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Charlie Sumner

    TOWN MEETING

    Wellfleet Adopts $24.9M Budget, OKs All Overrides

    Town service cuts are avoided, but spending must still pass at election

    By

    WELLFLEET — Town meeting voters approved nearly all of the 54 articles on the warrant on Saturday, including a $24.9-million operating budget, a $1.1-million capital budget, a $2.2-million sprinkler system for the elementary school, and $400,000 in Proposition 2½ overrides for two new police officers and two firefighters or EMTs.

    While the four overrides and one debt exclusion (for the sprinklers) passed by two-thirds majority votes at the meeting, they will need to be affirmed at a special election on Tuesday, June 21. If all are approved, property taxes on a house of median value ($619,000) would rise by $546, said former interim Town Administrator Charlie Sumner.

    At Saturday’s Wellfleet town meeting, left to right, former interim Town Administrator Charlie Sumner, Town Counsel Carolyn Murray, new Town Administrator Rich Waldo, and select board member John Wolf. (Photo by Michaela Chesin)

    Select board chair Ryan Curley asserted that an increase in the residential tax exemption from 20 to 25 percent would “offset most of the tax increase” for year-round residents, although his analysis appeared to be faulty. For the owner of a median-value house, the increased residential exemption would save about $240, not the $408 Curley mentioned.

    The meeting drew 266 voters to the ballfield across from the Wellfleet Elementary School.

    Select board members and town staff urged voters to pass the operating override to avoid cuts to various town services, including recreation, child-care vouchers, library staff and operating hours, and amnesty day at the transfer station.

    The 2.4-percent increase from the previous fiscal year will ensure that the budget is level-funded, Sumner said, without needing to depend on debt exclusions or using other one-time revenue streams, local receipts, and reserves, like draining the ambulance fund each year, as was done in the past. Sumner had already resumed his retirement, but attended the meeting with new Town Administrator Richard Waldo, who started on May 31.

    “The last time we had an operating override was over 15 years ago,” select board member Mike DeVasto said. Silverman confirmed that the last operating override was at the 2005 Annual Town Meeting, for $400,000.

    “I can’t express how excited I am to put that chapter in the rearview mirror,” said DeVasto of the town’s extended financial debacle. “I can confidently say that we are in a better place than we were prior to the accounting crisis.”

    Select board member John Wolf said that the town also faces “a credibility gap,” which must be addressed by the new town administrator and finance department staff.

    Wolf warned against taking a punitive stance toward “the outright incompetence that has taken place in the past.” But he questioned DeVasto’s rearview mirror metaphor, saying that “a good helmsman is aware of what’s going on in the back as well as what’s coming up ahead.”

    The biggest item on the warrant was the $2.2-million fire suppression system at Wellfleet Elementary School. Steven Kopits asked if the expensive system was “absolutely necessary.” Fire Chief Rich Pauley replied that the town was violating state law and that fire marshals could close the school building down.

    “Should there be a fire, the cost of sprinklers would be modest in comparison to the town’s liability,” Wolf commented.

    Supplemental funding of $334,500 for a fuel storage tank at the marina was approved. The new tank would be underground in the same location as the old tank, according to Harbormaster Will Sullivan.

    Police Chief Michael Hurley and Fire Chief Pauley urged voters to approve increases in their departments without further delay. The need has been present for several years, they said, but funding was put off due to the town’s financial disarray.

    Voters approved Article 46, placing a community impact fee of 3 percent on “professionally managed” short-term rentals. Article 47, also adopted, expands the provision to include owner-occupied properties.

    The money collected from the impact fees will be placed in two stabilization funds established by the town meeting: 35 percent of the funds will go into an affordable housing stabilization fund, aimed at providing housing for those earning less than 80 percent of area median income (AMI). The remaining 65 percent will go to a mixed-income housing stabilization fund, to benefit those who make more than 80 percent of AMI but still struggle to afford housing in town.

    Other articles approved at the meeting included authorization of an easement for the Herring River Restoration Project and a nonbinding resolution asking the select board to draft a tree preservation bylaw.

