Board of Finance - Minutes - 02/22/2023

Board of Finance
Wednesday, February 22, 2023
Town Hall Auditorium — 7:00 p.m.
Special Meeting Minutes
Present:
Absent:
Staff:
Chairman Glenn Patterson, John Sheehan, Ronald Fedor, Robert Tuneski, Kevin Petchark
Joe Filippetti, David Peabody
Kimberly Allen, Director of Finance
Shea Moses, Office Coordinator
Human Services Director Dani Gorman,
Recreation and Parks Director Ryan McNamara, Registrars of Voters Patt
Bigi Ebbin
Fire Services Director Michael Howley,
y Waters and
Establishment of a quorum and call to order
A quorum was established and the Special Meeting of the Board of Finance was
called to order at 7 p.m., February 22, 2023
Public Comment: There was a comment from a Waterford resident regarding the
concerns she had about her updated assessment on her home. She was concerned
about how this will affect her taxes. She was referred to the Assessor's Office.
Approval and acceptance of minutes:
Regular Meeting on January 11, 2023
Motion by John Sheehan and seconded by Robert Tuneski to approve the minutes of
the January 11, 2023 Regular Meeting.
Vote: 5-0-0 Motion Passed
To consider an act on the following request by the Registrar of Voters for an additional
: appropriation in the amount of $10,964.00 to fund line #10102-51320 - $8,582.00, —
Election Activities, line #10102-51920- $657.00, F.I.C.A, line #10102-52070 - $125.00,
Reimbursable Expenses, and line #10102-53020 - $1,600.00, Other supplies, to cover
primaries that are not covered within the department budget.
Motion by John Sheehan and seconded by Kevin Petchark to approve the additional
appropriation in the amount of $10,964 from the FY23 Contingency Account line
#10121-59010 to fund $8,582 to line #10102-51320, Election Activities» $657 to line
#10102-51920, F.I.C.A, $125 to line #10102-52070, Reimbursable Expenses, anid $1,4a
to line #10102-53020, Other supplies. mt “=f
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Vote: 5-0-0 Motion Passed =e, ho BO
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Board of Finance Special Meeting Minutes — February 22, 2023
TM Page 2
5. Pending BOS approval to consider an act for an additional appropriation for the Fire
Services in the amount of $130,000.00 to fund line #10123-52320 - $90,000.00, Rental
of Hydrants due to increase in cost, and line #10123-53070 - $40,000.00, Auto Repairs,
due to unexpected large repairs on apparatus and marine units.
There was a discussion about available funding in Contingency and any potential items
affecting contingency down the line. Finance Director Kim Allen discussed that there
would be only minor projects under $15,000. Mike Howley, Director of fire Services,
discussed how the current rental hydrant agreement charges increased by about
$93,000 at the end of June after the current budget was approved. As far as the
additional funds needed for the auto repairs, it has been a rough year with repairs and
there is a matter of safety concerns for personnel and the public. Fire Services Director
Howley also discussed that they had very little input for say or choice in the significant
increase and has had discussions with First Selectman Rob Brule and the Town Attorney
regarding this matter of increase.
There was also a discussion regarding the ladder apparatus and trying to keep it running
until they were able to purchase a new one. The Board also noted that the proposed
appropriation included funding for both preventive maintenance and repair items.
Director Howley stated that the proposed appropriation included a plan to undercoat
equipment to keep the salts from ruining the truck underneath. He has also directed his
staff to use the truck wash station at Public Works and noted that the departments are
using homemade attachments for hoses using PVC to be able to wash the salt off the
underside of the trucks on the weekends.
The Board also requested that repairs and maintenance be separated into separate
items back to the Board for upcoming budget reviews.
Motion by John Sheehan and seconded by Robert Tuneski to approve the additional
appropriation in the amount of $40,000 from the FY23 Contingency Account line
#10121-59010 to fund line #10123-53070, Auto Repairs and $90,000 from the
Unassigned Fund Balance of the General Fund to fund line #10123-52320, Rental of
Hydrants. It was noted that the Hydrant funding should be forwarded to the RTM as
required.
Vote: 5-0-0 Motion Passed

Board of Finance Special Meeting Minutes — February 22, 2023
Page 3
6. To consider an act on a request from Kim Allen, Director of Finance, on behalf of the
Recreation and Parks Department for FY23 Out of Series Transfer as follows:
APPROVED CURRENT ACCOUNT ACCOUNT REVISED
Budget Available INCREASE DECREASE Budget
Line No. Org. Code Object Code Object Description Amount Budget Amount
1 10137 53080] Maintenance of Vehicles 20,750.00 7,280.00 12,250.00 19,530.00
2 10137| 51620] Programs 321,338.00 100,378.00 (12,250.00) 88,128.00
3 0.00
4 0.00
5 0.00
6 0.00
7 0.00
8 0.00
9 0.00
10 0.00
0.00
0.00
TOTAL: H 12,250.00 (12,250.00)
There was a short discussion regarding this request. Director Ryan McNamara of Recs &
Parks stated the transfer request was in response to a BOF request to fund the repairs
‘within the existing budget rather than via an additional appropriation, which they were
able to do.
Motion by John Sheehan and seconded by Robert Tuneski to approve the decrease of
line #10137-51620, Programs in the amount of $12,250 and increase line #10137-53080,
Maintenance of Vehicles, in the amount of $12,250.
Vote: 5-0-0 Motion Passed.

