Pension Fund Again Dominates Audit

Things are improving, but the town's flailing pension fund once again dominated the annual town audit presented to the Legislative Council Tuesday.

Scott Bassett, a CPA and partner with McGladrey and Pullen, LLP, the town's auditors, made the presentation at the start of the council's committee meetings.

The town's fund balance is $558,000, 0.3 percent of its $185 million budget and far below the recommended 5 percent level. But it's the pension fund that is the most worrisome, Bassett said.

"The pension fund continues to be an item of concern," he said. It was recommended that the town allocate a $21 million contribution in this year's budget, but that line item was only funded with $6.5 million.

The town has addressed several concerns brought up in last year's audit, including the $9 million deficit in the medical expense fund, but the pension fund problems persist, he said.

That didn't come as a surprise to the administration, which has targeted the pension fund as its top priority this year, Chief Administrative Officer Curt Balzano Leng said.

"The pension problem is the administration's #1 issue," he said, and work has already begun to address it.

"This year we are going to look at every option available under state law to start to deal with it," he said, "while trying to avoid overtaxing residents.

"Last year, fixing the medical insurance deficit was the #1 issue, and this year it's the pension fund," Leng said. "That was a $9 million deficit that we eliminated in one year and I'm happy they recognized that."

Overall he was pleased with the auditor's report, Leng said.

"There were no surprises," he said. "They told us things that we are already working on, and I'm happy it came back clean with no significant problems that we weren't aware of."

The administration will be working with the Legislative Council's new Pension Committee, as well as former council president Jim Pascarella, who now sits on the Pension Board, Leng said. And one thing they'll consider is Pension Obligation Bonds, he said.

"Bonding is one of several options under consideration," Leng said. They will be flushing out the options during the upcoming budget process, he said, after which Mayor Scott Jackson will make his recommendations as to how it should be handled.

"It's going to be the 900 pound elephant in the room during the budget process," he said. "It's going to be a decision that is going to have to be made -- it can't be kicked down the road."

The goal is to avoid raising taxes to address the shortfall, Leng said. Putting in the recommended $20 million contribution would translate into a four to five mill tax increase, he said, which town officials consider unacceptable.

But it's an option, he conceded.

"I would be lying if I said it's not an option that is on the table," he said. "I certainly hope increasing taxes is not the result of this process -- that's not our goal, and our track record shows that we are not going to pass a four or five mill tax increase on to residents.

"We are looking for creative solutions here," he said, "but there is nothing that is not on the table."