The following email
thread shows the question and possible solutions of the issue of 475 (b), I
have already commented on how I feel about this in a previous blog, in short, I
believe the town should maintain checks and balances on all financial transactions.
Questions for the Board of Selectmen??
Jeffrey Bennett
From: "Town Coordinator"
To: treasurer@templeton1.org, "Virginia Wilder", stewy5@comcast.net, jpb01468@comcast.net,
"Julie Farrell" , "Patrick
Mullins" , "Kate Myers"
, "Fred Aponte"
Cc: PDeRensis@aol.com
Sent: Thursday, April 18, 2013 7:28:48 PM
Subject: FW: Payment Warrant Procedural Question
To: treasurer@templeton1.org, "Virginia Wilder"
Cc: PDeRensis@aol.com
Sent: Thursday, April 18, 2013 7:28:48 PM
Subject: FW: Payment Warrant Procedural Question
There was a question regarding the payment of
457(b) withholdings in timely fashion. Please see counsel’s response below, and
let me know which avenue you wish to take.
Jeffrey W. Ritter
Town Coordinator
Town of Templeton
690 Patriorts Road
PO Box 250
Templeton MA 01468
Phone 978.939.8801
Facsimile 978.939.4065
From: PDeRensis@aol.com [mailto:PDeRensis@aol.com]
Sent: Thursday, April 18, 2013 3:19 PM
To: towncoordinator@templeton1.org
Subject: Fwd: Payment Warrant Procedural Question
Sent: Thursday, April 18, 2013 3:19 PM
To: towncoordinator@templeton1.org
Subject: Fwd: Payment Warrant Procedural Question
Jeff:
Hope this finds you
well.
Last week you asked
technical procedural questions about the processing of the warrant. We have
looked at applicable law and consulted with Department of Revenue, and suggest
for your consideration the following answers:
In summary, the DOR
stated that it "may be" permissible for the Town to pay the 457(b)
contributions without full approval of the Selectman; however, the most prudent
method for the Town to circumvent the Selectman's full approval would be to
have the Town switch from using the statutory mechanism under MGL c. 41, sec.
52, to the mechanism in MGL c. 41, sec. 41 which permits the paying of payroll
without full Selectman authorization.
Town Question: Since
these withholdings are not town money, can the Treasurer pay them over to the
proper agency without a completed Select board signature block?
DOR Response: As it appears that the Town is following the procedure
laid out in MGL c. 41, sec. 52, the Treasurer needs to obtain the Board's
approval before a payment can be made; however, because the Town has an
independent legal obligation to pay out the 457(b) contributions it may be
permissible for the Town to pay the 457(b) contributions out without a
completed Selectman signature block. (It is unclear whether this
"independent obligation" requiring payment alleviates the Town's
responsibilities under c. 41, sec. 52, or if paying the 457(b) contributions in
a timely fashion is just the "lesser of two evils."
Can the Select board,
through prior authorization in writing, permit the payment of these monies
described, before perfecting the warrant with signatures?
DOR Response: The Select
board would need to give authorization every time that there is a payment, thus
prior authorization is not permissible.
MUST the Treasurer wait
to have a perfect warrant before mailing the (paper) check to the
457b plan
DOR Response: The DOR is
of the position that because there is an independent legal obligation to pay
these wages/contributions, the Town must pay the 457(b) contributions. However,
as stated in #1, it is unclear is the requirement to pay the 457(b)
contributions alleviates the requirements to obtain a perfect warrant.
The DOR made the
suggestion that instead of paying the 457(b) contributions through the MGL c.
41, sec. 52 procedures (and sometimes technically violating these procedures if
the Town needs to make the 457(b) contributions prior to a completed Select board
signature block being obtained) that the Town may want to pay the 457(b)
contributions through the MGL c. 41, sec. 41 payroll procedures. Chapter 41,
sec. 41 allows the Town to follow a more expedited procedure and does not require
the full Select board signature block. Section 41 permits the one member of the
Board of Selectman according to DOR's read of the statute to be designated to
swear and approve payrolls.
