Thursday, June 25, 2009

Standard & Poor's...what does a bond rating cost?

Before we comment on Standard & Poor's Rationale for the town's bond rating, we wanted to make some information known regarding the process for obtaining a bond rating and also let everyone know just what a bond rating costs.
1. Apparently no documents were provided to Standard & Poor's for their consideration in determining the bond rating of the Town of New Hartford; the rating was actually determined by a telephone conference call. According to the emails we received through the FOIL process, the conference call involved discussions between the Town Bookkeeper, Supervisor Reed, John Shehadi from Fiscal Advisors and Michael Taylor from Standard & Poor's. We confirmed with the Town Clerk today that there was no exchange of information/documentation between the town and Standard & Poor's except for the telephone conversation.
2. How much did that telephone conversation and bond rating cost taxpayers? The invoice we received through FOIL was for a total of $6,800.
We also FOILed the Purchase Order to see what account was used to pay the invoice. According to the Purchase Order, account AA1315.43 - Bond Rating Fees - was used.

Looking at the bottom part of the Purchase Order, we noticed that Councilwoman Krupa approved the expenditure and Supervisor Reed's secretary signed as authorized employee. The interesting part is that Councilwoman Krupa checked the box for "budgeted item" meaning there was money already appropriated to pay for the expense.

However, in looking over the 2009 Adopted Budget for line AA1315.43, we saw that there is no money allocated in the 2009 Adopted budget and there hasn't been any money appropriated in that particular budget line since at least 2007.

For Councilwoman Krupa to approve and sign a Purchase Order saying that this $6,800 was a budgeted item is unconscionable and as an attorney and CPA, she should know better. Was she derelict in her duties?

The only option the town has when there is a need to expend money that has not been appropriated as part of the Adopted Town Budget is to transfer money from other account(s) to cover the invoice. Only problem is that according to N.Y.S. Town Law, that has to be done by board resolution prior to the expenditure and we can find no adopted town board resolution for the transfer of monies to cover this expense. From Town Law:
§ 112. Supplemental appropriations; unappropriated unreserved fund balances. 1. The town board, during a fiscal year, by resolution [emphasis added], may make additional appropriations or increase existing appropriations and shall provide for the financing thereof. Moneys therefor may be provided from the unexpended balance of an appropriation, from the appropriation for contingencies, from unappropriated unreserved fund balance or unanticipated revenues within a fund or by borrowing pursuant to the local finance law. For the purposes of this subdivision, unappropriated unreserved fund balance or unanticipated revenues shall be utilized only to the extent that the total of all revenues of such fund recognized or reasonably expected to be recognized in the current fiscal year, together with unappropriated unreserved fund balance, exceeds the total of all revenues and appropriated fund balance as estimated in the budget.
While it is not unusual for a town to appropriate some of their fund balance as part of their adopted budget's anticipated revenues to offset expenses and keep the tax rate low, it is customary for them to keep unbudgeted expenses to a minimum and make adjustments or transfer funds from other budget lines as needed in an effort to keep within the constraints of the adopted budget.

The question is, how many times over the past 3 1/2 years has the town board approved the expenditure of "unbudgeted monies" and, in an effort to keep the expenditure out of the public eye, never adopted a board resolution to transfer monies from other accounts to cover the expense? The problem with that method of accounting besides the fact that it is against town law is...how do you know where you are budget-wise from month to month? Judging from the large sum of monies that were transferred at each year-end, one would have to guess that they had no clue and didn't worry about it until year-end when they were "forced" to use any money they could find to cover negative budget lines including using more fund balance than they anticipated they would need at the time the budget was prepared?

As if that were not enough, according to the Association of Towns Town Law Manual:
B. Transfers (Town Law § 113 and Highway Law § 285-a).

(1) The town board, by resolution, may transfer surplus monies, contingent appropriations and unexpended balances as follows:

(a) From General Fund, Town-Wide to any of the highway funds or accounts for which taxes are levied on the entire area of the town;
Concerned Citizens has noted and blogged about the fact that the town board has been inappropriately transferring monies or co-mingling funds at year-end ever since the end of 2006. Wonder if the newly hired Budget Director will right this wrong and where will they get [find] the money to make up for the misappropriated funds?

Budget time is just around the corner...should be interesting!

2 comments:

Anonymous said...

The inmates are running the asylum. So what else is new? We need to get rid of as many of these idiots as soon as possible. This year 3 are up and Boo-Hoo Earle Reed is gone at the end of the year(thank you Earle). You were going to lose in the primary anyway! Let's give Bob Payne a retirement party in December also. I light novena candles every day hoping somebody will run against Dave Reynolds... I don't care, Republican, Democrat, Bull Moose party, doesn't matter. Dave needs an opponent so he can see the dissatisfaction barometer for himself. And remember, in 2 years, 2 more seat are up for election. Mrs. Christine (let us stop talking falsely now) Krupa and Mr. Rich Foodland are up. This town needs change and Barack Obama said it best: CHANGE YOU CAN COUNT ON

Anonymous said...

I want to believe these never ending shenanigans will be thing of the past soon. Without know-nothing Earle always looking for cover, Krupa's role in the Town's finances should be greatly reduced.

Hopefully no more of, the blind leading the blind.