HomeMy WebLinkAboutBoard of Selectmen Agenda July 20, 2011 Packet_201402061630459095
DEPARTMENT OF MUNICIPAL FINANCE TOWN OF NANTUCKET
Finance Director (508) 325-7518 (508)228-7209
Operations (508) 228-7209 Town & County Building
Collector (508) 228-7270 16 Broad Street
Treasurer (508) 228-7265 Nantucket, MA 02554
Assessor (508) 228-7211
Accounts Payable (508) 228-7275
TO: C. Elizabeth Gibson, Town Manager
FROM: Irene Larivee, Assistant Finance Director
DATE: July 13, 2011
RE: Finance Department Progress - June 2011
Attached is the monthly progress report relating to: the findings and areas of concern of the FY 10
audit and management letter; the Abrahams Report recommendations implementation, and
Department of Revenue report submittals.
Fiscal Year 2010 Audit Management Letter
The audit management letter outlines areas for improvement and identifies findings and weaknesses.
The Town’s FY 10 management letter contains eight findings requiring immediate attention including
implementation of internal controls; cash reconciliations; legacy account issues; enterprise funds;
county reconciliations; late journal entries; enterprise fund inter fund transfers; capital borrowing and
associated expenditures.
Action Taken Since June 1, 2011:
1. Cash Reconciliations: County Cash Reconciliations as of April 30, 2011 are complete. Town Cash
Reconciliations are 96.7% complete as of April 30, 2011; with the remaining 3.3% in progress.
Between the Town and County, there are presently 108 bank accounts of which all activity is
reconciled through March with the exception of two town legacy accounts and one current
account. The Town current payroll account has been reconciled between the Treasurer’s
Cashbook and Bank Statements through April 30, 2011. The reconciling items have been
identified between the Cashbook and General Ledger; however additional research is required
before final adjustments are made to the General Ledger. The remaining two legacy accounts
within the town are scheduled to be addressed by the June 30, 2011 cash reconciliation internal
review on August 18, 2011.
2. Legacy Accounts: In progress. As of June 30, 2011; the legacy accounts issues associated with
the County Accounts Payable account and Town Payroll account have been resolved in the
Treasurers Cashbook. The Treasurer and Auditor continue to make progress on both the Old
Town Payroll account and Old Town Accounts Payable account in the month of May with the intent
to close the legacy issues by the June 30, 2011 cash reconciliation internal review on August 18,
2011.
The Management Letter also identifies other areas of concern that need to be corrected during the
remainder of FY2011 and FY2012, including reconciling Massachusetts Highway Grants; Accounting for
Trust Fund Balances; Commingling Cash Accounts of Enterprise Funds; Fraud Risk Assessment;
Accounting for Off-Duty Police and Fire Details; Dental Insurance Withholding Deficit; General Ledger
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Maintenance and Reconciliations for Nantucket County; Receivable Reconciliations; Prepaid Expense
Balance; Journal Entry Control; and County Escrow Accounts.
An update on key items listed in the prior paragraph follows:
1. Accounting for Trust Fund Balances – In progress. Trust fund bank statements are received on
a quarterly basis. Therefore, we anticipate the cash balances in the Trust Funds will be
completed for the close of the fiscal year cash reconciliation. The June 30, 2011 cash
reconciliation is due to the Finance Transition team for review on August 18, 2011.
2. General Ledger Maintenance and Reconciliations for Nantucket County – Complete. As of May
31, 2011; the Assistant Finance Director has reconciled the County and Town due to / due
from accounts.
3. Receivable Reconciliations – In progress. Of the 150 accounts receivable line items that are
reconciled each month, 139 or 92.7% of the accounts are reconciled as of April 30, 2011. The
remaining 14 accounts that have identified variances include Landfill User Fees (1 account),
Our Island Home (10 of 12 accounts). The Acting Finance Director and Controller will ensure
the June 30, 2011 receivables are reconciled by the due date of August 18, 2011.
