Quarterly Report: 2008, October - December (Q2), 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:
1/24/2008 
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:
On October 29 -31, 2007, Juneau RUBA staff, traveled to Kake to complete a RUBA Assessment of Management Capacity Indicators. At this time, the City fails to meet all of the RUBA essential management capacity indicators. The two main problem areas are that the City currently has not adopted a FY08 budget and the provisions in the collection policy are not being followed resulting in a very low collection rate. City staff was open and helpful with providing information to complete the assessment and are eager to work towards implementing better utility management practices. The City realizes the importance of community health and has committed to work with RUBA staff to address the deficient essential indicators.  
RUBA Activities for the Coming Qtr:
RUBA activities for the coming quarter will include: 1) Assist in the completion of an FY08 Budget. 2) Addressing the deficient essential indicators that were identified in the latest assessment of management capacity indicators. 3) Continue to provide support for increasing collection rates and pursuing delinquent water utility accounts.
Scores:
 
Essential Indicators:
19 of 27
Sustainable Indicators:
14 of 27
Total Score:
33 of 54

Finances

Essential Indicators
Answer Question
No 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.
Yes A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
The City has not yet adopted an FY08 annual budget. Until the budget is finalized and adopted by the Council, the City does not meet essential or sustainable indicators involving the budget. The City is current on all water and wastewater electric bills through October 2007. City staff is concerned about the increasing cost for electricity and the direct and indirect affects it has on the Citys ability to provide utility services. Electricity is provided through Inside Passage Electric Cooperative (IPEC) at $0.51 per kilowatt hour (KPH). 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 communitys 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. The City Administrator, who also serves as the Utility Manager gives a verbal status report to the Council at monthly meetings and provides financial reports including a profit and loss statement, a list of expenditures for the prior month and a printed check register.

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
The City of Kake has an adopted collections policy contained within the Public Utilities Ordinance; however, it has not been reviewed by the council since 1991 when the rates were last adjusted. Utility bills are sent out on a regular basis, however, there is little enforcement on delinquent accounts and the provisions contained in the policy are not routinely followed. The lack of follow-up and enforcement on delinquent accounts has created a sizable number of aged accounts with $456,323.00 being owed by utility customers. The utility currently has a collection rate of approximately 40%. Even though the City is currently using QuickBooks to track their accounts receivable and accounts payable, the primary tool that the city is using to manage the City finances is the online banking service through KeyBank. City staff reports numerous difficulties in using the QuickBooks program and has little confidence in the reliability and accuracy of the financial reports. The City uses QuickBooks to generate checks for accounts payable; however, is increasingly using the Citys debit card to pay some of their bills directly. The debit card transactions are not entered into QuickBooks. 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.
No 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 of Kake is current with tax reports and tax deposits.

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 currently carries workers compensation insurance through AML/JIA. The policy runs from 07/01/08 through 06/30/08. 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.
No The policy making body is active in policy making of the utility.
No The policy making body enforces utility policy.
Yes The utility has an adequately trained manager.
Yes The utility has an adequately trained bookkeeper.
No 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 utility fails to meet the essential indicators involving the policy making body because the council has not been active in making key policy decisions for the utility. The utility is operating at a sizable deficit with no identified sources of subsidy, personnel policies and utility ordinances have not been reviewed or updated since 1991, and utility rates are insufficient to cover operating expenses. The City does not have a written utility policy outside of what is contained in the public utility ordinance. A separate written document is not necessary provided that the ordinance is detailed enough to provide a deliberate plan of action to guide decisions made on behalf of the utility. The Council and City Staff should be familiar with the utility ordinance and review it on an annual basis to ensure compliance. The City Council is responsible for ensuring that the provisions in utility policy and public utilities ordinance are adhered to. The City does not have a written organizational chart that reflects the current municipal structure. The City has three employees working on the sanitary systems; however, none are currently certified as a water treatment operator. The main operator has an OIT certification in water distribution. The operator is pursuing additional training and has taken his level 1 water treatment exam and is currently waiting to receive the results. 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
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.
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 City Administrator and Mayor on a regular basis and provides written status reports. The City Administrator, who also serves as the utility manager, does visit the facilities and conducts random spot checks for maintenance items. The utility completes and distributes its Consumer Confidence Report (CCR) in compliance with State and federal regulations. As of the latest Significant Non-Compliance (SNC) list, the City of Kake was listed for non-compliance to the Stage 1 Disinfectant/Disinfection By-Product Rule, the Surface Water Treatment Rules, and failure to submit the certification page for the 2005 and 2006 Consumer Confidence Report (CCR). In addition to being listed on the SNC list, the Alaska Department of Environmental Conservation issued a Notice of Violation on December 22, 2006 for the following violations: ' Failure to meet filtration requirements under the Surface Water Treatment Rules; ' Failure to monitor Total Trihalomethanes and Haloacetic Acids as required by the Stage 1 Disinfectant/Disinfection By-Product Rule; ' Failure to meet Maximum Contaminant levels for Total Trihalomethanes and Haloacetic Acids as required by the Stage 1 Disinfectant/Disinfection By-Product Rule; and, ' Exceedance of the Action Level for both Lead and Copper in 2003. Failure to provide DEC with follow-up samples and a Corrosion Control Plan. The City was in violation of the Stage 1 Disinfectant/Disinfection By-Product Rule (Stage 1) and Long Term 1 Enhanced Surface Water Treatment Rule (LT1 ESWTR) for failing to conduct IFE turbidity monitoring and for failure to monitor for Trihalomethanes and Haloacetic Acids (TTHMs/HAA5s). The City collected TTHM/HAA5 samples in April and June 2007, however, the results of the HAA5 samples exceed the Maximum Contaminant Levels (MCL). The Citys last monitoring violation for Stage 1 was in the first quarter of 2007. This problem was corrected when the water treatment plant received an upgrade consisting of IFE turbidimeters in March 2007. In August 2007 the system operator submitted the required IFE turbidity data from March 2007 to present. Even though the system has not had a Stage 1 violation since first quarter 2007, it will take 12 months of no additional violations to return to compliance for Stage 1. The system received an additional violation in second quarter 2007 due to the high HAA5 results and must continue to collect monthly samples for TTHMs / HAA5s. The system did return to compliance for the CCR violation by completing the 2005 and 2006 CCR and submitting the certification pages to DEC. 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.