Quarterly Report: 2013, 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:
7/24/2013 
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 traveled to the City of Kake this quarter to assist with Community Revenue Sharing application, FY14 budget, FY12 audit, editing ordinances, Open Meetings Act requirements, training the new city clerk, and to conduct a brief training for the city council on water utility rates. Additionally this quarter, RUBA staff assisted utility staff with procurement policy review, local hire preference questions, employee manual edits and adoption, traffic ordinance revisions, water utility rates ordinance, elections ordinance changes, a utility payment agreement, taxation questions, harbor questions, and with writing resolutions and ordinances, as well as with writing a letter to water customers. 
RUBA Activities for the Coming Qtr:
RUBA staff will be traveling to the City of Kake in July to conduct a new RUBA assessment, conduct a garbage utility rate study, and to provide any other assistance as requested. Additionally, the city clerk has resigned. Thus, RUBA staff will be available to assist with the training of the new city clerk upon hire.
Scores:
 
Essential Indicators:
25 of 26
Sustainable Indicators:
22 of 27
Total Score:
47 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 FY13 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 $77,801 (46 percent of the utility budget) transferred from the general fund to balance the budget. Repair and replacement costs are not budgeted. The utility board has recently increased their water rates to be reflected in the FY14 budget and in the next quarterly report. 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. Additionally, expenditures were equally lower than expected for FY12 and the FY13 budget reflects this reality. The city council 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 fuel 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 city's bookkeeper provides financial reports to all council meetings, including a budget vs. actual, a profit and loss report and a verbal utility manager's report. As of March, 2013, water utility revenues collected are 49 percent of the budgeted amount, while expenses are 68 percent of budgeted. The city has drafted an amended budget to compensate for these expenses and has identified revenues to cover these expenses. Revenues may not be accurate at this time, as the city has recently taken back the billing responsibilities from Alaska Rural Utilities Collaborative (ARUC), and is still integrating reports and totals into the QuickBooks system. A water utility rate study in January 2013, identified that while the utility charges customers $30 per month for water and wastewater, the actual cost of the utility is $75.88 per month. The city plans on gradually increasing its rates to better reflect the cost of service, with the first increase occuring July 1, 2013.

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
The collection policy requires that delinquent utility customers be disconnected after a period of non-payment. Yet because the city lacks necessary curb stops to shut off delinquent customers, disconnection provisions of the policy may be impossible to fully enforce. The city's utility policy includes repayment agreement procedures, incentives for prepayment, reconnection fees, and the authority to refer delinquent customers to a collections agency. The new policy was adopted in May 2012 by the city council and immediately put into effect, with the exception of the requirement to disconnect delinquent customers. The city has recently resumed responsibility of billing customers. For the previous two years, ANTHC served this function at a cost to the city of $300 per month. The city's new 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. The city accepts payment by cash, personal check or credit card. 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 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. The utility's bookkeeper reconciles all bank accounts monthly, and has provided reconciliation summaries as confirmation.

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 of Kake uses QuickBooks accounting software to accurately calculate, track, and report its payroll tax liabilities. On May 30, 2013, the State of Alaska Employment Securities Division granted tax clearance to the City of Kake. Federal Taxpayer Advocates stated on June 17, 2013, that the city is currently in compliance with all federal employment tax filings and payments, and currently has no liens.

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.
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 Kake currently holds workers compensation insurance policy with the Alaska Municipal League Joint Insurance Association (AMLJIA). Proof of coverage is posted in all areas of employment including the main bulletin board at city hall. Coverage was confirmed on March 1, 2013. The City of Kake adopted a new Employee Handbook in spring 2013. The handbook was drafted by AMLJIA and amended by city staff and council, before being adopted via resolution. Changes need to be made to the municipal code to ensure there are no contradictions between the code and the handbook. The handbook explains that job descriptions will be written for all positions, though this step has not yet been completed. The handbook does give a procedure for performance evaluations, hiring, and a probationary period, all of which are now being carried out by city staff and council for all employees. 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 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. The city acquired some of the necessary equipment and supplies to conduct disconnections, though none have been imposed this calendar year and further equipment may be needed, depending on how many disconnections are necessary. 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 was hired in 2012 and brings significant expertise and experience to the position. 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. One council member has also attended both the RUBA UTM personnel and planning trainings. The city's clerk recently provided written notice of resignation. She will continue working with the city until a replacement has been hired. 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 December 31, 2013, CEUs met; Water Distribution, Level 1 - Expires December 31, 2015, CEUs not yet 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 operator receives on-site guidance from Alaska Native Tribal Health Consortium (ANTHC) engineers. He 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 advised 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 published as required. The community has recently undertaken a risk management assessment with Alaska Municipal League Joint Insurance Association (AMLJIA) and is incorporating recommendations made in the assessment. 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 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. 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.