BERLIN - An auditorâ€™s report shows the town on generally sound footing financially, but with a few areas of concern.
A representative of the auditing firm gave town officials her analysis at a recent special joint meeting of the Board of Finance and Town Council at the Berlin-Peck Memorial Library.
The town is getting healthier fiscally, said Katherine M. Patnaude of PKF Oâ€™Connor Davies - â€ś$460,000 healthier and thatâ€™s good.â€ť
That $460,000 surplus represents money from sources such as state aid, grants and taxes minus all expenditures, Finance Director Kevin Delaney said. It also means the townâ€™s ability to cover future liabilities is now stronger, Delaney added.
One area of concern was the townâ€™s pension liability, Patnaude said, with an estimated $9.1 million needed for employees on the townâ€™s old pension plan that is no longer offered.
The town had the plan funded at $268,669 for the 2016-17 fiscal year, short nearly $8.9 million. It did move nearly $1.5 million into the plan for the current fiscal year, but $1.3 million was paid out to two employees, leaving the current balance at just over $400,000.
The 14 active employees on the plan are able to retire anytime and receive a lump sum or extended payments. Two former employees are still eligible to receive benefits, and 21 retirees receive monthly checks totaling $205,000 a year. Four active police officers are eligible for over $1 million in pension benefits.
â€śThat should be something that should keep you up a little bit at night,â€ť said Patnaude.
â€śIt does,â€ť responded Mayor Mark Kaczynski.
Following the audit meeting, the Board of Finance discussed adding $1.6 million every year for the next five years to adequately fund the plan.
In comparison to other Hartford County townsâ€™ similar plans, excluding Hartford, Berlinâ€™s pension plan funding level was the lowest.
One strength of the townâ€™s finances was the $11 million of unassigned fund balance - cash reserves available for any use, anytime - that the town has.
Patnaude said a higher fund balance is good in case the underfunded pension plan needs immediate funds, the state decides to add to the townâ€™s expenses or funds are needed for capital projects.
Having too much in reserve can make it appear as if a municipality is taxing its residents too much, though, but she said, â€śYouâ€™ve got to have some (fund balance) to be responsible.â€ť
In comparison to 28 other municipalities in the county, excluding Hartford, Berlin was â€śabout the same as everyone else,â€ť said Patnaude of the portion of the unassigned fund balance the town uses.
Other positive she cited were the $2.6 million in last yearâ€™s budget the town didnâ€™t spend; the townâ€™s 99 percent tax collection rate, higher than the county and state averages; and fiscal management practices that set an example for other towns.
Other areas of concern were other post-employment benefits, potential teacher retirement funding needs, insurance coverage liabilities and $90 million in long-term debt, which is larger than the townâ€™s $85.2 million current operating budget.
Charles Paullin can be reached at 860-801-5074 or email@example.com.