Beaches and bottom line pose challenges for Oak Bluffs officials

Beaches and bottom line pose challenges for Oak Bluffs officials

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Auditor’s report cites modest improvements and continuing deficiencies in town finances, Inkwell beach concerns

In a marathon session Tuesday, Oak Bluffs selectmen received a middling report card on town finances and fielded citizen ire over the condition of the sand at Inkwell beach.

James Sullivan, CPA from the accounting firm Powers and Sullivan, presented the selectmen with an auditor’s report for fiscal year 2013 (FY 13) which began July 1, 2012 and ended on June 30, 2013. Mr. Sullivan said the town is generally moving in the right direction, albeit slowly, but that numerous action items listed in the FY 12 report remained partially or completely unresolved.

Liabilities

Mr. Sullivan began the assessment with the good news. “The 2013 results were exactly what you were looking for,” he said noting that the general fund, a primary indicator of financial health, had increased by over $1 million in FY 13. He also said the unassigned balance of the general fund is over 10 percent of the FY13 general fund revenue, which is excellent from that standpoint.”

The management letter also gave the town high marks for improved tracking of federal, state, and third-party grant funds.

Long-term liabilities, in particular pension liabilities, are one of the major concerns highlighted in the audit. In FY 13, the town made only 25 percent of the required employer contribution to the pension fund, down 5 percent from FY 12. The unfunded liability in the pension fund totals slightly over $25 million.

“We’re falling behind, and that concerns me” selectman Walter Vail said. “Some people say to float some debt, but I don’t think we go there.”

Mr. Sullivan agreed with Mr. Vail, adding that the tactic could backfire and increase the unfunded liability.

“Some people think this is so crucial that we should sacrifice other town services, but I don’t agree with that because I think some things will help us down the road,” Mr. Vail said.

Mr. Sullivan said that many towns, not just Oak Bluffs, are in this situation due to the financial meltdown in 2008, but that sacrifices, such as a hiring freeze, should be considered in the short term. “We’re having this conversation with most boards,” he said. “It’s an unfunded liability, and by law you have to pay for this.”

Mr. Sullivan said town accounts receivable reconciliations are still lagging considerably. “You’re behind significantly in fiscal year ’14, so there needs to be a catch-up,” he said. “We should be here in November, not in May.” As he did last year, Mr. Sullivan strongly urged that accounts be reconciled on a monthly basis.

Another unresolved issue from last year’s report, according to Mr. Sullivan, is organizational clarity. “It’s problematic that there isn’t a documented process of who’s responsible for doing what,” he said.

More oversight

In the management letter, Mr. Sullivan said that student activity funds, which are controlled by the school principal, lacked oversight by the town accountant and should be audited more frequently to be in compliance with state law.

Police department comp time, payment for unused vacation time and for overtime, continues to weigh heavily on the books, according to Mr. Sullivan. “Some officers have more vacation time than is allowed in their contract,” he said. “That gets hairy from a legal standpoint.”

Chairman Greg Coogan said that police chief Eric Blake was hired with a mandate to remedy the comp time issue.

Chief Blake said that historically, a considerable source of overtime was for police details at special events, some of which didn’t pay the bill. The police detail fund is currently $36,000 in the red. “Changes have been made to address it,” Chief Blake said. “Every detail pays up front except for NSTAR or Verizon.”

Mr. Sullivan reiterated another major concern from last year’s report — the lack of a policy and procedure manual for key financial reporting offices. “You don’t need an encyclopedia,” he said.

“The lack of a formalized policy and procedural manual could be considered one of the causes to the deterioration of the town’s ability to maintain and support its ledgers, accounting systems and financial reporting to external users,” he concluded in the management letter.

Mr. Sullivan said the town has a $20,000 liability for “tailings” — checks issued by the town but never cashed — that needed to be reconciled and periodically checked. The treasurer should contact the people to whom the check is issued and if no contact is available, the money should go back to the town, he said.

Mr. Sullivan also said other recommendations from 2012 had not been adequately addressed, including student activity funds, clarifying accounting practices with the Wastewater Enterprise fund, and a thorough fraud risk assessment. “We recommend that management develop and implement a fraud risk assessment program to identify, analyze and manage the risk of asset misappropriation,” the report say. “This can be done by completing the draft policy that was begun by the previous finance teams.”

Mr. Sullivan said that the town administrator should have the final say on all policy issues.

“It’s good to see the turnaround in the general fund,” Bob Whritenour, town administrator, said of the report. “If you think back a few years, we had a massive deficit and no town accountant. We’ve made a lot of progress, but we have a long way to go. If we maintain a positive balance sheet for a few years in a row, we’ll be in good shape.”

Inkwell ire

The dredge spoils from Lagoon Pond that were placed on Inkwell Beach in February elicited the most spirited exchange of the night. Richard Seelig, a seasonal resident who raised the issue when selectmen met on April 22 , returned to question the science and the logic behind the decision. Conservation commission agent Liz Durkee repeated her previous statement that the sand passed all department of environmental protection (DEP) tests for metal content and grain size compatibility. Mr. Seelig countered that the DEP tests for only three metals — lead, arsenic, and mercury — and that there could be a much wider range of toxins because the sand came from the Lagoon Pond bridge construction site. At the previous selectmen’s meeting, Mr. Seelig presented the sand, dark in color and clay like in texture, and showed rusted metallic objects he found in the material, including a rusted welding rod.

GZA Environmental tested the sand in July 2010 and deemed it appropriate for “reuse at a Massachusetts lined landfill or at an asphalt dispatching facility.”

On February 24, after testing the material for heavy metals, Ph levels and grain size compatibility, DEP amended the permit to allow the dredged soil to be used for “beach nourishment material” in Oak Bluffs.

“It’s not a perfect fit,” Ken Chin, the DEP agent who made the decision, said in a phone interview with The Times. “But the town was desperate for beach nourishment material and the sediment passed all the necessary tests. If there are metal objects, that’s the responsibility of the contractor.”

“I won’t let my dog walk on it,” former selectman Kerry Scott said. “It has a distinct petroleum smell. I can’t imagine babies drawing on it or people laying on it.”

Ms. Durkee said that Dale McClure and employees from Watercourse Construction, dredging contractors on the project, were going to rake out the material within a week. Once Little Bridge is dredged on June 1, that sand, which is cleaner and will blend in more quickly, will be placed over the Lagoon Pond dredge spoils, she said.

Shellfish constable David Grunden added that the dredge spoils from Little Bridge have been used many times before and have worked well.

“We’ve got two weeks until Memorial Day,” said selectman Gail Barmakian. “If this was February or March, we’d have time, but this is critical.”

In other business, John Bradford, former chairman of the Oak Bluffs planning board, was presented with a certificate of appreciation for years of service to the town that began in 1978. “You gave so much to this town,” Mr. Coogan said, as Mr. Bradford received a standing ovation. “We couldn’t have done it without you.”

Push carts were again pushed from Circuit Avenue when Bill Coggins was denied a one-time permit to put a retail cart on the lot he owns at 16 Circuit Avenue with a 3-2 vote. Selectman Kathy Burton said she was concerned that even one cart would break the long debated precedent. Mr. Vail and Ms. Barmakain agreed. Mr. Coogan and Mr. Santoro voted to give Mr. Coggins the permit.