Quarterly Report: 2007, April - June (Q4), Kasaan

Community:
Kasaan 
Staff:
Lawrence Blood  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Kasaan 
Population:
61  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
8/6/2007 
Community Sanitation Overview:
The City of Kasaan operates and manages a piped water system. The City Council is the policy making body for the utility. Water is derived from a water infiltration gallery (impoundment) at Linkum Creek, is treated, and piped to all homes in the core area. Homes use individual septic tanks and 95% are fully plumbed. A feasibility study to examine water and sewer service for a new 121-lot subdivision is underway under the auspices of Alaska Native Tribal Health Consortium (ANTHC). A landslide damaged the City's potable water system in 2003 causing a 'Boil Water Notice', and inclusion on the list of significant non-compliers (SNC). Repairs to the water treatment plant and corresponding infrastructure were completed by early fall 2004. Necessary water quality testing was completed, and the utility no longer is on the SNC list. The City collects and deposits refuse weekly at the Thorne Bay landfill. Electricity is provided by Alaska Power and Telephone Company. Kasaan has an annual operating budget of approximately $280,000. Kasaan is connected via gravel road to the Prince of Wales Island road system.  
RUBA Status & Activities This Qtr:
On May 24, 2007, Lawrence Blood, Juneau RUBA staff, traveled to Kasaan and met with City staff to complete a RUBA assessment of management capacity indicators. At that time, Kasaan met all essential management capacity indicators. 
RUBA Activities for the Coming Qtr:
RUBA staff will continue to provide assistance as requested to improve sustainable indicators in the areas of Utility Finance, Personnel System, and Operation of Utility.
Scores:
 
Essential Indicators:
26 of 26
Sustainable Indicators:
17 of 27
Total Score:
43 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
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.
Yes 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 of Kasaan is operating with a balanced FY07 City budget where all utility related revenues and expenditures are reasonably listed. Projected water revenues are $13,000. which is comprised entirely of user fees. The projected water related expenses are $12,445. which corresponds to a budgeted net profit of $555. for the water utility. As of May 24, 2007, a comparison of budgeted vs. actual income and expenses reveals that utility expenditures are below budgeted amounts, however user fee income is $4956.61 below its budgeted projection. The disparity between actual and projected revenue represents an actual net loss of $3,859.09. 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. It has been a general practice for the City to use other sources, such as the general fund, to subsidize utility operating expenses and savings are used for unexpected repairs. The community has adequate savings for unexpected repairs and equipment replacement. The Mayor, who also serves as the Utility Manager gives a verbal status report to the Council at monthly meetings and provides adequate financial reports including a profit and loss statement, balance sheet, and budget vs. actual profit and loss. The community has a City-owned bulk fuel facility which includes propane, gasoline and diesel storage tanks. The City receives fuel deliveries from Petro Marine Alaska in Thorne Bay, then retails this fuel to community members on a break even basis. The City has adequate funds available and purchases fuel as needed. The City usually maintains a one to three month fuel supply in the summer months and a slightly higher level of fuel reserve during the winter. Electricity is provided through Alaska Power and Telephone and the City is current on its electric account. No budget amendments have been made during the last fiscal year. As an informal city policy, amendments are only considered if actual revenue or expenditures for a particular line item deviates from budgeted projections by plus or minus $2,500.00. Even though this policy would normally be acceptable, the community was assessed as being deficient in reference to this sustainable indicator because given the criteria with this unofficial policy, water utility user fees have deviated from budgeted projections by over $5,000.00. There is little chance that the community will close this gap before the end of the fiscal year and the Council has not considered a budget amendment to address this shortfall.

