Great Barrington — The town’s finances are in shipshape condition, an auditor told the Selectboard and Finance Committee at a joint session Monday (December 8) night.
“Your financial position is enviable compared to many communities we audit,” said Patrice Squillante of Greenfield-based accounting and auditing firm, Melanson Heath. “We make no audit adjustments here, and that’s true every year here,” she added. “Lauren [Sartori] does a very good job of the accounting…we don’t have to make corrections…all the numbers are accurate.”
Squillante noted her 27 years of auditing experience. Her firm, she said, audits roughly 100 towns, cities and school districts every year.
The town’s total net position, according to Squillante’s report ,is $32,247,557, “an increase of $410,867 from the prior year.” Squillante said the town has “enormous taxing capacity…and that gives you flexibility that other [communities] do not have.” She said the town’s roughly $3 million in “free cash” — money unspent from the previous year due to conservative budgeting — is a very good sign.
Also pointing to the town’s “financial health,” Squillante said, was its “surplus of about $6 million of essentially retained earnings.” Almost all her clients, she added, “have or are hovering at a deficit.” The town’s setting aside of that free cash, she said “is enough to absorb liabilities you have right now.”
While Squillante said the books show tip-top conditions, there were a few things for the town to look out for. One is unpaid taxes totaling just under $600,000, or 3 percent of the net tax levy. “They’re not extraordinarily high,” she said, “but it’s growing. At some point, you need to take that next step [to collect] and you’re doing that.”
Indeed, the town is moving in that direction by auctioning off 14 foreclosed properties at Town Hall on January 30. Town Manager Jennifer Tabakin announced the date at the Selectboard meeting, “as a good step to deal with parcels the town has owned via foreclosure for many years.” The Finance Committee is also on the case of unpaid property taxes, and appears to want to keep the pressure on.
Squillante recommended an increase in the stabilization fund, which, she said was “a little low,” and creating an OPEB (Other Post Employment Benefits) trust account to have money put aside for future pension liabilities.
“The more money you can put away the better,” she added, but also said that the town’s lack of an OPEB trust has not damaged its financial standing, nor its bond rating with Standard & Poor, for instance.
The town has been “paying about 40 percent to 43 percent of what our actual liability actually is,” said Town Accountant Lauren Sartori. The town, she said, also has a benefit trust with about $360,000, as well as almost $1 million in a pension trust. All of these “really impress Standard & Poor,” she noted. Squillante said it would be prudent to come up with that other 60 percent, but added, “nobody’s going to do that — nobody can afford to do that,” referring to tight municipal finances.
The town pays into the Berkshire County Retirement System, which administers public employee pensions throughout Berkshire County.
Squillante said the unfunded pension liabilities will soon affect the town’s financial statements, however. New accounting standards taking effect next year will require the reporting of the present value of future liabilities calculated by an actuary.
By state law, an irrevocable trust would have to be set up to pay into OPEB. The town can vote to create one, according to Squillante, but that, said Finance Committee member Michael Wise, commits the money into that future piggy bank, reducing flexibility. “You can’t use it for anything else, but that might be a good thing.” Wise, however, doesn’t “conflate unfunded liability with a sky-is-falling-disaster. It depends on your faith in your ability to take care of [liabilities] in the future.”
Finance Committee Chair Sharon Gregory asked Squillante where that money might come from.
Squillante said that if a town decides to vote to create a trust, it might try to find a “revenue source like a hotel tax…to look at a revenue source they haven’t been counting on…or something over budgeted, and put that away.”
Gregory also expressed concern about the same unfunded pension liabilities in the Berkshire Hills Regional School District, given, she said, that the school’s “liabilities are backed by the faith of the towns in the district.”
Squillante said the school district could also vote to set up an OPEB trust fund. She noted that by law audits are required for the school district, and those audits are done separately.
Regarding the town, Wise says it’s probably a good idea to start saving up, “not because we’re forestalling disaster, but because we are prudent.”
Lauren Sartori and Sharon Gregory were unable to be reached for comment by the time this dispatch was posted.
