Tag Archive | "tamara wright"

Town Police Audit Unroots Cause of $4.6 Million Deficit

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FTI Consultants, a firm hired by Southampton Town, has finally completed a forensic audit of the town’s police fund and the firm presented their astonishing findings at a town work session on Friday, July 17. Brian Ong, speaking on behalf of FTI, enumerated the myriad ways mismanagement of the town’s police fund monies lead to a near $4.6 million dollar deficit at the close of 2007. However, the silver lining to the team’s audit was a list of recommendations for the town moving forward, many of which have already been undertaken by the town to clean up their accounting practices.

FTI’s forensic audit analyzed the police fund from January 1, 2003 through December 31, 2007. Ong and his team spent several months interviewing town employees and wading through electronic records of the town’s financial documents. FTI hoped to piece together the town’s complicated accounting practices from this time period and unearth the cause of the fund’s staggering deficit.

At the start of 2003, the town’s police fund was enjoying a healthy fund balance of a little over $3 million. Due to unexpected and unbudgeted Patrolman Benevolent Association (PBA) settlements, normal and disability retirements, over allocation of police expenditures and other budgetary variances the fund balance was not only whittled away to nothing, but by the close of 2007 the police fund was in the red. Between 2003 and 2007, the town’s police fund overspent by around $8 million, though the fund’s surplus was used to augment this figure. In 2003 and again in 2005, the town paid around $2.5 million, in total, for retroactive PBA contract settlements, which Ong pointed out contributed to a substantial amount of the overspending in the police fund.

“Additionally, we noted issues caused by unanticipated retirements, unanticipated normal retirements as well as disability retirements. Each of which resulted in lump sum distributions of severance which were not budgeted for at adequate levels,” added Ong.

Beginning in 2003, the police fund operated at a deficit, yet taxes in the town’s police districts weren’t levied to pay off these responsibilities. According to Wright, the town raised taxes just enough to maintain operations, though not to address the fund’s indebtedness. Furthermore, new tax monies, added supervisor Linda Kabot, were sometimes used for the incorrect budgetary year, consequently masking the actual deficit of the fund.

“Money was coming in from property taxes and so forth, and it was really earmarked for next year’s budget but was being used for the current budget in order to make payroll, etc.,” explained Kabot.

Ong added that over-allocation of police expenditures further exacerbated the police fund’s predicament. According to Wright, certain expenses, such as dental insurance, optical insurance, and workman’s compensation was erroneously charged to the police fund, when it should have been charged to other town funds. Another facet of the over-allocations were certain expenses that were charged in 2007, when they should have been charged in 2008.

However, between 2003 to 2007, to help make the police fund whole at year’s end and continue operations, the town often loaned money from one fund, primarily the general fund, to the police fund which the town refers to as an interfund loan. Under state law, interfund loans must be paid back to the lending fund within a year’s time, and if the loan isn’t paid back after a year the loan begins to accrue interest.

“Some years these loans would be paid back with the new tax money, so technically the loans weren’t outstanding. However, the taxes weren’t budgeted for that,” pointed out Wright, who added that during her research she found that once the police fund was low on money a loan would often be given.

The previous town board, however, didn’t sign off on these interfund loans. Instead, noted Kabot, the function of giving out interfund loans was under the purview of the comptroller’s office. Ong said he wasn’t aware of a law, which prohibits this practice, but said it is a good management policy to make town board members aware of interfund loans.

Going forward, Kabot said it was necessary for the town to draft a repayment schedule for the police fund.

According to Wright, the town has already implemented procedural changes to circumvent a deficit of the police fund in the future. Wright said the town has improved digital financial accounting and enacted a new system by which to manage separate accounts for a particular fund. Earlier this week, Kabot presented a draft law mandating the town board to pass interfund loans by way of resolutions.

In Midst of Financial Debacle, Town to Adopt New Finance Policies

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In the wake of discovering numerous accounting blunders dating back several years, the current Southampton Town Board hopes to wipe the slate clean for the town by tightening accounting controls and procedures for the future. The town’s present financial predicament stems from two main procedural oversights. Firstly, beginning in 2003, the town doled out a number of interfund loans from the general fund to other funds, like the police, waste management and highway fund, making sure these departments wouldn’t end up in the red at year’s end.

However, at a work session on Tuesday, July 21, comptroller Tamara Wright explained state law dictates an interfund loan cannot be extended for more than a year, meaning the loan must be paid back to the lending fund within a year’s time. In the instance where an interfund loan isn’t repaid within a year, the loan begins to accrue interest. The town’s failure to rectify these interfund loans resulted in several million dollars worth of indebtedness to the general fund.