4. Enterprise Funds – Complete. On a monthly basis, Airport and Wannacomet / Siasconset
Water reconcile the activity in their respective accounts (bank, general ledger, and billing
systems) to ensure transfers for payroll and accounts payable warrants as well as deposits for
cash receipts are made in an accurate and timely manner. As of May 31, 2011, the Airport and
Wannacomet / Siasconset water departments have confirmed their reconciliation has been
completed. The final reconciliation for June 30, 2011 from the Cashbook to the Airport and
Wannacomet Water General Ledger cash accounts will be completed on August 18, 2011.
5. Enterprise Fund Inter-fund Transfers – Complete. The Enterprise Fund Inter-fund transfers
pertain to funds that are due to Siasconset Water, Sewer, Landfill, Airport, and Wannacomet
Water either from other Enterprise Funds or the General Fund. As of May 31, 2011, all due to
due from accounts have been reconciled.
Journal Entry Control – In progress. For the month of May, Town journal entries have a cumulative
decrease of 51.5% over FY2010; with County journal entries cumulatively decreased by 64.7%.
Department of Revenue Schedule
The Massachusetts Department of Revenue provides a schedule of tasks with an associated timeline
for all municipalities in the Commonwealth.
Action Taken Since June 1, 2011:
1. Determine Valuation of Other Municipal or District Land – Complete.
2. Deadline for Appealing Commissioner’s Telephone & Telegraph Valuations – Complete.
3. Final Date (June 20, 2011) to Make Omitted or Revised Assessments – Complete.
4. Overlay Surplus Closes to Surplus Revenue - Complete.
5. Submit Annual Report of Omitted or Revised Abatements – Complete.
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6. Last Day (June 30, 2011) to submit requests for current fiscal year reimbursements of exemptions
granted under the various clauses of Chp 59 Sec 5 – Complete.
Abrahams Implementation Plan
In 2008, the Town contracted with the Abrahams Group to provide an organizational review of the
Finance Department. Within the report were thirty-six recommendations to improve the organizational
structure of the department. As of June 30, 2011; twenty or 55.6% of the recommendations have
been implemented; with an additional ten or 27.7% in progress.
Action Taken Since June 1, 2011:
1. Recommendation #1A: To assure duties that should be segregated are segregated to prevent
internal control weaknesses. In progress. The Acting Finance Director and Controller serve as
budget analyst and town accountant respectively. Posting to the cash receipts module has been
removed from the Treasurer. Once bonded, the Assistant Treasurer will also have posting
capabilities removed.
2. Recommendation #16: Decentralize cash receipt entry. In progress. Phase I is up and
operational. Phase II of the implementation is scheduled for the end of July, with the third and
final phase scheduled for August.
3. Recommendation #18: Formal monthly reporting to the Audit Committee as evidence of monthly
cash reconciliation and accounts receivable reconciliations. Re-established with monthly meetings
scheduled throughout the rest of calendar year 2011. As of April 30, 2011, County cash
reconciliations were complete. Town cash reconciliations were partially complete with the
exception of the remaining two town legacy accounts. Accounts receivable were 92.7% reconciled
with the exception of eleven accounts: The Landfill User Fees, and Our Island Home accounts.
4. Recommendation #24: Timely submittal of reimbursements for loan draw-downs. In progress.
Chapter 90 projects were submitted to the Massachusetts Department of Highway for
reimbursement in June of 2011. A copy of the submittal to the state was provided to the Finance
Department within twenty-four hours.
The Acting Town Accountant and Treasurer also met with representatives from the Massachusetts
Water Pollution Abatement Trust in June 2011. The purpose was to obtain a better understanding
of the drawdown process as well as identify opportunities to improve the timeliness of receipts.
5. Recommendation #34: Remove Human Resources / Personnel functions from the Finance
Department. Complete.
