TOWN OF TEMPLETON

FINANCIAL UPDATE

March 29, 2014

MASSACHUSETTS DEPT OF REVENUE REPORTING REQUIREMENTS

The Massachusetts Department of Revenue requires every city and town to file two reports each year.

The Tax Rate Recap Form Normally filed at the beginning of a fiscal year. Cities and towns cannot set a tax rate until this form is filed showing a balanced budget.

The Schedule A Form Normally filed at the end of a fiscal year. State aid will be eliminated for communities not submitting an accurate Schedule A and free cash will not be certified.

TEMPLETON FINANCIAL PROBLEMS EXTEND TO THREE FISCAL YEARS

FISCAL 2013 (July 1, 2012 – June 30, 2013)

FISCAL 2014 (July 1, 2013 – June 30, 2014)

FISCAL 2015 (July 1, 2014 – June 30, 2015)

FISCAL 2013

Schedule A was not filed with the DOR

Free cash was not certified by the DOR

FISCAL 2013

Schedule A not filed because cash reconciliation was not completed and

Entries to the General Ledger were not accurate and up to date.

FISCAL 2013

In November, the Town hired a forensic accountant to assist in updating financial data.

DOR issued letter threatening to cut off state aid payments if Schedule A was not filed by March 14, 2014.

FISCAL 2013

Schedule A was filed on March 14.

DOR certified Free Cash on March 28.

Massachusetts Department of Revenue Division of Local Services

Amy Pitter, Commissioner Robert G. Nunes, Deputy Commissioner & Director of Municipal Affairs

Friday, March 28, 2014

Fred AponteAccountantTown of Templeton

General Fund Deficit -26,899

Sewer Enterprise Fund 921,937

Re: NOTIFICATION OF FREE CASH APPROVAL - Templeton

Based upon the unaudited balance sheet submitted, I hereby certify that the amount of available funds or "free cash" as of July 1, 2013 for the Town of Templeton is:

This certification is in accordance with the provisions of G. L. Chapter 59, §23, as amended.

Certification letters will be e-mailed to the mayor/manager, board of selectmen, prudential committee, finance director and treasurer immediately upon approval, provided an e-mail address is reported in DLS' Local Officials Directory. Please forward to other officials that you deem appropriate.

Sincerely,

Gerard D. PerryDirector of Accounts

FISCAL 2014

The Town discovered a $505,000 gap in the budget adopted at the May 2013 ATM

Reason for the deficit:Those who prepared the budget did not havegood data

FISCAL 2014

The Tax Recap cannot be submitted until the budget is balanced

The tax rate has not been certified, and no tax bills can be sent out.

FISCAL 2014

Town was forced to borrow $2.5 million to operate and pay bills

This Special Town Meeting is needed to close budget gap.

STM was delayed until Free Cash was certified from Fiscal 2013.

FISCAL 2014

Budget Deficits can be closed by:

1) Reducing Budgets

2) One-time revenues like Free Cash and the Stabilization Fund

3) Additional taxes

1) Reduce Budgets

Selectboard mandated a 5% reduction in all Fiscal 2014 operating budgets on January 27.

This will provide only $148,000 and reduce services to residents.

2) One Time Revenues

SURPRISE! NO FREE CASH IS AVAILABLE.

$103,000 is available from the Stabilization Fund, BUT

This would strip all Town reserves.

FISCAL 2014

If one-time revenues are used in 2014, the problem is not solved.

A similar gap will exist in Fiscal 2015.

FISCAL 2014

The Town has a “structural deficit”

This is a permanent deficit that recurs every year.

The “Structural Deficit has been patched over by the use of Free Cash.

Use of Free Cash in Prior Years

FY’07 Free Cash used: $784,151 Budget: $4,064,358

FY’08 Free Cash used: $403,637 Budget: $3,686,661

FY’09 Free Cash used: $665,959 Budget: $4,883,566

FY’10 Free Cash used: $882,486 Budget: $5,160,573

FY’11 Free Cash used: $380,007 Budget: $5,101,816

FY’12 Free Cash used: $686,628 Budget: $5,277,527

FY’13 Free Cash used: $189,081 Budget: $4,627,447

Structural Deficits can only be resolved by:

1) Permanent reductions in services

OR

2) Additional taxes.

3) Additional Taxes

Article 1 proposes a General Override of Proposition 2 ½ for $505,000 in additional taxes. Must be approved in a Town Election

Will increase the tax rate to $16.20 FY'12 $14.60 FY'13 $14.12 – Senior Center debt discharged FY'14 $15.26 – Includes Fall 2013 override FY'15 $16.20– With $505,000 override

IMPROVING TOWN GOVERNMENT

A New Financial Management Team isbeing put in place:

The Town Accountant will be a 20 hour per week position.

| Warrant article merging Treasurer and Collector’s offices

Other Departmental consolidations being actively discussed

IMPROVING TOWN GOVERNMENT

Town is moving to sell liens on tax delinquent properties. $700,000 owed in back taxes.Will replenish reserves.

Selectboard has appointed a Tax Title Custodian to sell off Town-owned and foreclosed properties.

IMPROVING TOWN GOVERNMENT

All positions in the Town organization are being evaluated.

Staff reduction in Board of Selectmen/Town Administrator Office

IMPROVING TOWN GOVERNMENT

Decision on renting Town Hall or moving to a Town owned building to save moneyConsolidating all town offices

Town will bid contracts with various service providers seeking lower costs.

FISCAL 2015

Budget cuts, consolidations and efficiency measures are necessary but will not close the gap.

A Prop 2 ½ override will eliminate the Structural Deficit and close the gap in Fiscal 2014 and Fiscal 2015