The second major accounting error on the part of the town was the incomplete transfers from the general fund to the capital fund. A transfer, Wright pointed out at the work session, isn’t a loan and is simply a transference of money from one fund to another. However, beginning in 2004, previous town boards resolved to give a certain amount of money by way of direct appropriations, or direct cash transfers, from the general fund to the capital fund for various capital projects. Several of these transfers, however, were posted to have taken place on the town’s accounting database, but in fact the money wasn’t moved and remained in the general fund.

In order to prevent future town boards from repeating the mistakes of the past, supervisor Linda Kabot presented a draft law directly targeting these kinds of accounting errors.

“It is my belief that interfund loans should be done by town board resolution,” declared Kabot at the work session, detailing the first provision of her proposed law. In 2008, the town first implemented this policy, however, Kabot wishes to make this policy a law on the town books.

“This is an example of administrative policy, but I want to take it from policy to code amendment,” she said.

In addition, the comptroller would need to provide the town board with an annual or semi-annual report on all interfund loans throughout the town, specifying the lending fund and the receiving fund, the original loan amount, and the amount still owed on the loan at the close of the year.

To combat the second accounting problem revealed by the current town board, Kabot seeks to create an annual interfund transfer report. The comptroller would compile the report and distribute it to the town board.

Similar to the interfund loans report, the interfund transfer report indicates “the revenue source district/fund and receiving district/fund and the town board resolution authorizing the transaction.” Interfund transfers will also appear on the town’s annual operating budget and the funding source for each project will be specified.

Councilwoman Anna Throne-Holst, however, wished to take the tracking of available balances and spending for capital projects one step further.

“I want that level of recording and tracking as the project or funding is allocated and as that project proceeds forward, so the town board can always refer back to that to see where the cash lies,” said Throne-Holst. She would like to see information dispersed to the board on the cash available for the projects, how much has already been spent on them and if the full amount allocated for the project wasn’t used in its entirety.

Kabot suggested the town publish an additional report to include this information and said it would give the town an easy “opportunity to recoup money” that wasn’t spent.

In addition to these measures, under the draft law the comptroller would release a report on the “Authorized, Unissued Bonds.” Currently, the town has approximately $19 million in authorized, but as of yet, unissued bonds.

The draft law is still pending validation from the town attorney and it will also be put through the ringer of public hearings.

“I want to show that the board is moving proactively to manage our financial turmoil,” maintained Kabot. “This will lead to greater town board oversight.”

Town Presents Police Audit Findings

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FTI Consultants, a firm hired by Southampton Town, has finally completed a forensic audit of the town’s police fund and the firm presented their astonishing findings at a town work session on Friday, July 17. Brian Ong, speaking on behalf of FTI, enumerated the myriad ways mismanagement of the town’s police fund monies lead to a near $4.6 million dollar deficit at the close of 2007. However, the silver lining to the team’s audit was a list of recommendations for the town moving forward, many of which have already been undertaken by the town to clean up their accounting practices.

FTI’s forensic audit analyzed the police fund from January 1, 2003 through December 31, 2007. Ong and his team spent several months interviewing town employees and wading through electronic records of the town’s financial documents. FTI hoped to piece together the town’s complicated accounting practices from this time period and unearth the cause of the fund’s staggering deficit.

At the start of 2003, the town’s police fund was enjoying a healthy fund balance of a little over $3 million. Due to unexpected and unbudgeted Patrolman Benevolent Association (PBA) settlements, normal and disability retirements, over allocation of police expenditures and other budgetary variances the fund balance was not only whittled away to nothing, but by the close of 2007 the police fund was in the red. Between 2003 and 2007, the town’s police fund overspent by around $8 million, though the fund’s surplus was used to augment this figure. In 2003 and again in 2005, the town paid around $2.5 million, in total, for retroactive PBA contract settlements, which Ong pointed out contributed to a substantial amount of the overspending in the police fund.

“Additionally, we noted issues caused by unanticipated retirements, unanticipated normal retirements as well as disability retirements. Each of which resulted in lump sum distributions of severance which were not budgeted for at adequate levels,” added Ong.

Beginning in 2003, the police fund operated at a deficit, yet taxes in the town’s police districts weren’t levied to pay off these responsibilities. According to Wright, the town raised taxes just enough to maintain operations, though not to address the fund’s indebtedness. Furthermore, new tax monies, added supervisor Linda Kabot, were sometimes used for the incorrect budgetary year, consequently masking the actual deficit of the fund.

