The main item of business at last Wednesday’s Board of Finance meeting was the review of the Town’s audit for the 2015-2016 fiscal year. Marcia L. Marien, CPA and a partner at PKF O’Connor Davies presented the audit results.
Overall, the audit was good for the town. Both the Town’s short term and long term balance sheets were strong. The Town’s Unassigned Fund, was $5.9 million, or about 11% of its General Fund revenues. According to Ms. Marien, this put New Fairfield in the middle of the pack in relation to the other municipalities in Fairfield County, “a good place to be” according to her.
Ms. Marien noted that the Town’s tax collection rate was just over 99.5% of the budgeted amount. This was the second highest collection rate in the county and the state after New Canaan. She also noted that New Fairfield has historically had a good tax collection rate. The average collection rate for Connecticut was 98.3%
The Town’s percentage of long term debt vs. revenue was just 40%, tied with Redding for the lowest in Fairfield County. The average in Fairfield County in 2015-16 was just over 90%. At the top end of the spectrum, long term debt for Stratford and Bridgeport was over 200% of revenue. This is a good indicator that the Town is not overextending itself and is in a good position to be able to pay down its debt over time.
Ms. Marien did report that her firm had noted some internal control matters. These concerned three Board of Education purchase orders that were approved, but were charged to inappropriate line items. They recommended a more rigorous set of checks and balances be put in place and also recommended that a whistleblower policy be established so that employees would feel secure in reporting inappropriate or questionable transactions if they see them.
Seventeen invoices were reviewed out of 170. Three were found to have issues. The Board of Finance voted to allocate $1,500 from the Materials & Supplies portion of its budget to have PKF O’Connor Davies audit the remaining invoices to ensure there are no further discrepancies.
O’Connor Davies also recommended that the Town perform annual Information Technology risk assessments to make sure proper controls and safeguards are in place for both the Town and the Board of education. The firm indicated the assessment should include items such as password policies and controls, access rights recertification whenever an employee has a change of duties, physical security, wireless access management and business continuity/disaster recovery among others.
During the audit review, Ms. Marien also referred to Governor Malloy’s recent proposal that towns share the teachers’ pension funding burden in the coming years. Currently, the State is about $11 billion behind in funding the pension. If towns will be required to fund their portion of the teachers’ pension liability, New Fairfield’s share would be just under half a percent of the State’s net pension liability, or $52,643,952.
The percentage is the total amount of current New Fairfield teachers’ salaries compared to the current total of all teachers’ salaries statewide.
While nothing has been decided at the state level yet, it is generally assumed that towns will wind up losing some state funding, perhaps as much as 9%, which would translate to about $4.3 million in the case of New Fairfield. The State Legislature will not finalize its budget until early June, so the Board discussed how to address the possibility in the Town and Board of Education budgets, which are due to be presented and voted upon much sooner.
It was decided that the BOF will ask for two budgets to be prepared, one that assumes no loss of State funding and one that will show a 0% budget increase. The Boards will present the “business as usual” budgets in March, but will be asked to prepare the 0% increase budget pending what is included in the state budget.
The Board also discussed the possibility of delaying a town budget vote until after the State Legislature concludes its session on June 8th. The thought process is that no budget can be finalized until the State determines what, if any, cuts will be made to town budgets.
Once that is known, the town boards will have to move quickly to adjust budgets and present them for a town referendum, hence the need for two versions of the budget.
By Greg Slomba