Wednesday, March 12, 2014

Analysis of Templeton selectmen's shortfall explanation

Analysis of Templeton selectmen's shortfall explanation

To The Editor: 3/12/2014
Bernard J. Heaney
Templeton

To The Editor:

This letter is written at the request of the Templeton Select Board chairman asking that I correct information I provided in a previous letter explaining my “misunderstanding” or “misrepresentation.” On Jan. 27, the chairman presented a second explanation for the town’s fiscal 2014 budget shortfall describing the shortfall as $505,477; not the $1,005,000, as suggested by me in my previous Jan. 22 letter. The chairman requested that I submit this second letter.

I would like to state for the record, that there was no “misunderstanding” or “misrepresentation” on my part and that, based on the chairman’s recorded words during the Select Board meeting of Jan. 6, that every word in my first letter was true.


The chairman had said, “The local receipts were actually erred on the plus side. If that wouldn’t have been so, it was underestimated, if it would have been the other way, the deficit would have been bigger. … That was a $500,000 something plus.”

As a past supervisor of budgets and cost control for a budget much greater than the town’s, if someone came to me and told me that a revenue account had “erred on the plus side,” I would have understood this to mean that revenues were estimated (in error) too high or in the “plus” direction.

And when the chairman says, “That is a $500,000 … plus” then, I can only believe that our Local Receipts Account in the original budget forecast was estimated $500,000 too high.

The chairman also commented that if that wouldn’t have been so, the deficit would have been bigger. And this is true.

In other words, if a revenue account were to be smaller the result would be a bigger shortfall. From this, the only conclusion would be that the shortfall would increase by $500,000, as I wrote in my first letter to the editor.

However — based on the chairman’s more clear and complete second explanation on Jan 27 — this Local Receipts Account was reported as $1,680,351 and he said it should have been $2,264,220. Therefore, the projection was erroneously reported $583,869 too low.  i.e. it was erred on the low side. (Even though the chairman again used the phrase “error on the plus side.”)

During my recent meeting with the chairman he said, “Maybe I should have explained it better.” But, putting aside whether the chairman described the accounting error correctly or not, the more important issue here is why are there so many questions still remaining regarding the fiscal 2014 budget?

For one and a half months I’ve been asking why local receipts increased 1,012,334 (81 percent) over fiscal 2011. (Fiscal 2011 because fiscal 2012 and fiscal 2013 figures are not available, since fiscal 2013’s report is still not complete and fiscal 2012 was never published in the annual report).

I’ve asked why the Retirement Account increased $222,216 (60 percent) and why long-term debt suddenly increased $582,504 (72 percent).

The Select Board chairman was good enough to sit down with me for two hours but, for most of my answers, I was referred to the treasurer.

Little did I know, the treasurer would be “dismissed” two days before my appointment with him. I spoke with the accountant for a couple of minutes but, he was much too busy.

So, I went out on my own and learned why the Retirement Account increased 60 percent and it was a very simple reason.

The enterprise funds’ (wastewater, electric, and water entities) employee retirement obligations are now being reported with the town’s. Remembering that the Retirement account went up $222,216 in fiscal 2014, the Waste Water Treatment Plant’s $45,658, the Electric Plant’s $125,424, and the Water Company’s $51,134 retirement expenses equal $222,216.

These figures were not reported this way before because they are “wash” figures — i.e. they are expenses paid by the enterprise funds, that are just passed through the town’s financial system for payment. They are not revenues for the town and are not expenses of the town. However, they are now shown as a part of the town’s Retirement Expense.

I am therefore assuming that all the other “wash” figures are being treated in the same way, such as enterprise funds’ property, casualty and liability insurance, worker’s comp, health and dental, unemployment, Medicare, etc.

This might help explain part of the large long-term debt and local receipts increases.

Also, the Public Employee Retirement Administration Commission explained that this retirement cost increased $88,181 (17.4 percent) this year and will be going up another $86,874 (14.6 percent) for fiscal 2015.

In conclusion, the first step in solving any problem is to understand it.

We have been given a Recap Sheet with numbers that calculate a $ 505,477 shortfall. But, we do not understand the parts that make up this $505,477. We still do not know the why.

Is the shortfall due to inflation, increased debt, a poor economy leading to increased bad debt, past free cash spending, a shrinking tax base in town, accounting errors or all the above?

Without knowing the answers to these questions, we are left to make assumptions and with a missing accountant’s report for fiscal 2012, an unfinished fiscal 2013 accountant’s report, changes in accounting method, and a dismissed treasurer. It is nearly impossible for an outsider — like myself — to understand why we have this shortfall and, as before, I remain hopeful that someday we may know the why.

The Select Board chairman should understand that my previous letter was hand-carried directly to the assistant managing editor at The Gardner News. A partial transcript copy of the meeting was given to him and he was told where he could find the original public record for this meeting on the website. I know the transcription to be true and accurate because I am the person that transcribed the computer video record to hard copy.

Bernard J. Heaney
Templeton



2 comments:

  1. just think .. if you empty the obligation completely to the nightmare on bridge street [ sold Templeton L& W } public rights away " then privatizing " there be no retirements data no more issue as to taxes would be necessary further a positive flow= expected tax rev could be counted on all the Massachusetts protections law would engage for low income The minds of town of Templeton selectmen office would only need to deal with much other expected duties , Then considering all the loop holes in the laws for unity under municipality which was to benefit the town which it does not town lost control so I asked as you all should , why not sell ? all we need 2/3 of the vote

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  2. So selling the Light and Water plant will solve all the town's problems? I don't think so. You still have a BOS that doesn't know what the heck they are doing? They can not address any of the problems because they have no idea what caused them. You can not fix a problem if you do not know the cause. It seems that the accounting of the towns money is done in a way to hid something? would be nice to see what that is. Is there monies missing from the town? Are the BOS trying to hide that fact and why cant they get someone with some brains to get the books closed? what is taking so long? what is the accountant missing and from who or what department? Is anyone doing anything to help this get done? This town sucks and the Light and Water plant have nothing to do with how screwed up it is.

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