“Money was coming in from property taxes and so forth, and it was really earmarked for next year’s budget but was being used for the current budget in order to make payroll, etc.,” explained Kabot.

Ong added that over-allocation of police expenditures further exacerbated the police fund’s predicament. According to Wright, certain expenses, such as dental insurance, optical insurance, and workman’s compensation was erroneously charged to the police fund, when it should have been charged to other town funds. Another facet of the over-allocations were certain expenses that were charged in 2007, when they should have been charged in 2008.

However, between 2003 to 2007, to help make the police fund whole at year’s end and continue operations, the town often loaned money from one fund, primarily the general fund, to the police fund which the town refers to as an interfund loan. Under state law, interfund loans must be paid back to the lending fund within a year’s time, and if the loan isn’t paid back after a year the loan begins to accrue interest.

“Some years these loans would be paid back with the new tax money, so technically the loans weren’t outstanding. However, the taxes weren’t budgeted for that,” pointed out Wright, who added that during her research she found that once the police fund was low on money a loan would often be given.

The previous town board, however, didn’t sign off on these interfund loans. Instead, noted Kabot, the function of giving out interfund loans was under the purview of the comptroller’s office. Ong said he wasn’t aware of a law, which prohibits this practice, but said it is a good management policy to make town board members aware of interfund loans.

Going forward, Kabot said it was necessary for the town to draft a repayment schedule for the police fund.

According to Wright, the town has already implemented procedural changes to circumvent a deficit of the police fund in the future. Wright said the town has improved digital financial accounting and enacted a new system by which to manage separate accounts for a particular fund. Earlier this week, Kabot presented a draft law mandating the town board to pass interfund loans by way of resolutions.

Out with the Old and In with the New: Southampton Town Hires New Auditing Firm

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Southampton Town Supervisor Linda Kabot announced on Friday, June 19, that the town will hire a new external auditing firm, Nawrocki Smith, LLP, and is ending a five-year relationship with AVZ, or Albrecht, Viggiano and Zureck.
“I and other members of the town board have been calling for a second opinion . . . but what we really meant was a transitioning to a new auditing team,” explained Kabot of the new hire.
AVZ worked as the town’s external auditors during the years, from 2004 to 2007, when several errors occurred within the town’s capital fund, causing an overstatement of the town’s general fund by around $8 million. When completing their audits for the town, AVZ failed to notice discrepancies in the general fund and the capitol fund.
Last week, FTI consulting was brought in to begin a forensic audit of the town’s reconciliation of the capital fund. According to Kabot, FTI was hired to validate the information already gathered by the town’s financial team.
Nawrocki Smith, a Melville based firm, first interviewed with the town regarding the reconciliation of the capital fund. Both Kabot and town comptroller Tamara Wright said they were impressed with Nawrocki Smith’s qualifications, but opted to hire Manhattan based FTI consulting for the forensic audit of the capital fund. FTI consulting, however, isn’t an auditing firm and cannot certify financial statements for the town.
This Monday, Nawrocki and Smith started the audits for the 2008 financial statements with AVZ helping during the transitional period. One of Nawrocki Smith’s chief duties at the moment is to restate the 2008 year end financial conditions – to reflect the reconciliation of the capital fund.
Wright said Nawrocki Smith and FTI consulting predict they will finish the restatement of the 2008 financial reports and the certification of the capital fund database by July. She added that it is imperative for the two firms to work cooperatively in order to finish these projects.
Kabot added that East Hampton Town recently retained the services of Nawrocki Smith as their transitional external auditor. She said the transition to a new auditing firm was based on recommendations made by Wright, the town services administrator Richard Blowes and the town attorney Dan Adams.
The town is also in the midst of wrapping up an audit of the Community Preservation Fund, but because of state law the town was required to hire an additional auditing firm – BST advisers – to complete this audit.
Councilwoman Anna Throne-Holst thanked Wright for her part in bringing in the new auditing firm.
“It hasn’t been easy piecing together this puzzle and trying to keep everyone doing what they are supposed to be doing . . . There is a real thought process here that will bring the history in order and certify this history,” said Throne-Holst.

Southampton Town Comptroller Tamara Wright

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tamara wright

The Sag Harbor Express sits down with the new Southampton Town Comptroller, Tamara Wright, to discuss her background in finance, the state of the town’s finances and why she loves accounting.

What is your background in finance?

