Quarterly Report: 2011, April - June (Q4), Klawock

Community:
Klawock 
Staff:
Glen Hamburg  
DCRA Regional Office:
 
Gov't Type:
First Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Klawock 
Population:
755  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
8/3/2011 
Community Sanitation Overview:
The City of Klawock is located on the west coast of Prince of Wales Island, 56 air miles west of Ketchikan. Water for the community is derived from a dam on Half Mile Creek and then treated, stored in a tank, and piped throughout Klawock. The city operates a Class 2 water treatment system, Class 1 water distribution system, a Class 1 wastewater collection system, and a Class 1 wastewater treatment system. System classifications are determined by the State of Alaska's Department of Environmental Conservation Division of Water based on the type of components found in a treatment plant and the number of connections served by water distribution and wastewater collection systems. Over 90% of homes in Klawock are fully plumbed. Most homes also have access to the piped sewage collection service. Additionally, the city provides a refuse collection service whereby garbage is hauled to a permitted landfill shared with the City of Craig and other island residents. Power for the community is provided by the Tlingit-Haida Regional Electric Authority (THREA), which purchases electricity from Alaska Power and Telephone over the Craig-Klawock intertie. THREA also owns four standby diesel generators in Klawock. 
RUBA Status & Activities This Qtr:
This quarter, RUBA staff continued to offer training opportunities to city staff and officials in Klawock, including personnel and financial management courses and one-on-one city clerk training to improve the city's utility management capacity. Klawock's city administrator registered this quarter for an upcoming Financial Management for Rural Utilities course in Ketchikan. RUBA staff also monitored the city's tax payments to ensure that penalties do not jeopardize utility finances. 
RUBA Activities for the Coming Qtr:
In the coming quarter, RUBA staff will continue to offer RUBA assistance as needed or requested in order to bring Klawock's sanitation services in line with all essential indicators. Specifically, RUBA staff will work with the city administrator to see that adequate monthly financial reports are submitted to the city council and that the city implements a formal safety meeting program with its utility operators. Training opportunities will continue to be offered to city staff and officials in the coming quarter as well.
Scores:
 
Essential Indicators:
23 of 26
Sustainable Indicators:
18 of 27
Total Score:
41 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
Yes 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 fiscal year for the City of Klawock is July 1 through June 30. The FY11 budget was adopted on July 6, 2010 and while a budget for the 2012 fiscal year has also been adopted, RUBA staff has not yet received copies of that paperwork to provide financial analysis. The FY11 budget, however, was separated into two main sections, the general fund section and a section for other fund budgets. The other fund budget section included grant programs, business-type activities, and utility enterprise funds. Utility enterprise funds including water, wastewater, and solid waste were accounted for independently and appropriately outline revenues and expenses for each utility service. All three utility budgets had revenue projections equal to expenditures after a general fund transfer is applied. The FY11 budget did not include a comparative statement of actual expenditures and revenues for the preceding fiscal year as recommended by RUBA and required by the Klawock Municipal Code. Though, after comparing prior year revenue and expense reports to current year projections, the budget appears to be justified and realistic. The city administrator delivers verbal financial reports at each regular council meeting. Revenue and expense reports and balance sheets can be prepared upon request, however written financial reports are not routinely provided automatically. The administrator chooses not to present these documents on a monthly basis due to the time necessary to prepare such reports. This problem stems from the way the chart of accounts is integrated into the accounting system. Budgets and financial reports do not follow the same format. Instead, the budget lists revenue and expenses that are unique to specific enterprise funds under the appropriate fund, while the financial report clusters similar revenues and expenses from all utilities into one overarching utilities and services fund. Even though all revenues and expenses are allocated under a certain enterprise fund, these document layout issues make creating a budget versus actual profit and loss statement difficult to create. The community offsets the cost of providing water, sewer, and garbage services by charging user fees. The unmetered single family water rate is $42.81 per month. The utility has several classes of commercial businesses and charges commercial water rates ranging from $39.50 to $528.96 per month, depending upon the type of business and the estimated water usage. A regressive per gallon rate is charged for metered customers. The metered rate is $30.22 for the first 8,000 gallons, .0038 per gallon up to 100,000 gallons, and .0025 per gallon for amounts over 100,000 gallons. Wastewater rates are $46.00 for a single family residence and range from $43.69 to $450.95 for commercial business. Metered water customers are charged wastewater rates that are based on the amount of water used. These utility rates were last adjusted in 2006. Utility user fee revenues accounts for approximately 92% of the water budget and 88% of the wastewater budget. Utility-related expenses exceed revenues; however, the governing body elects to subsidize the water, sewer, and solid waste services. The community liquor store provides a significant subsidy, a subsidy that is budgeted and completed through a funds transfer in the accounting system. This subsidy is stable and sufficient enough to cover operating expenses and repair and replacement costs. Financial reports completed to the end of June, 2011 showed that the water, wastewater, and refuse collection enterprises all had sufficient funds allocated for the fiscal year. While certain line items for materials, supplies, and fuel had exceeded the amounts initially budgeted, other line items are well under budget.

