Quarterly Report: 2012, January - March (Q3), Chefornak

Community:
Chefornak 
Staff:
Ken Berlin  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Chefornak 
Population:
475  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
5/1/2012 
Community Sanitation Overview:
Chefornak, a village of approximately 418 residents, is located on the south bank of the Kinia River, at its junction with the Keguk River, in the Yukon-Kuskokwim Delta. Chefornak is 94 air miles southwest of Bethel and 490 miles southwest of Anchorage. The city operates a small water treatment plant which pulls water from a local well. Water is provided to the community from 12 watering points for .25 cents per 7-10 gallons via token purchase. Residents also use rain water and melted ice for drinking and domestic use. The community's water treatment facility provides piped water to the local school, health clinic, fish processor, and project camps. The city also owns and manages the community landfill, lagoon, and electric company. The city owns and operates a garbage hauling service on Tuesdays and Thursdays for a fee of $10 a month. A sanitation service, hauling honey bucket waste, is provided on Mondays, Wednesdays, and Fridays for a $25 monthly fee. The city offers low income households a reduced monthly fee for hauling services. A tank flush and haul service for $25 and water fill for $10 is provided on an as needed basis to seven homes. Several of the homes which were provided flush and haul systems are using honey buckets as their systems are no longer working for various reasons. The operation of the utility and hauling services is subsidized by a 2% city sales tax, gaming, and Community Revenue Sharing. In March 2011, the new washeteria was completed offering the community four dryers at 75 cents per 10 minutes, three washers at $3-$5 per load, and 2 showers plus a bathroom available via token purchase.  
RUBA Status & Activities This Qtr:
An on-site RUBA assessment was conducted September 1-2, 2011. The draft assessment was forwarded to the city on October 7, 2011, providing a 10 day draft period for any necessary changes. The final assessment will be forwarded to the city and other interested organizations on October 24, 2011. Finance reports up to date to November 2011 with meeting minutes but do not include all revenues and expenditures listed in the FY 12 budget. February 22, 2012 Bernard Mael, City administrator, the City got into a contract with Principal Financial Group in 2009, to set up a retirement system for the City of Chefornak's employees. Since then the number of employees in the system has increased to the point that the City's bookkeeper is having trouble keeping up with the paperwork. So now Bernard is looking for a CPA firm to help the City with this account. He said they talked with Mikunda, Cottrell and Co. but said they were too expensive. I recommend the City put out an RFP and see if they get some bids. Also, He said he is working with Turnagain to set up the City's QuickBooks Pro so the employee's payroll deductions and the City's contributions will show up correctly in the reports. March 12, 2012 the following were requested from the City staff: 1. Financial reports that reflect FY 2012 budgets revenues and expenditures with monthly and year to date figures, including meeting minutes where the Council reviewed the finance reports. 2. A copy of most recent accounts receivables report. 3. A copy of purchase ordering system or procedures. 4. Fill out IRS release form and send back. City staff sent back the same reports sent in December 2011. 
RUBA Activities for the Coming Qtr:
RUBA staff will continue efforts to assist the community in meeting essential and sustainable indicator compliance.
Scores:
 
Essential Indicators:
22 of 26
Sustainable Indicators:
21 of 27
Total Score:
43 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.
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.
Yes Budget amendments are completed and adopted as necessary.
Finances Comments
The City of Chefornak adopted its FY2012 annual budget on June 30, 2011, an electronic copy is on file at the Bethel regional office for review. The city's budget reflects combined revenues and expenditures of its garbage and landfill enterprise with its water and sewer enterprise. Therefore, this assessment is based on the city's entire budget. Garbage and sanitation services are subsidized by Community Revenue Sharing (CRS), gaming, and collection of 2% sales tax. A review of the city's expenditures vs. revenues of its FY12 adopted budget reflects a surplus of $827.50. Although the city has made several improvements to its budget since FY11, further improvements are necessary. The annual budget will need to be revised for FY13 separating enterprises, allowing a clear financial picture of each service the city provides. Such revisions will allow the city to review and set rates for each service to ensure sustainability. The city manager provides council monthly financial reports outlining the month's beginning bank balance, expenditures (not all budgeted categories are reflected), total deposits, and an ending bank balance. The financials provided to council do not mirror the adopted budget's expenditure and revenue categories nor does it provide a comparison of year-to-date vs. budgeted and balance. Although the documents provide some financial information, it's not a clear enough picture for council or administration to review in order to pin point financial issues. Monthly financial documents for May - July 2011, were reviewed for this assessment. RUBA staff advised the city manager to implement a simple monthly financial format providing year-to-date revenues and expenditures compared to the annual budget and an ending balance. The city has implemented a similar format used for its water and sewer monthly financials but it does not reflect revenues. Additionally, the expenses are combined with other services provided by the city. Again, due to the merge of enterprises in the city's financial documents, the assessment is based on the city's entire budget. The city owns and operates the community's electric company, the Naterkaq Light Plant, and is current with all electric bills. The city purchases fuel on an as needed basis from Chefarnrmute Incorporated using budgeted general funds. Due to the current set-up of the city's budget, RUBA staff is unable to determine whether the utility is receiving revenues sufficient to cover operating expenses. However, a review of the city's entire budget indicates that revenues exceed expenditures. The city does not have a Repair and Replacement (R and R) costs account established for its utility. The city manager provides council a detailed written and verbal manager's report at each meeting. Pictures are taken the day of each meeting and provided to council via projector of current projects and problem areas within the community for review and discussion. The city's budget has not been amended for this fiscal year but has in previous fiscal years; the city manager and council are familiar with the process.

