ASHBURNHAM —Growing concerns over Ashburnham’s financial situation prompted the state Department of Revenue to host a presentation on Wednesday detailing the town’s shortcomings with financial management.
The key issue facing the town is failure to submit financial documents to the state on time.
As fiscal year 2020 approaches, the balance sheet including the enterprise fund retained earnings from 2018 has not been submitted.
Retained earnings have to be certified by the Burreau of Accounts prior to being spent. Ashburnham typically submits retained earnings in July.
According to the Division of Local Services, concerns were raised after the town missed a debt service payment last July.
An annual debt service is the total principal and interest which needs to be paid at the end of the fiscal year, which the town reportedly failed to do three times in the past five years.
“It becomes a concern to us whenever a town missed a debt service payment,” said Scott Santangelo, who works for the Worcester Bureau of the Division of Local Services. “This is when we reached out to the town administrator and set up a meeting in August with financial management team to design a corrective action plan.”
Santangelo said this led to a series of discussions about providing oversight and training to Treasurer-Collector Sara Paz.
Since September, Marcia Bohinc with the Technical Assistance Bureau has provided hands on training to staff over the course of 10 visits.
Bohinc explained that the treasurer-collector is responsible for cash management, including monitoring receipts and overseeing the reconciliation of all town funds. Reconciliation could include receivables, debt, trust funds, and state or federal grants.
Bohinc said the treasurer-collected needs to communicate with the town accountant and submit copies of financial reports to that department.
She said a majority of the issues stem from lack of experience and communication.
However, Bohinc said the financial records for the current fiscal year are heading in the right direction.
“As far as I’ve seen in the past few months, the funding has been done correctly,” she said. “The transfers have been done correctly and it’s been kept up to date.”
Failure to submit financial records on time also threatens Ashburnham’s ability to claim free cash for the year. Free cash is a revenue source left over after expenditures from the previous fiscal year, and can be appropriated at Town Meeting.
In order to access the funds, free cash needs to be certified by the Bureau of Accounts.
Supervisor of the Worcester Bureau of Accounts Andrew Nelson said most towns submit free cash in the fall. Ashburnham, on the other hand, has not submitted so far this year.
The deadline to appropriate those funds is June 30, said Nelson, and the town will only have a few weeks to set up a Special Town Meeting to appropriate the funds if free cash is certified soon.
Town Administrator Heather Budrewicz said she hopes to submit free cash before the end of May.
Another issue at hand is a continued deficit in the town overlay account. Overlay is an account to fund abatements and exemptions of property taxes for any fiscal year.
Nelson said there has been a deficit in the overlay account in three of the past four tax rates. Towns usually have a surplus in this account and use the money as an available funding source, said Nelson.
“I don’t know of another town that has had three overlay deficits,” he said. “And certainly not in the Worcester or Central Massachusetts communities.”
Budrewicz said Ashburnham is working diligently so solve the issues, and will be monitoring the problems closely.
Budrewicz said the town is in a unique position in terms of its cash flow. While debt service payments are due in July and January, she said, taxes come in during August and February.
“It’s a cash flow problem,” said Budrewicz. “We recognized that piece of it, we took it easy on some of our spending, we monitored our spending to the penny.”
Budrewicz said the town is heading in the right direction.
“We’re doing OK,” she said. “As folks know who came to Town Meeting, we’re not rolling in dough and we’re being extremely conservative this year.”
She said the town will be conducting a tax title lean sale in June to help with cash flow. The practice is the selling of debt from a lean owed to the town.
“The running theme is the importance of a team approach,” said Santangelo. “A key to that is communication, regular communication, and transparency.”
Daniel Monahan: dmonahan@sentineland enterprise.com.