HomeMy WebLinkAboutBoard of Selectmen Agenda September 14, 2011 Packet_201402061642216952
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, Finance Director
DATE: September 1, 2011
RE: Finance Department Progress - August 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 August 1, 2011:
1. Town Cash Reconciliations: Complete. The Treasurers Cashbook and General Ledger June 30,
2011 cash reconciliation is complete. The reconciliation included the completion of the two town
legacy accounts (accounts payable and payroll).
2. County Cash Reconciliations: Complete.
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
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. Enterprise Funds Cash Reconciliation – Incomplete. The final reconciliation for June 30, 2011
from the Cashbook to the Airport and Wannacomet Water General Ledger cash accounts has
been completed. Wannacomet Water has confirmed agreement with the Treasurers Cashbook
However the Airport has not acknowledged the information agrees with their records.
2. Accounting for Trust Fund Balances – Complete. The reconciliation of the trust fund balances
for June 30, 2011 is complete. The physical cash transfers to tie the Treasurers Cashbook to
the General Ledger were completed August 31, 2011.
Page 2 of 2
3. General Ledger Maintenance and Reconciliations for Nantucket County – Complete for Fiscal
Year 2011.
4. Receivable Reconciliations – Complete for Fiscal Year 2011.
5. Enterprise Fund Inter-fund Transfers – Complete for Fiscal Year 2011.
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 August 1, 2011:
1. Notification of Total Receipts for the Proceeding Year – Complete. The information is available on
Page 3 of the Tax Recap and submitted electronically.
2. Deadline for Appealing EQV’s to ATB – Complete. The town is not appealing at this time.
3. Deadline for Appealing SOL Valuations to ATB - Complete. The town is not appealing at this time.
4. Begin work on Tax Recapitulation Sheet (to set tax rate for semi-annual bills). Complete. The
Finance Department Assessor, Collector, Treasury, and Accounting divisions have begun work in
August 2011.
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 August 31, 2011; twenty or 55.6% of the recommendations have
been implemented; with an additional ten or 27.7% in progress.
Action Taken Since August 1, 2011:
1. Recommendation #16: Decentralize cash receipt entry. In progress. The School department is
the only remaining department to convert to decentralized cash receipt entry. A meeting was held
with Administrative Support staff on August 31, 2011 to begin implementing the program with the
intent it will be complete in September.
2. Recommendation #5c: Close Town Clerk’s bank account and make all vendor payments through
warrant process. In progress. The Treasurer met with the Town Clerk to begin the transition of
the bank account within the next 30 days.
3. Recommendation #30: Restructure School Chart of Accounts. In progress. The Town contracted
Abraham’s group to develop the new school chart of accounts.
4. Recommendation #31: Document Financial Polices and Procedures. In progress. The Board of
Selectmen, Finance Committee, and Audit Committee have been provided with eight draft financial
policies with the intent they will be adopted on or before September 30, 2011. Internal
documentation of processes will continue through 2012 and 2013.
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 ScheduleAugust 31, 2011Rec. #Fundamental Purpose/ObjectiveDate DueAccomplishedCommentResponsible for Performing Task's) Responsible for Follow UpPartially AccomplishedNot AccomplishedDOR Schedule10Notification of Total Receipts of Preceding Year Town Accountant Finance Director 8/1/2011√DOR Schedule11Deadline for Appealing EQV's to ATB Assessor Finance Director 8/10/2011√NOT APPEALINGDOR Schedule12Deadline for Appealing SOL Valuations to ATB Assessor Finance Director 8/10/2011√NOT APPEALINGManagement Letter1b. Cash ReconciliationsTreasurer / Assistant Treasurer / Town Accountant / Accounting Clerk Finance Director 8/18/2011√County & Town CompleteManagement Letter9General Ledger Maintenance and Reconciliations for CountyAssistant Finance Director / Town Accountant Finance Director 8/18/2011√Final 2011 Trial Balance sent to Auditors Management Letter10Receivable ReconciliationsStaff Accountant / Town Accountant / OIH Administrator / DPW Acting Director Finance Director 8/18/2011√June CompleteManagement Letter1d. Enterprise FundsTreasurer / Airport Accountant / Water AccountantFinance Director / Airport Manager / Water Manager 8/18/2011√Wannacomet Water complete; Waiting on Airport ConfirmationManagement Letter1g. Enterprise Fund Inter-fund TransfersTown Accountant / Assistant Finance Director Finance Director 8/18/2011√June CompleteDOR Schedule16Begin Work on Tax Rate Recapitulation Sheet (to set tax rate for semi-annual bills)Assessors Finance Director 8/31/2011√Tax Recap work in progress with goal to submit by September 15, 2011Abraham's Implementation16 c.Decentralize cash receipts data entry into Munis to departmentsDepartment Heads / Assistant Finance Director Town Manager8/30/2011√Only remaining department is School.DOR Schedule17Jointly Submit Community Preservation Surcharge Report Accountant / Assessor Finance Director 9/15/2011√Submitted August 3, 2011Management Letter1b. Cash ReconciliationsTreasurer / Assistant Treasurer / Town Accountant / Accounting Clerk Finance Director 9/15/2011√July Town & County In ProgressManagement Letter9General Ledger Maintenance and Reconciliations for CountyAssistant Finance Director / Town Accountant Finance Director 9/15/2011√Management Letter10Receivable ReconciliationsStaff Accountant / Town Accountant / OIH Administrator / DPW Acting Director Finance Director 9/15/2011√Management Letter1d. Enterprise FundsTreasurer / Airport Accountant / Water AccountantFinance Director / Airport Manager / Water Manager 9/15/2011√Wannacomet is complete; Waiting on Airport ConfirmationManagement Letter1g. Enterprise Fund Inter-fund TransfersTown Accountant / Assistant Finance Director Finance Director 9/15/2011√DOR Schedule Submit Combined Balance Sheet; Free Cash Submission Town Accountant Finance Director 9/15/2011√Management Letter1f. Late Journal EntriesTown Accountant / Finance Operations Coordinator Finance Director 9/30/2011√All YE JE's to be complete by 09/30/11DOR Schedule18Compensating Balance Report Treasurer / Collector Finance Director 9/30/2011 N/A Not applicable per Collector & TreasurerDOR Schedule19Jointly Submit End of Year Report to DOE Accountant / School Committee Finance Director 9/30/2011DOR Schedule20Submit Snow & Ice Report Town Accountant Finance Director 9/30/2011√DOR Schedule22Statement of Indebtedness Treasurer Finance Director 9/30/2011√DOR Schedule214th Quarter Reconciliation of Cash for Previous Fiscal Year Treasurer Finance Director 9/30/2011√Management Letter12Commingling of Federal and State GrantsTown Accountant / Finance Operations Coordinator Finance Director 9/30/2011√New Accounts set up; need to transfer fund balance Management Letter Submit Final Town Trial Balance to Auditors Town Accountant / Finance Director Finance Director9/30/2011√9/1/2011
