In the wake of revelations this week that Oak Bluffs officials may have lacked the authority to approve over $200,000 in end-of-the-year transfers, selectmen on Tuesday hastily scheduled a special town meeting later this month to approve the transfers and close the books on the current fiscal year.
The special town meeting is scheduled for 7 p.m. on June 24 at the Oak Bluffs School. The timetable is tight: selectmen had to schedule the special meeting and publish the warrant 14 days before the meeting as required by law. And they must make the transfers by the end of the fiscal year on June 30.
The warrant is published in today’s Gazette.
Year-end transfers have been common in Oak Bluffs in recent years. Last year the selectmen and finance committee agreed on approximately $150,000 in end-of-the-year transfers.
This year selectman Kerry Scott openly questioned the practice after the board last month voted 3-1 (with Ms. Scott dissenting) to approve approximately $205,000 in transfers. Later Ms. Scott expressed her concerns in an e-mail that she sent to her fellow selectmen and Thad Harshbarger, chairman of the finance committee.
She cited guidelines from the state Department of Revenue which indicated the town was not complying with state law. She also said the transfers sent the wrong message to voters.
“The larger issue remains to be resolved — the public perception that some departments may be chronically over-budgeted to provide for these year-end adjustments,” Ms. Scott wrote in the e-mail. “I wonder if that may have sparked some of the requests for greater detail that we experienced at the [annual] town meeting [in April].”
Ms. Scott requested an opinion from the bureau of municipal finance law of the Department of Revenue. Although she did not receive an official legal opinion, she did receive a chain of e-mails from the department regarding a similar request for information about administrative transfers from the town of Brookline.
One of the e-mails is from Kathleen Colleary, chief of the bureau of municipal finance law. That e-mail states that although the statutory language pertaining to transfers is ambiguous, it does conclude transfers can only be used from line items within the budgets of specific town departments. Another e-mail cites a state law concluding that the amount transferred from one department to another may not exceed three per cent of the annual budget of the department from which the transfer is made.
Most of the transfers in Oak Bluffs this year came from health insurance accounts which saw savings after town officials persuaded some town employees to switch to a more affordable insurance program and a number of retired employees also switched from the town plan to Medicare. Money was also transferred from several unused salary accounts.
The money transferred out of these accounts was used to make up a shortfall in a wide range of line items from a $43,856 shortfall in the police salaries account — created when two officers unexpectedly left the force — to a $41,000 deficit in the highway building maintenance account.
When Ms. Scott first mentioned her concerns at a joint meeting between selectmen and the finance committee last Thursday, members of both boards expressed concerns the town would be micromanaging their finances by scrutinizing end of the year transfers. They also said that such transfers were routine and often necessary.
Ms. Scott disagreed.
“This isn’t about micro-management, this is about sound fiscal policy. When voters approve a budget at town meeting they expect that budget will be followed with no substantial changes. The town meeting is the only form of control voters have over their town’s budget. You don’t get to pick and choose which rules you get to follow,” she said.
At the joint meeting between selectmen and the finance committee held this week, town administrator Michael Dutton said he spoke with town counsel Ronald H. Rappaport who concluded that the transfers need approval from voters at special town meeting.
Selectmen agreed to schedule the special town meeting with little discussion. Following the meeting, some said end-of-the-year transfers should not be construed as mishandling town finances.
“These transfers have traditionally been normal end of the year transactions,” selectman Gregory Coogan said, adding: “I worry this may take people’s focus away from what is important; for example how these transfers were made possible because of savings we found this year in our health insurance accounts.
“These are a function of something positive rather then negative, I hope people don’t lose sight of that.”
Mr. Dutton said he agreed the transfers should be approved at town meeting, but he noted that such transfers are common not only in Oak Bluffs but in other towns as well.
“You always have to balance this push and pull between wanting people to participate in town government and calling them out of their homes for minor things they arguably don’t need or want to be a part of. In this case the law was unclear, but if there are questions, it is better to err on the side of caution and take it to the voters,” he said.