~
Board of Finance Special Meeting Minutes — February 22, 2023
Page 4
7. To consider an act on a request from Kim Allen, Director of Finance, on behalf of the
Recreation and Parks Department for FY23 Out of Series Transfer as follows:
APPROVED CURRENT ACCOUNT ACCOUNT REVISED
Budget Budget INCREASE . EASE Budget
Line No. Org. Code Object Code Object Description Amount Amount Amount
1 10137 51620) Recreation Programs 321,338.00 92,054.00 (2,000.00) 90,054.00
2 10137; 52020)Postage 6,100.00 624.00 2,000.00 2,624.00
3 10137 51620|Recreation Programs 321,338.00 90,054.00 (10,000.00) 80,054.00
4 10137 52420|Maintenance of Properties 72,642.00 (5,189.00) 10,000.00 4811.00
5 10137] 51620|Recreation Programs 321,338.00 80,054.00 (5,000.00) 75,054.00
6 10137 53010| Office Supplies 1,363.00 (1,590.00) 5,000.00 3,410.00
7 0.00
8 0,00
9 0,00
10 0.00
0.00
0.00
TOTAL 17,000.00 (17,000.00)
There was a discussion regarding office supplies, decorations that were purchased and
property maintenance. Ronald Fedor questioned why Recs & Parks had so much money
remaining on the Programs line. Director Ryan McNamara stated that they did not have
a program director between August and September and no programs were impacted.
Bill Sheehan noted the Program Director salary resides in the Programs section of the
Rec and Park budget.
Director of finance, Kim Allen, also stated that while the Finance department supplies
general supplies specialized items or supplies are covered by the department.
Motion by John Sheehan and seconded by Kevin Petchark to approve the decrease of
line #10137-51620, Recreation Programs, in the amount of $17,000 and increase line
#10137-52020, Postage, in the amount of $2,000, increase line #10137-52420,
Maintenance of Properties, in the amount of $10,000 and increase line #10137-53010
Office Supplies in the amount of $5,000.
Vote: 5-0-0 Motion Passed.

Board of Finance Special Meeting Minutes — February 22, 2023
Page 5
8. To consider and act on the following request from Kim Allen, Director of Finance, on
behalf of the Senior Services Department for FY23 Out of Series Transfer as follows:
APPROVED CURRENT ACCOUNT ACCOUNT REVISED
Budget © Available |. INCREASE CREA: Fardget
Line No. Org. Code Object Code Obiect Description: Amount Budpet Amourt
i 1OUse BiL10 Sominsteation pees Nat] 4191 5352.00 LESQOo 100, 26550
z 1OL3s 52060) Dues /Confences FFRGR {e3.42F 150.05 SBS
3 10135) 52380 Pmgrems 180.00 {Rog 200.05 350.00
4 16135 34056) Auto Equlpmert SeA00 f20n 55! LOmt.co LEO
BE] fale
& O50
= o.oo
EI O.Ga
$ 0.03
big 0.00
oon
0.60
TOTAL L350.00 LSC
Motion by John Sheehan and seconded by Ronald Fedor to approve the decrease of line
#10135-51110, Administration in the amount of $1,350 and increase line #10135-52050,
Dues/Conferences, in the amount of $150, increase line #10135-52380, Programs, in the
amount of $200 and increase line #10135-54050, Auto Equipment in the amount of
$1,000.
Vote: 5-0-0 Motion Passed.
9. Discussion and possible action to correct the CNR fund report to eliminate the $2M
designation for CNR Line Item 20523-57733 Oswegatchie Fire Building improvements.
John Sheehan prepared a statement regarding the removal of $2 Million in Designated
Funds in the CNR line #20253-57733 which is attached to these meeting minutes.
Motion by John Sheehan and seconded by Ronald Fedor that the Finance Director be
directed to correct the CNR fund report to eliminate the $2,990,000 Million designated
so that the new OSW building Committee is not under the illusion that those funds
actually exist.
Vote: 5-0-0 Motion Passed.
10. Old Business
a. Continued discussion around revising BOF Policy 1.01, Board of Finance
Budget Guidelines to include Performance Metrics.

Board of Finance Special Meeting Minutes — February 22, 2023
Page 6
Director of Finance Kim Allen stated that she has already started meeting
with department heads regarding performance metrics and how they can go
about providing this as each department is measurably different.
Kim Allen also stated that it would be helpful if the Board at some point
provide feedback once these metrics are identified so the Board can receive
exactly what they are asking for.
There was also a discussion regarding the different software programs that
already gather data within the department which can help with the
performance metrics. Directors Howley and McNamara stated that they
already use these systems within the Fire Services and Rec & Parks
department.
Kim Allen said that some of the metrics info is already provided every year
in the Town Annual Reports.
b. Update on the request to provide BOF members with email accounts on the
town system.
Kim Allen, Finance Director stated that all email accounts are already set up
and each board member will need to get a token to two factor user
authentication. She was directed by board Members to IT manager Jeff
Robillard to schedule a time to meet with each member individually.
New Business:
Select the Board of Finance School Building Committee Representative for the next
term of 7/1/2023-6/30/2024.
Following a brief discussion this item was tabled until the March 15, 2023 Board of
Finance Regular Meeting.
Select a Board of Finance representative to serve on the building committee
established by the RTM on February 6, 2023 to repair and/or replace the
Oswegatchie Fire Station.
Robert Tuneski was nominated for the position.
Motion by John Sheehan and seconded by Ronald Fedor to approve the
nomination.
Vote: 5-0-0 Motion: Passed

Board of Finance Special Meeting Minutes — February 22, 2023
Page 7
12.
13.
c. Review of the Audit Report for FY 2022 by the Board of Finance. John Sheehan
reviewed selected items from an extensive list of questions and comments that he
prepared. A copy of the list is attached to these meeting minutes.
Director of Finance, Kim Allen was also directed to clarify for the Board what is
actually determined as a lease, as the Auditor’s definition of lease is somewhat
convoluted.
She also stated that there was 1 bid that came back for next year’s Audit services
which is the same company that we already have.
d. Discussion of a potential BOF policy governing the use of the Unassigned Fund
Balance of General Fund to adjust the Mill Rate.
Chairman Glenn Patterson believes that there should be a default policy governing
the use of funds being returned to the Unassigned Balance of the General Fund at
the end of a fiscal year. For example, the policy could direct the amount being
returned to mitigating the follow-year’s tax burden. It was noted that this approach
is used in other towns.
Liaison Reports: None
Correspondence
Abbas Danesh, Town Treasurer, Quarterly Treasurer’s Report ending 12/31/2022.
Virginia Bielucki, Town Accountant, Periodic Financial Statements FY23 dated January
10, 2023.
Virginia Bielucki, Town Accountant, Status of General Fund Unassigned Balance dated
January 19, 2023.
Virginia Bielucki, Town Accountant, Status of Contingency FY23 dated January 18, 2023.
Virginia Bielucki, Town Accountant, June 30, 2022 Periodic Financial Statements dated
January 25, 2023.