I have a masters degree in accounting, or a masters of accountancy. My first job was working for a liberal arts college, Guilford in North Carolina, as an assistant comptroller. After that I worked for [the professional services firm] Price Waterhouse, before their merger with Coopers and Lybrand, for six years.

I detect a slight Southern accent. Where did you grow up?

I grew up in North Carolina and Virginia. I did my masters at Virginia Tech and then I moved to New York City to work for Price Waterhouse.

What did you do at Price Waterhouse?

I was in the management consulting division. At that time there weren’t industry specialties. I worked in a number of different industries, but my area of expertise was in financial management and strategic planning. Now things are organized in such a way where you might be an expert in the financial sector or the manufacturing sector, or you might be an expert in government.

One of my first projects was for the New York City Fire Department. There had been a lawsuit against the city because the cost of the fee for fire inspections was exceeding the cost of completing the inspection itself. I developed a cost allocation model, [which meant] I had to figure out what it really cost [to do the inspection.] I had to watch how they inspected a how and how long it took them to do it.

I did a similar kind of job when they were building the World Financial Center. The city of New York and Olympia & York were my clients. They had a joint agreement with the Port Authority. They had four buildings, but when they were selling their first building they didn’t know how much it had cost them to build it. So I had to put on a hard hat and go out and see how they had built the building . . . see how much steel they had used.

Was that one of your favorite aspects of the job, to go out and see how these financial projects existed in the real world?

I think I have always loved learning new things and I have always been drawn to improving things, so management consulting was a really good place for me. I was able to learn a lot and develop different skills in financial planning, budgeting systems and improving financial functions. I learned how to make them more efficient and effective.

What else did you at Price Waterhouse?

I specialized in transfer pricing, financial planning, financial reorganization and financial records reconstruction, [among other things.] I did this across a number of sectors. Air Canada was one of my clients.

Mostly my work was involved in financial and strategic issues. The job really allowed me to develop my financial management skills.

I also did a little “tour of duty” developing continuing education classes in management consulting at the national office. I wrote a couple of courses and taught new managers. I taught them how to manage profitability. That experience gave me a whole other dimension into how adults learned. It really helped me as a manager to know how to educate adults and understand how they learn.

Where did your career take you after Price Waterhouse?

At Price I felt like I was a jack of all trades, but a master of none so I decided to work inside a company. I became interested in the financial sector and I ended up in the world of Wall Street. I left Price Waterhouse to work for Prudential Financial first as a risk analyst, then moved on to a variety of other roles, including business unit controller and budget officer, director of strategic and financial planning, and chief operating officer for the international business.

How long did you work for Prudential?

For 16 years. I did a lot of different things for them, but I thought I would only be there for a few years, then return to consulting. After that, I started my own consulting firm on the East End in 2006. Most of my consulting work was with not-for-profits and some start up ventures. I didn’t want to travel too far from home.

How did you become involved with Southampton Town?

Councilwoman Anna Throne-Holst knew me because our children went to school together. She knew that I had a financial background. In the spring of 2008 she asked if I would submit my resume [as an outside financial consultant] to the town since they were going through a financial transition after the resignation of Charlene Kagel and appointment of the new comptroller, Steven Brautigam. My resume made its way to Human Resources and then I received a call from [former deputy supervisor] Richard Blowes and interviewed with the Town Board.

What were your main responsibilities when you started consulting for the town in July 2008?

Mostly, I was involved in two things: looking at how to redeploy the town’s financial system so that it would provide better financial controls and better reporting; and then the other part was helping to re-establish and organize the comptrollers office.

When Charlene left, two senior people — the deputy comptroller and the senior auditor — left with her. Another person retired after working here for a very long time. The office manager transferred to the water district. The payroll officer was transferred to the parks department. By the time I got here in July, there were only two people who had been in the department at the beginning of 2008. The office was pretty decimated and Steve Brautigam was struggling because he didn’t have the staff. The first thing I focused on was recruiting individuals, working with the human resources department and Steven to rebuild the comptroller’s office.

You were recently named town comptroller. Why did you accept the position?

I think my appointment was the least disruptive to the town when it found itself in need of a new comptroller. There had been so much disruption here, and since I had been part of recruiting and training the new staff, it was a bit easier for me to step in. This is an appointed position [that runs concurrent with the supervisor’s term] and my appointment will end in December. I think it wasn’t going to be easy for the town to find someone who would want to work for only six months as the comptroller.

I was already here and working with the town. I understood what was happening at the town, so I made the full time commitment.

