Budget $450,000 Out Of Whack

Budget $450,000 Out Of Whack
Damien Fisher
News Staff Writer

WINCHENDON  Delayed school payroll reports continue to plague Winchendon, and now have contributed to financial errors that has left the fiscal year 2015 budget close to $450,000 out of balance, according to Tony Roselli, the town’s auditor.

Mr. Roselli addressed the Board of Selectmen on Monday night to discuss problems with the 2015 fiscal year, including the deficits, which he found when his firm, Roselli, Clark and Associates started work to close the books this year. Mr. Roselli said that his firm found errors in the payrolls, in the payroll withholding, payroll information being posted in the wrong pay period, as well as errors made in the town’s transition from the self-insured employee health insurance trust fund to a traditional health insurance plan.

“This will be listed as a material weakness in the management letter,” Mr. Roselli said.

In a financial audit, a material weakness is when an institution that is being audited has internal controls that fail to prevent problems, leading to the possibility that there will be errors in the financial statements. Auditors put all of their findings into a management letter presented to the town. The 2015 letter is not yet complete.

Mr. Roselli was told that the town’s finances were in order when he started this year’s audit, and that the books were balanced. This was not the case, and he has found that the books were out of balance between $400,000 to $450,000.

Donna Allard, Winchendon’s accountant, said the School Department’s payrolls had not been entered into the town’s general ledger in a timely fashion, which would have allowed her to have the information to reconcile the finances. The School Department’s financial management team, TMS, did not enter payroll information in the general ledger between Oct. 2, 2014, through the end of January 2015, creating a backlog of information. Even after that point, the school’s reporting of payroll data has been lagging about six weeks behind the town, she said.

TMS CEO Davis Lockwood said Monday night that the payroll information will be caught up starting this week.

The town stopped using an outside consultant this year to help reconcile the books. This was a cost saving measure put in place this spring, one that Mr. Roselli said contributed to the payroll errors going unchecked. Mr. Roselli is disappointed that the town did not follow through on more of the recommendations he made in last year’s management letter, such as selling off tax title properties, and sending out tax payment reminders in mid-June.

The 2015 budget being out of balance is hitting the town as it is trying to recover from last year’s financial crisis. Winchendon was forced to borrow close to $3 million from the state to clear its deficit, caused largely by accounting errors in the health insurance trust fund, and by School Department overspending.

Voters will be asked to approve an additional $550,000 to cover the remainder of health insurance trust fund deficit at this month’s special town meeting, which is more than previously anticipated. Voters will also be asked to move $130,000 from the stabilization fund to cover the premium health insurance account shortfalls.

Interim Town Manager Bernie Lynch said the town is now bringing back the consultant, which will help going forward.

Payroll issues have dogged the School Department for almost two years, going back to the tenure of Finance Director Melissa Dunnet. Ms. Dunnet left the district suddenly in June 2014, and was then paid more than $25,000 a month later. School officials have refused to explain that payment.

TMS took control after she left, contracting the financial services for $100,000 a year. In September 2014, the district paid about $20,000 to former employees after another erroneous payroll. It took about a month for those funds to be fully recovered.