Page 1 of 4
TOWN & COUNTY OF NANTUCKET
BOARD OF SELECTMEN
COUNTY COMMISSIONERS
FINANCIAL ACCOUNTING POLICY AND PROCESS
Effective date:
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 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 signature of the Finance Director or his/her designee. 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 Finance Director and appropriate staff monitor 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 Finance Director and/or appropriate staff will prepare monthly reports for Town
Administration, Board of Selectmen, and Finance Committee that analyze and evaluate
Page 3 of 4
revenue and expenditure financial 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 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
Page 1 of 6
TOWN & COUNTY OF NANTUCKET
BOARD OF SELECTMEN
LONG RANGE FINANCIAL PLANNING POLICY
Effective date:
Adopted: [if applicable]
Revised: [if applicable]
Applicability: Town, School, and Enterprise Departments
I. Purpose
The Long Term Financial Plan establishes financial guidelines for the Board of Selectmen /
County Commissioners; Finance Committee / County Finance Review Committee and Town /
County Administration in managing the financial affairs of the Town & County of Nantucket over
the course of the next ten years.
The purpose of this policy is to:
1. Ensure the Town & County of Nantucket attain financial sustainability
2. Ensure the Town & County of Nantucket has sufficient long term information to guide
financial decisions.
3. Ensure the Town & County of Nantucket has sufficient resources to provide the core
programs and services the community expects.
4. Ensure potential risks to on-going operations are identified in the long term financial
planning process and communicated on a regular basis.
II. Policy – Long Term Financial Plan
At the beginning of the budgetary cycle each year, the Finance Department in collaboration with
Town Administration will provide a Long Term Financial Plan to the Board of Selectmen and
Finance Committee. The Long Term Financial Plan is a five year municipal budget and capital
planning forecast. The forecast provides a long-term overview of revenue, operating expense,
and capital activity. For Fiscal Year 2012 and going forward, the forecast information is
presented in a format of what the Town & County can afford to spend as opposed to identifying
gaps between revenues and expenditures.
It will take a number of years to fully implement all the components of the Long Term Financial
Plan policy. Highlights of each policy are provided for a quick reference in the planning process.
III. Policy – Budget
The Town & County will provide for all core programs and services within current revenues. In
order to achieve this policy, the following criteria must be followed:
1. All funds are required to balance. As such, total projected revenues must equal the
sum of budgetary expenditures for each fund. Revenues are derived from four
sources: current revenue charges; increases in existing revenue charges; new
revenue sources; and unallocated reserves carried forward from prior years.
Deleted: While a few of the policies
listed below will be in place in
September 2010,
Page 2 of 6
2. All requests for appropriations are considered only in conjunction with measurable
performance criteria. Expenditures are approved or rejected on the basis of planned
levels of performance. Therefore, it is necessary for each activity within a fund to
prepare a performance plan consisting of workload measures, efficiency measures,
and effectiveness measures.
3. Expenditure budgets for enterprise operations (i.e., Water, Sewer, Airport, Solid
Waste, and Our Island Home) must be funded either exclusively or primarily by user
fee revenues. More specifically, the Department Heads directly responsible for the
Solid Waste and Our Island Home Enterprise Fund need to work towards reducing the
General Fund subsidy each fiscal year until such time a subsidy is no longer required.
Self-sufficiency remains a long range objective for these funds.
4. Ongoing expenses are never funded by a non-recurring or one-time revenue source.
Future and current funding sources are identified for all new programs and services.
5. The Town & County of Nantucket will seek an operating override if projected recurring
revenues decline more than 5% over the prior fiscal year actuals and over 50% of
reserves have been depleted. An operating override will be sought for no less than 3
years to replenish the reserves and continue daily operations at the service levels
expected by the community.
6. The Town & County will not introduce new programs & services during the time which
the operating budget is balanced with funding generated by an operating override.
IV. Policy – Capital Improvements
One of the Board of Selectmen goals related to Capital Planning and Infrastructure is to work
towards reducing costs associated with borrowing. One of the methods to achieve the stated
goal is the strategic planning surrounding the Town & County’s 5-year Capital Improvement
Program.
1. The Town & County will update the five year capital improvement plan on an annual
basis through the budget process. The plan identifies not only anticipated capital
expenditures in excess of $50,000 but also related operating expenses with the
project and anticipated funding sources. Capital improvements less than $50,000 are
funded within the operating budget.
2. Capital projects in excess of $50,000 financed through the issuance of bonds will be
financed for a period not to exceed the useful “life” of the project as defined by
Massachusetts General Law (M.G.L.)
