Quarterly Report: 2006, 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:
167  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
7/26/2006 
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:
RUBA received an IRS report in April that indicates there are unpaid tax deposits for two quarters of 2005. In verifying this information with the IRS, it was also learned that reports for two quarters have also not been received. In addition, as of May 8th, DCCED has not received a budget for the current fiscal year (FY-06). RUBA assistance was offered in a phone contact with the city's manager and also with the city's consultant located in Anchorage. Contact information for the IRS was requested and provided by RUBA, but there have been no other requests from the community. The status of most management indicators is unclear, however the community does not currently meet all essential indicators.  
RUBA Activities for the Coming Qtr:
RUBA activities for the coming quarter: Contact the community to offer assistance with local government issues, and provide support for improving utility management if requested.
Scores:
 
Essential Indicators:
15 of 27
Sustainable Indicators:
18 of 27
Total Score:
33 of 54

Finances

Essential Indicators
Answer Question
No All revenues and expenses for the utility are listed in the utility budget.
No The utility has adopted a balanced realistic budget.
No Monthly financial reports are prepared and submitted to the policy making board.
No 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.
No 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.
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
A balanced and realistic FY05 budget was passed on June 16, 2004 and the fiscal year started on July 1, 2004. The water, sewer, and garbage budgets were part of the overall City of Adak budget. All revenue and expenses for water, wastewater, and garbage services were listed in the utility section of the budget. Monthly financial reports were prepared and submitted to the policy making body. The utility received revenues sufficient to cover operating expenses; however, user fees did not completely cover operating costs causing the City of Adak to subsidize water and wastewater utility services with other sources of funding. A budget for FY-06 is believed to have been adopted, however RUBA has not recieved it, or copies of financial reports, making assessment of their current financial situation very difficult. It is unknown whether a budget for FY-07 has been adopted. A monthly manager's report is not prepared. The bookkeeper and city manager report making budget amendments as needed.

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 collection policy, however, the City has installed and is currently using the Powerstat utility billing and collection system for electricity. This system requires residents to prepay for services rendered, however, large volume customers are not utilizing the Powerstat system. There reportedly is a large amount of past due utility billings owed to the city, mostly from one large, commercial customer. An accounts receivable system is implemented which documents customer payments and reports past due accounts with corresponding amounts. The City is currently using the QuickBooks accounting software for their accounts receivable, accounts payable, and payroll. The City uses a manual written receipt system to record incoming funds, which is later entered into QuickBooks. The City also uses QuickBooks for their cash disbursement system to record the spending of funds. The City has created a chart of accounts that identifies categories in a reasonable and useable manner. The bookkeeper reportedly completes monthly bank reconciliations, however, the most recent documentation of this dates from March, 2005. The City has implemented a purchase order system by ordinance that requires approval prior to purchase.

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.
No 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 Adak uses QuickBooks to calculate, track, and report payroll liabilities. An IRS reply to a request for tax information dated May 2, 2006 indicates that the City of Adak owes federal tax for at least two quarters, and forms 941 from two other quarters had yet to be received.

Personnel System

Essential Indicators
Answer Question
No 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.
Yes The utility has adopted and follows a written personnel evaluation process that ties the job description to the evaluation.
Yes 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 of Adak had a posted workers compensation insurance policy in effect for the last fiscal year, however it is unknown whether coverage currently is in place. Alaska Public Entity Insurance was the insurance provider. The City of Adak has adopted and uses a personnel policy, which is recorded in the Adak Municipal Code. The City does not have adequate job descriptions for all municipal positions. For municipal positions with written job descriptions, the City does have a formal evaluation process that ties job description to evaluation. A satisfactory hiring process is documented in the City's codebook. There are personnel folders for every municipal employee that contain at least an I-9 and job application. The City has implemented a probationary period for new hires that includes orientation, job training, oversight, and 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.
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
The City of Adak owns and operates the water and wastewater system. The city council is the policy making body for the utility and is active in developing, adopting, and implementing utility policy, including billing and collections, however in recent months there reportedly have been instances where collections policy has not been enforced, and has resulted in a large outstanding accounts receivable balance. The City has adopted the necessary ordinances required to give it the authority to operate. The city council meets as required (twice a month) and complies with the Open Meetings Act for all meetings. On a daily basis, water and wastewater utility duties are generally split between two adequately trained operators. The first operator is certified at the following levels: Water Treatment Level 1, Water Distribution OIT, Wastewater Collection OIT, and Wastewater Treatment OIT. The second operator is certified at the following levels: Water Treatment OIT and Water Distribution OIT. There is also a third operator that fills in when necessary that is certified as a Water Treatment and Water Distribution OIT. The city manager also serves as a utility manager, but is generally unneeded in daily operations considering operator experience, training, and autonomy. The utility bookkeeper is adequately trained with an associates degree in accounting and prior bookkeeping experience. The City does not have a written organizational chart that reflects the current municipal structure; however, the City does maintain a current city employee list that also includes vacated positions.

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.
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 water utility operators have achieved the necessary certification to operate the utility and are actively considering further training. The city manager is also pursuing further utility management training. The water utility operators report a preventative maintenance plan is included in the water utility Operation and Maintenance Manual. Furthermore, the city manager reports a new user-friendly preventative maintenance plan is currently being drafted. The water utility manager does not necessarily receive monthly operation and maintenance reports from the operators, but does review a journal that operators use to record relevant daily operation and maintenance issues. The water utility manager does not spot check facilities to verify maintenance items are being completed; however, this task is likely unnecessary due to the extensive daily involvement of both water operators. Furthermore, both utility operators communicate regularly with the utility manager. A water operator reports the utility has a safety manual and conducts safety meetings. Utility facilities have not suffered any major problems or outages due to unresolved management issues. The water utility is not operating at the proposed level of service because it was originally designed for a much larger capacity. Specifically, the water utility was designed for a large military base, but now only serves a community of approximately 100 residents. Utility operators provide status reports to the utility manager on a routine basis via a written communication log and regular verbal communication. The water utility completes and distributes its Community Confidence Report (CCR). The utility is not currently on the Significant Non-Compliance List. The utility does not maintain an inventory control list or a critical spare parts list.