Board of Finance Special Meeting Minutes — February 22, 2023
Page 8
14. Adjournment
Motion by John Sheehan and seconded by Ronald Fedor to adjourn the Special Meeting.
Vote: 5-0-0 Motion passed.
Meeting adjourned at 8:46p.m.
Respectfully submitted,
John Shéehan, Clerk Shea Moses, Office Coordinator

ee
Statement of John W. “Bill” Sheehan Feb 22, 2023
Regarding the removal of $2 Million in Designated Funds
In CNR Line 20253-57733
Oswegatchie Fire Building lnprovements
First, I want to note that the CNR reports shows that the $2,990,00 finds are offset by a debt
service of $3,00,000. Unfortunately, as you will see, this bonding was defeated on November
14, 2018.
Here is the explanation of each page of the backup attached file:
First page is the CNR report for June 30, 2017. Notice that the OSW line has $196,000
appropriated and $54,000 designated.
Second Page is the listing of the FY2018 Capital Requests from my spreadsheet analysis for the
budget hearings. Note that OSW Building Renovations has $2 million planned for debt
financing. The Municipal Complex has $9 million also planned for debt financing.
Page 3 is also from my spreadsheet showing the shift of OSW financing had changed in the
FY2018 Budget.
Pages 4 through 7 are the Transfers to Capital and Non recurring expenditure Fund in the
FY2018 budget. Page 4 shows OSW Building Renovations of $2 Million Page 5 shows
Municipal Complex Renovations of $9 Million. Page 7 shows a Debt Service Subtraction of $11
million among other reductions. This means the total General Fund Appropriation to the CNR
for FY2018 was $1,337,678. This is nowhere near the $11 Million needed to fund the OS W Fire
House and the Municipal Complex.
Page 8 and 9 are the July 31, 2017 CNR balance report that adds in the designations from the
budget and then shows the funding offsets from debt service for both OSW fire house and the
Municipal Complex.
Page 10 is an excerpt from the BOF minutes of SEP 12, 2018 showing the approval of funding of
$64,000 for the OSW building Committee and my statement that the OSW Fire House and the
Municipal Complex should be separate bonding resolution.
Page 11 and 12 are the minutes of the BOF meeting of November 14, 2018 (Note the Finance
Director) which show the approval of the funding and bonding for the Municipal Complex and
the rejection of the bonding for the OSW Fire House.
When the bonding for the OSW firehouse was rejected on November 14, the Designated funds
should have been eliminated and the CNR adjusted accordingly. This did not happen however
even in the current CNR report, there is a note about the OSW fire house being funded by
bonding even though it is not as easily connected to the designated line as it was in the July 31,
2017 financial report.

It is my recommendation and Motion that the Finance Director be directed to correct the CNR
fund report to eliminate the $2,990,000 Million designation so that the new OSW building
Committee is not under the illusion that those funds actually exist.

dlic
Highlights of Questions and Comments on FY 2022 Audit Report
State and Federal Special Report Letters
1.
Federal Single Audit Pending. Due March 31, 2023. Does it really take nine months to -
generate the usual three-page report?
As usual, the Town got a clean report with no noncompliant issues in the State Audit.
I always have to smile when every such audit includes the statement “Our audit was not
designed for the purpose of expressing an opinion on the effectiveness of internal control
over compliance. Accordingly, no such opinion is expressed.” Then the report says “The
purpose of this report in internal control over compliance is solely to describe the scope
of our testing of internal control over compliance and the results of that testing based on
the requirements of the State Single Audit act. Accordingly, this report is not suitable for
any other purpose.” This statement comes after two and one half pages describing
internal control compliance.
. Total State revenues - $3,673,564 for FY2022. Increase appears to be form the LOTCIP
grant of $1,580,345.
Management Letters Comments
1.
2.
No observations or negative comments in the FYT2022 Management Letter or Audit
Check Off List. There were no recommendations from the Auditors.
In FY20, however, the Auditors did have some recommendations regarding Internal
Controls:
a. Initiate a regular review of employee listing and the payroll system change logs
by an employee of the HR department to insure there are no false employees,
individuals not removed upon termination, or unapproved changes to pay rates.
b. Establish a formal Whistleblower policy and tip line, especially for employees, to
report fraud or inconsistencies in the Town.
c. Establish the practice of having Town employees and elected officials sign a
formal log acknowledging their understanding of the Ethics policies of the Town.
I informed the RTM L&A committee of this comment during the public hearing
on the revision to the Ethics Ordinance. The committee determined that the
requirement for employees and public officials to sign acknowledging receipt of a
copy of the Ethics ordinance was sufficient. The Ordinance would rely on the
Human Resources Department and Town Clerk to administer such a sign in log.
d. Town should perform a risk assessment to identify, analyze and manage the risk
of asset misappropriation. This should be an element of Town Internal Controls.
This assessment can be performed by an outside agency or a management level
individual who has extensive knowledge of the Town that might be used in the
assessment.
e. The Town must be proactive in assessing and managing operations and IT
environments in anticipation of cyber threats. The recommendations are lengthy
and I recommend all members read them to see what financial investments might
be requested by the administration to implement the recommendations.