3. The Town & County will seek a Proposition 2 1/2 override for capital projects that are
for the greater benefit of the entire community.
4. The Town will coordinate the development of the capital budget with the development
of the operating budget. Future operating costs associated with new capital projects
will be identified and included in operating budget forecasts.
5. The Town will preserve it’s assets at a level adequate to protect the capital investment
and minimize future maintenance and replacement costs.
6. The Town will establish an appropriate distribution of bonded debt and cash financing
in the funding of capital projects.
7. The Town will closeout all capital projects within six months of completion. If a capital
project, subject to borrowing and/or funded by revenues in excess of $5,000, has a
remaining available budget, the Finance Department in collaboration with Town
Administration will propose a reallocation of the available balances to other capital
projects in accordance with the General Laws of Massachusetts (MGL) Chapter 44,
Page 3 of 6
Section 20. Capital projects funded with available revenue that have an available
balance less than $5,000 will be closed out by the Finance Department to the
appropriate fund surplus.
V. Policy – Debt Service
The Debt Service policy pertains to Debt Limits, Issuance, Management, and Ratios. A more
detailed Debt Service policy is available that outlines each section in greater detail. In terms of
the impact on Long Term Financial Planning, highlights include the Debt Limit, Compliance with
Federal, State, and Local regulations, Investor Communications, and Debt Ratios.
1. In accordance with the General Laws of Massachusetts Chapter 44 Section 10, the
Town is authorized to incur debts to an amount not to exceed 5 percent of the
equalized valuation. As general practice, the goal is to ensure Town of Nantucket
debt service payments will not exceed 12% of the Total Municipal Budget (General
Fund combined with Enterprise Funds) and 12% of the General Fund operating
budget.
2. In order to ensure compliance, the Finance Director and Treasurer will coordinate
their activities to make certain that all securities are issued in the most cost-effective
manner while in accordance with Governmental Accounting Standards Board (GASB),
the General Law of Massachusetts (MGL), Town & County By-laws, and Town &
County Policies. In order to ensure the Town & County is complying with legal and
regulatory requirements, the Finance Director and Town Counsel will coordinate all
activities necessary to issue debt, including but not limited to the selection of bond
counsel; review of ordinances and resolutions provided by bond counsel; review of all
documents necessary to issue debt provided by bond counsel; and verifying
compliance with the Town Charter.
3. The Town of Nantucket will include a written statement in the bond offering
documents which commits the Town staff to provide timely information to the rating
agencies and to provide investors with copies of the basic financial statements upon
written request and payment of a reasonable fee.
4. The Finance Director will present key debt ratios with recommendations to Town
Administration for future capital expenditures subject to borrowing.
i. Debt as a percentage of assessed value. Debt as a percentage of assessed
value indicates the relationship between the Town’s debt and the taxable
value of property in the Town.
ii. Debt per capita. Debt per capita is a ratio that indicates the per capita debt
burden and is a general indicator of the Town’s debt burden.
iii. Debt per capita as a percentage of per capital income is a measure of the
capacity of citizens to finance tax supported debt. A low ratio means that
taxes required to pay debt represent a smaller portion of the average
citizen’s income.
iv. Debt Service as a percentage of general governmental expenditures
identifies the Town’s ability to repay debt without hampering other Town
services and programs.
VI. Policy – Investments
The investment policy applies to the investment of Town & County General Funds, Special
Revenue Funds, Enterprise Funds, and Capital Projects Funds. Information contained with
investment policy document is quite detailed and includes but is not limited to the legal
requirements as outlined in the General Laws of Massachusetts; acceptable levels of safety,
liquidity, and yield; ethical standards & prudence required of the Treasurer; diversification of
investments; investment instruments; risk; and reporting.
Deleted: 0
Deleted: 0
Page 4 of 6
On a semi-annual basis (as of September 30th and March 31st of each fiscal year), the Treasurer
shall issue a report to the Finance Director, Town Administration / County Administration, and the
Board of Selectmen / County Commissioners containing the following information:
1. A listing of Total Funds on deposit by financial institution or advisor showing
percentage of total deposits to each institution, type of insurance coverage or
collateral and approximate value of uninsured or uncollateralized funds held by the
Town & County.
2. A listing of Total Funds on deposit by financial institution or advisor by type of
deposits or investment showing percentage of total deposits in each institution.
3. Summary of interest income, realized and unrealized gains and losses earned on
investments on a fiscal year to date basis.
4. Detail listing of any exceptions to policy stating reason for exception and anticipated
date of correction, if applicable.
VII. Policy – Revenues
The Town & County will maintain a diversified and stable revenue system. Each year, the
Finance Department will update the five year revenue forecast and identify potential risks
associated with each revenue stream including User Fees & Charges and One Time Revenue
Sources.
User Fees & Charges apply to Town & County programs and services where the intent is to
recapture, through fees, up to the full cost of providing such programs and services. On an
annual basis, 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 & charges matrix. 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 determine if there is a public benefit to providing a subsidy to support the service or if
the user fee needs to be adjusted to achieve full cost recovery. Town Administration’s
recommendations are then forwarded to the 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 & charges matrix no later than October each fiscal year. The review of user fees &
charges that apply to the School system would be conducted by the School Finance Director,
Superintendent, and School Committee.
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. One time revenue
sources include but are not limited to revenue obtained through the sale of public land, grants,
and gifts. Approved uses of one time revenue resources are as follows:
1. 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 fixe
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
the proceeds of a sale in excess of fie 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”.
2. Grant funding is only used for the purpose as stipulated in the grant. A financial audit
is conducted each year for Federal & State grants to ensure the funds are used as
intended by the grantor.
3. 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
Page 5 of 6
and donations can only be expended according to the purpose of the gift and/or
donation as specified by the donor. If the Town & County is unable to use the gift or
donation for the specified purpose, the funds will be returned to the donor.
