Sunday, March 21, 2010

TGSC Weekly Message: Financial Management Under a Charter

Simply put, under the Charters the Town Manager is responsibility for building and managing the budget; the Board of Selectman or Town Council (BOS/TC) have fiduciary and oversight responsibility. Town Meeting or Town Council, depending on the charter adopted, makes the decision to appropriate the money.


Under the proposed Charters, the currently decentralized administration of the finances of the town are consolidated under a professional Town Manager. The Town Manager coordinates the efforts of the town’s financial team that consists of an appointed, qualified town treasure/collector, accountant, and finance committee.


The Charters require the Town Manager to submit a proposed budget for all town departments along with a budget message that explains the budget, its impact on departments, and any major variations from the current fiscal year. The proposed budget shall provide a complete fiscal plan of all town funds, activities and summarize the town’s debt position, including factors affecting the ability to raise resources through debt issues. A preliminary budget will be submitted no later than February 1st of each year. The final budget shall be submitted by the first Board or Council meeting in April and include the Regional School District budget proposal.


The Charters require a public hearing be held on the proposed budget and that the public be given fourteen days notice of the hearing date, location of where the public can acquire copies of the full budget, which will also be posted on the town website. At the mid point of the fiscal year, the Town Manager is required to hold a public hearing to assess the state of the budget.


The Charters also require the Town Manager to submit annually a five-year Capital Improvement Plan at least thirty days before submitting the operating budget. The Town Manager is also required to prepare annually a Long Term Financial Forecast (five-year) that identifies factors which will impact on the financial condition of the Town: revenue and expenditure trends; potential sources of new or expanded revenues, and any long or short term actions which may be taken that will enhance the financial condition of the Town. The Charters require that the Capital Improvement Program and the Long Term Financial Forecast be published on the town’s website an updated when changes occur.

The Charters require an annual independent audit of all town accounts and calls for an Audit Committee of no less then three members of the BOS/TC. The committee will oversee the work of the firm and receive the report and make recommendations to the BOS/TC based on the findings contained in the report.


The Charters allow the Town Manager to transfer unencumbered funds up to a maximum of $25,000 from one department to another, and from one line item to another with the concurrence of the Finance Committee and the BOS/TC. This provision preempts having to have numerous town meetings under the Open Town Meeting/Board of Selectman/Town Manager Charter to deal with financial matters that fall under the $25,000 mark. The Charters also require the Town Manager to reduce appropriations when it appears probable that the revenues or fund balances available will be insufficient to meet appropriations. The Town Manager will inform the BOS/TC as to any remedial action taken and make recommendations as to other steps that may need to be taken.


A nine-member Finance Committee will be formed to assist the Town Manager. The Town Manager will appoint three members to three-year staggered terms, the BOS/TC shall appoint three, and the Town Moderator/Town Clerk (depending on which Charter passes) will appoint three. The Finance Committee examines all budget and appropriations proposals and issues its review prior to consideration, debate, and vote of BOS/TC/Town Meeting.

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