Quarterly Report: 2011, July - September (Q1), Kake

Community:
Kake 
Staff:
Glen Hamburg  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Kake 
Population:
497  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
2/2/2011 
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 water treatment, water distribution, and piped sewer system in addition to providing refuse collection, recycling, and hazardous waste disposal. The Inside Passage Electric Cooperative (IPEC), a non-profit subdivision of the State of Alaska, provides electrical services to the city with three diesel-fueled generators. 
RUBA Status & Activities This Qtr:
Juneau RUBA staff traveled to Kake on July 20, 2010 and conducted a RUBA management assessment. It was discovered that Kake had not adopted the FY11 budget and did not actively follow the collection policies found in the city code. These two items prevented Kake from meeting all essential management indicators. KAKE, however, has made significant progress in developing the accounting system and was active in seeking training for the utility operators. While in Kake, RUBA staff met with the city manager to develop a RUBA assistance work plan. The plan's short term goals include adopting the budget and updating the personnel policy. Staff also recommended the city code of ordinances be updated to allow for changes in the utility payment collection policy. After these key issues are addressed, the city is interested in exploring new utility rates using data collected by RUBA. RUBA staff contacted Mark Spafford, Alaska Native Tribal Health Consortium (ANTHC) engineer concerning Kake's Santitation Master Plan that was recently completed. RUBA requested a copy for the Juneau office. Juneau RUBA staff contacted the city manager with information on four city facilities were not receiving power cosst equalization (PCE) subsidy due to not being correctly identified on the monthly PCE report. RUBA staff explained that the city dock, sewer lift station, water treatment plant, and city shop may be eligible for both future PCE subsidies and retroactive funding. The city manager was provided the necessary PCE application instructions and materials. RUBA staff contacted the lead water opeartor to obtain figures necessary for a water rate analysis. The city manager had requested RUBA assistance in updating the utility rate structure. RUBA staff will first determine the true cost of water production in the community with data provided by the utility operator, then work with the community to develop a rate that covers these expenses. In September, Kake signed a RUBA assistance Agreement. The agreement is to ensure that RUBA staff is able to meet with city employees and city council memebers, obtain city documents, and assessment city utility management practicies. RUBA staff will maintain a copy of the agreement with Kake's RUBA supporting documents and records. RUBA staff will make quarterly trips to the community to provide assistance. RUBA staff made two trips to the City of Kake this past quarter to continue the process of updating the Kake Code of Ordinances (KCO). The city has a disorganized and incomplete set of city codes. Further, many provisions in the KCO relating to the city's utilities, personnel, elections, and municipal property are contradictory, preventing the city from adopting sound policy in these areas. RUBA staff traveled to the community in October and November to finish compiling all of the city's ordinances and disparate code sections. The pieces were then scanned into PDF format from which RUBA staff arranged and retyped all of the pieces into one cohesive, electronic document. During the process, RUBA staff also noted numerous sections that were out-of-date or otherwise need to be addressed by the city during the update process. After working closely with city staff and city officials on this update both in Kake and in Juneau, RUBA staff is scheduled to present a first draft of the retyped KCO to the Kake City Council on January 18, 2011.  
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff will continue to work with city officials to fully update the Kake Code of Ordinances. After a draft code is presented to the city council on January 18, RUBA staff can work with the council to amend sections that are inconsistent or out-of- date, with particular attention the KCO's utility and personnel titles. RUBA staff is scheduled to conduct an eight-hour newly-elected officials training for the Kake City Council on January 19. The training will examine council roles and responsibilities, municipal acts, Title 29, parliamentary procedure, conflict of interest, fiduciary responsibility, and Alaska's Open Meetings Act. As soon as a new clerk is hired in the city, RUBA staff will also be available to provide a clerks training seminar.
Scores:
 
Essential Indicators:
27 of 27
Sustainable Indicators:
13 of 27
Total Score:
40 of 54

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
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.
No A monthly manager's report is prepared.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Kake adopted its FY11 budget on July 30, 2010. However, this budget required an amendment shortly thereafter in order to adopt more realistic projections for outside funding and building rental revenue. The amended budget projects that water, sewer, garbage, and landfill expenditures will outweigh the revenue these utilities generate by approximately $147,000. No interfund transfer is provided in the FY11 budget to fill this gap. Rather, utility cost overruns are folded into the city's general finances which are supported by state revenue sharing and federal government grants/payment in lieu of taxes (PILT) funds. The city's November financial reports indicate that actual utility revenues exceeded the FY11 budget's projected figures for the month by $2,400. These figures, however, are due mostly in part to new utility bill collection policies implemented by the city and include back payments from utility customers. Continued implementation of the city's new collection policy and continued monitoring of the city's finances will show more meaningful trends in the amount of revenue generated by Kake's utilities. The Kake Code of Ordinances requires that monthly financial reports be prepared by the bookkeeper for the council and include a summary statement, a reconciliation statement, and a statement of expenses. Monthly financial reports are indeed being prepared, though because the city was late in adopting its FY11 budget, budget vs. actual financial statements do not meaningfully project whether year-to-date revenues and expenditures for the utilities are on target. When compared to the FY10 budget, the FY11 budget provides for significant increases in funding for operator training, treatment supplies, equipment maintenance, and testing. However, the budget does not plan for repair and replacement costs or facility maintenance. The utility's last water/wastewater electric bill was paid in full in December and they are not behind in any other payments. The FY11 budget allocates sufficient funding for the city to continue purchasing fuel from Kake Tribal Fuel (KTF). KTF receives fuel shipments as needed (about once a month) and stores it in four 20,000-gallon tanks and eight 10,000-gallon tanks.