6. Recommendation #35: Assistant Treasurer Function. In progress. The remaining task to ensure
the Assistant Treasurer is able to perform her duties is to have the Assistant Treasurer bonded
and designated as the second signatory on the major cash accounts for the Town and County.
This task is in progress and is scheduled to be completed by June 30, 2011.
If you have any questions or concerns regarding our progress to date or future deadlines, please don’t
hesitate to let us know.
Combined Status of Management Letter, Abrahams Implementation, and Department of Revenue ScheduleJune 30, 2011Rec. #Fundamental Purpose/ObjectiveDate DueAccomplishedCommentResponsible for Performing Task's) Responsible for Follow UpPartially AccomplishedNot AccomplishedDOR Schedule64Determine Valuation of Other Municipal or District Land Assessors Acting Finance Director(s) 6/1/2011√DOR Schedule70Deadline for Appealing Commissioner's Telephone & Telegraph ValuationsAssessors Acting Finance Director(s) 6/15/2011√DOR Schedule71Make Annual Preliminary Tax Commitment Assessors Acting Finance Director(s) 6/15/2011N/APertains to Quarterly Tax BillingManagement Letter1b. Cash ReconciliationsTreasurer / Assistant Treasurer / Town Accountant / Accounting Clerk Acting Finance Director(s) 6/16/2011√Third Thursday of Each MonthManagement Letter9General Ledger Maintenance and Reconciliations for CountyAssistant Finance Director / Town Accountant Acting Finance Director(s) 6/16/2011√Third Thursday of Each MonthManagement Letter10Receivable ReconciliationsStaff Accountant / Town Accountant / OIH Administrator / DPW Acting Director Acting Finance Director(s) 6/16/2011√Reconciliations for month ending May 31st incomplete. Year End reconciliations in progress.Management Letter1c. Address Legacy Account IssuesAssistant Finance Director (County) / Treasurer / Town Accountant Acting Finance Director(s) 6/16/2011√Status Required @ Monthly Audit Committee MeetingManagement Letter1d. Enterprise FundsTreasurer / Airport Accountant / Water AccountantActing Finance Director(s) / Airport Manager / Water Manager 6/16/2011√Completed Management Letter1g. Enterprise Fund Inter-fund TransfersTown Accountant / Assistant Finance Director Acting Finance Director(s) 6/16/2011√Completed DOR Schedule72Final Date to Make Omitted or Revised Assessments Assessors Acting Finance Director(s) 6/20/2011√Abraham's Implementation34Transfer H.R. functions done by Finance to H.R. DepartmentHuman Resources Director / Treasurer Town Manager6/30/2011√Remaining Insurances Transferred to HRManagement Letter2Reconciling Massachusetts Highway GrantsStaff Accountant / DPW Acting Director / Town Accountant Acting Finance Director(s) 6/30/2011√Complete Reconciliation by 4th Quarter 2011Management Letter4Commingling Cash Accounts of Enterprise FundsTown Accountant / Treasurer / Assistant Finance Director Acting Finance Director(s) 6/30/2011√Reconciliation completed by Assistant Finance Director March 2011. Complete Physical Due To / Due From Transfers by 4th Quarter 2011Management Letter6Accounting for Off-Duty Police and Fire DetailsStaff Accountant / Town Accountant / Chief of Police Acting Finance Director(s) 6/30/2011√Reconciliation for month ending May 31st complete.Management Letter7Dental Insurance Withholding DeficitTreasurer / Assistant Treasurer / Town Accountant Acting Finance Director(s) 6/30/2011√Completed on weekly basisManagement Letter8Accounting Separately for Bond Proceeds Town Accountant Acting Finance Director(s) 6/30/2011√Complete by 4th Quarter 2011DOR Schedule73Notification of Quarterly Local Aid Payments Before June 30 State Treasurer 6/30/2011 N/A Applies to FY2013DOR Schedule74Overlay Surplus Closes to Surplus Revenue Assessors Acting Finance