The Town & County of Nantucket will not use One Time Revenue Sources as a resource to
balance the operating budget.
VIII. Policy – Reserves
The purpose of reserves is to ensure the resiliency within all operations in the Town & County of
Nantucket. There are four main reserves contained within the Town of Nantucket: Free Cash, the
Stabilization Fund, Trust Funds, and Fund Balance. As contained within the Financial Reserves
policy, reserve funds can only be used for the following purposes:
1. 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 unapporpriated amount of free
cash is to provide for cash flow and to have funds available if necessary for
emergency appropriation.
2. 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’s revenue,
whichever is less. There will not be any additional withdrawals from the Stabilization
Fund until the amount withdrawn is replenished. Replenishment funding 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.
3. The Town & County of Nantucket will not use the fund balance(s) as a source to
balance the operating budget or to offset unforeseen expenditures until all other forms
of reserves have been exhausted.
IX. Policy – 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 receivables at the
years end for the Airport, Water, Our Island Home, Sewer, and Solid Waste enterprise funds are
not accrued since they are not significant to current operations.
The Town & 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
Formatted: Bullets and Numbering
Deleted: <#>In the event the Health Insurance Trust Fund exceeds Three Million Dollars ($3,000,000), the Town & County portion of the trust will be
used to offset the Other Post
Employment Benefits (OPEB) liability.¶
¶
Page 6 of 6
Funds include the Health Insurance Trust Fund, Expendable Trust Funds, and Private Purpose
Trust Funds.
X. Policy – 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 line
item in the fund. Any change in the salary or operating expense appropriation level of the fund
must be approved at the Annual Town Meeting or at fiscal year end by the Board of Selectmen
and Finance Committee. Line item adjustments within the department’s budget do not require
Town Meeting approval; however alterations to 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’s end. Appropriations for
Capital Improvement Projects are carried forward until such time as the project is completed.
XI. Policy – Interim Reporting
In accordance with the General Laws of Massachusetts Chapter 41 Section 58, the Finance
Department provides a summary report on revenue and expenditure activities by category and
department to the Board of Selectmen and Town Administration on a monthly basis. The
information contained within the summary report includes not only current fiscal year actual to
budget information but also a comparison to last year’s actual activities.
On an annual basis, the Finance Director acting as the Town Accountant provides the
accountants report on prior year’s finances in the Annual Town Report. The Annual Town Report
is distributed each year at the Annual Town Meeting.
XII. Timeline
The long term financial planning policy will be communicated to departments no later than
September 15, 2010. The effectiveness of the policy will be reviewed each fiscal year at the
beginning of the budgetary cycle and refined accordingly.
Page 1 of 4
TOWN & COUNTY OF NANTUCKET
BOARD OF SELECTMEN
BUDGET POLICY & PROCESS
Effective date:
Adopted: [if applicable]
Revised: [if applicable]
Applicability: Town, School, and Enterprise Departments
I. Purpose
The overall goal implementing financial policies is to improve fiscal planning and maintain
effective management of the Town’s financial resources. One of the key deliverables in obtaining
the goal is to provide a balanced budget without the assistance of one time revenue streams.
The purpose of this process is to:
1. Ensure annual budgets for all Town, School, and Enterprise Funds are structurally
balanced throughout the budget process;
2. Ensure recurring revenues will equal or exceed recurring expenditures in both the
projected and adopted budget;
3. Ensure that if a structural imbalance occurs, a plan will be developed and
implemented to provide for a balanced budget.
II. Budgetary Policy – Operating Budget
All funds are required to balance. As such, total projected revenues and other resources must
equal of sum of budgetary expenditures for each fund. Revenues and other resources are
derived from the following: current revenue charges; increases in existing revenue charges;
new revenue sources; and unallocated reserves carried forward from prior years to the extent
allowed by law.
Beginning in FY2014, all requests for appropriations are considered only in conjunction with
measurable performance criteria. Expenditures are approved or rejected on the basis of planned
levels of performance. Therefore, it is necessary for each activity within a fund to prepare a
performance plan consisting of workload measures, efficiency measures, and effectiveness
measures.
Note: Finance Committee recommendation: Expenditure budgets for enterprise operations (i.e.,
Water, Sewer, Airport, Solid Waste, and Our Island Home) must be funded either exclusively or
primarily by user fee revenues; unless the Town decides to use the general tax revenue when a
greater public benefit is demonstrated (i.e. Solid Waste and Our Island Home).
NOTE: Audit Committee recommendation: Expenditure budgets for enterprise operations (i.e.,
Water, Sewer, Airport, Solid Waste, and Our Island Home) that require the use of general tax
revenue as a funding source to balance the operating budget require Board of Selectmen
approval prior to forwarding to the Finance Committee.
Deleted: More specifically, the
Department Heads directly
responsible for the Solid Waste and
Our Island Home Enterprise Fund
need to work towards reducing the
General Fund subsidy each fiscal
year until such time a subsidy is no
longer required. Self-sufficiency
remains a long range objective for these funds.
Page 2 of 4
Allocations from the General Fund are based on a long-range financial plan which includes an
unallocated fund reserve. This reserve protects the Town against catastrophic revenue losses
and major emergency expenditures as well as contributes to the Town’s favorable bond rating.
Ongoing expenses are never funded by a non-recurring or one-time revenue source. Future and
current funding sources are identified for all new programs and services.
III. Budgetary Policy – Capital Expenditures
A five year program for infrastructure capital improvements is updated annually through the
budget process. The plan identifies not only anticipated capital expenditures in excess of
$50,000 but also related operating expenses and anticipated funding sources. Capital
improvements less than $50,000 are funded within the operating budget.
