Quarterly Report: 2008, April - June (Q4), Adak

Community:
Adak 
Staff:
John Nickels  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Adak 
Population:
136  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
7/31/2008 
Community Sanitation Overview:
The City of Adak operates and manages a piped water and sewer system. The city council is the policy making body for the utility. Surface water is derived from Lake Bonnie Rose, which is located approximately three miles southwest of the core townsite. The water utility is operated as a Class A public water system and operates under filtration avoidance (Public Water System Identification Number 260595); therefore, the only treatment provided is chlorination with required detention for disinfection. Water is treated, stored in two 450,000-gallon tanks, and piped to facilities and housing units. If needed, two 500,000-gallon storage tanks provide additional water storage. The wastewater treatment system discharges through a marine outfall line to Kuluk Bay. One-hundred percent of homes have complete plumbing. The City collects and deposits refuse at a municipal landfill, Roberts Landfill, which is a permitted Class Three landfill with balefill. The City also provides electricity, road maintenance, airport maintenance, and a small boat harbor facility. Bulk fuel is provided by the Aleut Corporation, which maintains nine underground tanks with a total capacity of approximately 18,000,000 gallons of marine diesel, gasoline, and jet fuel. Cable television is provided by Adak Eagle Enterprises. A feasibility study to provide guidance for water and wastewater utility downsizing, upgrading, and future utility project planning for the City of Adak is underway under the auspices of Alaska Department of Environmental Conservation, Village Safe Water. The study is being conducted by the Bristol Environmental and Engineering Services Corporation located in Anchorage. Although the water treatment plant is operating and provides adequate potable water, the City of Adak is attempting to address numerous water and wastewater utility concerns including aging infrastructure, chronic leakage, and maintaining a water/wastewater utility designed for much larger capacity than is actually needed. 
RUBA Status & Activities This Qtr:
The City of Adak currently does not meet RUBA essential management indicators in the areas of financial reporting and utility collections. These are the final unmet essential indicators that remain from an assessment conducted in 2006. Last quarter, these indicators were discussed with city staff and the Adak Compliance Committee. To meet the indicators, the following actions are to be taken: 1.) Create and present to the city council each month a budget vs. actual report that compares budgeted expense and revenue line items with actual year-to-date expense and revenue figures. This report can be created using QuickBooks if the budget is entered into the program, or a similar report can be created using the Excel program with expense and revenue data exported from the QB program. 2.) Follow the existing collections policy with regards to overdue customer debt by requiring either payment in full, payment over time as part of a signed payment agreement, or discontinue service to those customers with delinquent accounts. This quarter, the city clerk contacted RUBA April 30 by email to request information on documentation for essential indicators. In a response dated May 1, 2008, RUBA staff explained in detail the unmet indicators and how to document the actions described above, particularly the collections issue. The clerk's initial message indicated corrections had been made to the accounting system that would allow a budget vs. actual financial report, but RUBA has not received one. There has been no response or further contact with the community.  
RUBA Activities for the Coming Qtr:
RUBA staff will continue to offer, and assist with deficient RUBA indicators or other local government and utility management issues if requested by the community.
Scores:
 
Essential Indicators:
22 of 27
Sustainable Indicators:
15 of 27
Total Score:
37 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.
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.
No 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.
Yes A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
During a trip to the community in July 2007, RUBA staff assisted the administrator in creating an FY08 budget that was realistic and balanced. The budget was adopted by the city council September 26, 2007. It is unknown whether a budget for FY09 has been drafted or adopted. Monthly financial reports have not been provided to the council recently; in the past, they consisted of a profit/ loss report, with an accounts payable summary. The city clerk reportedly has entered the current budget into QuickBooks, so the software can produce a budget vs. actual report; however, RUBA has not received a copy. Budget vs. actual financial reports would be more meaningful for council members to understand whether revenues and expenses are above, equal to, or below those budgeted. According to city staff, budget amendments are not adopted by the city council. A monthly manager's report is not written, but management issues are presented verbally at council meetings, and recorded in the meeting minutes.

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 City of Adak has adopted a billing and collection policy, including provisions for disconnection of service for nonpayment. A substantial amount of customer debt overdue for greater than 90 days has been a problem, however, in recent months that amount has been reduced through negotiation with a large commercial customer. Some residential customers are billed through the Power Stat meter system that requires payment in advance for electric service. Electric service is discontinued automatically by an electronic meter when prepaid credit is exhausted. Water, sewer, and landfill charges are also programmed into the system, effectively requiring prepayment for all residential utility services, and ensuring a high collection rate. There are a number of commercial and industrial users, however, that are not using the Power Stat system, and that have large outstanding, greater than 90 day-old utility debt. Many of these accounts have stayed the same or increased since July, 2007, indicating that the collection policy is not being followed.

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 IRS has verified that the City is current with tax reports and deposits. Alaska Dept. of Labor indicates the City of Adak is current with state reporting and filing requirements.

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.
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.
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
A Notice of Workers' Compensation Insurance has been provided from Alaska Public Entity Insurance that is valid for the period July 13, 2007 to July 1, 2008. A copy of Chapter 5.01 Personnel Regulations was provided, and city staff report that day to day personnel matters generally follow the policy, but it is not followed all the time. For example, performance evaluations are to be performed for each regular employee at least every 12 months, (5.01.50, #1.) however, staff indicates that evaluations are not conducted. The policy gives no direction regarding the evaluation being tied to the job description, nor is there an evaluation form provided. Job descriptions and a hiring policy are not included in the personnel regulations; however, job descriptions are maintained electronically on the Clerk's computer. There is a probation period for new hires, but the policy does not require an evaluation at the end of the probation period.

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.
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
Although the City of Adak is a relatively new second-class city, it is well known as the owner and operator of the community's utility services. The city council is active and regular meetings are planned for the first and third Wednesday of each month. Workshop sessions are often held before meetings. They are not active in seeking enforcement of the collection policy. There has been a lack of enforcement of utility policy in the area of collections as evidenced by a large amount of outstanding customer debt greater than 90 days old. Those customers with past due amounts greater than 90 days that have left the community reportedly were turned over to a collections agency. RUBA staff was provided with a copy of an organizational chart; however, city staff indicated that the chart had not been adopted by the council.

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.
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.
No 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
City staff reported that there are maintenance plans and check lists for different components of the water and sewer systems. These plans are kept at the water treatment building and were not available for review. Safety meetings are held occasionally and follow a written safety guide to focus on different safety issues. Attendance is documented with a sign-in sheet. There is one certified operator for Water Distribution and Water Treatment. This operator's certifications expire 12/31/09. The manager indicated that operations and maintenance reports are not created, and that status reports from the operator generally occur only when there are issues that need his attention. Lists for inventory and critical spare parts are not used, however, an attempt is made to have critical spare parts on hand.