Director(s) 6/30/2011√DOR Schedule75Physical Inventory of all Parcels for Communities that accepted MGL Ch 59, Sec 2A(a)Assessors Acting Finance Director(s) 6/30/2011 N/ADOR Schedule76Submit Annual Report of Omitted or Revised Abatements Assessors Acting Finance Director(s) 6/30/2011√DOR Schedule77Last Day to Submit Requests for Current Fiscal Year Reimbursements of Exemptions Granted Under the Various Clauses of Chp 59, Sec 5 Assessors Acting Finance Director(s) 6/30/2011√Abraham's Implementation1aTo assure dutires that should be segregated are segregated to prevent internal control weaknesses Treasurer / Town Accountant Acting Finance Director(s)6/30/2011√all reassigned to another individual continuing theAbraham's Implementation20Record all Receivables on G. L. based on recording of the relevant source documents Staff Accountant / Town Accountant Acting Finance Director(s)6/30/2011√All financial activity recorded on G.L. should be based on source document. In progress; June 30 reconciliation due by August 18, 2011Abraham's Implementation24Timely submittal of reimbursements for loan drawdownsTown Accountant / Acting DPW Director / Transportation Planner Acting Finance Director(s)6/30/2011√Resolved in FY 2009 according to audit report to management with exception of 3-C and Chapter 90. Chapter 90 resolved in May 2011.Management Letter1b. Cash ReconciliationsTreasurer / Assistant Treasurer / Town Accountant / Accounting Clerk Acting Finance Director(s) 7/21/2011√Completed for Town and County. Town still has two legacy accounts (Accounts Payable and Payroll) that need to be resolved. The June 30 cash reconciliation is due August 18, 2011.Management Letter9General Ledger Maintenance and Reconciliations for CountyAssistant Finance Director / Town Accountant Acting Finance Director(s) 7/21/2011√In progress Management Letter10Receivable ReconciliationsStaff Accountant / Town Accountant / OIH Administrator / DPW Acting Director Acting Finance Director(s) 7/21/2011√In progress Management Letter1d. Enterprise FundsTreasurer / Airport Accountant / Water AccountantActing Finance Director(s) / Airport Manager / Water Manager 7/21/2011√In progress Management Letter1g. Enterprise Fund Inter-fund TransfersTown Accountant / Assistant Finance Director Acting Finance Director(s) 7/21/2011√In progress Abraham's Implementation16 b.Decentralize cash receipts data entry into Munis to departmentsDepartment Heads / Assistant Finance Director Town Manager7/31/2011√Scheduled 2nd team training and implementation in July (Includes: Code Enforcement, Public Works, OIH, Visitor Services, and Marine Department.)7/13/2011
TOWN OF NANTUCKET
BOARD OF SELECTMEN
FINANCIAL RESERVES POLICY
Effective date: 07/20/2011
Adopted: [if applicable]
Applicability: Town, School, and Enterprise Departments
I. Purpose
In an effort to improve and protect the Town’s long-term financial health, the proper
reserves should be in place to offset any unforeseen or extraordinary needs of an
emergency nature.
The purpose of this policy is to:
1. Ensure the Town maintains adequate reserves’
2. Ensure the Town maintains and improves its bond rating;
3. Ensure the operating budget is not balanced using financial reserves.
The effectiveness of this policy will be reviewed each fiscal year at the beginning of the
budgetary process and refined accordingly, if necessary.
II. Policy – Free Cash (Previously Adopted August 3, 2005)
Free Cash is the term used for the portion of the Town’s funds which is unrestricted and
available for appropriation at the end of a fiscal year. The amount of Free Cash is
certified by the Director of Accounts at the Department of Revenue’s Division of Local
Services, upon application by the Town on an annual basis.