3.
f. The Auditors also reviewed the specific security of the financial management
systems and the letter notes seven recommendations that are still outstanding:
i. Perform regular format tests of backup data
ii. Implement formal wire transfer procedures
iii. Evaluate and ensure PCI (personal/confidential information) compliance
We should compare our recent Internal Control Policy with these recommendations.
Comprehensive Financial Report
l.
10.
11.
12.
A Comprehensive Financial Report (CAFR) provides additional statistical information
that is very useful in understanding what a municipal government does for its
municipality.
The Organization Chart on Page iii does not reflect the titles of one of the Town Officials
listed on Page iv. Also, the “reports to” lines need to be changed to reflect the current
actual chain of command in Waterford Town Government.
. The Profile of Government on pages v and vi does not include the four year term for
members of the Board of Finance.
The Auditor’s report explained how they conducted the Audit of The Financial
Statements provided by the Town noting what they reviewed and what they did not
review. Key paragraph is the Opinion that the Financial Statements were “...in
accordance with the accounting principles generally accepted in the United States of
America.”
In the conclusion of the Auditor Report, the Auditors again state that the report is not an
opinion “...on the effectiveness of the Town...internal control over financial reporting or
on compliance” In plain English, What they looked at was correct but that does not mean
there are no errors in places where they did not look.
In FY2022 the Town’s net position increased by $5.0 million or 3.2% and business
activities (Utility Commission) decreased by $6.9 thousand or 1.4%. Expenses were $5
million less than the $111.5 million generated by taxes and other revenues for
government programs.
Overall, in FY2022 the operating results increased the General Fund Balance by $350.6
thousand
Note that the Board of Finance does not establish funds “..to help control and manage
money...” as stated in the paragraph after “Fund Financial Statements”. The RTM
establishes the funds, generally as recommended by the Board of Finance. Page 5
Total Cash, cash equivalents, and investments at end of FY22 was $61,377,408 in the
Audit. The Treasurer’s report for 06/30/2024, showed a value of $61,131,329. Page 13
Note that the Net Pension Liability is $20,396,063, Compensated absences is $7,033,590;
and Net OPEB Liability is $17,595,916 in FY22. Page 16
General Fund Balance at end of FY22 was $23,848,156 ($30,696,849 in Treasurer’s
Report) Page 17
The combined Retirement and OPEB Investment Income in FY22 was a loss of
($1,447,732). This compares to an FY21 Investment income ofa positive $1,977,974
up from FY20 Investment Income of $333,388 in FY20, compared to a FY19 Investment

13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
income of $297,336 up from $161,460 in FY18. The FY17 investment income was
$48,277. FY22 was not a good year for the Stock Market. Page 23
It is important to understand the accounting policies discussed on pages 24-35.
Note that revenues are recorded when earned and expenses are recorded when a liability
is incurred regardless of the timing of the related cash flows. Page 25.
Generally, expenditures are recorded when a liability is incurred. However, debt service
expenditures as well as expenditures related capital leases, compensated absences, claims
and judgements are recorded when payment is due. Page 25
Note the rules on interfund activity described on Page 26
Note the depreciation table on page 28 for all physical property and equipment.
The Section on Leases is new in FY22 due to GASB 87 Pages 28-29
Note discussion of Deferred Outflows/Inflows related to OPEB funds on Page 29-30.
Fund balance terms explained on pages 31-32. (GASB 54 implementation)
In budget discussion on page 33, the appeals process time lines are in the Town Charter,
not Town Ordinances. This error was also in the FY21, FY20, FY19 and FY18 reports.
The Section on Leases is new in FY2022. What has been leased? Page 43
Membership in the Town Retirement Plan is down to 7 persons in FY22. Page 46
The Audit says that the Town has recorded $536 as long term liability to MERS at end of
FY22. Is that a correct number? Page 54
Membership in the OPEB retirement plan is 492 as of July 1, 2020. Page 60
FYI — according to the Actuarial Evaluation dated July 1, 2022 (not in the range of the
current audit, the total members are 547.
The Net OPEB liability that is recognized as of June 30, 2022 is $17,595,916. Note that
because the total OPEB liability in FY22 is $26,048,033 up from the FY21 total OPEB
liability of $25,755,778 the Plan fiduciary net position percentage of total OPEB liability
is only 32.45% in FY22. For a defined benefit plan it is considered “fully funded” if the
funding status is 100% which means there is enough money to cover any liabilities. If
the fund is 80% funded it is considered “Healthy”. In reality, the average funding status
is 69.9%. Sourced from “THE NEST” “What is a Fully Funded Retirement Plan”.
Note discussion on Risk Management on Pages 69-70. Stop Loss is discussed on Page
69. This is important in funding Health Care Plans
The total returned funds for the Town and Board of Education was $1,033,598 at end of
FY22
Comparing expenditure total on Pages 76 with revenue total on page 72 Revenue was
$83,434 greater than expenses in FY22
The major difference between the budgetary and GAAP basis is that encumbrances are
recognized as a charge against a budget appropriation in the year in which the purchase
order is issued so that encumbrances outstanding at year end are recorded in budgetary
reports as expenditures of the current year while in GAAP basis encumbrances are
recorded as assigned fund balance. Page 76
Carefully review the MERS retirement plan data and the Teachers Retirement Fund Data.
The Town is fortunate that it is not paying for the Teachers retirement fund as will as the
MERF. Pages 77-86
The Town has been fortunate that the tax collection rate continues to be greater than 99%
and the Town has been successful in collecting back taxes. Page 88 and Page 110

34, Review the explanation of the Special Revenue funds on the unnumbered pages between
pages 90 and 91. Then see how the funds are expended. Pages 96-99
35. The Statistical Data on pages 103-118 are valuable information on the Town and well
worth spending some time reviewing to see how the Town as changed in the past ten
years.

