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04/15/2020 08:15 AMThe Chester Board of Finance was recently presented with the town’s annual audit report for fiscal year 2018–’19. The presentation highlighted the state of the town’s general fund balance, pension plan funds, and recommendations in certain areas of the town’s financial accounting.
Chester First Selectman Lauren Gister said she wasn’t surprised by the findings of the audit and has already been working on some of the issues revealed by auditors.
“We’re very conservative and cautious when it comes to our fiscal responsibility to taxpayers and residents of the town,” Gister said. “We didn’t expect anything shocking.”
Chester’s total governmental fund balance increased by $441,823 to $4,850,541. The unassigned fund balance of the general fund was $2,657,629, or 19.81 percent of general fund expenditures, a 2.69 percent increase from the previous year.
The unassigned fund balance level’s 19.81 percent resulted in a AA- credit rating, which, as highlighted in the presentation, would better position the town to deal with future storm-related damages or other unanticipated expenses.
“I think that there are areas in our budgets where we have seen exponential rises in cost that were impossible to plan for,” said Gister. “One of those things is that the weather has become less predictable. When we get storms, they seem to be potentially more violent. This winter we were very, very lucky. It’s kind of a big question mark, are we putting enough money away? We talk about those things all the time.”
In 2018-’19, the town spent $180,308 in repairs to the Liberty Street Bridge due to flooding damage caused by a major storm. This was the town’s largest expenditure on capital assets. Other expenditures on capital assets included $97,771 for a new hooklift vehicle, $75,676 for Phase III of the Main Street Project, $62,041 for the playground at North Quarter Park, and $60,000 for new firehouse boilers in FY 19.
Overall, the Capital Reserve Fund, which is used for road, sidewalk, bridge construction and capital equipment projects, had a balance of $1,493,454 at the end of 2018-’19. The town appropriated $663,761 and had expenditures of $696,477.
The town saw an increase in the value of its capital assets, after depreciation, from $12,461,637 in 2017-’18 to $12,698,709 in 2018-’19.
To cover the cost of road and tree maintenance, Chester transferred $139,764 to its highway department budget. The town also transferred $9,133 to its fire protection budget for fire marshal inspections.
Under town retirement plans, the Employee Retirement Plan is funded at 75.96 percent with an annual rate of return of 7.30 percent. The Chester Hose Company plan is funded at 91.79 percent with an annual rate of return of 11.32 percent.
Chester’s overall pension funding, at 83.88 percent, is higher than most towns highlighted in the auditor’s presentation, which included Bethel at 78.76 percent, Haddam at 77.42 percent, Durham at 77.11 percent and East Hampton at 75.44 percent.
Revenues increased by $571,699 in 2018-’19, with property taxes bringing in $487,446 more than the previous year. Expenses increased by $218,354, primarily due to an increase in fire protection and highway expenses.
The auditor made general recommendations to the town including that the town clerk make changes to the clerk’s accounts and modifications be made under the Board of Education’s Cafeteria Fund line item to increase transparency in account balances and payroll.
In terms of the Cafeteria Fund, Gister said “there is room for improvement” in that area.
“Part of it was how they were accounting for the money and how they were budgeting which bucket it was going in,” said Gister. “It’s a not a for-profit enterprise and there is some subsidy that comes from the state for food services. There also were some things for the cafeteria being paid for out of the general fund. It was hard to follow the money.
“So that is why we went back and asked the auditor to do some special investigation [on] what was going on with that and I know with the new superintendent and school board, [they are] really working on how to account for that so that it is a transparent process and it makes sense,” she said.
Chester’s 2018-’19 financial audit was completed by PKF O’Connor Davies, LLP.