Quarterly Report: 2012, October - December (Q2), Nikolai

Michele Aranguiz  
DCRA Regional Office:
Gov't Type:
Second Class City 
Agreement Date:
City of Nikolai 
Assessment Status:
Assessment Date:
Exp Date:
Last Updated:
Community Sanitation Overview:
All 47 households and facilities use individual wells; of these, only two units lack plumbing. Thirty-three homes, including ten new HUD housing units north of the airport, are connected to the piped wastewater system. The remaining 15 homes use septic tanks. Funds have been requested for a master plan to rehabilitate the washeteria, develop two new wells, upgrade the landfill and expand the piped wastewater system. 
RUBA Status & Activities This Qtr:
On October 31, RUBA staff traveled to Nikolai at the city's request to help the city clerk resolve IRS reporting discrepancies and to support the electoral process during the city's regular municipal election held on November 1. Notices received from the IRS regarding quarterly payroll taxes could impact the status of Nikolai's RUBA essential indicators. The city has been paying the taxes at the level it understood to be correct. RUBA staff contacted the RUBA QuickBooks consultants to request assistance with Nikolai's IRS payroll tax issues. The QuickBooks consultants were able to access Nikolai's QuickBooks program remotely, and discovered that there were problems with the way payroll taxes had been set up in the program, as well as multiple versions of the QB program being used. Corrections were made and it was confirmed that Nikolai did owe payroll taxes. The city signed an authorization so that the consultants could contact the IRS directly. While in Nikolai, RUBA staff also assisted the city conduct the municipal election. The Nikolai city council also serves as the utility board. Two city council seats were up for election, but as voting progressed, it was revealed that one of the candidates on the ballot was not registered as a Nikolai voter. City ordinance requires that candidates be registered in Nikolai. The sole candidate for the second seat was listed on the ballot using a new last name (she was recently married), but this seat was lost to a candidate who garnered a substantial write-in vote. The community was very interested in the electoral process, and while the above mishaps created some confusion, they also generated a strong interest in city ordinances, with many local residents consulting the ordinance book for the first time. The first council seat (in which the lone candidate was disqualified because of registration/residency status) accumulated a wide range of candidates as write-ins; none received 40% of the vote required to sweep the election. The process of a run-off election for the two highest vote-getters was explained in depth and the steps written out for the city clerk. The following morning RUBA staff worked with the office manager to understand the steps necessary to certify the election results, so that he is prepared to explain the process to the council when they meet. The city clerk contacted RUBA staff this quarter unable to locate even a single copy of Nikolai's original code of ordinances. RUBA staff had a copy of the ordinances, including both the 1973 originals and various amendments which had never been codified. The code (originally typed), was scanned, formatted, repaired, and codified. The ordinances required basic re-formatting, in addition to consistency issues. RUBA staff sent eight working copies of the draft revision of the city code with instructions for the city clerk and council members on the review process, and codifying any additional amended ordinances that were passed after 1973, which might not have been available to Anchorage RUBA staff. Finally, the community has substantial concerns about erosion on the river. LGS staff provided information to assist with writing a grant for a feasibility and engineering study. This impacts projects related to building additional utility infrastructure.  
RUBA Activities for the Coming Qtr:
RUBA staff will update the full RUBA assessment in the upcoming quarter. We are also planning to work with the Mayor and city council to adopt a current and complete personnel policy. An onsite visit is being scheduled. RUBA staff will continue to work with the City of Nikolai as needed to ensure the council has all the necessary assistance to meet any deficient management indicators. QuickBooks consultants will continue to provide QuickBooks assistance as requested.
Essential Indicators:
25 of 27
Sustainable Indicators:
15 of 27
Total Score:
40 of 54


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.
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.
No Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Nikolai drafted and adopted the FY12 budget with RUBA assistance. The budget includes expenditures for the wastewater department. The City of Nikolai owns and operates the electric utility. The City of Nikolai receives fuel from Everts, Inc. on an as needed basis. All fuel orders are paid in full upon arrival. The City of Nikolai does not charge residents for wastewater service because only a small portion of the community is on the system. The city has instead chosen to subsidize the wastewater utility through the fuel and electric sales revenue. Although the council does not receive a monthly financial report that compares actual income and expenditures to the budgeted amounts, the office provides this information with separate reports that, when compared, show the utility's year-to-date figures are at a level equal to those budgeted. Manager/operator reports are given verbally when requested by the council. Because of the small labor pool in Nikolai, many city council members either work for the city or donate time to the city to complete needed jobs or tasks.

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.
No Monthly bank reconciliations have been completed for all utility accounts.
No 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 does not have an adopted collection policy for the sewer utility because they do not charge the customers. They do, however, have an adopted collection policy that they actively and consistently enforce for the electric and fuel utilities; these utilities subsidize the sewer utility. The city utilizes QuickBooks for accounts receivable, accounts payable and payroll. The QuickBooks system is set up properly and has been a tool to reliably keep the city's finances in order. Bills are issued on a regular basis by the 5th of every month in accordance with the city's billing and collection policy. The city purchasing system requires prior approval from the mayor or city clerk depending on the purchase amount. Once approval has been given, a purchase order is issued; however, requests are not compared to the budgeted amounts.

Tax Problems

Essential Indicators
Answer Question
Yes The utility has a system to accurately calculate, track, and report payroll tax liabilities.
No The utility is current on filing tax reports.
No 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
Authorization for Federal Tax information has not yet been received. The city uses the QuickBooks accounting program to accurately track, calculate and report payroll tax liabilities. Liabilities are paid monthly.

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.
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
The City of Nikolai has a posted workers' compensation insurance policy in effect from July 1, 2011 to July 1, 2012 with Alaska Municipal League Joint Insurance Association (AMLJIA). The city's current hiring process is not written. Job notices are posted for ten days with the job title and description. Interested applicants apply at the city office. There is currently no probationary period for employees. Personnel folders contain: I-9, Job Application and Letter of Acceptance. Training opportunities to staff are provided as funds allow or opportunities by other sponsors come 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.
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
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 City of Nikolai is known as the entity that owns and operates the utility, and is active in policy making for the utility. The city council has been actively enforcing the fuel and electric utility policy. The city clerk has attended a QuickBooks training class sponsored by the RUBA program. Utility operators have completed trainings that have adequately prepared them to operate the utilities. The City of Nikolai has adopted the necessary ordinance to give it the authority to operate. The Nikolai City Council meets as required and complies with the Open Meeting Act for all meetings.

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".
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 utility operator is not certified and is actively working toward the necessary certification. A preventative maintenance plan for the existing system is on file in the city office. The City of Nikolai does not participate in AMLJIA monthly safety meetings or conduct other means of safety meetings. The utility operator reports to the mayor, vice-mayor or city clerk when there is a problem or when he can foresee one. The utility operator and council attempt to keep needed critical spare parts on hand but they currently have no written critical spare parts list.