or
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Questions and Comments on FY2022 Audit Report
State and Federal Special Report Letters
1.
Federal Single Audit Report Pending. According to the Finance Office it is not
due until March 31, 2023. This makes the report useless to us before the budget
cycle and means it takes nine months to generate this Special Report that is
usually only three or four pages.
As is usual, the Town got a clean report with no noncompliant issues in the state
audit. I always have to smile when every such audit includes the statement “Our
audit was not designed for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, no such opinion
is expressed.” Then the report says “The purpose of this report in internal control
over compliance is solely to describe the scope of our testing of internal control
over compliance and the results of that testing based on the requirements of the
State Single Audit act. Accordingly, this report is not suitable for any other
purpose.” This statement comes after two and one half pages describing internal
control compliance.
. Total State revenues = $3,673,564 in FY2022 up from $2,075,683 in FY2021 up
from $1,848,603 down from $2,446,421 in FY2020 down slightly from
$2,489,647 in FY2018 which was down from $4,830,177 in FY2017. Increase in
FY2017 was in School Construction Grants. FY2022 increase appears to be from
a LOTCIP grant of $1,580,345 to Public Works.
Grant that I just noticed after all the years doing this report - Which Department
uses the Medicaid Grant from the Department of Social Services? Page 4 of State
Single Audit. ($124, 194 in FY2022, $62,310 in FY2021 and $52,714 in
FY2020)
5. No Findings or Questioned Costs found in the State Single Audit Report
Management Letters Comments
1.
No observations or negative comments were in the FY2022 Management Letter
or Audit Check Off List. This was also true in the FY2021 Management letter
and Audit Check off list. Unlike the FY20 Audit letter, there were no
recommendations for improved Internal Controls.
In FY20, however, the Auditors did have some recommendations regarding
Internal Controls:
a. Initiate a regular review of employee listing and the payroll system change
logs by an employee of the HR department to insure there are no false
employees, individuals not removed upon termination, or unapproved
changes to pay rates.
b. Establish a formal Whistleblower policy and tip line, especially for
employees, to report fraud or inconsistencies in the Town.
c. Establish the practice of having Town employees and elected officials sign
a formal log acknowledging their understanding of the Ethics policies of
the Town. I informed the RTM L&A committee of this comment during
the public hearing on the revision to the Ethics Ordinance. The committee
see
a
Cc
Page 1

determined that the requirement for employees and public officials to sign
acknowledging receipt of a copy of the Ethics ordinance was sufficient.
The Ordinance would rely on the Human Resources Department and
Town Clerk to administer such a sign in log.
d. Town should perform a risk assessment to identify, analyze and manage
the risk of asset misappropriation. This should be an element of Town
Internal Controls. This assessment can be performed by an outside agency
or a management level individual who has extensive knowledge of the
Town that might be used in the assessment.
e. The Town must be proactive in assessing and managing operations and IT
environments in anticipation of cyber threats. The recommendations are
lengthy and I recommend all members read them to see what financial
investments might be requested by the administration to implement the
recommendations.
f. The Auditors also reviewed the specific security of the financial
management systems and the letter notes seven recommendations that are
still outstanding:
i. Perform regular format tests of backup data
ii. Implement formal wire transfer procedures
iii. Evaluate and ensure PCI (personal/confidential information)
compliance
iv. Update technology and operational policies and procedures
v. Develop and test a comprehensive disaster recovery plan
vi. Incorporate a mobile device and bring your own device (BYOD)
strategy
vii. Institute a comprehensive cybersecurity training program
Comprehensive Financial Report
1.
Ws
Cover notes that, like the FY2019, FY2020 and FY2021Reports, the FY2022
. Report is a Comprehensive Annual Financial Report (CAFR) unlike the
FY2018 report, which like the FY2017 Audit Report was just the Annual
Financial Report, not a Comprehensive Annual Financial Report (CAFR). I
prefer the CAFAR because the additional statistical information is very useful.
Short summary of Waterford Government that preceded listing of Principal
Town Officials in prior CAFRS is after the listing of Principal Town Officials.
It did not appear in FY2018 Audit Report. It was also not in the FY2017 or
FY2016 Audit reports. It had been in previous Audit reports.
The Organization Chart on Page iii does not reflect the titles of one of the
Town Officials on page iv. Also, the “reports to” lines need to be changed to
reflect what is actually the current chain of command in Waterford Town
Government.
The Profile of Government on pages v and vi does not include the four year
term for the members of the Board of Finance.
Excellent summary of Economic Activity in Town on Pages vi-vii.
The paragraph on Long Term Financial Planning needs to be corrected to
include the fact that the RTM formed a Planning Committee that superseded
Page 2