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.
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 has an adopted collection policy which is outlined in Title 10 of the Klawock Municipal Code. The city follows the collection policy and actively pursues delinquent utility accounts. The policy is somewhat flexible and contains two discretionary methods for collection of past due accounts. Any customer who is more than 60 days past due, at the discretion of the city, may either be turned over to collections or have their service disconnected. However, the community does not favor water service disconnection and will do so only as a last resort. The city uses Ketchikan Credit Bureau Inc. as its collections agency. In addition to the consequences found in the collections policy, the city may establish repayment plans and allow for Permanent Fund Dividend (PFD) assignments in order for customers to avoid collection actions. The utility bills customers each month. Bills typically go out on or around the 5th of each month. Yet, the administrator has acknowledged that bills are occasionally delayed due to the availability of staff to read water meters prior to the mailing deadline. The City is currently using Cougar Mountain accounting software. Cougar Mountain is designed for nonprofit and government entities for basic general ledger fund accounting. General ledger functionality includes an unlimited number of funds, departments, or grants, as well as inter-fund transfers and fund balancing. The software allows for multiple grants with varied year ends. A bank reconciliation function is included for reconciling bank statements with actual checks and deposits. The program consists of five integrated modules: general ledger, accounts receivable, accounts payable, inventory, and order entry. The city has also purchased Cougar Mountain's payroll and purchase orders modules separately. Each module provides standard reports such as income statements, balance sheets, cash requirement, and cash flow statements that provide sufficient financial information. But, these reports are not easily customized without an additional report generating software add-on. The general ledger contains internal controls such as permission settings and audit trails. The accounts payable module issues checks, manages vendor information, and interfaces with the purchase orders and general ledger modules to enable full encumbrance accounting. The accounts receivable module maintains customer account and payment information, documents customer payments, and reports past due accounts. The accounts payable module issues checks, manages vendor information, and prints 1099 and 1096 tax forms. The payroll module automatically posts payroll expenses to the general ledger and allows direct output printing for 941, W-2, and W-3 forms and meets payroll reporting requirements for Alaska. The program maintains payroll history for five quarters to allow processing of the current year's payroll before finishing W-2s for the prior year. Cougar Mountain continues to support the software with updates and provides annual IRS Circular E updates for current tax requirements at an extra cost. The City uses a purchase order system for all purchases and maintains a cash disbursement system to track expenditures. In this system, department heads complete the purchase orders which are then submitted for approval. Purchase orders are not always compared with remaining budgeted funds. This has caused a few occasions where purchases have exceeded budgeted amounts.

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 Internal Revenue Service's taxpayer Advocacy Office confirmed that Klawock is current in its federal tax reports and filings and the IRS has no liens against the city as of June 2011. The Alaska Department of Labor and Workforce Development confirmed on June 16 that all state tax payments are current as well.