Capital projects in excess of $50,000 financed through the issuance of bonds will be financed for
a period not to exceed the useful “life” of the project as defined by Massachusetts General Law
(M.G.L.)
The Town will coordinate the development of the capital budget with the development of the
operating budget. Future operating costs associated with new capital projects will be identified
and included in operating budget forecasts.
In accordance with the Town By-law, the Town will contribute up to 1% of prior year local receipts
towards capital improvements.
The Town will preserve its assets at a level adequate to protect the capital investment and
minimize future maintenance and replacement costs.
The Town will establish an appropriate distribution of bonded debt and cash financing in the
funding of capital projects.
IV. Budgetary Policy – Revenue
The Town will establish and maintain a broad revenue base. This is achieved through
establishing and maintaining diversified revenue sources in order to distribute the revenue
responsibly and equitably and protect the Town from short-term fluctuations in any one revenue
source.
In order to fulfill funding requirements without an over dependence upon property taxes, the Town
will attempt to enlarge the revenue base by seeking new revenue sources.
The Town will implement user fees in all areas where feasible and productive as well as set fees
at levels related to the costs of providing the services, within the constraints of the General Laws
of Massachusetts. User fees will be reviewed annually as part of the budget process and if
applicable, be adjusted to maintain current levels of service.
In accordance with MGL Chapter 44 Section 53 F 1/2, the Town will establish self-supporting
enterprise funds where the relationship between operating costs and revenues is clearly identified
or for the purpose to clearly identify the total service costs which may include a subsidy from the
General Fund or other funds.
The Town will limit the designation of General Fund revenues for specified purposes in order to
maximize flexibility in budgeting and utilize revenues more efficiently.
The Town will maintain effective collection systems and implement aggressive enforcement
strategies in order to maximize revenues from available sources.
Revenues will be projected conservatively with the goal of avoiding revenue deficits that impact
future budgets and of realizing actual revenues at the fund level that equal or exceed budgeted
revenues.
Deleted: Efforts will be made to work
individually as well as collaboratively
with the State of Massachusetts to
adopt legislation which will increase
local government revenue streams.
Deleted:
Page 3 of 4
V. Budget Process – Preparation
The Town & County of Nantucket’s fiscal year begins July 1st and concludes on June 30th. Major
steps in the budgeting process include but are not limited to the following:
a. The Finance Department prepares the five year forecast and assumptions which
identify positive and negative financial trends impacting the Town and County. The
information is presented to Town Administration as well as the Board of Selectmen.
Once adopted by the Board of Selectmen, the forecast and assumptions are then
used as the financial framework for budget preparation.
b. A Five Year Capital Plan is prepared by the Chief Procurement Officer and presented
to Town Administration and the Board of Selectmen. Any additional operating costs
associated with the first year of the plan are incorporated into the budget forecast.
c. The Ad Hoc Budget workgroup will begin meeting in the fall to facilitate
communications among the Board of Selectmen, School Committee, and Finance
Committee concerning budget issues. The workgroup is comprised of the Chairs and
Vice-chairs of the Board of Selectmen, School Committee, and Finance Committee.
The Town Manager, Superintendent of Schools, and Finance Director also serve as
ex officio members of the workgroup.
d. The Finance Department and School Business Office, with directions and guidelines
from Town Administration and the Superintendent develop base budget expenditure
levels for all departments and town-wide revenue projections for the upcoming fiscal
year. Departments prepare data on performance measures and service levels for
inclusion in the budget document. Additionally, departments submit service change
request to enhance a current activity, establish and activity and/or obtain equipment
associated with an activity. These detailed requests are reviewed and changes
made to present a balance budget to Town Administration and the Superintendent.
e. Town Administration and the Superintendent conduct budget workshops with their
respective Department Heads to review expenditures for the upcoming year and
announce any significant changes which directly impact new / existing programs or
service levels. The changes are then used to prepare the Town Manager’s budget
recommendations to the Board of Selectmen and Superintendent’s budget
recommendations to the School Committee.
f. The Board of Selectmen, School Committee, and Finance Committee conduct a
series of workshops and public hearings before making changes to the Town
Manager’s and Superintendents budget recommendations. After careful and
thorough consideration, the Board of Selectmen; School Committee; and Finance
Committee present the budget recommendations to Town Meeting.
g. When the budget is adopted at Town Meeting, the budget becomes effective on July
1st.
VI. Budget Process – Execution
On July 1st of each year, the adopted budget is implemented. Concurrently, an analysis of the
previous year’s actual expenditures will begin. During this analysis, problem areas are identified
and reconciled. Problem areas that have an impact on the current year are closely monitored.
Moreover, throughout the year, expenditures, revenues, and performance data are monitored in
order to ensure the successful implementation of the Town & County’s service plan. Status
reports are provided to Town Administration and the Board of Selectmen on a monthly basis.
VII. Budget Process – Amendments
As conditions change or circumstances are altered, Department Heads are required to notify the
Finance Department of anticipated requests for budget amendments. Budget amendments are
subject to positive approval at the Annual Town Meeting and/or if applicable, a Special Town
Meeting. Once approved, the Finance Department will post the budget amendments within a
timely manner.
VIII. Budgetary Process – Year End Transfers
In accordance with MGL Chapter 44 Section 33B, the Finance Department prepares and
presents a request to the Board of Selectmen and Finance Committee for budgetary transfers
Formatted: Bullets and Numbering
Page 4 of 4
during the time period or May 1st to July 15th. Transfer requests are limited to 3% of the original
budget amount of $5,000 whichever is greater. Year end transfers are only used to offset
projected deficits in departmental or enterprise fund budgets.
IX. Timeline
The effectiveness of the process will be reviewed at the end of each budget cycle and refined
accordingly.