10.
11.
12
13.
_COVID-19 partial shutdown of activities in FY2022, $1.8 million was
the BOF Committee in CY 2013 (October 7, 2013 RTM meeting). Also, the
RTM Committee established in 1998 went out of business after the release of
the Government Consulting Group Report in CY2001. That is why the BOF
formed its committee in FY2001. A similar comment was in the Review of
the FY 2021 report, FY2020 Report and the FY2019 report. Page viii
Note the Unassigned Fund Balance discussion. Page viii
The Auditor’s report explained how they conducted the Audit of the Financial
Statements provided by the Town noting what they reviewed and what they
did not review. Key paragraph is the Opinion that the Financial Statements
were”... in accordance with accounting principles generally accepted in the
United States of America.” Pages 1-3.
In the conclusion of the Auditor Report, the Auditors again state that the
report is not an opinion “...on the effectiveness of the Town...internal control
over financial reporting or on compliance” In plain English, What they looked
at was correct but that does not mean there are no errors in places where they
did not look. Page 3
In FY2022 the Town’s net position increased by $5.0 million or 3.2% and the
business activities decreased by $6.9 thousand or 1.4% In FY2021 the
Town’s net position decreased by $688 thousand after restatement or 0.4%
and Business Activities decreased by $1.6 million or 3.1%. In FY2020 the
Town’s net position decreased by 0.6% or $894 thousand and business
activities decreased by 2.9% or $1.6 million. In FY2019 the Town’s net
position decreased by 0.8% or $1.4 million and the business activities
decreased by 2.2% or $1.3 million. Town’s net assets as restated due to GASB
75 increased by 1.4% in FY2018 compared to the increase in FY2017 of 1.7%
compared to the decrease of 3.42% in FY16. Page 4
In FY2022 expenses were $5 million less than the $111.5 million generated
by taxes and other revenues for government programs. Expenses in FY2021
were $2.3 million more than the $121.6 million generated in tax and other
revenues for governmental programs. Expenses in FY2020 were $894
thousand more than the $111.4 million generated in taxes and other revenue.
Expenses in FY2019 were $1.4 million more than the $102.6 million
generated in tax and other revenues compared to FY2018 expenses that were
$2.1 million less than the $106.9 million generated in tax and other revenues.
In FY2017 expenses were $2.7 million less than generated revenues compared
to expenses $5.8 million more than generated revenues in FY2016. Page 4
. Resources available for appropriation in FY2022 were $1.1 million more than
anticipated for the General Fund. Resources available for appropriation in
FY2021 were $1.7 million more than anticipated. Resources available for
appropriation in FY2020 were $1.5 million more than anticipated compared to
FY2019 resources available for appropriation compared to $2.7 million more
than anticipated compared to resources in FY2018 that were $823.4 thousand
more than anticipated. Resources available for appropriation were $1.2
million more than anticipated in FY2017. Page 4
Due to the managed spending by department heads and the impact of the
Page

transferred to the Capital and Nonrecurring (CNR) Fund and an unused
appropriation of $1.0 million returned to the General fund. Overall, in
FY2022 the operating results increased the General Fund Balance by $350.6
thousand. This compares to the $41.1 thousand transferred to the Capital
Improvement Fund in FY2021 and unused appropriations of $2.2 million were
returned to the fund balance at the end of FY2021. This compares to $1
million of the unassigned balance transferred to the Capital Non-Recurring
Expenditure Fund and $1.8 million of unused appropriations were returned to
fund balance in FY2020 compared to the $963.0 thousand that were returned
to fund balance at the end of FY2019 compared to $792.6 thousand of unused
appropriations which were returned to the general fund balance in FY2018.
This compares to $591.2 thousand of unused appropriations were returned to
the general fund balance in FY2017. Page 4
14. Good explanation of town financial activities and categories of Town funds is
found Page 5.
15. Note that the Board of Finance does not establish funds “..to help control and
manage money...” as stated in the paragraph after “Fund Financial
Statements”. The RTM establishes the funds, generally as recommended by
the Board of Finance. Page 5
16. Note that Town Funds use the modified accrual accounting method so there is
a difference between governmental activities and governmental funds. This
difference is described in a reconciliation included with the fund statements.
Page 5.
17. Town cannot use fiduciary net assets to finance operations. Page 5
18. The FY 2022 Unrestricted net position decreased to $5.48 million. Due to
GASB 84 the FY2020 Unrestricted net position was restated at $18.9 million
and the FY2021 Unrestricted Net Position is $9.002 million. As noted above,
the Town’s assets were restated in FY2018 Audit Report due to GASB 75. In
FY2020 the unrestricted net assets changed to ($19.13) million compared to
the FY2019 unrestricted net assets of ($13.040) million from the ($11.532)
million in FY2018 Based on that restatement, the Unrestricted net assets
decreased from ($13.638) million in FY2017 to ($11.532) million in FY2018.
In the FY2017 report Unrestricted net assets changed from (5.725) million at
end of FY15 to (10.913) million at end of FY16 to (5.839) in FY2017. The
negative value is a result of the implementation of GASB 68 in FY15.
Business type activities (mostly the Utility Commission Enterprise Fund)
decreased to $49.7 million in FY2022 compared to $50.4 million in FY2021
compared to $52.0 million in FY2020, compared to $$53.6 million in
FY2019 compared to $54.817 million in FY18 compared to $56.670 million
at end of FY17 compared to $57.463 million at end of FY16. This compares
to $57.6 million in FY15. Page 6.
19. Total Revenues were $115.3 million and total expenses were $111.0 million
in FY2022 compared to total revenues of $117.776 million and total expenses
of $118.432 million in FY2021 compared to total revenues of $111.416
million and total expenses of $112.215 million in FY2020 compared to Total
Revenues of $102.563 million and total expenses were $103.781 million in
Page4