Section 41 states, "[n]o treasurer or other fiscal officer of
any town or city shall pay any salary or compensation to any person in the
service or employment of the town or city unless the payroll, bill or account
for such salary or compensation shall be sworn to by the head of the department
or the person immediately responsible for the appointment, employment,
promotion, or transfer of the persons named therein, or, in the case of the
absence or disability of the head of the department or of such person, then by
a person designated by the head of the department and approved by the board of
selectmen in towns, and by the mayor in cities, or by the city manager in
cities operating under a Plan D or Plan E charter. Except as otherwise provided
in a collective bargaining agreement, the treasurer or other fiscal officer may
pay the payroll to an employee on a biweekly or semimonthly basis. A
commission, committee or board of trustees in a city or town, including a city
council, board of aldermen or common council in a city, may for purposes of
this section designate any one of its members to make oath to a payroll, bill
or account for salary or compensation of its members or employees. This
provision shall not limit the responsibility of each member of any such body in
the event of a noncompliance with this section. "
It should also be noted
that if the Town would like to continue using the statutory mechanism under MGL
c. 41, sec. 52, but is unable to perfect warrants in a timely manner due to the
continued absence of one Selectman from the jurisdiction, the DOR recognizes
such absences and may permit the town clerk to substitute for the Selectman.
MGL c. 41, sec. 56 states, "...the treasurer shall pay no money from the
treasury except upon such warrant approved by the selectmen. If...a vacancy
occurs in the office of selectman, the remaining selectman or selectmen,
together with the town clerk, may approve such warrant.".
You may want to consult
with your DOR representative for further information on these procedures. This
reply was provided with the assistance of Attorney Nick Dominello at
DWBD&H.
Paul
From: "Town Coordinator" <towncoordinator@templeton1.org>
Date: April 12, 2013, 1:30:30 PM MST
To: <PDeRensis@aol.com>
Cc: "'Town Coordinator'" <towncoordinator@templeton1.org>
Subject: Payment Warrant Procedural Question
Date: April 12, 2013, 1:30:30 PM MST
To: <PDeRensis@aol.com>
Cc: "'Town Coordinator'" <towncoordinator@templeton1.org>
Subject: Payment Warrant Procedural Question
Counselor:
I have been asked to bring this mildly
interesting legal question to you for your comment and advice.
The Town must make regular payroll weekly
deductions from employees for federal tax withholding, state tax withholding,
county retirement withholding, and (here’s the problem) a voluntary
contribution retirement plan (a 457b plan). These are mandatory (or voluntary)
pay withholdings which the Treasurer is required to pay over to the respective
entities in timely manner.
Since these withheld amounts are part of the
Templeton “weekly vendor warrant” process (not the payroll warrant), we
naturally require the signature of at least three selectmen. And, given the
continued absence of one selectman from the jurisdiction, as well as the
regular unwillingness of one or more of the remaining four members to timely
sign the vendor warrant (due to disagreement with some particular item in the
warrant like questioned items for legal services provided to the light
department, and etc.) we occasionally have a hard time mustering the required
three Selectboard signatures to process the vendor warrant within
the timeframe of the calendar week.
When that event occurs, the withholdings
mentioned above are not paid over timely, especially voluntary withholdings to
the 457b plan (which requires a paper check), thus making certain employees
rather angry. Now, the correct amount DOES eventually get deposited, but
sometimes the deposit is a bit late. Sometimes a week to ten days late. And the
employees draw no interest on their contribution during this “gap”.
The Treasurer has gone on record saying this is
not his problem, but is a problem solely within the BOS, and any resolution
must come from the Board itself. I (being wise enough to stay out of this)
neither agree nor disagree with the Treasurer.
And finally, the questions issue:
1. Since these withholdings are not town money, can the Treasurer pay
them over to the proper agency without a completed Selectboard signature
block?
2. Can the Selectboard, through prior authorization in writing, permit
the payment of these monies described, before perfecting the warrant with
signatures?