    The 54-article warrant was dispatched in just over four hours, a significant improvement over last year’s annual town meeting, which took six and a half hours.

     

    TOWN FINANCE

    Wellfleet’s Bond Rating at Risk in Accounting Quagmire

    Free cash certification now depends on town’s same-old auditors

    By

    WELLFLEET — As April town meeting approaches, time is running out for the town to sort through its financial disarray.

    The Mass. Dept. of Revenue (DOR) has informed the town that it will not certify Wellfleet’s free cash account until the town’s fiscal 2021 audit is done, interim Town Administrator Charles Sumner told the select board on Feb. 8. At the same time, interim accountants Mary McIsaac and Lisa Souve are still working to close the cash books for both fiscal 2020 and fiscal 2021, which also must happen before free cash is certified. They now say that could happen by the second week of March, after which the auditors could start their work.

    Cash Wants to Be Free

    Free cash is the total of unspent, unrestricted funds from the previous fiscal year. The money is not available for use until the account is certified by the DOR. Wellfleet’s free cash account has not been certified since June 30, 2019, according to DOR spokeswoman Naysa Woomer.

    If free cash isn’t certified by town meeting, now scheduled for April 25, the stabilization fund won’t be replenished, which could affect the town’s AAA bond rating. A lower bond rating would mean higher interest rates on borrowing.

    Last month, Sumner told the select board that the stabilization fund had been drained of $639,000 since June and that it was important to replenish the fund to maintain the AAA rating.

    Sumner said this week that his financial plan had been put in jeopardy by the DOR’s message but that it was still possible to get the accounting work done by town meeting. He also suggested that the April 25 date might be postponed.

    The town’s books have been audited for the past 25 years by the same firm, Powers & Sullivan of Wakefield. Sumner told the select board last week that he lacked confidence in the last audit “for obvious reasons.”

    In the fiscal 2020 audit, Powers & Sullivan found an unexplained variance of $765,000, which Sumner described as “significant, particularly for a community the size of Wellfleet.”

    The firm’s previous audit, for fiscal 2019, did not include a management letter — an unusual omission, given the magnitude of the accounting deficiencies that now are obvious. The auditors have consistently refused to answer questions from the Independent about the reasons for this omission, why other material weaknesses in the town’s accounting practices (such as the lack of balance sheets and a general ledger) were not flagged sooner, and how the upcoming audit will be approached.

    Powers & Sullivan is in the last year of a three-year contract with the town that was negotiated by former Town Administrator Dan Hoort. The fiscal 2021 audit will cost $22,900 under that contract.

    McIsaac and Souve have been working since last August to close the cash books, “peeling away layers of the onion and identifying problems,” Sumner said. “There’s still some variance and outstanding questions. The best way to provide clarity is for the next audit cycle to wash through the system. While it’s disappointing, it’s not terribly surprising.”

    Other than replenishing the stabilization fund, Sumner did not name any other planned uses for free cash at the upcoming town meeting.

    Untangling the Accounts

    Progress on the books has been slower than expected because of vacancies at town hall.

    Assistant Town Accountant Jane Tesson took a leave of absence Oct.1, and former Town Treasurer Miriam Spencer resigned Nov. 30. “We had to backfill on duties we consider to be mandatory and just try to keep the wheels turning,” McIsaac told the Select Board.

    The plan now is to close the records and provide the DOR with system-generated documents, finalize a punch list, and get the auditors in, McIsaac said.

    The work McIsaac and Souve have been doing for seven months includes inspecting all the records the town has (audit work papers, source documents, and department materials) and then determining beginning account balances. Once those are determined, they make sure that town meeting votes were recorded properly across all the funds.

    “We’re looking at receipts and disbursements as much as possible,” said McIsaac. “We came up with an ending balance first for FY ’20 and then carried that into FY ’21 to be able to close both years consecutively and smoothly, produce the records that the DOR would like to see, and also produce the records that are required for our auditors,” McIsaac said.