Originally, my work was only supposed to be a 90-day project. My plan had been to move back down to Virginia. I had agreed to do a mid-July to mid-October project; but, while I was in the midst of it, the project took on a life of its own.

You were part of the team of town financial officials who discovered significant problems in the funding of the town’s capital projects and the inaccurate tracking of these projects from 2003 through 2007. How did you make this discovery?

Well, it wasn’t like we had a sudden epiphany. It slowly revealed itself over time. In the beginning, as we were redeploying the town’s financial systems. We wanted to have the cash for the projects and wanted to allocate the necessary funding. There were a combination of projects. Some were almost complete and some were just about to be completed. We had to decide if we wanted to carry these projects forward. Those kind of questions lead us to not really being able to reconcile the funding.

We realized that the cash in the bank and the amount left to spend [for each project] wasn’t equal. We did know that there were bonds that hadn’t fully been issued, but we knew something else must be at play.

Where does the town’s corrective action plan stand?

I think it is fair to say that we are still working on it. It is still in progress and we don’t fully know project by project where we stand. We are just beginning to understand the over- and the under-funding. We had to go back all the way to 2002 and look at how much cash was in the bank, how the money was borrowed for each project and we had to develop a database [with all of this information].

Richard Blowes has been heading the effort to see what was actually happening with these projects. He is looking at what money was going out and what money was coming in.

[Current deputy supervisor] Bill Jones is going through each town board authorization because the resolutions tell you how much spending was approved for each project, and how that project was supposed to be funded.

This week our forensic auditing company will begin a project to review all of the data. They will help validate what we have collected to make sure the information is accurate and complete. We need this independent audit to make sure that we have identified everything. It should be complete in a month and then we will have full understanding of how each project stands. Then, the draft corrective action plan will be updated and completed.

What are some measures the town is taking to make sure this doesn’t happen again?

Certain new controls have been implemented, but improving the controls was a decision the town made before [discovering the errors in the capital fund.] It was through the process of improving [the town's finances] that we discovered the problem. I have to give the town credit, because they understood that they needed to improve their accounting for the capital projects almost a year ago. There was a recognition that there needed to be better accounting.

Now, each capital project has a cash account and a fund balance. It has an actual balance sheet. We are recording the funds received for each project, as well as for the spending. [Before, the funding for each project was coming from one fund, or “pool of money,” and the funding wasn't separated for each project.]

On a different note, what is it about finances that interests you? What do you love about finances?

I think when the financial function is performing effectively it provides information for good decision making. Accurate information is the corner stone of efficient and effectively running any kind of business, whether it be a municipality, private cooperation or a not-for-profit. You have to make good decisions. When a company fails the customers get hurt, and likewise when a municipality fails the taxpayers get hurt.

In my career I have enjoyed developing information that can be relied upon and helps management make good decisions.

Kabot Wants to Create “Lock Box” For CPF

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In light of Southampton Town’s troubled finances and decreased revenues, supervisor Linda Kabot asked the town board to consider “lock boxing” money for the Community Preservation Fund (CPF). Kabot says the plan would allow the town to continue paying off the CPF’s annual debt without relying on the general fund to cover any shortfalls from decreases in transfer taxes, which is the CPF’s main revenue source.
“You would do this in your own home. If you had a mortgage and you lost your job, you would want a savings account to pay for your obligation,” explained Kabot. “We have a mortgage on the CPF program that is over $100 million.”
Over the past 10 years the town spent around $400 million on land purchases, continued Kabot, but only received $300 million in transfer tax revenue. The remainder of this expense was procured through bonding. This year the town will pay around $9 million towards the principal and interest on these bonds, though next year these payments will increase to roughly $10 million. Kabot said the town should be “judicious” when deciding whether to purchase a piece of property in the future as the town will most likely have to bond for future purchases.
“If we are getting $1 million a month in revenue that is $12 million for the year, minus $10 million which is spoken for for debt services, leaving us with $2 million if we are giving certain school districts and other eligible districts PILOTs [Payment In Lieu of Taxes],” explained Kabot. “If you’re going to be paying for land and you aren’t doing it on a pay as you go basis, you may be borrowing and that will increase your debt services.”
Based on recommendations made by former town comptroller Steve Brautigam, Kabot’s plan, which is in the form of a resolution, calls for the creation of a $1.2 million preliminary cushion fund. This money is already in CPF coffers and was transferred there at the end of 2008, when it was ascertained that the CPF fund paid too much into the town’s debt clearing fund.
CPF manager Mary Wilson said the second part of the resolution would “designate a portion of future monthly revenues” which would go into this rainy day or debt reserve fund. For the next six months of 2009, Brautigam proposed that $250,000 in CPF revenue be segregated for this fund. In 2010, the town would increase the allotted savings to $350,000 per month.
“The goal is to get up to a point where there is at least $11 million in this reserve fund or at least one year’s debt services,” said Wilson.
Current town comptroller Tamara Wright said the town’s projections of receiving around $1 million a month in revenue wasn’t conservative. She added that last month, the town received only slightly over $1 million, but in the prior months, received under $1 million.
“If we were planning conservatively, by my estimation, you would be almost $3 million short of being able to reserve adequately,” said Wright. “If the revenue streams stay where they are, paying for properties out of cash is going to be very difficult for the next 18 to 24 months.”
“The dilemma is that this is an unprecedented opportunity to stockpile open spaces at prices that aren’t going to stay at this level in our lifetime,” observed councilwoman Anna Throne-Holst. “We need to look at the bigger picture. It is estimated that for every $1 of land that is developed rather than preserved $1.30 is needed to provide services for the infrastructure that goes with that.”
Kabot said she hoped the board would come to a consensus vote at the next town board meeting on Tuesday, June 9.