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.
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
Current coverage for workers compensation insurance was verified through Alaska Public Entity Insurance Company (APEI). The policy is effective from July 1, 2011 until June 30, 2012. The policy covers work-related accidents and occupational diseases up to the Alaska statutory limits for each occurrence. Proof of policy coverage is posted in accordance with state statute in all public buildings. In addition to workers compensation insurance, the APEI municipality insurance program includes general liability, automobile, and property insurance, as well as coverage for public officials and law enforcement officers. The city has an adopted personnel policy handbook. Every employee is expected to follow these personnel policies, thought they are not required to submit a signed statement attesting that they have read and understand the handbook. The administrator admits to it being outdated and in need of review and some revising. The city has recently contracted with a consultant to review the employee handbook and bring the existing material in line with applicable state and federal laws. The city has job descriptions to aid in the staffing, wage and salary administration, and training for all positions. These job descriptions are up-to-date and clearly outline each employee's required duties. Personnel files are well organized and in most cases, contain all the necessary employment documents. The city does not use acceptance letters when offering employment. All files connected with an employee are considered strictly confidential and are stored in a locked filing cabinet in the city clerk's office. To limit access, the key to the filing cabinet is kept in the office safe. The city clerk has reported that access to the personnel records are limited to only the employee, to those who have a job-related 'need to know,' and to those who have been authorized by the employee to see the file. A probationary period for new employees lasts up to 90 days from the date of hire. During this probationary period, an employee may be terminated without advance notice and without cause. Upon satisfactory completion of the probationary period, the employee becomes a permanent employee. The probationary period also includes workplace orientation, job training, oversight, and performance evaluations.

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 Klawock owns and operates the water, wastewater, and solid waste utilities. The city council is the formal governing body and meeting minutes verify that it is actively engaged in making decisions on behalf of the utilities. The council meets the first Tuesday of each month and holds additional work sessions when necessary. Overall, the council supports and enforces established utility policies. However, once a particular policy is set, there is rarely an annual review to ensure that those policies are still relevant and are meeting the needs of the community. RUBA staff received information that it has been several years since the council has reviewed utility policies such as ordinances, personnel policy, and water rates. By city ordinance, the mayor is the chief administrative officer of the city; he has, however, delegated the majority of the administrative officer functions and authority to the city administrator. The city administrator, under the direction of the mayor and council performs administrative duties, supervises administrative staff and is responsible for managing daily operations. The administrator is in a multiple-responsibility position. In addition to his administrator duties, he serves as the city accountant, is responsible for the maintenance of the books, and is the citys utility manager. The administrator does share some of his utility management duties with the public works director. His duties include supervision of operational utility staff and the daily operations and maintenance of all sanitary facilities including water, sewage, garbage collection, and landfill services. The council has adopted all the ordinances necessary to own and operate utility services in Klawock. Title 10, Chapter 1 of the Klawock Municipal Code establishes the policies and procedures for the operation, regulation, and maintenance of the water and sewer facilities. The city has an organizational chart. This chart is fairly rudimentary and does not effectively show the direct relationship between supervisor and subordinate. It also does not accurately reflect the organizational structure of the city and fails to define either lines of authority or lines of communication.

Operation of Utility

Essential Indicators
Answer Question
Yes The utility operator(s) are actively working towards necessary certification.
No 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.
No The utility has completed and distributed its "Consumer Confidence Report".
No 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 city encourages professional development training and the utility operators are adequately trained given the classification of Klawock's sanitation facilities. There are three operators responsible for operating and maintaining these sanitary systems and possess the following certifications: Bennett Charles: Water Treatment Level 2 Exp. 12/31/2011 Water Distribution Level 1 Exp. 12/31/2011 Sampson Nickerson: Wastewater Treatment Level 2 Exp. 12/31/2012 Water Distribution 1 Exp. 12/31/2011 Wastewater Treatment Level 2 Exp. 12/31/2012 Wastewater Collection Level 1 Exp. 12/31/2013 Harry Jackson: Water Treatment Level 1 Exp. 12/31/2013 Water Distribution Level 1 Exp. 12/31/2013 Wastewater Treatment 1 Exp. 12/31/2012 Wastewater Collection 1 Exp. 12/31/2012 Utility staff have not been able to produce a preventative maintenance plan, though the administrator reports that daily preventative maintenance is performed nonetheless and that the sanitary facilities have not suffered any major problems or outages. The Klawock public water system is not listed on the most recent (January 2011) Environmental Protection Agency Significant Non-Compliance List. However, the last Consumer Confidence Report (CCR) providing drinking water quality information as required by the Safe Drinking Water Act was completed and distributed in 2006. The utility does not maintain an inventory control or critical spare parts list. The utility maintains a sufficient level of supplies and tools, but due to the community's island location and dependence on air and ferry service, the level of critical spare parts may be inadequate to prevent a service outage.