North Adams Financial Review Finds Few Issues
 Thomas Scanlon of Scanlon & Associates explains a point of the management letter for fiscal 2014. |
NORTH ADAMS, Mass. — The city's consulting auditor is continuing to express concern over its lack of reserves but found few other issues in its review of the fiscal year that ended June 30, 2014.
"I know we've been harping on reserves, reserves are a good thing," Thomas Scanlon of Scanlon & Associates told the City Council on Tuesday night. "The city for the first time in a few years had free cash certified for about $143,000. You are going in the right direction."
The management letter can be read here.
Free cash should generally be about 3 to 5 percent of a municipal budget. For North Adams, it would be about $1.2 million based on the city's nearly $40 million budget.
The free cash from fiscal 2014 was also primarily from turnback of assessments for the charter school that cannot be relied upon.
"I encourage you don't get use to free cash going forward," Scanlon said, because of the one-time nature of the funds.
Looking at the last three fiscal years, the auditors found variances between budgets and actuals that "would not be considered financially healthy by municipal financial standards."
The administration's response was that "it is highly unlikely based on the incredibly tight budgets that we will see significant free cash in the near term."
The two other comments in the audit review were mostly cautionary, dealing with the adoption of new financial rules that require reporting and accounting for future pension liabilities and expenses and new federal reporting for grant funds, such as Community Development Block Grants.
Scanlon anticipated "a lot of compliance findings" related to federal grants until communities got used to the new rules. He recommended the city's financial team brush up on the new reporting requirements to avoid pitfalls.
Looking at comments from the year before, the city had developed a procedures and policies manual to address financial controls, particularly for cash transactions, and was cognizant of the need to ensure timely submission for reimbursements for state funds such as Chapter 90.
The auditors also advised the city work on the $2.3 million in outstanding property liens that are sitting on the books.
Mayor Richard Alcombright said he is still evaluating companies that could buy up the tax titles.
"They give you pennies on the dollar but we're looking at funds that are probably never going to be collected anyways," he said. For example, he said, the two large apartment buildings on East Main Street torn down several years ago are still delinquent about $80,000. "We can go to Land Court and take possession of that but then what do we do?"
It is possible that should the council adopt a zoning change put forward by Councilor Wayne Wilkinson to allow limited rebuilding on nonconforming lots, some of the properties might be worth more. Currently, they are often vacant lots left after abandoned houses have been razed, their only value as enlarging neighbors' yards.
Scanlon also answered several questions from the audience, explaining what appeared to be discrepancies in the airport's funds as accounting differences and why smaller accounts, such as the skating rink, aren't regularly audited unless there is a significant drop in revenues. The cost benefit is of greater value reviewing larger accounts, he said.
Councilor Keith Bona asked what other municipalities affected by a drop in state funding were doing to improve their finances.
"I think they're doing it with overrides, debt exclusions," Scanlon said, pointing to Northampton's successful Proposition 2 1/2 override. Others are specifically looking at overrides for capital improvements rather than general operations. "If you're going to do that route, have a plan in place."
In other business, the council unanimously approved at a second reading a new public arts commission and raises in trash disposal rates from $80 a ton to $94.39. Councilors Lisa Blackmer and Benjamin Lamb were absent; Councilor Jennifer Breen was out for medical reasons.
There were a few objections to the rate hike from residents in the audience but councilors felt there had been enough debate.
"The issues of about the effect of the raise on businesses is a real concern but it's one that has been answered to my satisfaction," said Councilor Eric Buddington.
Wilkinson, who had not been initially in favor of the hike, said there had been five meetings on the issue and "we have people still asking questions."
Resident Wayne Goodell expressed disappointment that councilors had not bothered to read the city's contract with Casella to remove trash and recyclables from the transfer station before voting the rate hike.
Tags: arts commission, audit, transfer station,