    Souve said each town fund was a project. She gave the community preservation fund as an example.

    “I have resigned myself to the fact that I have to rebuild it from fiscal ’20 forward,” Souve said. “Nine hours just the other night on CPC. It’s not done yet.”

    Depending on what CPC funds are available at the end of her search, town meeting articles may be affected, she said. At the same time, McIsaac will be working on untangling the Affordable Housing Trust Fund.

    Most town funds are now closed or on the verge of closing, the accountants reported. The largest is the general fund.

    “We’ve done the lion’s share of work on those balance sheet items to be able to close the years on that,” McIsaac said.

    McIsaac said she expects the auditors will complete a satisfactory audit of the town’s records for fiscal 2021 “and render a good opinion accompanied by a constructive management letter.” The management letter should note fixes of items from the previous management letter plus additional items that hadn’t been addressed before, she said.

    Last year, the DOR’s Division of Local Services came to Wellfleet and interviewed town staff for a comprehensive report yet to be completed, Sumner said. “We’re anxiously waiting,” he said. “The state department is swamped, but we should be seeing it in the next several weeks.”

    The Search Goes On

    Sumner’s choice for the position of town treasurer, Cameron Reiss Scott, was to be presented to the select board on Tuesday, Feb.15.

    The Town Administrator Search Committee will begin to discuss candidates in executive session, and preliminary interviews have begun for the town accountant positions. During the Feb. 8 select board meeting, Sumner’s contract was extended until May 15, but if someone is hired as town administrator he will leave sooner.

    When the books finally close, “Wellfleet can move on, and we can be in a reasonably good place to get a treasurer and town accountant on board with as good-as-we-can-get records,” Souve said.

    FISCAL CRISIS

    Wellfleet Funds Not Certified by State Since 2018

    The town has no general ledger or access to ‘free cash,’ says Interim Administrator Sumner

    By

    WELLFLEET — The town’s “free cash” account has not been certified by the state Dept. of Revenue for the last three years. This is just one of the mind-bending problems facing the volunteer and temporary workers who are racing to prepare a budget and a town meeting warrant by a May 21 deadline.

    In municipal accounting, free cash is unrestricted funds left unspent as of June 30, the last day of the fiscal year. Town officials may use this money to pay future expenses, with the approval of town meeting voters. The funds are not available, however, until the state certifies the balance sheet from the previous year. This normally happens within two or three months.

    But there hasn’t been a balance sheet since 2018.

    The accountant who prepared Wellfleet’s books for fiscal 2019 never completed the work, said Interim Town Administrator Charles Sumner this week. Thus, 2019 free cash was never certified. And the incomplete work has never been finished. So, there is no free cash available from fiscal 2020 either, and none can be anticipated for fiscal 2021, which ends in six weeks.

    “It’s been a rolling ball effect,” said Sumner, who began work in Wellfleet one week ago.

    Sumner also reported that the town accountant has not kept a general ledger for the entire town that tracks all expenses, wages, and revenues. In the absence of a general fund chart, the department heads have been keeping their own books with Excel spreadsheets, Sumner said.

    “Thankfully, they’ve done a good job,” he said.

    Without Dept. of Revenue certification, Wellfleet cannot use its free cash, which amounts to about $1 million, at town meeting on June 26, according to select board chair Mike DeVasto.

    Sumner is assembling an accounting team to address the town’s long-festering financial control problems. He hired Lisa Souve, who was the town accountant for Brewster, where Sumner served as town administrator for 29 years. He planned to interview a second accountant on May 19.

    Sumner’s plan is to have one accountant work to correct the errors and omissions going back to fiscal 2019. The other will be tasked with putting proper procedures in place going forward by creating “a general fund chart of accounts that makes sense,” he said.

    “It will take several months to work our way through this,” Sumner said on Monday.

    An auditor from Powers & Sullivan who found “substantial issues” with the town’s accounting practices will make a presentation of findings to the select board on May 25, Sumner said.