20.
21.
22.
23.
FY2019. This compares to Total Revenues of $106.967 million and total
expenses of $104.634 million in FY18. This compares to Total Revenues
$104.939 million and total expenses $102.223 in FY17 compared to revenues
of $101.315 million and Total Expenses $107.242 million in FY16 compared
to Total revenues $102.886 million, Total Expenses $102.315 million in
FY15. Page 7.
Government activities revenue sources —84.4 % from property taxes, 12.5%
from operating and capital grants and contributions, 2.9% from charges for
services and 0.2% from investments and other general revenues in FY2022
compared to 79.1% from property taxes, 17.9% from operating and capital
grants and contributions, 2.8% from charges for services and 0.2% from
investment and other general revenues in FY21 compared to 82.7% from
property taxes, 13.4% from operating and capital grants and contributions,
2.8% from charges for services and 1.1% from investment and other general
‘revenues in FY20. This compares to 88.0% from property taxes, 7.2% from
operating and capital grants and contributions, 3.5% from charges for services
and 1.3% from investment and other general revenues in FY2019, This
compares to 82.2 % from property taxes, 14.0% from operating and capital
grants and contributions, 3.1% from charges for services and 0.7% from
investment and other general revenues in FY18. This compares to 81.9%
from property taxes, 14.4% from operating and capital grants and
contributions, 3.3% from charges for services and 0.4% from investment and
other general revenue in FY17 compared to 85.2% from property taxes, 11.2
from operating and capital grants. 3.4% from charges for services and 0.2%
from investments in FY16, This compares to 80.5% from property taxes,
16.2% from operating and capital grants and contributions, 3.1% from charges
for services and 0.2% from investment and other general revenues in FY2015.
Investments have increased by $93 in FY2022 after decreasing by $949.3
thousand in FY2021 after decreasing by $215.0 thousand in FY2020 after
increasing slightly in percentage share (up by $611.0 Thousand in FY2019
over FY18. Page 7 & 8.
Note the factors affecting operations outlined on Pages 7 & 8.
Revenues from Sewer fees increased by $43 Thousand in FY2022 after an
increase of $115 thousand in FY21 after decreasing by $55 thousand in
FY2020 after increasing by $111 thousand in FY19 compared to a decrease of
$265,000 (3.3%) in FY18 compared to $226,000 (1.4%) in FY17 compared to
decrease of $70,000 (1.8%) in FY16. Capital contributions increased by $16
thousand in FY21 after decreasing by $43 thousand in FY2020 after a $221
thousand (5.3%) decrease in FY2019, compared to a $890 thousand decrease
(68.1%) in FY17 compared to the increase by $362,000 (38.3%) in FY16.
This was due to completion of work on Pump Station Grit Facility in FY18,
Harvey Ave. Pump Station in FY17 and the Wastewater SCADA system
project. lon FY16 Page 8
Town Combined Fund Balance in FY2022 was $38.8 million, and increase of
$3.2 million from the FY2021 value of $35.6 million, an increase of $4.1
million from the restated $31.5 million ( $31.2 million originally) in FY2020,
PageD

24.
25.
26.
27,
28.
an increase of $7.5 million from $23.7 million in FY2019, an increase of $1.7
million compared to $22.0 million, an increase of $0.9 million in FY18 from
$21.1 million an increase of $3.5 million in FY17 compared to $17.6, million,
a decrease of $2.7 million in FY16 compared to $20.4 million in FY15. The
General Fund showed a total increase of $64.1thousand in FY22 compared to
an increase of #3.7 million in FY21 compared to an increase of $2.8 million
in FY20 compared to an increase of $2.5 million in FY2019 compared to an
increase of $1.2 million in FY18 compared to an increase of $1.7 million in
FY17 compared to an increase of $1.3 million in FY16. Page 8 -
The Internal Service Fund net assets decreased by $163.6 thousand in FY22
after an increase of $426.5 thousand in FY21 compared to an increase of $1.3
million in FY20 compared to a decrease by $352.5 thousand in FY19
compared to an increase by $255.3 thousand for FY18 adding to the $217.2
thousand in FY17 adding to the $788,900 increase in FY16. The FY22
decrease is a result of revenue of $$12.1 million and expenditures of $12.3
million. Fortunately, in FY21 the contributions of $11.9 million offset the
expenses for claims and program administration of $11.5 million in FY21
compared to FY20 when the contributions of $11.4 million offset the expenses
of $10.2 million. This compared to FY19 when the contributions of $11.7
million offset the expenses of $12.1 million. This compares to FY18 where
the $11.2 million in contributions was greater than the $11.0 million expenses
in FY18 continuing the positive trend. In FY17 the $11.0 million in
contributions and other revenues was greater than the $10.8 million in
expenses for claims and administration. This continues the positive trend. In
FY16 the $10.9 million in contributions was greater than the $10.1 million in
expenses for claims and administration. Page 9.
FY22 revenues were $350.6 thousand over expenditures. In FY21 revenues
were $3.9 million over expenses compared to FY20 revenues which were $2.3
million over expenditures. This compares to FY19 when revenues were $2.8
million over expenditures on a budgetary basis. This compares to FY18
revenues that were $934.9 thousand over expenses compared to FY17 when
revenues were $1.8 million over expenses compared to FY16 when revenues
were $1.2 million over expenses. Page 9
As usual, a good presentation of major factors affecting the FY21 operating
budget. Pages 9 and 10.
There were $226.1 thousand of outstanding encumbrances at end of FY22
compared to $641.8 thousand of outstanding encumbrances at the end of
FY21 compared to $522,100 of outstanding encumbrances at the end of FY20.
This compares to’$186,800 of outstanding encumbrances at end of FY19.
This compares to $566,000 of outstanding encumbrances at the end of FY18.
This compares to $279,600 of outstanding encumbrances at the end of FY17.
This compares with $414,700 of outstanding encumbrances at the end of
FY16. Encumbrances are reported as expenditures for budgetary purposes.
Page 10
Note that balances for special revenue funds that are funded primarily from
operating transfers from the General Fund are also rolled into the General
PageOD

