North Adams Needs $396,000 to Fund Insurance Trust
Councilor Gailanne Cariddi questioned whether the city should accept the study or do an audit.
The state Department of Revenue has informed the city that it must make the payment, Mayor Richard Alcombright told the City Council on Tuesday night.
"I have no idea where it will come from, but the Department of Revenue said we must fund it for 2010," he said. "But we may need special legislation to push it into next year or to push it out further".
The study that came out last week showed the city had underfunded the trust by some $1.1 million over 2008 and 2009, a situation that has spilled into fiscal 2010. The city's public unions have claimed their own analysis shows the city shorted the fund by $1.8 million over three years.
Both Councilors Gailanne Cariddi and Michael Bloom called for more extensive audits.
Cariddi was concerned that the mayor was moving forward with negotiations with the union and state on the sole basis of the study. "You seem to be going in a direction like this is the last document we're going to hear."
An audit would cost upwards of $40,000 to $50,000 compared to the $2,500 for the two-year study, said Alcombright, and wouldn't likely show anything different than what the study has.
In fact, previous audits hadn't shown any underfunding since they were focused on ensuring that claims going out were being covered by premiums coming in. The city paid its insurance bills, said Alcombright, but what it hadn't done was fully pay its share of the premiums as required by state law. In failing to do so, it had also left the fund short in case of runout, or claims coming in after the fiscal year, should it decide to switch to a different insurance.
The mayor also wanted to refute several assertions in a recent article (and editorial) in the North Adams Transcript, including one that the accounting was a matter of creative financing.
"'Creative financing,' I got a big kick out of that," he said. "Mass General Law governs the payments on the self-insured trust. You cannot be creative with Mass General Law."
Both Cariddi and Alcombright referred to a letter DOR sent to Wareham when that town asked last fall if could just pay costs this year. DOR's answer was a firm no: "We have interpreted GL c. 32B, 53A as requiring that the town contribute a specific percentage of the previously determined premium or rate amount, at least by year end."
Councilor David Bond: 'I am ashamed of the findings.'
Councilor David Bond waited until councilor's concerns to read a statement expressing his anger and embarrassment over the situation.
"This promises to be one of the most difficult budgets to balance and now have a very cumbersome and difficult expense ... What else is out there and what else is the city liable for?
"I am ashamed by the findings in this report and the further malfeasance that may be out there."