Deleted:
Page 1 of 2
TOWN OF NANTUCKET
BOARD OF SELECTMEN
USER FEES & CHARGES POLICY
Effective date:
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. Exceptions to full recovery costs include cases where
the 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
unless; the Town decides against full costs recovery where greater public
benefit is demonstrated.
2. Ensure user fees are not in excess of full costs.
3. Review existing fee structure on a periodic basis; as opposed to proposing
new fees not vetted through the public process.
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.
Where appropriate, 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
Formatted: Bullets and Numbering
Page 2 of 2
adjusted to achieve full cost recovery. Town Administration’s recommendations are then
forwarded to the Board of Selectmen for consideration as part of the overall budget
recommendations during the budget development process. 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 annually.
Page 1 of 5
TOWN & COUNTY OF NANTUCKET
BOARD OF SELECTMEN
INVESTMENT POLICY
Effective date:
Adopted: [if applicable]
Revised: [if applicable]
Applicability: Town, School, Enterprise, and County Departments
I. Purpose
The purpose of an investment policy is to safe guard the investment of General Funds, Special
Revenue Funds, Enterprise Funds, and Capital Projects Funds.
The purpose of this process is to:
1. Ensure the Town & County invests are in accordance with the applicable General
Laws of Massachusetts.
2. Ensure the Town & County investment funds maximize a high rate of return with
minimal risk.
3. Ensure the Town & County investments are diversified.
4. Ensure the Town & County investments are not invested in any instrument exposed
to foreign currency risk.
II. Policy
In accordance with the General Laws of Massachusetts (MGL) Chapter 44, Section 55B requires
the Treasurer to invest all public funds at the highest possible rate of interest reasonable
available, taking into account acceptable levels of safety, liquidity, and yield while meeting the
daily cash requirements for the operation of the Town & County.
1. Safety – The safety of public funds must be the main objective in the investment
program. Investments shall be made in a manner that seeks to preserve principal
through the mitigation of credit risk and interest rate risk. These risks shall be
mitigated by the diversification and prudent selection of investment instruments, and
choice of depository. Credit risk is the risk of loss due to the failure of the security
issuer or backer. Interest rate risk is the risk that the market value of the security will
fall due to changes in general interest rates.
2. Liquidity – The overall portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. Since all possible cash demands
cannot be anticipated, the treasurer shall carry out investment activities in a manner
that provides for meeting unusual cash demands without the liquidation of
investments that could result in forfeiture of accrued interest earnings, and loss of
principal.
3. Yield – Investments shall be made to achieve a fair average market rate of return
taking into account the safety and liquidity constraints mentioned above as well as
any legal requirements imposed by the General Laws of Massachusetts or Town By-
Laws.
The Treasurer will adhere to the following risk guidelines for all investments of Town & County
funds:
Page 2 of 5
1. Custodial Credit Risk – The custodial credit risk for deposits is the risk that, in the
event of a failure of a depository institution, the Town would not be able to recover
deposits or the securities used to collateralize the deposits from the institution or third
party. For investments, the risk occurs if the Town is unable to recover the value of
an investment or collateral in possession of a third party.
The Treasurer will review each financial institution conducting business with the
Town & County on a quarterly basis.
All securities not held directly by the Town & County will be held in the Town or
County’s name, whichever is applicable, and tax identification number by a third-party
custodian approved by the Treasurer. The Treasurer will receive monthly
safekeeping reports from the custodian as well as safekeeping receipts detailing
each transaction from the account.
2. Interest Rate Risk – Interest rate risk is the risk that changes in interest rates will
adversely affect the fair value of the investment. Short-term investments for funds
covered in the Process – Operating Funds section which are by statute limited to one
year or less in maturity with all securities held to maturity.
Longer term investments will be made for periods not longer than seven years,
maintaining an average maturity no greater than three years for the portfolio.
3. Credit Risk – Credit risk is the risk that an issuer or other counterparty to an
investment will not fulfill it’s obligations. Short term investments for funds covered in
the Process - Operating Funds section are by statute limited to US Treasury or
Agency securities which carry “AAA” ratings.
Longer term investments in fixed income securities will be made principally for capital
preservation and income potential. Corporate debt must be rate “A” or better by
either S&P or Moody’s rating services. If a security falls below the “A” rating, the
security will be monitored by the Treasurer and advisor, if applicable. The security
will be noted as an exception to the policy if held in the portfolio. The Treasurer
and/or advisor may sell the security if a further decline in value is expected.
4. Concentration of Credit Risk – Concentration of Credit Risk is the risk of loss
attributed to the magnitude of the Town & County’s investment in a single issuer.
The Town & County will minimize any concentration of credit risk by diversifying the
investment portfolio so that the impact of potential losses from any one type of
security or issuer will be minimized. Specific investment amounts and/or issuer
limitations are addressed in the Investment Instruments section of this policy.
5. Foreign Currency Risk – Foreign currency risk is the risk that changes in foreign
exchange rates will adversely affect the fair value of an investment or deposit.
The Town & County will not invest in any instrument exposed to foreign currency risk.
The Treasurer and Assistant Treasurer shall refrain from any personal activity that may conflict
with the proper execution of the investment program or which could impair or appear to impair
their ability to make impartial investment decisions. The Treasurer and Assistant Treasurer shall
disclose, at least annually, to the Town Clerk any material personal depository relationship in
financial institutions that do business with the Town & County as well as any material personal
financial investment positions or loans with these same institutions.
The standard of prudence to be used by the Treasurer shall be the “Prudent Person” standard
and shall be applied in the context of managing an overall portfolio. The Treasurer, acting in
accordance with written procedures and this investment policy and exercising due diligence, shall
be relieved of personal responsibility for an individuals security’s credit risk or market price
changes, provided the purchases and sale of securities is carried out in accordance with the
terms of this policy.
