WELLFLEET — After three years of inaccurate and incomplete financial reporting, the state Division of Local Services gave Select Board and Finance Committee members tough recommendations at a joint meeting Tuesday night.
Hiring a finance director and consolidating the town’s financial operations is paramount, according to state Senior Project Manager Marcia Bohinc.
A 90-minute presentation by Bohinc, Bureau Chief Zack Blake and Bureau of Accounts Chief Deb Wagner laid out the findings of a 37-page report created at the request of the select board. The division gave 20 recommendations for improving the town’s finance department, instituting financial planning procedures and improving overall financial operations.
The recommendations are both basic and expensive, and instituting them and improving the financial well-being of the town will take years, not months, according to Blake.
Besides hiring a finance director, the report’s recommendations include implementing standard financial reporting, developing a financial plan and decreasing reliance on debt exclusions to pay for capital financing. It recommended the town create a procedures manual and reconcile the cash book to the general ledger on a routine basis.
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“Reconcile, reconcile, reconcile,” said Bohinc, adding it must be foundational, formalized and routine. “There’s nothing more important than reconciliation and making sure that the treasurer is reconciling cash flow to the bank, the collector is tallying the daily activity with the control book, and both of those officials are taking their control books and reconciling with the town accountant and the general ledger.”
A cash book is where cash receipts, deposits, transfers and disbursements are recorded. A general ledger keeps track of the financial records of a town’s accounts.
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Regular reconciliation of the town’s accounts has been hampered by a whirlwind of employee turnover, according to the report. In the last 10 years, the town has had six town administrators, six assistant town administrators, nine town accountants, six treasurers and two collectors.
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The last time free cash was certified was in 2019, though Town Administrator Richard Waldo estimated the town was three to four weeks away from free cash certification for fiscal 2022. Without certification, the town cannot use free cash for current-year expenses and risks losing some state funding.
The report blamed the town’s “unorganized and mismanaged finances” for delaying the fiscal 2022 budget process. The report found fault with the town’s paper-driven financial operations, lack of consistency and lack of proper financial training for staff.
The recommendations were broken down into three categories: finance department, financial planning and financial operations. The first step would be to appoint a finance director, a cost the state suggests could be shared with another town. Other recommendations include having the director supervise all financial operations staff; combining the treasurer and collector positions; providing training and professional development for staff and committee and board members; instituting standard financial reporting; and holding regular financial management team meetings.
The report suggests the town develop a financial plan, hire a new outside auditing firm and decrease its reliance on debt exclusions. In the last 12 years, voters approved 15 of 19 override requests; six for the fiscal 2023 budget alone.
Wellfleet isn’t the first community in Massachusetts with financial challenges
Blake assured board and committee members that Wellfleet isn’t the first community in the commonwealth to experience challenges. He recognized the special challenges facing towns on Cape Cod, including the high cost of living, the lack of housing stock, and the difficulty recruiting senior municipal leadership.
Select Board Chairman Ryan Curley asked how the town could fund the recommendations. Wellfleet relies on residential taxes for 96% of its tax levy. Only 1% comes from new growth. With the Cape Cod National Seashore taking up 70% of the town’s land mass, new growth can be hard to come by.
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“How do we fund that?” he asked. “What options do we have besides asking voters?”
There was some good news: Wellfleet was recently upgraded to AAA status by Standard and Poor’s. And local receipts came in higher than anticipated. Waldo, who was hired in 2022, said the town was already heading in the direction recommended by the report.
“It’s not a light switch,” Waldo said, adding the town would get there by making incremental changes.
The state will continue to partner with the town to assist them in their efforts, Wagner said. The Department of Revenue has a regulatory role but also provides support to the community, she said.
Contact Denise Coffey at [email protected]. Follow her on Twitter: @DeniseCoffeyCCT.
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