Auditors cautiously optimistic for Oak Bluffs finances, fire department

Auditors cautiously optimistic for Oak Bluffs finances, fire department

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— File photo by Mae Deary

Jim Powers, partner in Powers & Sullivan, the accounting firm hired to audit Oak Bluffs finances, reviewed for the town selectmen his firm’s audit for fiscal 2012. His remarks were approving, but work needs to be done, he said, and vigorous stewardship must continue.

Although FY 2012 ended on June 30, 2012, the auditor’s management letter was not complete until March 25, 2013, due to a delay in receiving the town’s final accounting. Town administrator Robert Whritenour, who was hired four months into FY12, explained that the delays in closing the books were due to a backlog of unreconciled accounts and that he anticipates the town will close the books on FY13 by December.

“We’re going over every single solitary account with a fine tooth comb. We’re cleaning up the entire system account by account so we can eliminate any surprises,” he said.

“I know you’re closer to closing your books than you were last fiscal year, which is good,” Mr. Powers told the selectmen, “but you’re not there. Realistically, you should be there. We’re almost in November: June 30th was a long time ago. Things need to occur on a monthly basis.”

Credit Bob

“When we got Bob [Whritenour] on board, things were in bad shape,” said chairman Walter Vail. “Bob’s done a great job in turning this thing around.” Mr. Vail also said that FY13 would show continued improvement.

“Everybody remembers you had negative free cash flow for five years. You were in a bad situation financially,” Mr. Powers said in a measured tone. “Fiscal year 2012, you had a halfway decent year, and you were $200,000 positive balance. Obviously, you can’t turn it around in one year. It’s going to take a while to get where you should be for a town your size, which is five percent of the year’s recurring expenses sitting in there as unreserved free cash, so you deal from a position of strength, not a position of weakness. There are always unanticipated things that come up, like a big storm. It happens all the time, you need reserves.”

Pension funding a concern

Mr. Powers expressed concern over the town’s underfunded pension. “It’s not in terrible trouble, but accountants want to see you’re funding all the expenses that you incur even though the actual cash outflow won’t occur for a long time in the future,” said Mr. Powers. “If you did the simple math right now, you’ve got about 250 retired town employees, you got $25,000,000 overall liability, that ends being $105,000 per employee. That’s what should be set aside at this time.”

Mr. Powers said most towns are in a similar position.

“We are seeing monthly financials now, which we weren’t before,” said Mr. Vail. “Now that [town accountant] Arthur Gallagher’s on board, things are a lot more professional.”

Mr. Powers also said the town should be more aggressive collecting back taxes. “I would expect a higher rate of collection,” he said. “Sometimes you have to be heartless as a business person. You’re not in the banking business. Every dollar in accounts receivable is a dollar you don’t have in free cash.”

Fire department update

Consultant and former Brewster fire Chief Roy E. Jones 3rd was on hand to review his evaluation of the Oak Bluffs fire department (OBFD), which was released to the public on July 17. The study exposed substantial problems with leadership, operational clarity, morale, data collection, inter-department cooperation, training, and hiring practices. Disharmony with the selectmen was also cited.

In his opening comments, Mr. Jones was effusive about the current OBFD staff. “Personnel-wise you have a fantastic group of people,” he said. “They all want to do the right thing.”

Then Mr. Jones put the importance of OBFD’s readiness in a sobering context. “From a risk management point of view, the town of Oak Bluffs has greatest risk of any town on the Island,” he said. “In fact, conflagration wise, you compete with Provincetown.” Mr. Jones explained that the high density of old, wooden structures in the downtown area and in the campground, made the town extremely vulnerable. “The wrong wind combined with a fire in one of those buildings and you have the chance of a major disaster. You got building after building that, candidly, is going to burn.”

Mr. Jones recommended that the EMS chief and Fire Chief be combined into a paid, full-time position. Acting Chief John Rose, also in attendance, requested that the administrative load on the fire chief be mitigated by the appointment of a deputy EMS chief and an assistant fire chief, funds for which had already been appropriated by the selectmen.

“It’s very hard to stay focused on a project involved with numbers, when a call would come in and you have to go on the call and start all over again,” Mr. Rose said. “It’s extremely hard to do that.”

The selectmen voted unanimously to support Mr. Rose’s request, and that the positions of deputy EMS chief and assistant fire chief be advertised to the public.

In other fire department business, Mr. Rose presented the selectmen with a detailed disclosure to comply with state conflict of interest law. There have been accusations of nepotism made against Mr. Rose, which have been brought to the attention of the state ethics commission.

“We’ve been working with attorney Jack Collins to take care of all potential conflict of interest issues,” said Mr. Whritenour. “[John] has provided previous disclosures, but this is being comprehensive as possible. If the board accepts it would not interfere with his duties, that would enable us to roll forward and we’ll continue to work with ethics commission and get their take on this issue as well.”

“Many of these people were hired before John became chief of anything,” said selectman Kathy Burton. “In a small town, lots of people are related. It’s not uncommon to see people in same families in firefighting.” The board will make its recommendation at their November 19 meeting.

Farm Pond fix

Shellfish constable Dave Grunden and Franz Ingelfinger, from the Department of Ecological Restoration (DER), division of the state fish and game department, were on hand to update the selectmen on the campaign to save Farm Pond.

Mr. Grunden has been supervising restoration efforts for over a decade, doing battle with increasing nitrogen levels and mountains of red tape. “We know what we need to do to get the pond back to health,” he said. “We are currently in the final design stage and the beginning of the permit stage to replace the current culvert with a much larger one. Computer modeling was done, and with a larger culvert, we should be able to bring the pond well below the nitrogen threshold, so the pond will be in compliance with the U.S Clean Water Act. It’ll be one of the few in the state to meet that criteria.”

Mr. Grunden said the new culvert will cost between $1 million and $1.5 million. “But in the big scheme of things, it’s a cheap fix, especially when you start to look at other options, like sewering the area. And we should get results quickly.”

“We’re at a critical juncture in this project,” said Mr. Ingelfinger. “We’ve done all the feasibility studies, tidal propagation, culvert sizing, flood analyses, we’re at the point where we need to make a decision about what this is going to look like.”

The selectmen agreed to have a scoping meeting at Farm Pond before Thanksgiving.

In closing, Mr. Vail asked the media to repeat to the general public that the northbound lane of East Chop Drive, which is marked closed, is closed to all traffic.