Noyac Center Off the Table As Town Faces Finances

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For nearly five years, Noyac community members had been petitioning Southampton Town for a community center, and in November 2008, it looked like the hamlet was one step closer to getting their wish. Town supervisor Linda Kabot visited the Noyac Civic Council in late November and told the group the town was receptive to the idea of erecting a new center on a parcel of land adjacent to Trout Pond. The town had even scheduled funding for the project as part of the 2011 budget.

  Only five months have passed since the meeting, but in that time, a host of fiscal blunders in Southampton Town have come to light — leaving the town strapped for cash and unable to complete many of the projects it had hoped to accomplish, including a new Noyac Community Center.

  “There was great discussion on the board about the Noyac Center, about creating a brand new facility, but in these times it certainly doesn’t seem prudent,” deputy supervisor Bill Jones reported during an interview last week. “There is basically no surplus. The plan for capital projects for 2009 has slowed to a trickle unless there is a great need or if there is an issue of public safety.”

  Jones added that this bare bones approach to funding capital projects would likely continue through the next couple of years. Supervisor Kabot said the projects which will take precedence now include roadwork, necessary building improvements and drainage, while other projects like playground and community centers will be put on the back burner until the town’s coffers are healthy and plump once again.

  As 2009 approaches the mid-year mark, it seems the Town of Southampton is experiencing a perfect storm of financial troubles. The town continues to reconcile the hidden I.O.U.s from the capital fund to the general fund from 2004 through 2006, but is also burdened by $19 million in authorized — but unissued — bonds, which must be issued at some point. In order for Southampton to go out to bond, the financial statements of the town must be completely accurate, which is only possible after the town’s financial records are fully reconciled. In addition to these worries, the town is also facing a $2 million revenue shortfall from mortgage taxes and the possibility of decreased property assessments for the next tax year, both of which are due to the ailing economy.

  In town hall, expense cuts have already been implemented across the board. The town has enacted a hiring freeze and is looking closely at part-time positions, said Jones. He added that the town hasn’t ruled out a lag payroll, in which employee wages for certain days work are deferred until employment is terminated. The supervisor has also frozen each department’s contingency fund.

  “Her [Kabot’s] message there is don’t overspend,” explained Jones. “There is no safety net.”

  Of the loss in mortgage tax revenue, Kabot said, “The taxpayer cannot absorb the difference. We must cut the expense side of the balance sheet.”

  In these situations, Kabot added that trimming spending could possibly translate to personnel cuts.

  Financial consultant Tamara Wright, who was recently appointed to the position of town comptroller, noted that decreases in revenue streams is a problem municipalities across the nation are grappling with, but unlike other municipalities Southampton Town must issue $19 million worth of authorized but unissued bonds. Both Kabot and Jones, however, noted that the town can ill afford to issue these bonds all at once. Jones said if the town issued all of the bonds and increased the tax rate up to the 5 percent tax rate cap, almost 4.4 percent of the tax increase would be set aside to pay off these bonds. Furthermore, the remaining .6 percent wouldn’t cover the expenses associated with running town hall or the town.

  “If we were to borrow all of that money in September 2009, it is like a mortgage. At some point in 2010 we would have to pay the principal on it,” explained Jones. “No way and no how would that 4.4 percent solve the problem because the town still has to continue operating into the next year.”

