Sutton audit successful; more OPEB funding sought
BY TOM REILLY
SUTTON – Melanson and Heath representative Alan Goodwin appeared before the Sutton Board of Selectmen Feb. 5 to reveal the town’s annual outside audit had gone well, with all of the books and records being reconciled in a timely fashion. He noted the review was taking place at roughly the same time as last year, meaning it too was on schedule.
Heath said the town must monitor the Other Post Employment Benefit (OPEB) trust fund, however, in order to keep up with retirement costs.
This fund is supposed to eventually fund the town’s post employment benefit liability. The town’s net OPEB obligation rose by $800,000 in the last year, Goodwin noted, bringing it to $3.7 million overall. He said it was admirable the town had begun funding the OPEB liability but noted that only $85,000 so far was contributed.
He illustrated how quickly the liability had increased over the past four years, from $749,000 in 2009 to almost $3.8 million today. It goes up between $800,000 and $1 million annually.
The town also dealt with the second year of the middle school/high school construction project. Goodwin said last year the town took out a $23 million construction bond and this year there were $15 million in expenditures related to that bond.
Goodwin also talked about the town’s journal fund, which he called the town’s chief operating fund. He said the journal fund had a “break even” year in FY2012. He said the town’s unrestricted net asset fund came in at about $7 million, up $4 million from the prior year. He said this increase was driven by $6 million in Massachusetts School Business Administration money sent for the school construction project.
He told the town the unassigned fund balance was essentially unchanged, going up by about $50,000. This $1.1 million makes up about 4 percent of the total general fund balance. The assigned fund balance comes to $1.048 million, basically a free cash carry forward.
The town’s total fund balance went down by about $300,000 in FY2012, Goodwin said. He said this was because slightly more revenues came in than had been budgeted for and actual expenditures were slightly less than predicted. He also noted the sewer enterprise fund and the transfer station enterprise fund had essentially remained unchanged.
Goodwin conducted an audit of student activity funds and the review went extremely well. He was making two recommendations—to handle funds individually and to create written policies for receipts.
He also felt there was a need to analyze the handling of indirect costs for the sewer department and the transfer station. He said this process of allocating indirect costs has not changed in recent years, recommending the town take a look at it again.
He urged the town to come up with formal written policies whenever possible. He said the question to ask was “what could go wrong?” with the town’s financial statements and act accordingly. He also asked the town to update its balance sheet to be consistent with GASB-54, implemented last year as a means of reclassifying fund balances. Finally, Sutton, as a member of the Worcester County Retirement Board, is required to show its pension liability on its statements by FY2015.
Selectman David Hall asked about the transfers in and out of the sewer fund and Goodwin said this was due to debt service between the sewer fund and general fund.