    Last week, town officials provided the Independent with a copy of the most recent audit, after the newspaper filed a formal public records request. The document is being studied by newspaper staff, including a certified public accountant, and an independent analysis will be published before the upcoming town meeting.

    Wellfleet’s accounting problems came to light during a leadership vacuum in the fall of 2020. On Sept. 22, the newly hired Town Administrator Maria Broadbent fired the town accountant, Gene Ferrari, who had been on the job for one year. This was shortly after the annual town meeting on Sept. 12, during the time when free cash from the previous fiscal year is generally certified. Though Broadbent would not state her reasons for firing Ferrari, she hinted at several problems.

    On Dec. 14, Broadbent hired Heather Michaud as the new town accountant. On April 23, Broadbent and the select board “mutually agreed” that Broadbent would resign on April 30, more than two years before her contract was up. And Michaud announced that same day that she, too, was quitting for personal reasons.

    “We lost two town administrators and two town accountants,” said select board member Justina Carlson, referring to Dan Hoort, the town administrator until 2020, and Broadbent. “So, it’s understandable that we have had bookkeeping snarls.”

    $8.5M in Overrides and Exclusions

    As the interim management team is assembled, town officials have been feverishly cutting articles from the draft town meeting warrant to get it to the printer by Friday, May 21.

    Town officials met on May 12, May 17, and May 18, and will meet again May 20 as the deadline looms.

    They slashed $5 million in wastewater expenditures from the warrant on May 12. The money was part of a single $6.9-million article comprising several projects offered by the town’s comprehensive wastewater planning committee. Select board member Ryan Curley said the proposal needed to be split into nine separate articles, one for each project.

    Harry Terkanian, the retired attorney and former town administrator who is volunteering to prepare the town meeting warrant, said there were 26 articles on the draft 53-article warrant containing debt exclusions or budget overrides, totaling $8.5 million.

    “That’s a huge ask of the voters and many are not essential,” he said.

    The largest of the wastewater projects asked voters to spend $3.7 million on a septic system upgrade subsidy. It would provide home owners who have failed septic systems with $12,500 subsidies to buy enhanced innovative or alternative systems, which can reduce nitrates to a level far below traditional Title 5 systems and thus keep groundwater cleaner. The fund could be tapped by anyone constructing a new system or upgrading an old one. The $12,500 subsidy, according to the warrant article, would lower the home owner’s costs down to the price of a Title 5 upgrade.

    The wastewater articles can wait, DeVasto said, because they need more “feedback and buy-in” from the public.

    The select board did leave one wastewater article on the warrant, however: Article 19, to raise $1.9 million to design and construct a wastewater facility for the 46 units at the future 95 Lawrence Road affordable housing project. This system would also serve the school, police and fire stations, and, eventually, other nearby properties.

    On May 17, the select board kept on cutting the draft warrant, removing capital purchases such as a new bandstand awning at the pier, basketball court resurfacing, and an all-terrain forklift for the marina. More cuts were expected.

    If getting the town meeting warrant ready is a sprint, solving the town’s accounting issues will be a marathon.

    “The public can have confidence that it is possible to go back and correct these problems, but it will take time,” Sumner said. “The public needs to have a little patience.”

    “We’re not in bad shape,” Carlson told the Independent on Tuesday. “The real story in not the crisis — it’s how we all came together to respond to the crisis.”

    THE DOOR REVOLVES

    Wellfleet Taps Sumner as Interim Town Administrator

    Meanwhile, volunteers push to finish town meeting warrant and budget

    By

    WELLFLEET — In three days last week, the select board held three meetings during which they delayed town meeting by three weeks, reviewed warrant articles, and decided to offer the job of interim town administrator to Charlie Sumner, 66, the retired Brewster town administrator.

    With the town meeting warrant and omnibus and capital budgets not yet finalized, the board had little choice but to change the date of the annual meeting from June 5 to the 26th. The budgets and warrant are expected to be complete in about two weeks, Acting Town Administrator Rich Pauley said on Tuesday. If negotiations go smoothly, Sumner said, he will take over from Pauley, who is also the town’s fire chief, at Wellfleet Town Hall on May 12.