  Kabot remarked that it was the town’s duty to issue these bonds, which had been signed off on by previous town board administrations, and said the taxpayers will most likely have to pay back this debt over the next 30 years.

  For now, the town is focusing its efforts on reconciling the I.O.U.s from the capital fund to the tune of $10 million, of which $8.7 million is owed to the general fund.

  “We are looking at the transactions to see what was spent and then we have to analyze what was supposed to be spent in terms of budgets and authorized spending,” said Wright, who added that she has poured over thousands of resolutions for the 175 accounts, dating back to 2002, which need to be reconciled down to every penny spent. Kabot predicts the town will have a full analysis of the actual spending by Monday, June 1.

  According to Jones, the town will have certified financial reports for the audit of the 2008 budget by August. Jones expects the New York State Comptroller to come in at the end of the summer, or early fall, to conduct a risk analysis, which he predicts will prompt a full blown state audit of the town.

  In terms of the capital fund debacle, it is still unclear exactly where the fault lies, though former comptroller Charlene Kagel admitted she knew of the problem in 2007.

  Of any future legal actions, Kabot said, “It would be premature to assign culpability [right now.]”

Southampton Town Picks New Comptroller

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Southampton Town Hall will undergo an administrative reshuffling in the Comptroller’s office. During a work session on Friday, May 22, town supervisor Linda Kabot announced by way of a resolution that as of June 1, Tamara Wright will be appointed as the town comptroller. Wright will serve out the remainder of current comptroller Steve Brautigam’s term, which expires in December 2009.

Since July 2008, Wright has worked as a financial consultant to the town. Brautigam will take over the position of Assistant Town Management Services Administrator, working under the authority of Richard Blowes, the town services administrator.

In addition to the new appointments, the duties of comptroller and assistant town administrator will be segregated. As always, the comptroller will oversee the financial reporting and accounting for the town, but the assistant town administrator will be responsible for many of the functions of the town’s capital program. Steve Brautigam will also coordinate between the town and the state comptroller, when the state conducts a risk analysis and audit. The state will likely commence the audit at the end of the summer or early fall, according to deputy supervisor Bill Jones.

“The intent of the re-organization is to provide greater leadership and strategic management for the comptroller’s office in terms of financial reporting and use of technology and staff resources to accomplish critical accounting duties for the town,” said Kabot in a press release distributed by the town last week.

“This reflects what I proposed several weeks ago,” councilwoman Anna Throne-Holst chimed in. “This comes at a time when we need to re-organize our financial oversight in the town.”

The decision appeared unanimous on the board, until councilman Chris Nuzzi raised complaints over Wright and Brautigam’s appointments.

“For months, I have raised numerous questions regarding how our current comptroller is performing in his job … Now it is my understanding that this inability is being rewarded with a $100,000 a year taxpayer-funded job offering … full benefits. This is completely and utterly unacceptable,” said Nuzzi in a statement released on Friday.

“In light of the continuing deliberation on budgetary numbers, capital dollars authorized and spent, authorized and unspent, fund balance amounts and budget reconciliations that have yet to be completed, I am calling for the withdrawal of this resolution,” continued Nuzzi.

According to Nuzzi, the resolution was previously discussed at a meeting attended by only four other board members, excluding himself, the supervisor’s office and the office of general services. He added that the decision of the new appointments was made “under the cloak of darkness” and that it was imprudent to vote on the resolution before a holiday weekend.

In his statement, Nuzzi recommended the town advertise for the comptroller’s position, conduct interviews in June and hold off on creating a new position in the office of general services.

Other members of the board, including Throne-Holst and councilwoman Sally Pope, strongly disagreed with Nuzzi’s statements saying the board had discussed the reorganization of the comptroller’s office for several months.

“We have discussed this issue for far too long without taking action. Yes we could have voted [on this resolution] at a regular board meeting, but we are not adding budget line. We are doing what we should have done a long time ago,” countered Throne-Holst.

“We have multiple audits underway. There is no question that our staff is being pulled away from the day to day operations of the town,” added councilwoman Nancy Graboski. “we need to have financial personnel who are on the inside.”

Kabot informed the audience that the resolution was budget neutral, meaning the town had already budgeted for the salaries of the comptroller and assistant town administrator. Wright will earn $115,000 a year, while Brautigam will earn $100,000. The town will also eliminate the director of audit and control position with a salary of $85,000.

Nuzzi’s comments did little to sway the other board member’s opinions and the resolution was passed.

