Quarterly Report: 2014, April - June (Q4), Klawock

Community:
Klawock 
Staff:
Lynn Kenealy  
DCRA Regional Office:
Juneau regional office 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Klawock 
Population:
786 2013 DCCED Certified Estimate 
Assessment Status:
Assessment Completed 
Assessment Date:
2/25/2014 
Exp Date:
 
Last Updated:
6/18/2014 
Community Sanitation Overview:
The City of Klawock is located on the west coast of Prince of Wales Island, 56 air miles west of Ketchikan. The city provides water, wastewater, landfill, garbage haul, EMS, police, and harbor/dock services to the community. Water for the community is derived from a dam on Half Mile Creek, treated, stored in a tank, and piped throughout the community. The City of Klawock operates and manages the the community’s Class 2 water treatment system, its Class 1 water distribution system, and the Class 1 wastewater treatment system. It provides sanitation services to approximately 330 hourseholds, the school, and the cannery, as well as raw water to the hatchery. The city also offers garbage haul and landfill services, and a harbor/dock. 
RUBA Status & Activities This Qtr:
RUBA staff visited the City of Klawock this quarter to assist in drafting a new water/wastewater utility ordinance. The ordinance the city currently has does not accurately reflect the successful collection policy being engaged. RUBA staff drafted the ordinance to reflect the current practices, and provided the draft to city staff and council for consideration. At the time of this writing, the ordinance has not yet been adopted, but is under consideration. RUBA staff also discussed financial management practices, procurement policies, and removing utility rates from code to be adopted by resolution. Additionally this quarter RUBA staff conducted a utility collection rate study. The city has progressively increased it's collection rates over the past five years. In FY10 the rate was 60 percent, in FY11 it was 92 percent, in FY12 it was 92 percent, in FY13 103 percent, and so far in FY14 it is 105 percent. Also this quarter, RUBA staff provided a reminder to utility staff to complete the 2013 CCR by July 1 and provided documents and links to assist; and addressed questions pertaining to city council member absences. 
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff will work with city staff to make any necessary revisions to the utility ordinance and encourage adopting the ordinance to ensure ordinances reflect actual successful collection practices. RUBA staff will also work with utility staff as requested to improve other RUBA indicators.
Scores:
 
Essential Indicators:
24 of 26
Sustainable Indicators:
23 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.
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.
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.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The Klawock City Council adopted an FY14 budget by non-code ordinance on June 18, 2013. The budget shows only FY14 budget numbers, though the council worked with FY13 actuals to establish those FY14 budget amounts. The budget is divided into departments, including a general fund, utility services, and the liquor store, and thoroughly lists revenues and expenditures. The budget is balanced and realistic, and amendments are adopted as needed. The council receives monthly financial reports, which include budgeted and actual numbers for each category, as well as a percentage used and percentage remaining line. As of December 31, 2013 (half-way through the city’s fiscal year) water/wastewater revenues equaled 47 percent of the budgeted amounts, water expenditures equaled 47 percent of the budgeted amounts, and wastewater expenditures equaled 33 percent of expected amounts. This shows the utility is moreorless on track with the budget thus far. Two expenditure line items are over-budget, though sufficient monies remain in other lines to diffuse these expenses via budget amendment. City staff did not provide updating financial reports to RUBA staff for the sake of the most recent quarterly report. Financial reports are provided to the council most, but not all months. The RUBA program encourages staff to ensure financial reports are provided every month to the council. A verbal report from the utility manager accompanies all financial reports. Residential customers are charged $117.58 per month if they are not metered. If customers are metered, the average cost per month comes out to $91.09. The utility is encouraging the metering of all customers by offering to sell meters to all customers and sign onto a payment plan. According to this payment plan, customers would continue paying at the $117.58 rate, with the remainder being saved every month going toward paying back the cost of the meter. It is estimated that meters should be paid off within one year (depending on each customer’s actual water use), and after this point, customers should see a reduction in rates. This is hoped to both encourage more conservative water use, and to allow utility staff to better monitor water loss and leaks. Labor for installing the meter is provided by the city free of cost. The cost of the meter is currently $300. There are several additional specific customer classes, each with their own rate structure. The only customer class currently being subsidized is elderly customers, which is subsidized by the General Fund. All other customer groups cover the cost of operating expenses through user fees. There is not currently any money being reserved for repair and replacement costs. The utility receives its electricity from Alaska Power and Telephone, and billing is allocated to the appropriate department and paid monthly by finance staff. Petro Marine provides fuel for the community and is delivered on a cyclical basis. Sufficient funds for fuel are allocated to each department, and as of December 31, 2013, the water department had expended 49 percent of its fuel allocation, and the wastewater department had expended 39 percent of its fuel allocation.