As approved by the Board of Selectmen on August 3, 2005, appropriate uses of free cash
include: to fund the stabilization fund; to fund capital projects with an estimated cost
between $100,000 and $500,000 for which long-term borrowing is authorized at terms of
five or fewer years; to fund extraordinary deficits that would otherwise be carried over to
the following year; to remain in unreserved, undesignated fund balance until the sum of
unappropriated free cash is equal to 5% of general fund revenue. The purpose of
maintaining an unappropriated amount of free cash is to provide for cash flow and to
have funds available if necessary for emergency appropriation.
Exceptions to the free cash policy shall be made only under extraordinary circumstances
and any such exception shall be explained to the voters in a statement written by the
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Board of Selectmen in the Annual Town Meeting or Special Town Meeting warrant if
applicable. The Town will not use Free Cash as a source to balance its operating budget.
III. Policy – Stabilization Fund (Previously Adopted January 13, 2005)
A stabilization fund is designed to accumulate amounts for capital and other future
spending purposes, although it may be appropriated for any lawful purpose (MGL Ch 40
Section 5B). Communities may establish one or more stabilization funds for different
purposes and may appropriate into them in any year an amount not to exceed ten percent
of the prior years tax levy. The total of all stabilization fund balances shall not exceed
ten percent of the community’s equalized value, and any interest shall be added to and
become a part of the funds. A two-thirds vote of town meeting is required to establish,
amend the purpose of, or appropriate money into or from the stabilization fund.
The Town will maintain initial funding in the Stabilization Fund an amount equivalent to
3% of the Town’s prior year revenue. The fund shall be funded only with Free Cash or
revenues. Once the initial funding goal of 3% of revenue has been achieved, additions to
the Stabilization Fund shall be made each year to maintain the 3% level. In any year in
which Free Cash exceeds $3,000,000, an additional 3% of Free Cash will be added to the
Stabilization Fund until the Stabilization Fund reaches 5% of revenue.
The Stabilization Fund may only be used to support the operating budget when revenue
increases less than 3% from the prior fiscal year. The amount withdrawn from the Fund
shall be equal to the amount necessary to bring the year-over-year increase in the Town’s
prior year revenue to 3%, or 1% of prior year revenue, whichever is less. There will not
be any additional withdrawals from the Stabilization Fund until the amount withdrawn is
replenished. Funding to replenish the Stabilization Fund shall come from Free Cash or
from revenue. If Free Cash or revenue is insufficient to replenish the Stabilization Fund
in the immediately following fiscal year, the replenishment shall occur as soon as Free
Cash or revenue is available, and no further withdrawal shall occur until the fund has
been replenished.
IV. Policy – Trust Funds
Trust funds account for assets being held by a community in a trustee capacity and for a
specific purpose stipulated by a trust agreement. In the Town of Nantucket, the Treasurer
generally acts as the trustee. If the trust is an expendable trust, then both the principal
and interest may be used for the purpose as specified within the trust. If the trust is non-
expendable, then only the interest can be used as directed in the trust agreement.
In the event the Health Insurance Trust Fund exceeds $3,000,000, the Town portion of
the trust will be used to offset the Other Post Employment Benefits (OPEB) liability.
The Town will not use Trust Funds as a source to balance the operating budget.
V. Policy – Fund Balance
Fund Balance is defined as the difference between assets and liabilities reported in a
governmental fund, which is also known as fund equity.
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The Town will not use the fund balance(s) as a source to balance the operating budget or
to offset unforeseen expenditures.
TOWN & COUNTY OF NANTUCKET
BOARD OF SELECTMEN
COUNTY COMMISSIONERS
FINANCIAL ACCOUNTING POLICY AND PROCESS
Effective date: 07/20/2011
Adopted: [if applicable]
Applicability: Town, School, and Enterprise Departments
I. Purpose
In a concerted effort to improve financial management, the Town and County will
conform to Generally Accepted Accounting Principles as promulgated by the
Governmental Accounting Standards Board (GASB) and the General Laws of
Massachusetts (MGL).