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
Kake's accounting system has made significant progress toward ensuring that city utilities are operational and sustainable. Bills are sent out to all 210 accounts on the last day of the month (or within five days if the scheduled billing date falls on a weekend). The account holder's name, their address, the payment due date, an invoice number, and a utility use description are included on each bill. While these utility bills still combine the separate water, sewer, and garbage fees into one monthly rate of $36, city officials hope to eventually separate these charges so services can be paid separately. A QuickBooks accounts receivable system run by the city bookkeeper keeps track of all payments efficiently and accurately. The bookkeeper scans copies of issued bills and links them directly to their respective QuickBooks account. This new scanning process has made it easier for the bookkeeper to reference specific account histories and to better organize data. In practice, utility bills are considered 'late' if a payment has not been made by the 15th of the following month. However, the city code does not clearly indicate when these bills are officially considered late. This is a problem that both the utility manager and members of the council are working to address and have already begun formulating new payment policies. Along with the accounts receivable system, the bookkeeper is also in charge of the accounts payable system using purchase orders that are reviewed for initial approval by the utility manager. Though the general appropriateness of each purchase is considered, no department or account codes are used on the purchase orders. Therefore, it is up to the bookkeeper to determine on a case by case basis where to charge purchase requests. Kake's utility cash receipt system involves the bookkeeper issuing individual receipts to utility customers and recording the payments in QuickBooks. Other duties of the bookkeeper include conducting the monthly bank reconciliations (currently reconciled up to December 30, 2010) and completing payroll. The bookkeeper also maintains a detailed, alphabetical chart of accounts that clearly identifies the name of the account, the account type, and the account balance.

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.
Yes 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 Department of Labor and Workforce Development, Employment Security Division granted tax clearance on December 29, 2010 to the City of Kake, assuring that the city is current in filing state tax reports and in making state tax deposits. On December 30, 2010, the Internal Revenue Service's Taxpayer Advocate Service deemed the City of Kake in compliance with federal tax filing and deposit requirements as well. There are currently no tax liens against the city.

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.
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.
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 has a workers' compensation insurance policy with AMLJIA valid through June 30, 2011. This policy is posted in three areas including the main bulletin board at City Hill. The city manager has begun completing an AMLJIA personnel survey for the adoption of a personnel policy for all city employees, including the utility operators. Personnel folders for the operators are already in place, though there is no set requirement for what is to be included in those files. One operator's file includes an employment contract, a leave application/report, a job description and all training certificates. The other operator's file includes an I-9, discipline letters, and a job announcement. Currently, there is no evaluation process for the two positions, either. Both files do contain 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 staff schedule that was last updated on September 9, 2009.

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
Kake's utilities are owned, employed, and operated by the City of Kake. Chapter 54 of the Kake Code of Ordinances (KCO) makes clear that the city will be responsible for providing water processing and distribution, sewer collection and processing, and garbage collection. The KCO also grants the city the authority to set service rates and to collect payment. In September, the city acquired the necessary equipment and supplies to shut off water service to past-due customers. Notices posted around the community are warned customers that they had until October 1 to pay utility balances or face termination of service. Some delinquent customers have already been shut off and city staff report a dramatic increase in the utility bill collection rate since September. While these are efforts are certainly positive, they are not entirely in keeping with the enforcement policies set forth by the KCO. The city manager and members of the city council are interested in updating the code so that the policies on the books are in line with the successful policies being enforced. The Kake City Council is the city governing body and meets publicly on the first and third Tuesday of every month. Meeting notices are posted in public locations prior to each meeting to comply with the Open Meetings Act and meetings are postponed if the notices cannot be posted at least five days in advance. While there is no utility management system in the city code, an organization chart has been adopted by the city and indicates that the city manager, Bill Lee, is the manager of the utilities. Mr. Lee has a long history of management experience from his time in the military, law enforcement, and as a city official outside of Alaska. Mr. Lee is also taking coursework towards a Masters of Public Administration. Selma Jackson, the utility's bookkeeper, is also highly trained. She has years of experience working for the City of Kake and has undertaken critical RUBA and QuickBooks training courses to be proficient in the city's accounting system. The city's lead utility operator, Clifton 'Kip' Howard, is properly certified to operate the city's Class 1 water distribution system, but is still under-certified for the city's Class 2 water treatment system and Class 1 wastewater collection system. Mr. Howard and a water operator trainee have demonstrated the ability to run Kake's utilities effectively and reliably while actively pursuing new training opportunities.

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 two water/wastewater utility operators have not yet achieved the necessary certification level in all areas, but continue to make meaningful progress. The head operator has met Kake's Class 1 water distribution system certification requirements, though both are still under-certified in operating the Class 2 water treatment system and the Class 1 wastewater collection system. The utility manager is kept abreast of utility issues with verbal monthly reports and status reports. The utility manager also makes monthly utility facility site visits to review maintenance issues. The utility's preventative maintenance plan consists of the operators examining all equipment on a monthly basis and unloading sewer tanks every two-four weeks. The remote maintenance worker staff also assists with equipment and facility review. Consumer Confidence Reports (CCRs) are issued regularly. The operation of Kake's water utilities does face sustainability challenges. Kake Municipal Water is still listed on the EPA's Significant Non-Complier (SNC) list for its high levels of haloacetic acid (HAA5) disinfectant by-products (DBPs). Air scour upgrades have been underway in an attempt to address the problem and continued testing between January 1 and June 30, 2011 will determine whether the utility remains on the SNC list. Finally, while certain critical spare parts such as electric motors and sensors are kept on hand, the utility does not maintain a full critical spare parts list or an inventory control list. A safety manual is available, though utility operator safety meetings are not held.