WELLFLEET — Untangling the mess of accounts that do not match and the unreconciled records dating back two years in the town’s books will take several more months. It may delay setting the tax rate and hiring a new town administrator.
That is the latest news — all of it bad — from a recent budget update that interim Town Administrator Charlie Sumner and temporary accountant Mary McIsaac presented to the select board on Aug. 10. Sumner will be reporting on the “forensic” accounting progress every few weeks, he said.
So far, nine funds have been reconciled through June 2021, McIsaac told the select board. That is a small fraction of what needs to be done.
“We have only scratched the surface,” said Lisa Souve, a second temporary accountant working with McIsaac. “We are like cats playing with balls of yarn.”
They open up the records for one fund and “it unravels,” she said. “You follow it. There are journal problems that send you in one direction, and then you get there and you find more problems that send you in more directions.”
Souve and McIsaac, both retired municipal accountants, were brought in after turnover in the town’s accounting department and the introduction of new software resulted in an extended period of incomprehensible bookkeeping.
McIsaac, Souve, and Sumner said they inherited data that was never properly entered into an accounting system that town staff was never trained how to use.
That led to the town’s free cash account not being certified by the state for more than a year. And it could well delay setting the tax rate this year, as it did last year, said Sumner.
In his first detailed account of the painstaking repair of the books, Sumner said he would like to hold a special town meeting in the first week of December. It cannot be any earlier than that because his team needs every spare moment to put the budget numbers in order.
The purpose of the December special town meeting would be to correct suspected errors in the fiscal 2022 budget adopted at the June annual town meeting, Sumner said. That budget was put together by volunteers in crisis mode after former Town Administrator Maria Broadbent and Town Accountant Heather Michaud left in April. Broadbent and the select board agreed that she would resign nine months into a three-year contract. Michaud lasted four months before resigning.
In June, town meeting voters approved a $21-million operating budget, up 4.82 percent over last year. With the capital budget and debt service payments from previous appropriations and projects, property taxes are expected to rise 13 percent this year.
Or, at least, that is what passed at town meeting. Sumner now says problems have emerged. For example, the liability insurance budget for the entire year is already spent, he said — not because there was some unusual expenditure but, likely, from lack of research into what should have gone into that budget.
“I am not comfortable that the money we collected in all kinds of fees — for beach parking, building permits, ambulance runs, and the like — matches what we expected,” Sumner said.
Future revenues are hard to predict because he does not yet know the actual revenue brought in over the last two years. The proper records do not exist, he said.
Every account should have been reconciled monthly, but that has not been done properly in at least two years, Souve said.
Doubting the Auditors
An audit of Wellfleet’s 2020 accounts found an unexplained variance of $764,489. The money was likely in an agency fund, according to the auditors at Powers & Sullivan.
An agency fund is any account that gathers funds destined to go elsewhere. For example, meals and gas tax revenues and pistol permit fees paid to the town are kept in an agency fund until they get sent to the state. An agency fund was way off, the auditor told Sumner, so it made sense that is where the $764,489 must be.
But Sumner said he does not believe it. He said further forensic review will find many unbalanced funds contributed to the variance.
“They were providing a simple solution,” Sumner said of the auditors. “But for the sake of public confidence and the accuracy of the town records, we would prefer to find the real numbers.”
Because no one wants to try to recruit a new town administrator and town accountant until all the errors are corrected, the budget issue is affecting the town’s ability to hire key staff. Officials worry that hiring someone during the crisis could cause another transition nightmare.
But the problem is that Sumner is already technically retired, after nearly 30 years as town administrator of Brewster. He said he expects to stay in Wellfleet only until January.
The select board has just begun to discuss whether it should hire a consultant and appoint a search committee to find a new town administrator. Such searches take several months.
Police Chief Mike Hurley said that, for his own “selfish” reasons, he hopes Sumner, McIsaac, and Souve stay as long as possible.
The last 90 days with “Charlie, Lisa, and Mary is the most stability I have seen” since becoming the chief in 2019, Hurley said.