The purpose of this policy is to:
1. Create transparency to the citizens, Board of Selectmen / County
Commissioners, and Town / County Administration on the financial condition
of the Town and County.
2. Provide a notification mechanism of major exceptions that will have a positive
or negative impact on the Town and/or County reserves and/or budget.
II. Accounting Basis
Governmental funds are accounted for using the current financial resources measurement
focus incorporated in the modified accrual basis of accounting. Using this basis,
revenues are recognized when they are subject to accrual or when they become
measurable and available. Likewise, expenditures are recorded as the liabilities are
incurred with the exception of principal and interest on general long-term liabilities
which are recognized when they are due. Revenues which are subject to accrual include
grants from other governments and interest on investments. Revenue from property taxes
is subject to accrual but is not accrued because funds are not collected in an appropriate
time period after the fiscal year’s end to pay the liabilities of the current reporting period.
Local revenues are generated from excise taxes, fees, licenses, permits, rentals, penalties,
and interest. Local revenues are not subject to accrual as they are neither measurable nor
available prior to receipt of revenue.
Proprietary funds, including enterprise funds and internal service funds, are accounted for
on the accrual basis of accounting. Revenues are recognized when they are earned and
become measurable. Expenses are recognized when incurred, if measurable. Unbilled
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receivables at the years end for the Airport, Siasconset Water, Wannacomet Water, Our
Island Home, Sewer, and Solid Waste enterprise funds are not accrued since they are not
significant to the general fund current operations.
The Town and County also report fiduciary funds which do not adopt budgets. These
funds are accounted for on an accounting basis consistent with the funds measurement
focus. Fiduciary funds include the health insurance trust fund, expendable trust funds,
and private purpose trust funds.
III. Budgetary Basis
Annual budgets are adopted for the general fund, special revenue funds (revolving funds),
and enterprise funds. All budgets are adopted on a basis consistent with Generally
Accepted Accounting Principals (GAAP) and the General Laws of Massachusetts
(MGL).
The level at which expenditures may not legally exceed the budget is contained within
each category (salaries and expense) in the fund. Any change in the appropriation level
of the fund must be approved by Town Meeting or at fiscal year end by the Board of
Selectmen and Finance Committee. Line item adjustments within departmental budgets
do not require Town Meeting approval; however transfers within a category of the budget
require the approval of the Assistant Finance Director. With the exception of
appropriations pertaining to capital improvements projects and outstanding purchases,
appropriations lapse at year end. Appropriations for capital improvement projects are
carried forward until such time as the project is completed or no longer occurring.
IV. Process – Single Audit
The audit function is contained within the Finance Department. The Finance Director is
accountable to the Town Manager to ensure the annual audit is conducted in a timely
manner.
As recipients of federal and state assistance, the Town and County are also responsible
for ensuring an adequate internal control structure is in place to secure compliance with
applicable laws and regulations related to those programs. This internal control structure
is subject to periodic evaluation by the Finance Director, Town Manager, external
auditing staff; and Audit Committee.
V. Process – Budgeting Controls
The Town and County also maintain budgetary controls to ensure compliance with legal
provisions. Balanced annual budgets are adopted for the general fund, special revenue
funds, and enterprise funds. The Assistant Finance Director monitors expenses and
revenues, adjusts departmental line item budgets as needed, and prepares interim
financial reports for Town Administration and the Board of Selectmen.
VI. Process – Monthly Financial Reports
The Assistant Finance Director will prepare monthly reports for Town Administration
and the Board of Selectmen that analyze and evaluate revenue and expenditure financial
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performance. Anomalies or one-time occurrences will be explained in a summary section
of the report. In the event a major revenue or expense exception occurs, the Assistant
Finance Director will inform Town Administration of the potential long-term impact on
the Town and County budget and financial condition. A major exception threshold is a
revenue decline or expense increase in excess of Two Hundred Fifty Thousand Dollars
($250,000).