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 of Kasaan has adopted a collections policy and follows their policy as much as realistically possible. The City Administration reports that utility billing collections are becoming increasingly difficult due to mounting customer dissatisfaction with water quality. In late 2003, the water system's intake was destroyed and the treatment facility was damaged due to a large landslide. Due to this unforeseen interruption in service, the community was placed on a DEC issued Boiled Water Notice for the entire 2004 year. Starting in 2005, the water system was again in operation. Once the community resumed water treatment they were required to continue state and federal water sampling and reporting requirements including the fairly new requirement to monitor for Total Trihalomethanes and Haloacetic Acids (TTHM/HAA5) as required by the Stage 1 Disinfectant/Disinfection By-Product Rule. In the City's June 29, 2005 Community Confidence Report (CCR) they reported for the first time exceeding TTHM and HAA5 allowable limits. Prior to this natural disaster and the issuance of the unfavorable CCR, a RUBA assessment that was performed in May 2003, reported that the utility had an outstanding collection rate and strict adherence to their collection policy. Utility bills are still being distributed on a monthly basis and the provisions contained in the municipal code for the collection of delinquent accounts is followed. Collection actions include the establishment of payment agreements, service charges to restore service, and a 7.5% monthly service charge on delinquent accounts. Disconnection notices are sent to customers 5 days after the account becomes delinquent including the date of service disconnection. The city has recently discovered that service disconnections are for the most part an unenforceable provision of their collection policy. Due to the age and condition of the distribution system and the lack of adequate planning and utility easements, a large proportion of the curb stops are either inaccessible or inoperable. The community is currently discussing the possibility of pursuing delinquent accounts through small claims actions and / or with the aid of a collection agency. The City is currently using QuickBooks Pro for their accounts receivable, accounts payable, and payroll which was originally installed through a RUBA sponsored QuickBooks onsite installation and training grant. The City has an adequate chart of accounts. The account receivables system documents customer payments and reports past due accounts with corresponding amounts. The City Administrator / Bookkeeper completes monthly bank reconciliations and the City uses a purchase order system for all purchases and maintains a cash disbursement system to track expenditures. The City provides water utility services to the local population for the following fees: Elder Residential = $40.00 per month Residential = $60.00 per month Commercial = $70.00 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.
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 Kasaan uses QuickBooks Pro to calculate, track, and report payroll liabilities. The City of Kasaan is current with tax reports and tax deposits. The City has not received any DOL or IRS letters within the past year.

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.
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 currently carries workers' compensation insurance through AML/JIA. The policy runs from 07/01/06 through 06/30/07. 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 the Post Office. Kasaan has an implemented personnel policy; however, since the City only has two paid employees, having a written hiring process, job descriptions, and a formal evaluation process has not been a high priority. There are personnel folders for both current municipal employees which contain recommended documentation including an I-9, job application, and other miscellaneous documents. The City does not use letters of acceptance for municipal positions. Despite not having a formal hiring procedure, the City has traditionally required a 90 day probationary period for new hires which includes work place orientation, job training, oversight, and performance evaluations. The City provides training opportunities as needed.

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 Council meets monthly, complies with open meeting requirements and is active in policy making for the utility. The City operates a small level T (treated) drinking water system. The City has one operator working on the sanitary systems who provides services to the utility as an independent contractor. The operator has a Small-T certification, which is appropriate given the classification of the facility. The utility operator Russell Zeman has the following certificates: Water Treatment OIT Exp. 12/31/08 Water Distribution OIT Exp. 12/31/08 Small-T (Water Treatment) Exp. 12/31/07 The utility has adopted an organizational chart which is included in their utility business plan. The City Administrator who also acts as the City Bookkeeper is a Certified Public Accountant (CPA) and runs his own bookkeeping business in the City of Klawock. He also successfully completed a financial UTM course in Kodiak on March 13, 2006.

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.
No 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".
Yes 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 operator has achieved the necessary certifications to operate the current sanitation facilities. The operator has a preventive maintenance plan for the sanitation facilities contained within the utility operations manual. The utility could not locate a safety manual and, as the operator is an independent contractor, he does not participate in any kind of administrative meetings including safety meetings. The utility operator consults with the City Administrator and Mayor on a regular basis and provides verbal status reports. The Mayor, 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 Community Confidence Report (CCR) in compliance with State and federal regulations. As of the latest Significant Non-Compliance (SNC) list, the City of Kasaan was not listed. However, on March 7, 2007 the Alaska Department of Environmental Conservation issued a Notice of Violation for the City of Kasaan. The Notice of Violation was issued 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 ' Exceedance of the Action Level for Lead. Additionally, on May 31, 2007 the Alaska Department of Environmental Conservation (ADEC) issued another Boil Water Notice because the system was temporarily by-passing its filtration. The type of filters that the system is currently using are no longer being manufactured and the utility has exhausted its supply of replacement filters. Alaska Native Tribal Health Consortium (ANTHC) and ADEC have been working on the filtration situation to correct the recent NOV and boil water notice. On June 11, 2007, ANTHC installed a new type of filter system to experiment with the practicality of using this type of filters with this particular water treatment system. The test of the new filters was unsuccessful and concluded after only one day of testing. Premature plugging of the new filters forced the end of the trial after producing less than 10,000 gallons. ANTHC is still working with industry representatives to come up with other feasible solutions. Apart from the water filters, 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.