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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 Page 2 of 3 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. Page 3 of 3 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 Page 1 of 3 Page 2 of 3 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. Page 3 of 3 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 Page 1 of 4 Page 2 of 4 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 Page 3 of 4 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 Page 4 of 4 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 Page 1 of 2 Page 2 of 2 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 Page 1 of 2 Page 2 of 2 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.