Town of Templeton Financial Update

1. TOWN OF TEMPLETON
FINANCIAL UPDATE
March 29, 2014

2. MASSACHUSETTS DEPT OF REVENUE
REPORTING REQUIREMENTS
The Massachusetts Department of Revenue requires every city and
town to file two reports each year.
 The Tax Rate Recap Form Normally filed at the beginning of a
fiscal year. Cities and towns cannot set a tax rate until this form is
filed showing a balanced budget.
 The Schedule A Form Normally filed at the end of a fiscal year.
State aid will be eliminated for communities not submitting an
accurate Schedule A and free cash will not be certified.

3. TEMPLETON FINANCIAL PROBLEMS
EXTEND TO THREE FISCAL YEARS
FISCAL 2013 (July 1, 2012 – June 30, 2013)
FISCAL 2014 (July 1, 2013 – June 30, 2014)
FISCAL 2015 (July 1, 2014 – June 30, 2015)

4. FISCAL 2013
Schedule A was not filed with the DOR
Free cash was not certified by the DOR

5. FISCAL 2013
Schedule A not filed because cash reconciliation
was not completed and
Entries to the General Ledger were not accurate
and up to date.

6. FISCAL 2013
In November, the Town hired a forensic
accountant to assist in updating financial data.
DOR issued letter threatening to cut off state aid
payments if Schedule A was not filed by March
14, 2014.

7. FISCAL 2013
Schedule A was filed on March 14.
DOR certified Free Cash on March 28.

8. Massachusetts Department of Revenue Division of Local Services
Amy Pitter, Commissioner
Robert G. Nunes, Deputy Commissioner & Director of Municipal Affairs
Friday, March 28, 2014
Fred Aponte
Accountant
Town of Templeton
General Fund Deficit -26,899
Sewer Enterprise Fund 921,937
Re: NOTIFICATION OF FREE CASH APPROVAL - Templeton
Based upon the unaudited balance sheet submitted, I hereby certify that the amount of available funds or "free cash" as of July 1, 2013 for the Town of Templeton is:
This certification is in accordance with the provisions of G. L. Chapter 59, §23, as amended.
Certification letters will be e-mailed to the mayor/manager, board of selectmen, prudential committee, finance director and treasurer immediately upon approval, provided an e-mail
address is reported in DLS' Local Officials Directory. Please forward to other officials that you deem appropriate.
Sincerely,
Gerard D. Perry
Director of Accounts

9. FISCAL 2014
 The Town discovered a $505,000 gap in the
budget adopted at the May 2013 ATM
 Reason for the deficit:
Those who prepared the budget did not have
good data

10. FISCAL 2014
The Tax Recap cannot be submitted
until the budget is balanced
The tax rate has not been certified,
and no tax bills can be sent out.

11. FISCAL 2014
Town was forced to borrow $2.5
million to operate and pay bills
This Special Town Meeting is needed
to close budget gap.
STM was delayed until Free Cash was
certified from Fiscal 2013.

12. FISCAL 2014
Budget Deficits can be closed by:
1) Reducing Budgets
2) One-time revenues like Free Cash and the
Stabilization Fund
3) Additional taxes

13. 1) Reduce Budgets
Selectboard mandated a 5% reduction in
all Fiscal 2014 operating budgets on
January 27.
This will provide only $148,000 and reduce
services to residents.

14. 2) One Time Revenues
SURPRISE! NO FREE CASH IS AVAILABLE.
$103,000 is available from the
Stabilization Fund, BUT
This would strip all Town reserves.

15. FISCAL 2014
If one-time revenues are used in 2014,
the problem is not solved.
A similar gap will exist in Fiscal 2015.

16. FISCAL 2014
The Town has a “structural deficit”
This is a permanent deficit that recurs every year.
The “Structural Deficit has been patched over by
the use of Free Cash.

17. Use of Free Cash in Prior Years
 FY’07 Free Cash used: $784,151 Budget: $4,064,358
 FY’08 Free Cash used: $403,637 Budget: $3,686,661
 FY’09 Free Cash used: $665,959 Budget: $4,883,566
 FY’10 Free Cash used: $882,486 Budget: $5,160,573
 FY’11 Free Cash used: $380,007 Budget: $5,101,816
 FY’12 Free Cash used: $686,628 Budget: $5,277,527
 FY’13 Free Cash used: $189,081 Budget: $4,627,447

18. Structural Deficits can only be
resolved by:
1) Permanent reductions in services
OR
2) Additional taxes.

19. 3) Additional Taxes
 Article 1 proposes a General Override of
Proposition 2 ½ for $505,000 in additional taxes.
Must be approved in a Town Election
 Will increase the tax rate to $16.20
 FY'12 $14.60
 FY'13 $14.12 – Senior Center debt discharged
 FY'14 $15.26 – Includes Fall 2013 override
 FY'15 $16.20– With $505,000 override

20. IMPROVING TOWN GOVERNMENT
A New Financial Management Team is
being put in place:
 The Town Accountant will be a 20 hour per week position.
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 Warrant article merging Treasurer and Collector’s offices
 Other Departmental consolidations being actively
discussed

21. IMPROVING TOWN GOVERNMENT
Town is moving to sell liens on tax delinquent
properties.
$700,000 owed in back taxes.
Will replenish reserves.
Selectboard has appointed a Tax Title
Custodian to sell off Town-owned and
foreclosed properties.

22. IMPROVING TOWN GOVERNMENT
All positions in the Town organization
are being evaluated.
Staff reduction in Board of
Selectmen/Town Administrator Office

23. IMPROVING TOWN GOVERNMENT
Decision on renting Town Hall or moving
to a Town owned building to save
money
Consolidating all town offices
Town will bid contracts with various
service providers seeking lower costs.

24. FISCAL 2015
Budget cuts, consolidations and efficiency
measures are necessary but will not close
the gap.
A Prop 2 ½ override will eliminate the
Structural Deficit and close the gap in
Fiscal 2014 and Fiscal 2015