Phillipston gets results of financial checkup

PHILLIPSTON – The Select Board recently received a report on the financial health of the town following an audit conducted by public accounting firm Roselli, Clark & Associates of Woburn. The management letter received by the board covered the fiscal year ending June 30, 2018.

Company partner Tony Roselli briefed the board on a number of items, but began his presentation by discussing the impact of interest rates on municipal finances.

“One of the things that is appearing in most of the management letters that I’m looking at across the state,” said Roselli, “I have about 60 communities that I do audits for, is the interest rate. The Federal Open Market Committee has had a lot of action in the last year. They are the arm of the federal government that increases or decreases interest rates. They’ve moved interest rates up in the past 12 months. What’s happened is, that’s had a nice effect on bank interest; it’s moved bank interest rates up to close to three percent.”

“So, what I’m noticing,” he continued, “and it’s not just here, it’s not an indictment of what’s going on here, it’s more that this is what I’m seeing everywhere. And that’s that the (town) treasurers for years didn’t worry about interest rates because back in 2008 and 09, after the financial collapse, interest rates dropped to 0.1 percent. Well, those rates hopped up last year and it kind of caught treasurers off guard.”

Roselli explained that the town currently has about $1.5 million in deposits sitting in accounts bearing interest of only 0.0 to 0.5 percent. As a result, he said, the town earned only about $11,000 on its deposits.

The management letter said, “We recommend the town treasurer evaluate the town’s depository balances and accounts and evaluate the possible benefits of reallocating other portions of the town’s excess funds to...financial institutions that offer very liquid safe short-term investments.”

Such a move, he said, could earn the town upwards of $25,000 on its deposits.

He then zeroed in on the town’s Community Preservation Fund.

“The Community Preservation Trust Fund,” said Rosell, “showed no interest earned, which is impossible. The CP Fund should either be in its own bank account or, if it’s in a pooled account, there should be an allocation to put interest in the fund. I recommend just putting it in its own bank account and having it earn its own interest.”

Town Accountant Kelli Pontbriand said many of the steps outlined by Roselli have in fact been taken in the past year.


The management letter pointed out that the town is still owed $708 in property taxes back five years or more. He suggested the town simply write off the loss.

He also pointed out that more than $6,600 is owed to the town for motor vehicle excise takes bills that are 10 years or older.

“What’s great about motor vehicles,” said Roselli, “is if you don’t pay your taxes the Registry tags you, so, if you don’t pay your motor vehicle (taxes) you’re not going to be able to renew your license or your registration. However, the Registry just did a massive computer conversion last summer and they basically got rid of anything greater than 10 years old. So, you’re never going to collect that, in my opinion. I would suggest just writing them off. I think this would help really clean up the ledgers.”

Among recommendations made in the management letter is the development of a more centralized procurement process.

“Department heads,” said the letter, “essentially handle their own purchasing with no input from the executive level or town accountant's office...We discovered that that there is no requirement that the town accountant or executive secretary maintain copies of any contracts and there is no central purchasing function.”

Overall, Roselli seemed to express confidence that the town is financially healthy, while adding steps remain to be taken to tighten up certain bookkeeping procedure.

 

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