VII. Financial Structure
Financial transactions of the Town and County are budgeted and recorded in separate
funds. A fund is an independent financial and accounting entity; it is a set of interrelated
accounts used to record revenues and expenditures associated with a specific purpose. A
fund has a balanced set of accounts and records, cash and other financial resources in
conjunction with all related liabilities and residual equities, which are segregated for the
purpose of carrying on specific activities or attaining certain objectives in accordance
with special regulations or restrictions. Funds include but are not limited to:
FUND PURPOSE*
General Fund The fund used to account for most financial
resources and activities governed by the
normal town meeting appropriation
process. Examples include the Police
Department, Fire Department, and School
Departments.
Special Revenue Funds Funds, established by statute or local bylaw
only, containing revenues that are
earmarked for and restricted to
expenditures for specific purposes.
Special Revenue for departmental
purposes, in accordance with MGL Ch 44
Section 53E1/2, must be reauthorized each
year by Town Meeting with a limit
established on the total amount that may be
spent from each fund. Examples include
the Ambulance Reserve Fund, the Beach
Improvement Revolving Fund, and
Waterways Improvement Fund.
Capital Improvements Projects Fund Fund type used to account for financial
resources to be used for the acquisition or
construction of major capital facilities.
Enterprise Funds An enterprise fund, authorized by MGL Ch
44 Section 53 F1/2 is a separate accounting
and financial reporting mechanism for
municipal services for which a fee is
charged in exchange for goods or services.
It allows a community to demonstrate to
the public the portion of total costs of a
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service that is recovered through user
charges and the portion that is subsidized
by the tax levy, if any. With an enterprise
fund, all costs of service delivery – direct,
indirect, and capital costs – are identified.
This allows the community to recover total
service costs through user fees if it
chooses. Enterprise accounting also
enables communities to reserve the
“surplus” or net assets unrestricted
generated by the operation of the enterprise
rather than closing it out to the general
fund at year-end. Services that may be
treated as enterprises include, but are not
limited to, water, sewer, hospital, and
airport services. In Nantucket, the six
enterprise funds are Nantucket Airport,
Siasconset Water, Wannacomet Water, Our
Island Home, Sewer, and Solid Waste.
Community Preservation Fund The purpose of the Community
Preservation Fund, as stated in the
legislation, is “the acquisition, creation
and preservation of open space, the
acquisition, creation and preservation of
historic structures and landscapes and the
creation and preservation of community
housing”.
*Source: Excerpts from Municipal Finance Glossary, Massachusetts Department of
Revenue, May 2008. Retrieved on August 14, 2008 from:
http://www.mass.gov/Ador/docs/dls/publ/misc/dlsmfgl.pdf
TOWN OF NANTUCKET
BOARD OF SELECTMEN
USE OF ONE-TIME FINANCIAL RESOURCES POLICY
Effective date: 07/20/2011
Adopted: [if applicable]
Applicability: Town, School, and Enterprise Departments
I. Purpose
One-time revenue sources are identified as unreserved, undesignated revenue streams that
occur on a one time basis as opposed to a continuous basis each fiscal year.
The purpose of this policy is to:
1. Ensure one time revenue sources are used in accordance with Government
Accounting Standards Board (GASB) guidelines and the General Laws of
Massachusetts (MGL);
2. Ensure one time revenue sources are used in a consistent and efficient manner;
3. Ensure the operating budget is not balanced by using one time revenue
sources.
The effectiveness of the policy will be reviewed at the beginning of the budgetary cycle
each fiscal year and refined accordingly, if necessary.
III. Policy – Use of Revenue from Sales of Public Land
Public land can be acquired through taking by eminent domain, tax title taking, and/or
gifted to or purchased by the Town. If the Town decides to sell public land, prior to
proceeding with the sale, the disposal of the public land is subject to approval at Town
Meeting.
