city. The city administrator maintains a file with I-9 and job applications, though no job applications are available for employees who have been with the city for several years. All new employees are submitting job applications, which are maintained in files hereafter. Letters of acceptance have also not been previously used, but have recently been instituted by the city administrator, including information about employees' start month and year, and current position and pay. Letters have been completed for all current employees, and will be completed in the future for all incoming employees.

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 City of Kake owns and operates the community's water and wastewater systems with the necessary authority to operate provided in Title 60 of the Kake Municipal Code. The city council is the decision-making body for the utility, and holds regular meetings monthly. The council's regular meetings are noticed in advance in compliance with the Alaska Open Meetings Act, as are all special and committee meetings. The council also convenes special meetings as needed, and there is a harbor and utilities committee which meets approximately monthly as well. The finance committee also meets monthly and discusses utility finances at that time. The council has been particularly active over the past year in updating the city's utility ordinances, and in increasing utility rates in striving to cover the cost of the utility. One city council member has attended the 32-hour RUBA Planning training and Personnel training. The utility's manager is the city administrator, who has worked for the city since October 2012. The administrator attended the SDS conference in 2013, and participates with RUBA staff regularly around training and assistance. The utility's bookkeeper has been in the position for several years and has attended the 32-hour RUBA Personnel training, Financial training, Elected Officials training, Clerks training, and QuickBooks class. The bookkeeper has also completed the 18-hour UAS Bookkeeping for Small Businesses and Non-Profits course. The utility's primary water operator has attended several trainings and received many certifications including HAZWOPER training and certification in 2005; ANTHC Water Treatment Seminar in 2007; SEARHC Introduction to Small Water Systems Workshop in 2008; and NTL's Water Treatment Systems class in 2011. Water operator certification will be discussed further under Operation of Utility below. The utility does not have a current organizational chart, though a proposed organizational chart has been drafted and will be introduced to the city council shortly for consideration and possible adoption by resolution.

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.
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
The primary water operator has been working in this position since 2006, and has Class 1 Water Distribution and Water Treatment certifications. The primary water operator is currently working on passing the Class 2 Water Treatment exam. The utility also has a back-up operator, who has not yet been certified but is in the process of training. The primary water operator has written up a very specific schedule he follows regarding preventative maintenance, including checks, calibration, cleaning, backwashing, and much more. The plan is posted in the water treatment plant, and can be followed by any back-up or substitute water operator if needed. The primary water operator provides regular verbal reports to the manager at least weekly and often daily. The manager is active in assisting in water operations when needed, and passes on information about water operations to the city council when appropriate. The manager is not currently conducting spot checks of the water utility, but discussed beginning this soon. The utility is not currently conducting safety meetings either, though attending the AMLJIA telephonic safety meetings has been discussed. The city is working with AMLJIA's loss control program, and has instituted several recommendations made to increase safety and decrease loss. The water utility has not suffered any major problems or outages due to unresolved management issues. There have been issues with the wastewater collection system, which is currently being cleared and worked on with the assistance of the Remote Maintenance Worker (RMW) program and ANTHC engineers. The primary water operator discussed concerns that a back-up electric system is needed in the case of electric outages. The distribution system is gravity-fed, though the treatment system does require electricity. A back-up generator may be an option. The utility on a whole is operating at the proposed level of service. The 2013 Consumer Confidence Report was completed and distributed to the community in July 2013. The city is currently on the Significant Non-Compliance (SNC) List, due to high levels of disinfectant bi-products. ANTHC and the RMW are attempting to find the optimal chlorine levels, and changes have been completed. Further testing is required to ensure the changes are sufficient, and to remove the community from the SNC list. The utility does not have an inventory control list or critical spare parts list. RUBA staff will assist in developing these lists, which utility staff will then maintain. The primary water operator is very aware of what parts the utility currently has and needs, and works closely with management to ensure all necessary parts are budgeted for and obtained. However, in the event of an emergency or were the primary water operator to become unavailable, critical spare parts and inventory control lists would assist back-up operators in maintaining the system.