30.
31,
32.
33.
34,
35.
Fund for reporting purposes. In FY22 those balances amounted to $59.3
thousand. FY21 those balances amounted to $53.7 thousand. In FY20 those
balances amounted to $355,500. In FY19 those balances amounted to
$67,000. In FY18, those balances amounted to $74,900. In FY17 those
balances were $86,600 compared to $98,700 in FY16. Page 10
. Capital assets decreased by $6.1 million in FY22. This compares to Capital
assets decreasing by $4.5 million in FY21. This compares to Capital assets
decreasing by $2 million in FY20. This compares to a decrease of $6.8
million in FY19. This compares to a decrease of $7.0 million in FY18 on top
of the $7.37 million decrease in FY17 on top of the $5.8 million decrease in
FY 16. Much of these decreases were influenced by depreciation Page 11.
Town debt at end of FY22 was $67.0 million, down from the debt of $72.8
million at end of FY21 which was up from FY20 debt of $63 million down
from $69.5 million at the end of FY19, down from $74.5 million at end of
FY18 which was down from the $79.5 million in at end of FY17 compared to
$85.7 million at end of FY16. Page 12.
Town debt rating is “AA” from Standard and Poor’s in FY21. This is no
change from FY20, FY19 and FY15. There is no mention of “Aa2” (up from
“AA3” in FY11) from Moody’s Investors Service that was noted in the FY 16
report. Page 12.
Note that the town debt limit is $654.1 million in FY22 up from $646.3
million in FY21 up from $638.6 million in FY20, up from $614.8 million in
FY19, up from 603.2 million in FY18, unchanged from FY17 but up from
$572.3 million in FY16. I hope we never get close to that figure. Page 12.
The unemployment rate in FY22 was 4.3% down from 6.5% in FY21,, down
from the FY20 10.8% up sharply from 3.7% in FY19. The FY19 rate was down
from the FY18 rate of 4.0% down from an FY17 rate of 4.7% in FY17 compared
to 5.3% in FY16. This is higher than the national 3.6% and equal to the State
average of 4.31% in FY22. (The FY22 audit report says it is higher-Hmm) Page
12
The Unassigned Fund Balance increased by $23.0 thousand in FY22
compared to an increase of $4.0 million in FY21 compared to an increase of
$2.2 million in FY20 compared to a $2.8 million increase in FY19 compared
to an increase of $796.8 thousand in FY18 compared to an increase of $2.2
million in FY17 compared to a $809,700 increase in FY16. For historical
information prior to change in fund definitions in FY11, the Unreserved Fund
Balance at end of FY2010 was $11.1 million, essentially the same as in
FY2009 (report says it is a decrease from $12.08 in FY09) and close to the
$11.4 million at end of FY07 after an increase to $19.2 million in FY08 due to
Dominion settlement. Page 12
Total Net Assets for FY22 are $212,711,093 compared to $208,405,121 in
FY21 compared to $210,444,390 in FY20 compared to net assets in FY19 of
$212,884,881 compared to net assets for FY18 of $215,485,469 compared to
net assets of $222,999,822 in FY17 compared to $221,076,376 in FY16. Page
13.
Page /

36.
37,
38.
39,
40,
41,
42.
43,
Total Cash, cash equivalents, and investments at end of FY22 was
$61,377,408 in the Audit. The Treasurer’s report for 06/30/2021 showed a
value of $61,131,329. Page 13
Loss in the Business Type Activities (Utility Commission) in FY22 was
$1,322,111 compared to a loss of $1,622,655 in FY21, compared to a loss of
$1,688,931 in FY20 compared to a loss in FY19 of $1,451,560 compared to a
loss of $2,085,971 in FY18 compared to a loss of $800,704 in FY17,
compared to FY16 loss of $137,199. These losses are mostly due to
depreciation of related capital equipment. Page 14.
Long Term Liabilities at end of FY22 was $19,538,314. This is a slight
increase from the FY21value of $19,360,178. This is an increase from the
FY20 value of $14,540,697. This is an increase from the FY19 value of
$13,688,114, a slight decrease from FY18 total liabilities of $14,426,353
compared to $10,893,245 in FY17 compared to an FY 16 value of
$19,128,450. Page 15.
Total Cash and Investments in the General Fund for FY22 was $30,204,733.
The 06/30/2022 Treasurer’s Report reported a total of $30,696,949 of Cash
and Investments in the General Fund. Page 16.
Long Term Liabilities not reported in the funds at end of FY22 are
$162,968,647 compared to a FY21 value of $157,967,581 compared to a
FY20 value of $158,417,896 compared to a FY19 value of $134,731,866
compared to $124,511,806 in FY18 compared to $124,073,136 in FY17,
compared to FY16 liabilities of $125,581,192 compared to FY15 liabilities of
$123,607,087. This is the fifth time the long-term liabilities have been
detailed in this part of the audit due to the OPEB reporting requirements. Page
16.
Note that the Net Pension Liability is $20,396,063, Compensated absences is
$7,033,590; and Net OPEB Liability is $17,595,916 in FY22. This compares
to a Net Pension Liability of $33,780,610, Compensated absences is
$6,740,355, and Net OPEB liability is $16,693,761 in FY21. This compares
to a Net Pension Liability is $31,574,561, Compensated Absences is
$7,239,502 and Net OPEB Liability is $17,291,575 in FY20. This compares
to a Net Pension Liability of $29,879,877, Compensated absences liability of
$7,258,446, and the Net OPEB liability of $18,501,569 in FY19. This
compares to Net pension liability of $14,262,138; the compensated absences
liability of $7,093,628 and Net OPEB liability of $20,720,417 for FY18. Page
16
General Fund Balance at end of FY22 was $23,848,156 ($30,696,849 in
Treasurer’s Report) compared to $23,782,024 at end of FY21 compared to
$20,113,162 at the end of FY20 compared to $17,259,424 at end of FY19,
compared to $14,789.151 in FY18 compared to $13,594,126 in FY17,
compared to FY16 Balance of $11,922,864 compared to a general fund
balance at end of FY15 of $10,574,012. Page 17
Capital and Nonrecurring Fund Balance at end of FY22 was $9,477,402
compared to $7,797,327 at end of FY21 compared to $8,062,934 at end of
FY20 compared to $4,491,330 at end of FY19, compared to $5,593,327 at end
PageO

44,
45.
46.
47.
48.
49.
50.
51.
of FY18 compared to $6,473,966 in FY17, compared to FY16 CNR balance
of $7,307,393 compared to a CNR balance at end of FY15 of $10,197. Page
17.
Note that there was still a deficit of $2,941,624 related to the Waterford High
School Building Project, a reduction of $3.00 from the $2,941,627 related to
the Waterford High School Building Project at the