    The select board and former Town Administrator Maria Broadbent parted ways on April 23 with a “mutual agreement,” and Heather Michaud, the town accountant for the last four months, resigned the same day. They left after an auditor’s report showed the town’s finances in disarray and after failing to prepare the town budget.

    Though the select board did not complete the warrant review, and the members were too exhausted to deal with the 2022 budget by the third night of meetings on April 29, they did on April 28 interview Sumner, who retired in 2015 after serving in Brewster for 29 years.

    “He is the right person for what we need right now,” Pauley said. “He has great knowledge, temperament, and the ability to guide us through for the next few months.”

    Pauley said he will ask the select board to meet in executive (private) session on Friday, May 7 at 6 p.m. to approve Sumner’s contract.

    Sumner finished serving in April as Provincetown’s interim town manager for the previous nine months. He stepped in after Robin Craver and the Provincetown Select Board parted ways just as Craver’s six-month probationary period ended. Sumner received $80 an hour and worked a 32-hour week, according to his contract with Provincetown. He is still negotiating with Wellfleet.

    Sumner’s time in Provincetown went so well that the select board named Friday, April 2, “Charlie Sumner Day” before he left.

    “I have only heard the most glowing reports,” Wellfleet Select Board Chair Mike DeVasto said of Sumner.

    In the meantime, Pauley and attorney Harry Terkanian, who was Wellfleet’s town administrator from 2013 to 2015, have been working to prepare the town meeting warrant and the fiscal 2022 budget. Voters must approve that budget at town meeting on June 26.

    Terkanian is volunteering his time, and Pauley refused additional pay. The select board offered to pay Pauley more than his current salary as fire chief, but he declined. “That’s my decision,” he said. “There is just stuff that needs to get done. And Harry has been fantastic.”

    Sumner said he believed that, between the two of them, Terkanian and Pauley could put the budget together for town meeting.

    Wellfleet’s big picture, however, is less certain. The auditor’s report, which the select board is still reviewing and has not released to the public or the press, raised alarming problems, which Michaud, before she resigned, said would take two or three years to fix.

    Several former town employees and others familiar with Wellfleet’s finances, speaking on condition of anonymity, said the town has suffered from inconsistent leadership. Gene Ferrari, the last town accountant before Michaud, was let go by Broadbent after one year. Before Ferrari, Connie Boulos was the accountant for two years. The town administrator position bounced from Paul Sieloff, who began in 2007 and commuted weekly from Albany, N.Y to work four days in Wellfleet, to Terkanian for three years, to Dan Hoort for four years. Broadbent lasted nine months.

    Several sources said training and compliance of staff in use of the current accounting system, Vadar, has been poor. One former contractor said, “It’s endemic of not having good management. It happens over a long period of time; things build and then it gets worse.”

    Pauley described “real difficulties within the accounting department related to the software and previous accounts transferring to the current software. That’s been an issue for a year.”

    “We have had the turnover at the town accounting office and at town hall,” Pauley continued. “But I have full faith and confidence that the townspeople can feel the important business of town will get done.”

    Accounting discrepancies during transition years do happen. In fact, Sumner faced the same issue shortly after leaving Brewster.

    Sumner told the Wellfleet Select Board he retired in the fall of 2015 and Brewster Finance Director Lisa Souve retired in 2016. “We had worked together for over 25 years,” Sumner said. “We kind of finished each other’s sentences.” But after their retirements, “things kind of went off the rails,” he said.

    The new town administrator, Mike Embury, and new town accountant, Irene Larivee, blamed accounting errors found by an auditor on Sumner and Souve. In a May 2018 meeting, Embury, Sumner, and Souve traded accusations. “It was ugly,” Sumner said.

    Ultimately, Larivee was placed on leave and let go in October 2018. Embury resigned in June 2018. Embury, who could not be reached for comment, is currently a bus driver for the Cape Cod Regional Transit Authority.

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