Revenue obtained from the sale of public land will be recognized in accordance with the
General Laws of Massachusetts Chapter 44, Section 63 as follows:
“whenever the proceeds of the sale or other disposal of real estate exceeds five
hundred dollars, the same shall be applied to the payment of indebtedness
incurred in acquiring such real estate or shall be added to the sinking fund, if
any, from which said indebtedness is payable, or if no such indebtedness is
outstanding may be used for any purpose or purposes for which the town is
authorized to incur debt for a period of five years or more or be applied to the
payment of indebtedness incurred under clause (3) of section seven, except that
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the proceeds of a sale in excess of five hundred dollars of any park land by a town
shall be used only by said town for acquisition of land for park purposes or for
capital improvements for town land”.
The Town of Nantucket will not use revenue from the sale of public land as a source to
balance its operating budget.
III. Policy – Use of Grants
Grants are defined as a sum of money awarded by the federal government, state
government, private sector companies, or individuals. Examples of federal grants include
but are not limited to: general government grants, public safety grants, public works
grants, education grants, Federal Emergency Management Agency (FEMA) grants.
Federal grants include monies awarded to the Town through the Commonwealth of
Massachusetts. Examples of state grants include but are not limited to: general
government grants, public safety grants, public works grants, education grants,
Massachusetts Emergency Management Agency (MEMA), culture and recreation grants,
council on aging grants, and library grants.
Grants are awarded for specific purposes which do not include balancing the operating
budget.
The Town & County of Nantucket legally cannot use Federal, State, or other grants as a
source to balance the operating budget.
IV. Policy – Use of Gifts and Other One Time Sources
In accordance with the General Laws of Massachusetts Chapter 53A and 53A½ and
Chapter 38 of the Code of the Town of Nantucket, the receipt of gifts and donations are
subject to approval by the Board of Selectmen or the School Committee. Once approved,
gifts and other one time revenue sources such as donations shall be held by the Town
Treasurer and maintained in a separate fund by the Town Accountant. Gifts and
donations can only be expended according to the purpose of the gift and/or donation as
specified by the donor. If the Town is unable to use the gift or donation for the specified
purpose, the funds will be returned to the donor.
The Town will not use gift or donation funds as a source to balance the operating budget.
TOWN OF NANTUCKET
BOARD OF SELECTMEN
USER FEES & CHARGES POLICY
Effective date: 07/20/2011
Adopted: [if applicable]
Applicability: Town, and Enterprise Departments
I. Purpose
The Town may recapture, through fees, up to the full cost of providing specific services.
Regular and consistent review of all fees is necessary to ensure the costs associated with
the delivery of specific services have been appropriately identified and that the Town &
County is recapturing the full cost except in the case fee maximums are established by
the General Laws of Massachusetts (MGL); or where a policy decision has been made
otherwise.
The purpose of this policy is to:
1. Ensure the Town is recovering the full cost of providing specific services
where applicable.
2. Ensure user fees are not in excess of full costs.
3. Identify services where the Town decides against full cost recovery where
greater public benefit is demonstrated.
User fees and charges will be reviewed each year at the beginning of the budgetary
process and revised accordingly, if necessary.
II. Process
In conjunction with the specific departments collecting the user fees and charges, the
Finance Department will document a comparison between the revenue received from
specific user fees and the cost associated with delivery of the service. A subsidy is
shown when costs exceed revenues. A surplus is shown when revenues exceed costs.
At the beginning of each budgetary cycle, the Finance Department will forward
recommendations to Town Administration pertaining to increases and/or decreases to the
existing user fee and charges schedule. Within the report to Town Administration, the
service detail will indicate if there is an associated subsidy, surplus, or break even point.
Town Administration will review and recommend whether there is a public benefit to
providing a subsidy to support the service or if the user fee could be adjusted to achieve
full cost recovery. Town Administration’s recommendations are then forwarded to the
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Board of Selectmen for consideration. In order to be incorporated into the financial
forecast, the Board of Selectmen will need to adopt changes to the user fee and charges
schedule no later than October 31st each fiscal year.