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Hilltown Archives — The Altamont Enterprise, June 3, 2010

Comptroller criticizes Berne’s big balance, supers defend rainy-day account

By Zach Simeone

BERNE — The state comptroller’s office says that Berne has raised taxes to unnecessarily high levels, while gathering an unexpended fund balance larger than half of its total budget. The comptroller, however, has no specific guidelines for municipalities on limits to fund balance, and town officials believe that having a large balance is prudent.

The town of Berne “should have some checks and balances in place and take a better look at what they’re doing and where they’re allocating certain funds so they’re not overcharging taxpayers on things they don’t need to be paying for,” said Nicole Hanks, a spokeswoman for the comptroller.

An audit released on Tuesday covers Jan. 1, 2008 to June 30, 2009. At the end of ’08, the town had $938,586 in its unexpended fund balance — 103 percent of the $909,740 that had been budgeted for the general fund in the 2009 budget.

Kevin Crosier, who was Berne’s supervisor during the period covered in the audit, said late last year that the town had more than $1 million in its fund balance.

“That surplus was there because I knew we were going to be facing hard times down the road,” said Crosier this week. Referring to comptroller Thomas DiNapoli, he went on, “If I’d followed Mr. DiNapoli’s blueprint for healthy government, our town would be in the same mess that the state is in.”

Crosier also pointed to the fact that Berne’s budget for 2009 did not increase the tax levy; the 2010 budget raised taxes by .006 percent to $752,150. This year’s budget was Crosier’s last, as he did not seek re-election.

Berne Supervisor George Gebe, who took office in January, told The Enterprise this week that, while the town board has not yet had a chance to sit down and fully discuss the audit’s findings, he thinks the large fund-balance stems from issues of cash flow.

“Numbers are great to look at but, as you take a look at the total budget, everyone needs to realize that we don’t get our monies in a lump sum,” Gebe said. “You do have to have some cash on hand until some of that revenue comes in from property tax and sales tax. Some people think you get a big lump sum in January; you really don’t. So, the bottom line is, it’s a cash-flow problem.”

In the end, Hanks said, it is really up to the municipality to decide how much to keep in this “rainy-day” account.

“It’s got to be based on what they’ve dealt with in the past, and where they’re going in the future,” said Hanks. “We couldn’t say a specific percentage without knowing exactly what one place is doing versus another. It’s up to them to look at what they’ve got going, and make the best allocation possible.”

State law says only that a municipality can keep a “reasonable amount” of money in its fund balance, placing no specific cap on how much taxpayer money a municipality can withhold. Schools, on the other hand, can have no more than 4 percent of their budgets in an unreserved fund balance, state law says.

On how much a town should have in its fund balance, William Reynolds at the state comptroller’s office said last year that it is “hard to know without conducting an audit.” But this latest examination by the comptroller yielded no more specific recommendation.

The town has also accumulated a total $69,136 in reserve for medical expenses “without the legal authority to do so,” the audit goes on.

“This is one of the things I told the state comptroller’s office that they should use as an example for other municipalities,” Crosier said when asked about the reserve. “Our insurance costs went down by over 30 percent, while everyone else’s went up 15 or 18 percent a year. We took the savings from that, and we put them away in a reserve fund. We did the same thing with our retirement reserve fund so that, when the comptroller slams us with this unexpended rise in retirement, it won’t affect the town. So, I started an insurance reserve fund, setting that money aside for health insurance and benefits for employees. Evidently, that’s illegal. So, what they’ll probably end up doing is just taking the reserve money and putting it into the fund balance.”

The report also says that, because the supervisor’s accounting records were inaccurate, and due to discrepancies between the town’s book balances and its bank balances, the annual financial report filed with the state comptroller in 2008 was inaccurate.

“Basically, it was transposing numbers from one document to another,” Crosier said. “Our bookkeeper transposed one of the numbers wrong or something.”

The audit also cites issues with records of payment, due to lack of a proper internal audit.

“The town paid claims totaling almost $90,000, even though they were not recorded in the minutes as being audited and approved by the board,” the audit reads. “Our review of 14 claims, totaling $94,070, found that 11 claims totaling $23,133 lacked evidence of department head approval; 10 claims totaling $90,565 lacked evidence of receipt; and one claim totaling $16,921 included an overpayment of $1,741.”

Crosier attributes this to the fact that groups of bills are approved at once during town board meetings.

“If you look at the minutes, it says ‘bills were approved by the board,’” he began. “The board would look at all the general fund bills, and the highway fund bills, and we would approve them in one swoop. I’m sorry that they didn’t like that, but that’s tough,” he said of the comptroller’s office. “What they’re saying is, we should specifically identify every bill and vote on it. We’re not going to sit there and go through each bill. No town does that.”

The audit goes on to say that, while evidence suggested that town officers and employees had presented their financial records to the town board, councilmen had no documentation indicating that there had been a detailed audit of town records.

“Every year, the books are presented to the town board members for review,” Crosier explained. “If they wanted us to sit down there and write our own audit, we don’t have time for that.” But, Crosier said, the books were reviewed and approved by each town board member.

The audit concludes that “the board’s ability to monitor financial operations has been diminished, and there is an increased risk that errors or irregularities could occur and remain undetected and uncorrected.”

Crosier replied, “They want to come and tell you how to run your government, and their government is a disaster.”

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