Southampton Town to Examine all Capital Projects

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Town Board Meets to Discuss Capital Accounts

At a Southampton Town Board work session on Friday, board members gathered to talk about the discrepancies in the capital accounts. At last week’s work session, council members discovered that there was an approximate $19 million difference between the $16 million actual cash on hand and the $35 million the department heads thought they had in their accounts. Town supervisor Linda Kabot said that this difference in figures could be due to bonds being authorized, but never issued. Now, the board will be looking to go back through all the outstanding capital projects to determine which ones will be priority.

At Friday’s meeting, the town’s management service administrator, Richard Blowes, Tamara Wright, a finance consultant and comptroller Steve Brautigam met with the board members to discuss their plan of action.

Councilwoman Nancy Graboski first spoke at the meeting, giving insight as to what she believes will be the best way to move forward. Graboski and councilwoman Sally Pope were in several meetings this week with the town’s audit committee on the topic.

Graboski said that this issue is particularly disconcerting now because of the current state of the economy.

“This is top priority as far as I’m concerned,” she said on Friday.

Graboski stated that the audit committee intends to gain a full understanding of why these issues have arisen and then put forth their plan of action. She explained that a piece of software called, Team Budget could be utilized to prevent these types of situations in the future.

When Blowes tried to offer the board a history of what has occurred with capital accounts over the past few years, board members Chris Nuzzi and Anna Throne-Holst questioned why they weren’t getting all the account information at Friday’s meeting.

“I appreciate the accounting of what’s happened,” Nuzzi said. “I thought today would be over the capital budget and what happened this year.”

Blowes explained that he was told by Graboski that a good idea would be to go over the chronological history of what has been happening with the accounts over the past few years, so that he may bring the town board up to speed.

“My concern is there is not sufficient time to provide in that level of detail,” Blowes responded.

Throne-Holst agreed with Nuzzi, saying she thought the meeting was going to be held to discuss the realistic situation of the accounts.

“This has not been made clear, and certainly not to me,” the councilwoman said and added she has been requesting a copy of the capital budget for a while.

“What we have is some numbers,” councilwoman Graboski said, “there isn’t anyone willing to stand behind those numbers…then and only then will we be able to state with certainties that we can go forward with the systems and complete the computer software we need in the first quarter to get these numbers and this research back up.”

“Time is up now, I don’t think the board and the public can except to wait until April,” Throne-Holst maintained.  

Kabot explained that at first, the priority was on the $7.5 million deficit that was accumulated over the years 2004 through 2007 for police, highway, and waste management expenses, in the $82.5 million operating budget.

“We needed to fix it and go line by line and expense by expense,” she said before adding that now, the capital plan will be priority.

“Let the process and the priorities be laid out, hypocritical doesn’t work here,” the supervisor said.

“We are trying to take the bull by the horns at this point,” Graboski added.

Kabot said that the town hired a financial consultant to go over the information, and a Microsoft consultant to go over the software and address these problems.

“We now have all the cash accounts reconciled through November,” explained Wright. What she was advocating for at the meeting was the implementation of Team Budget, a budgeting software tool. She said that the software consultant said it was never fully implemented but now her plan is to bring the software consultants back in.

“As soon as an account goes negative, and you know you need to bond, it [the computer program] will trigger it is time to borrow,” Wright said.

“This is so you don’t prematurely borrow when you are not ready,” Kabot explained.

“They are coming in February and will install it,” Wright added. “So starting in the first quarter, department heads can work on their budgets.”

Comptroller Brautigam explained the reason for the so-called “missing funds” is because the “computer program is saying there is much more because the town board approved the projects.” Brautigam further explained that sometimes the projects are approved but the money wasn’t borrowed straight away, which is common because it saves money on interest and bond council costs.

For example he explained that he recently got a quote for a $20 million bond and the interest rate was 3.85 percent. But for a bond of $2.5 million the rate was two percent. 

Kabot said that there may be critical projects such as building or road repairs, but added, “We are not floating another bond until we have a good handle on our bonded indebtedness.”

Nuzzi asked for an immediate list of projects so that the board may consider those that may be of priority, like projects in the highway department or public works.

“What may be a greater issue is why are we authorizing projects that are not being done right away,” he asked.

“You’ve hit the nail on the head,” said Kabot. The supervisor said there are some projects that could have been given dual names in an account.

“We will scrutinize all of it,” said Nuzzi of all capital projects.

The board will meet on February 13, for a work session on public works, to see if there are any projects that need to be handled immediately.