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
Klawock Municipal Code Section 10.01.240 provides that any customer over 60 days past due be turned over for collection or disconnected, and an 8 percent interest rate charged. This collection policy is not currently being followed. However, an unwritten policy is being enforced with a positive outcome thus far -- 105 percent collection rate for FY14 as of May. City staff hopes to amend municipal code to reflect the current enforcement procedures. Amending ordinances have been drafted and proposed to the city council. The current process involves billing customers on the first of every month, then placing door hangers on the homes of residents who have not paid within the time allowed in the bill. Delinquent customers either pay the amount owed in full or come to the city office and sign a pay-back agreement plan, which includes making each monthly payment plus an amount toward the past-due amount. The specific amounts involved in this pay-back agreement are arranged between the customer and the city administrator, and are specified in writing. There are some delinquent accounts which are likely to be considered “bad debt” and will require council write-offs. As of February 2014, 31 customers have customer pay-back plans. In the month of February, 8 customers received shut-off notice door hangers. By the end of the day, most of these customers had come into the office to either pay or agree upon a payment date or arrangement. This rate is an improvement from 36 shut-off notices monthly one year ago. The current city administrator, who serves as the utility manager, has extensive experience in financial management and is working to fully reconcile past years’ accounts. Previous practices did not meet RUBA standards nor generally accepted accounting practices, though accounting practices in the past few years have drastically improved and meet or even exceed RUBA indicator standards at this time. The City of Klawock utilizes the Cougar Mountain accounting system, with some accounting elements being maintained in writing, such as the check ledger. Appropriate segregation of duties is instituted among city finance staff, and staff only have access to sections of the Cougar Mountain account which are appropriate and necessary for their positions and duties. A chart of accounts is maintained including a fund account code followed by the category, each classified as either asset, equity, liability, etc. Reconciliations are completed monthly by the city administrator, though reconciliations are a bit behind at this time, as bringing reconciliations for previous years up-to-date is taking priority. The city’s accounts receivable clerk sends out bills then accepts payment via hand-delivery, mail, or credit card. A dual-verification system is in place for acceptance of all cash, with receipts being made in triplicate, the incoming amount being applied to the appropriate account. All cash is maintained in the safe and verified by two employees and attached receipts. The city administrator takes all cash to the bank on a regular basis. The city’s accounts payable clerk follows a similar approval process to the purchase order system. A purchase order form is signed by the appropriate department supervisor and city administrator. The city administrator then provides a purchase request to the accounts payable clerk, who codes the expense to the appropriate department and provides payment. The purchase request form is in triplicate: pink remains in the purchase request book, yellow goes to the accounts payable clerk, and white goes to the appropriate vendor. There is no cash disbursement. Payroll begins with each employee’s timecard, which is signed by the supervisor. The payroll clerk processes the time cards, and then the city administrator verifies each one. The clerk then processes all appropriate withholdings and produces a check for each employee.

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’s Cougar Mountain software helps to track payroll liabilities, and the payroll clerk processes all payments and reports. The State of Alaska Department of Labor and Workforce Development reported the city compliant with employment security tax requirements on May 30, 2014. The IRS reported the city compliant on all federal tax requirements on June 2, 2014.

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
The city receives workers’ compensation insurance coverage from Alaska Public Entity Insurance, with proof of coverage posted in the city office. The city’s employee handbook is provided to all new employees, and includes an orientation checklist signed by both the employee and the supervisor and an employee acknowledgement form. The handbook is comprehensive, though some items may be in need of updating. There are also job descriptions for all employees; some of these may also be in need of updates. There is no written hiring process at present. The employee handbook discusses some elements of the hiring process, such as reference checks and application, but is not comprehensive. There is an introductory period of 90 days, subject to change depending on performance, followed by a performance evaluation, then an annual performance evaluation thereafter. However, the performance evaluation portion is not currently being practiced, and the city has asked for assistance with improving this indicator. All employees have personnel files including a hire sheet, wage sheet, I-9, and W4. They will also include personnel evaluations once an evaluation process is instituted. The city encourages training through the RUBA program and other options as available. The city clerk has attended the RUBA clerk’s course, the administrator has attended financial and planning courses, and the public works director has attended the personnel course and is registered to attend an upcoming operations management course. Staff and management also attend other trainings, such as the Sanitation Deficiency System (SDS) conference, and other trainings provided throughout the state.

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 Klawock owns and operates the community’s water and wastewater utilities. Though this entity is known and set and discussed in Klawock Municipal Code Title 10, the current municipal ordinance pertaining to the water utility is in need of updates and additions at this time, and the city administrator wishes to take this project on in the coming months. The city council is the decision-making body for the city’s sanitation utilities, meets the first Tuesday of every month, and complies with the Open Meetings Act. The utility’s organizational chart is included within the city’s organizational chart, and clearly delineates lines of authority and responsibility. See Personnel Management for details of utility management training.

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.
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.
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.
Yes The utility maintains an inventory control list.
Yes The utility maintains a critical spare parts list.
Operation of Utility Comments
The utility has three operators who share various water and wastewater roles and tasks, under the supervision of a public works director. Klawock’s water treatment system is considered a Class 2 system; its primary operator is certified at the Class 1 level, while one backup operator holds Class 1 certification and another is provisionally certified. The distribution system is rated Class 1, and both the primary and backup operators are are appropriately certified. An additional backup operator is provisionally certified in water distribution. The wastewater treatment system is Class 1; the primary operator holds Class 1 certification, and the backup operator provisional certification. An additional backup operator holds no wastewater treatment certification. The wastewater collection system is rated Class 1 with the primary operator fully certified, the backup operator provisionally certified, and an additional backup uncertified. The utility displayed a preventative maintenance plan, inventory control list, critical spare parts list, and safety manual and log of safety meetings. All of these documents are maintained in the treatment plants, and the public works director conducts site visits at least daily, often more frequently. Concerns and issues are immediately reported to the city administrator and passed on to the city council if necessary. The preventative maintenance plan includes a comprehensive list of tasks to be undertaken daily, weekly, monthly, etc. Safety meetings occur weekly, usually on Mondays, and discuss various safety matters. The most recent safety meeting, for instance, discussed earthquake management. The water and wastewater systems have both been neglected in the past, but the systems are now in a schedule for maintenance and care, including ongoing works to repair and replace issues created by previous mismanagement, with the assistance of ANTHC. The system is not on the EPA’s Significant Non-Complier (SNC) list any longer, and has been offering the level of service proposed for at least a few years. The only recurrence on the SNC list has been a result of storm-related incidents, and have been only temporary. Consumer confidence reports are distributed to the community every July.