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.
No 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
Ordinance 09-01: Title II Village Water and Sewer Department, adopted on January 21, 2009, includes the city's collection policy. Utility bills are sent to customers on a monthly basis on or before the last week of each month. All bills not paid within 40 days are considered delinquent. The city provides an option for deferred payment agreements for customers demonstrating an economic hardship, a signed agreement and one-third of the outstanding bill is required up front. The remaining outstanding balance, in installments, is required to be paid within 12 months of the signed agreement. This policy is actively adhered to. The city uses QuickBooks Pro 2011 for its accounting and payroll. An aging report dated September 1, 2011, reflects several delinquent accounts exceeding 90 days overdue. This report however is not accurate as payments are not correctly posted to customer accounts. The city will need to post payments to specific customer invoices to reflect an accurate report of accounts. The city's accounts payable is accurate and invoices are paid as received. Manual cash receipt booklets (Quality Service) are used separated by services provided by the city. As mentioned previously, payment and receipts for utility bills need to be accurately posted to specific customer accounts. A written cash disbursement log is kept by month indicating the date of transaction, description, amount withdrawn or deposited and an ending balance; the September 2011 log was provided to RUBA staff for review. The city maintains a written and electronic chart of accounts for all budgeted revenue and expense categories. The city's accounting clerk completes monthly bank reconciliations; RUBA staff reviewed reconciliations for the month of July 2011 from Alaska USA Federal Credit Union. Ordinance 02-11: Adopting a Purchase Policy for all Accounting Departments, has been drafted but has not been approved by council as of October 1, 2011.

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.
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 uses QuickBooks Pro 2011 to accurately calculate, track and report payroll liabilities. IRS release form was not returned. The city is not listed on the January-February 2012 Lien Watch. March 2012, the Alaska Department of Labor indicates the city is current with its employment security tax payments and deposits.

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.
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
A September 22, 2011, phone conversation with Alaska Municipal League Joint Insurance Association (AMLJIA) indicated the city's workers compensation insurance policy is paid in full for coverage through July 1, 2012. Ordinance 09-02: Title II Chapter 2.8 Personnel Policy Requirements, adopted on January 21, 2009, outlines personnel policies for the City of Chefornak including topics such as merit system; classification and compensation; promotion; discrimination; nepotism; recruitment and hiring of personnel; work and pay schedules; evaluations; leave and holidays; resignation, layoff, and dismissal; and grievance procedures. Pursuant to the adopted personnel policy Chapter 2.84 Section 8, every original appointment and promotional appointment of a permanent employee is subject to a probation period of three months from date of appointment. RUBA staff reviewed detailed job descriptions for the water/pump house operator, water utility clerk, refuse hauler, sanitarian, and alternates for each position. Pursuant to Chapter 2.86 of the city's adopted personnel policy, all employees shall receive a written performance evaluation at the end of their probationary period and thereafter on their anniversary date. The city has a detailed personnel evaluation report and requires employees to also complete a self evaluation. The city manager conducts quarterly staff meetings to discuss current issues with employees. Chapter 2.84 of the city's personnel policy outlines the recruitment and hiring of personnel. Pursuant to policy, notice of permanent and temporary job openings of more than 2 weeks in duration shall be posted in at least three public places within the city. Notice shall include at a minimum the job title, rate of pay, duration of the job, and ending date of the recruitment period. Notice shall be posted for a minimum of three days. Review of three employee files indicated the city maintains personnel folders containing I-9's, job applications, and a letter of acceptance. The utility provides training opportunities to its staff on an as needed and available basis. City staff has successfully completed QuickBooks, Financial Management for Rural Utilities, and Small Water System and Distribution certifications.

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
Ordinance 98-01 adopted in 1998 established the Chefornak Public Water and Sewer Department whereby deeming the city as the owner and operator of the utility. Ordinance 09-01 adopted on January 21, 2009, amends the original ordinance deeming the city council as the utility's authority further setting rates and regulations. The city manager is more than adequately trained and has great knowledge of the city, its many concurrent projects, and infrastructure. In 2009, the city manager successfully completed 'Financial Management for Rural Utilities' conducted in Bethel sponsored by AVCP and RUBA. In 2010, the bookkeeper successfully completed 'Becoming a QuickBooks Power User-Level One' sponsored by RUBA and is adequately trained in the position. The bookkeeper could use additional training to assist in accurately posting utility bill payments in QuickBooks. Both water treatment operators are certified to the class of the city's utility system. It should be noted that both certificates expire in December of 2011. Council adopted the city's organizational chart at its regularly scheduled meeting on September 1, 2011, as previous adoption could not be verified. Pursuant to state statute, the city council meets the first Thursday of each month and conducts special meetings to address city business as needed. The city complies with the Open Meetings Act by posting for council meetings in advance allowing for public participation and prepares meeting minutes of council proceedings.

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.
No The utility maintains an inventory control list.
No The utility maintains a critical spare parts list.
Operation of Utility Comments
Both water treatment operators are certified to the class of the city's utility system. It should be noted that both certificates expire in December of 2011. Due to the system being 30 years old, there is no written and relevant maintenance plan; however, the operators are using checklists as a maintenance plan to maintain their system. Monthly operation and maintenance reports for the utility operator are being completed, and routine spot checks of the facilities are conducted by the city manager. Regular safety meetings are held, documented, and sent to RUBA staff for review. The last safety meeting proceedings reviewed by RUBA staff is dated August 29, 2011. The community was not on the July 2011 Significant Non-Complier (SNC) list. A copy of the community's 2010 CCR is on file at the Bethel regional office for review. The city was not able to provide RUBA staff with an inventory control list or a critical spare parts list.