Quarterly Report: 2010, October - December (Q2), Adak

Community:
Adak 
Staff:
Julie Dirks  
DCRA Regional Office:
 
Gov't Type:
Second Class City 
Borough:
 
Agreement?
No 
Agreement Date:
 
Entity:
City of Adak 
Population:
136  
Assessment Status:
 
Assessment Date:
 
Exp Date:
 
Last Updated:
2/22/2010 
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 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; electricity is provided by TDX Adak Generating, LLC. 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:
The City Administrator has provided a certified FY08 financial statement, FY08 budget vs. actual report, FY10 approved operating budget, aged accounts receiveable report as of August 13, 2008, 2008 Community Confidence Report, proof of workers compensation coverage, authorization to request tax information, and IRS 941 and ESC reports. The city clerk attended utility clerk training in Anchorage November 2-6, 2009. The city council has requested city council member training during January or February 2010. The city clerk has also requested assistance with setting up QuickBooks to track utility transactions and budgets. A QuickBooks course is planned in Anchorage in the Spring of 2010 and a seat will be reserved for Adak staff to attend. Information regarding the QuickBooks contractor hotline was also provided to Adak to avail themselves of technical support. 
RUBA Activities for the Coming Qtr:
In the 1st quarter 2010 staff will travel to Adak to provide city council member training and to assist the city clerk with QuickBooks set up for the FY 11 fiscal year. RUBA staff will continue to offer, and assist with deficient RUBA indicators or other local government and utility management issues if requested by the community. A new budget format will be developed by RUBA staff using existing budget information and offerred to the City for use.
Scores:
 
Essential Indicators:
18 of 27
Sustainable Indicators:
11 of 27
Total Score:
29 of 54

Finances

Essential Indicators
Answer Question
Yes 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.
Yes 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.
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.
No A monthly manager's report is prepared.
No Budget amendments are completed and adopted as necessary.
Finances Comments
Monthly financial reports have not been provided to the council recently. In the past, they consisted of a profit and loss report, with an accounts payable summary. Budgets for FY08, FY09, and FY10 were provided. In each year budgets are not balanced and expenditures are budgeted to exceed revenues. In FY08 expenditures exceeded revenue by a significant amount ($533,927). In FY09, actual revenue was $1,110,131 and expenditures equaled $859,086. The water and sewer utilities do not bring in sufficient revenue to cover expenses. For example in FY08 water revenues totaled $8,323.13 while expenses equaled $95,452. The FY10 utility budget for the sewer and garbage services that was adopted in June 2009 projects that total revenue will equal $43,200 while planned expenditures total $61,440. There does not appear to be another source of funds to cover the projected shortfall. No budget was provided for the water service. According to city staff, budget amendments are not adopted by the city council. The budget itself is not adhered to with expenses made for items not budgeted. Fuel is purchased from a local fuel vendor. A fuel loan was received and the city is current with fuel loan payments.

Accounting Systems

Essential Indicators
Answer Question
No The utility has adopted a collection policy and actively follows it.
No 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
No 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.
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 billing and collection policy, including provisions for disconnection of service for nonpayment. A substantial amount of customer debt overdue for greater than 90 days has been a problem and is largely responsible for the city's current overdue accounts payable balance. Management of the electric utility was taken over by TDX Power effective December 1, 2008. Now that the city no longer operates the electric utility, it is unclear whether the old electric utility debt will be collected; however, a resolution authorizing filing of small claims actions for accounts with past due amounts of $7,500 or less was adopted by the council in January, 2009. In addition, the City recently filed a law suit against the facility owner, The Aleut Corporation, to collect over $500,000 in past due utility charges for Adak Seafoods. An aged accounts receivable report dated August 21, 2009 indidates that of the $861,310 in accounts receivable, $766,925 is more than 90 days overdue. The FY10 budget is cumbersome to follow. The City uses QuickBooks software. QuickBooks could be set up to make it easier to read the budget, track utility revenue and expenses separately from the budget and generate and budget reports. The administrator reports that he has hired a Certified Public Accountant to work on getting the city accounting records straightened out. RUBA has offered QuickBooks training and support.

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.
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
The IRS responded to a request for federal tax information reporting that the City of Adak is compliant with federal tax reporting and deposit requirements. The Alaska Department of Labor reported that the City of Adak is current with ESC filing and deposit requirements.

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
Workers' compensation insurance is provided by AMLJIA and is valid through July 1, 2010. A copy of Chapter 5.01 Personnel Regulations is on file and city staff report that day to day personnel matters generally follow the policy, but it is not followed all the time. For example, performance evaluations are to be performed for each regular employee at least every 12 months, (5.01.50, (1)) however, staff reports that evaluations are not conducted. The policy gives no direction regarding the evaluation being tied to the job description, nor is there an evaluation form provided. Job descriptions and a hiring policy are not included in the personnel regulations; however, job descriptions are maintained electronically on the clerk's computer. There is a probation period for new hires, but the policy does not require an evaluation at the end of the probation period.

Organizational Management

Essential Indicators
Answer Question
Yes The entity that owns the utility is known; the entity that will operate the utility is set.
No 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.
No 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
Although the City of Adak is a relatively new second class city, it is well known as the owner and operator of the community's utility services. The city council is active and regular meetings are planned for the first and third Wednesday of each month. Workshop sessions are often held before meetings. Bookkeeping responsibilities have been contracted to an accountant located in Anchorage. The high balances of accounts more than 90 days is an indicator that the Council does not enforce utility policy. There are overdue accounts belonging to other customers besides the Aleut Corporation and Adak Fisheries.

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.
Yes The utility is operating at the level of service that was proposed.
No The operator provides status reports to the manager on a routine basis.
Yes 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
City staff reported that there are maintenance plans and check lists for different components of the water and sewer systems. These plans are kept at the water treatment building and were not available for review. Safety meetings are held occasionally and follow a written safety guide to focus on different safety issues. Attendance is documented with a sign-in sheet. There is one certified operator for Water Distribution and Water Treatment. This operator's certifications expired December 31, 2009. A second operator is in training but has not obtained operator certification. Operations and maintenance reports are reportedly not created and status reports from the operator generally occur only when there are issues that need attention. Lists for inventory and critical spare parts are not used, however, an attempt is made to have critical spare parts on hand. The City of Adak appears on the August 2009 SNC list for Surface Water Treatment Rule (STRW). A letter notified the city that a filtration system needed to be installed by September, 2008 and was previously sent to the city.