3. MUST the Treasurer wait to have a perfect warrant before
mailing the (paper) check to the 457b plan (and, yes, a bank wire would
reduce the scope of this problem by reducing lag; we’re working on that…)
Very Truly Yours,
Jeffrey W. Ritter
Town Coordinator
Town of Templeton
690 Patriorts Road
Jeff these differred comp/457B plan should be treated the same as the part of my check that goes to my christmas club or savings acct or whatever. it is part of my pay, the fact that I choose to send that amount to a "retirement acct" is my choice. so it is part of the payroll warrant! not a vendor warrant. check on this please
ReplyDeletemy contention is since it comes from your paycheck, that makes it part of the payroll system which to be started requires the signing of the payroll warrant on the part of selectmen. So according to the law, there are 5 people back there to sign the payroll and or vendor warrant, 4 selectmen and town clerk. Why 3 selectmen cannot get in their and sign is a good question. As for where the deduction falls under, this is municiple finance but again, does it matter if the selectmen do their responsibility and go in and sign the weekly paper work that they all know about. If one has a problem with something in the payroll, such as a relative, that still leaves 3 to sign. Sounds like some selectmen not doing their job. I will send an email but my guess is by the time it gets read and answered, the Monday night selectmen meeting will be in progress. Regardless of what time my post will read, it is 3:45 AM here as I write this (never bothered to adjus time on my laptop so I always have a quick reference on time back home.
ReplyDeleteWhy is Templeton still doing weekly payroll? Would not this in part be easier if employees were paid every 2 weeks? It seems that there should be no delay in getting contributions, whether voluntary or mandatory into their respective accounts. Over time that delay results in lost interest and that is not right. Given the continuing conflicts and issues among our Select Board, I think the Town should follow the more expedited procedure allowed under MGL CH. 41, Sec 41 for these regular payroll issues.
ReplyDeleteThe town would save money going to doing payroll every other week. It seems like Templeton needs to move into the 21st century!
DeleteHire a payroll company it's cheaper and less conflicts
ReplyDeleteHas anyone checked the law on deposits to these accounts? It is not unusual for payroll deductions to be deposited
ReplyDeleteHere are the regulations:
The time period described by the DOL regulations requires that a plan sponsor deposit 401(k) deferral, after-tax contributions and loan repayments (employee contributions) that have been taken from their employees' paychecks on the earliest date the employer can reasonably segregate these amounts from its general assets, but in no event later than the 15th business day of the month following the month in which the employer withheld the contributions from the employee's paycheck.
You'll go crazy trying to anticipate gains on deposits before they are deposited. You never know what days the market will be down, it is advantageous to buy on down days. Over time, you will win some and lose some. Sometimes, waiting a week will buy more shares, sometimes it will buy fewer. As for "interest" earnings, money is pretty much "free" now-a-days. Nobody is losing much interest on payroll deductions going into an account a couple weeks late.
...deposited a couple weeks after the deduction from employees paycheck.
DeleteI think the most expeditious manner to process these payments is to include the payments in the payroll warrant.
ReplyDeleteIn the past I had an issue with the one salaried, managerial employee receiving OT pay. That issue was resolved by an addendum in that union contract. I have always signed the payroll warrant in a timely manner.
Currently, the vendor warrant has the payment for the withholdings. If those entires are placed on the payroll warrant, because they are payments that come out of employees salaries, that should resolve the issue of timely payments.
This past week was the first week using Harper's payroll service. I would like to see the town move to a bi-weekly payroll.
As a selectman, there are times I will find invoices with which I disagree. Most recently it was the invoice from Ferriter and Scobbo ($10,000) regarding the citizen petition. There was another invoice from Rubin & Rudman regarding PILOT payments that I would not sign off on. These invoices are part of the vendor warrant. If they are not pulled, I will not sign that vendor warrant. By my count, there are 3 other selectmen who can sign that warrant.
Just a few of my thoughts on the issue.