Investments shall be made with judgment and care, under circumstances then prevailing, which
persons of prudence, discretion, and intelligence exercise in the management of their own affairs;
not for speculations but for investment considering the probable safety of their capital as well as
the probably income to be derived.
In addition this section would also apply to the General Laws of Massachusetts Chapter 44
Section 55A which refers to the liability of the Treasurer for losses due to bankruptcy.
Page 3 of 5
On a semi-annual basis (as of September 30th and March 31st of each fiscal year), the Treasurer
shall issue a report to the Finance Director, Town Administration / County Administration, and the
Board of Selectmen / County Commissioners containing the following information:
1. A listing of Total Funds on deposit by financial institution or advisor showing
percentage of total deposits to each institution, type of insurance coverage or
collateral and approximate value of uninsured or uncollateralized funds held by the
Town & County.
2. A listing of Total Funds on deposit by financial institution or advisor by type of
deposits or investment showing percentage of total deposits in each institution.
3. Summary of interest income, realized and unrealized gains and losses earned on
investments on a fiscal year to date basis.
4. Detail listing of any exceptions to policy stating reason for exception and anticipated
date of correction, if applicable.
III. Process – Operating Funds
This section of the investment policy pertains to short term operating funds such as general
funds, special revenue funds, enterprise funds, bond proceeds and capital project funds.
The Treasurer may invest in the following instruments:
1. Massachusetts State Pooled Funds - The Massachusetts Municipal Depository Trust
(MMDT), an investment pool for state, local, county and other independent
governmental authorities, is under the auspices of the State Treasurer. MMDT seeks
to obtain the highest possible level of current income consistent with the preservation
of capital and liquidity by investing in a diversified portfolio of high quality money
market instruments with an average dollar-weighted portfolio maturity of 90 days or
less. MMDT investments are not guaranteed by the State, FDIC, or any other
governmental agency. The Treasurer may invest an unlimited amount.
2. US Treasury Obligations – Treasury obligations must be held to maturity. The
maturity date of these securities must be no grater than one year from the date of
purchase. The Treasurer may invest an unlimited amount
3. US Agency Obligations – Agency obligations must be held to maturity. The maturity
date of these securities must be no greater than one year from the date of purchase.
The Treasurer may invest an unlimited amount
4. Bank accounts or Certificate of Deposit accounts (CD’s) with a final maturity no
greater than one year from the date of purchase may be made for unlimited amounts
if the deposit is fully collateralized by a third party agreement or securities owned by
a depository institution that have been segregated from the day to day assets of the
institution in order to provide collateralization.
5. Bank Accounts, Certificate of Deposit accounts (CD’s) and/or brokered CD’s with a
final maturity no greater than one year from the date of purchase up to the FDIC
coverage limits. All account balances in a single depository institution are considered
in the aggregate to determine FDIC coverage limits.
6. Bank accounts or Certificate of Deposit (CD’s) with a final maturity no greater than
one year from the date of purchase may be made for unlimited amounts if the
depository institution is a member of the Depository Insurance Fund (DIF) or the
Share Insurance Fund (SIF). These funds insure all deposits held at a member
Massachusetts state chartered savings bank or co-operative bank respectively.
7. Money Market Mutual Funds that are registered with the Securities & Exchange
Commission that have received the highest possible rating from at least one
nationally recognized statistical rating organization and as referenced in the General
Laws of Massachusetts (MGL) Chapter 44 Section 55.
8. Uninsured or unsecured bank accounts or Certificates of Deposit accounts (CD’s)
with a final maturity no greater than on e year from the date of purchase are allowed
to be held by the Town & County subject to the following limitations:
Page 4 of 5
i. The aggregate uninsured portion of deposits held at any one institution
cannot exceed 5% of the institutions total deposits reflected on the bank’s
last filed FDIC Call Report.
ii. No more than 35% of the Town & County funds may be held in uninsured
accounts. This percentage may be increased for no more than 30 days
during times of heavy collections or in anticipation of large payments to be
made by the Town such as debt service, pension expense, or other
expenses determined by the Treasurer as necessitating special cash
handling.
Diversification of funds between financial institutions is another important tool available to the
Treasurer to ensure the safety of funds on deposit. Given the above limitations regarding
investment types and dollar limits as well as insurance coverage requirements, the need to place
further limitations on the funds placed in one financial institution is not necessary provided the
following:
1. All financial institutions with which the Town & County conducts business will be
reviewed by the Treasurer on a quarterly basis utilizing the Veribanc ratings report.
In addition, the Treasurer will review the Call Reports and/or the Uniform Bank
Performance Report of any institution receiving a “Yellow” classification or receiving
less than three stars on the previous quarter’s Veribanc report, noting trends in
capital ratios, net income, operating expenses, loan losses and loan delinquencies,
or any other determining factors which may have resulting in the lower rating. The
Treasurer will meet with the representatives of the institution, as necessary, to further
enforce the financial review.
2. The Treasurer will, after conducting this review, determine the proper deposit levels
to maintain at such institutions or implement an “exit” plan, if necessary, fro the
eventual removal of Town & County funds from the institution.
As a sound practice, however, the Treasurer will attempt to maintain no more than 40% of the
Town & County’s total funds in one financial institution or 50% with a single advisor.
Also, in accordance with Chapter 44, Section 55 of the General Laws of Massachusetts (MGL),
the Treasurer will not at any one time have on deposit in a bank or trust company or banking
company an amount exceeding 60% of the capital and surplus of each bank or trust company or
banking company unless satisfactory security is given for such excess.
IV. Process – Trust and Other Special Funds
This section of the investment policy applies to funds with special circumstances such as
stabilization, 32B funds and the depreciation.
Trust funds may be established a s a pooled investment portfolio. The accounting of each fund
swill be maintained separately to ensure that each fund receives their proportionate share of
interest realized and unrealized gains or losses.
