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Auditor Praises Pittsfield's Bookkeeping, Offers Few Suggestions
By Andy McKeever, iBerkshires Staff
01:17AM / Monday, February 04, 2019
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Auditor Thomas Scanlon praises the city's bookkeeping.

PITTSFIELD, Mass. — Auditor Thomas Scanlon is praising the city's bookkeeping.
 
"This is probably the best condition the city's financial reporting has been in," Scanlon told both the City Council and the School Committee at a joint meeting Wednesday evening. 
 
Scanlon has been auditing the city's books for a decade and said this year was one of the easier ones. Particularly he praised the timeliness and accuracy of the required filings with the state Department of Revenue. That, he said, makes it much easier and more efficient to perform the audit. 
 
Scanlon is putting the final touches on the audit now but said he found no significant deficiencies. 
 
He also praised the city's efforts to revamp its investment strategy. In the fall the city worked with the banks to change the city's investments and was able to significantly bolster its total income.
 
"The city made a conscious effort to address investment policy this fiscal year," Scanlon said.
 
He was also glad to see the city curb back using so much free cash to offset the tax rate. For years, he has urged the city to move away from that tactic under the premise that free cash is a one-time and unpredictable revenue and should be used for one-time expenditures and not recurring costs in the city's budget. 
 
The city had been using more than $2 million per year to offset the tax rate. 
 
"You've gone down to $1 million the in last two years. In a city this size and the way you are generating free cash, $1 million would be appropriate," Scanlon said.
 
The city has $5.5 million in certified free cash, a $1.1 million increase over the year before. Scanlon said 40 percent of $2.5 million in free cash was generated by unexpended appropriations from the prior year's budget and that's roughly what was put back in. He's OK with at level but urged the council not to use much more than that. 
 
He added that the use of free cash to offset the tax rate "fictitiously" improves the look of the levy capacity. The city's levy capacity has been increasing in the last two years after it had butted right up to the levy ceiling. The capacity is now at $3.1 million and Scanlon referred to that as an "off the books reserve" that bonding agencies look at when setting rates. 
 
In prior years he's pushed the city to put more free cash into reserves. At this point, the city has $5.5 million in free cash and $3.6 million in stabilization as a reserve. That $9.1 million equates to 6 percent of the city's budget and ideally, a municipality would have closer to 10 percent.
 
Scanlon said 6 percent is still good and a stable level compared to prior years. But he'd still like to see more in stabilization.
 
He also raised concern with the collection of taxes for properties in tax title. The city has a high collection rate of 96 percent but Scanlon noted collections haven't been as successful when properties go into tax title.
 
The city's tax title receivables grew from $4.5 million to $7.1 million. However, that was before the city held a tax title auction and got many of those property owners into payment plans to catch up.
 
Scanlon also sounded the alarm on other post-employment benefits. OPEB is essentially what the city will owe to future retirees. It is estimated that the city has $366 million in liability for those workers.
 
In 2014, the city created an OPEB trust fund with the idea of stashing a bit aside each year until there is enough interest generated per year to pay for those retiree benefits. But that account has been growing slowly while that liability has been growing as the number of retirees grows. 
 
"That is something the city has to have in mind for future budgets," Scanlon said. "It is a real liability."
 
The audit reviewed fiscal 2018 and is still in draft form. Director of Finance Matthew Kerwood said once that audit is completely finished, it will be made publicly available.
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