The General Laws of Massachusetts (MGL) Chapter 44 Section 54sates that money should be
deposited into savings bank, trust companies incorporated under the laws of the Commonwealth,
banking companies incorporated under the laws of the Commonwealth which are members of the
Federal Deposit Insurance Corporation, or national banks, or invested in participation units in a
combined investment fund under section thirty-eight A of chapter twenty-nine, or in a paid-up
shares and accounts of an in co-operative banks, or in shares of savings and loan associations or
in share or savings depositors of federal savings and loan associations doing business in the
Commonwealth.
Additionally the Town & County may invest such funds in securities, other than mortgages or
collateral loans, which are legal for the investment of funds of savings banks under the laws of
the Commonwealth; provided that not more than 15% of any such trust funds shall be invested in
bank stocks and insurance company stocks, nor shall more than 1 ½ % of such funds be invested
in the stock of any one bank or insurance company. The General Laws of Massachusetts (MGL)
Deleted: The above
Page 5 of 5
Chapter 167 Section 15A and Section 15B describes the list of legal investments for savings
banks which dictates the allowable investments for municipalities.
The Treasurer may invest trust funds in the following instruments:
1. Massachusetts State Pooled Funds - The Massachusetts Municipal Depository Trust
(MMDT), an investment pool for state, local, county and other independent
governmental authorities, is under the auspices of the State Treasurer. MMDT seeks
to obtain the highest possible level of current income consistent with the preservation
of capital and liquidity by investing in a diversified portfolio of high quality money
market instruments with an average dollar-weighted portfolio maturity of 90 days or
less. MMDT investments are not guaranteed by the State, FDIC, or any other
governmental agency. The Treasurer may invest an unlimited amount.
2. US Treasuries – Us Treasuries maybe sold prior to maturity. The Treasurer may
invest an unlimited amount with maturity limits as stated in the interest rate risk
section of this policy.
3. US Agencies – US Agency obligations that may be sold prior to maturity. The
Treasurer may invest an unlimited amount with maturity limits as stated in the interest
rate risk section of this policy.
4. Bank accounts or Certificate of Deposit (CD’s) with a final maturity no greater than
one year from the date of purchase may be made for unlimited amounts if the
depository institution is a member of the Depository Insurance Fund (DIF) or the
Share Insurance Fund (SIF). These funds insure all deposits held at a member
Massachusetts state chartered savings bank or co-operative bank respectively.
5. Bank Accounts, Certificate of Deposit accounts (CD’s) and/or brokered CD’s with a
final maturity no greater than one year from the date of purchase up to the FDIC
coverage limits. All account balances in a single depository institution are considered
in the aggregate to determine FDIC coverage limits.
6. Bank accounts or Certificate of Deposit accounts (CD’s) with length of maturity limits
from the date of purchase, as stated in the interest rate risk section of this policy, may
be made for unlimited amounts if the deposit is fully collateralized by a third party
agreement or securities owned by a depository institution that have been segregated
from the day to day assets of the institution in order to provide collateralization.
7. Uninsured or unsecured bank accounts or Certificates of Deposit accounts (CD’s)
with a final maturity no greater than on e year from the date of purchase are allowed
to be held by the Town & County subject to the following limitations:
i. The aggregate uninsured portion of deposits held at any one institution
cannot exceed %% of the institutions total deposits reflected on the bank’s
last filed FDIC Call Report.
ii. No more than 35% of the Town & County funds may be held in uninsured
accounts.
iii. The credit worthiness of the depository will be tracked by the Treasurer
utilizing Veribanc rating report.
8. Common and preferred stock, investment funds, and other items that are listed in the
State of Massachusetts List of Legal Investments. Link:
http://www.mass.gov/?pageID=ocaterminal&L=5&L0=Home&L1=Business&L2=Banki
ng+Industry+Services&L3=Banking+Legal+Resources&L4=Laws+%26+Regulations
&sid=Eoca&b=terminalcontent&f=dob_leglist&csid=Eoca
V. Timeline
The effectiveness of the policy will be reviewed each fiscal year at the beginning of the budgetary
cycle and refined accordingly.
Page 1 of 2
TOWN OF NANTUCKET
BOARD OF SELECTMEN
USE OF ONE-TIME FINANCIAL RESOURCES POLICY
Effective date:
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 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: federal aviation grants; 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 will not 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
FINANCIAL RESERVES POLICY
Effective date:
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.
Date: September 8, 2011
To: C. Elizabeth Gibson, Town Manager
Gregg Tivnan, Assistant Town Manager
From: Pat Perris, Human Resources Director
Re: Comparison of Existing Town Manager Evaluation Form
and Recommended Evaluation Form
The current evaluation form was developed by Groux and Associates in the early 1990s.
It reflects the Town government structure at that time as well as the common practice of
evaluating performance standards. In the mid 2000’s the Town of Nantucket made two
significant operating changes that support the need for an updated evaluation process for
the “chief executive officer”:
1. Adopted a revised Town Charter that calls the chief executive officer Town
Manager
2. The Board of Selectmen adopted annual goals and objectives for Town
Administration.
The following chart compares the existing and recommended evaluation forms for the
position of Town Manager.
Current Evaluation Form Recommended Evaluation Form
Five (5) point rating scale Three (3) point rating scale +
accomplishment ratings
Evaluate Town Administrator in 3 roles:
“Chief Executive Officer”
“Staff Assistant”, and
“Operating Representative:
Evaluate lead staff person in the role of
Town Manager
Evaluate fourteen (14) performance
categories or standards
Evaluate nine (9) performance categories
or standards retaining key categories
Two (2) written narrative opportunities Three (3) written narrative opportunities
Measurement of progress towards BOS
goals and objectives
If you have any questions please feel free to contact me. Thank you.