Massachusetts Municipal Auditors and Accountants Association June Annual Meeting

1
Massachusetts Municipal Auditors and
Accountants Association June Annual Meeting

• Gerard D. Perry
• Director of Accounts
• Division of Local Services
• Bureau of Accounts

2
Overview

• Division of Local Services Gateway System
• Enterprise Fund Manual
• Local Aid
• Miscellaneous
• Questions

3
DLS Gateway System

• Gives accountants and auditors the ability to
  enter data directly into the DOR database
• Online error checking and analytical report
  review available
• Direct entry into Gateway available for Tax Rate
  and Schedule A reporting
• Other forms for entry will become available
  (i.e., snow and ice reporting and outstanding
  receivable reconciliation)

4
DLS Gateway System, contd.

• Users will need passwords for log in
• You will have access only to your communitys
  information
• When information is submitted and approved by
  DLS, that information will become part of the
  Databank, available to everyone
• Pilot testing was successful for 2008 Tax Recaps
  in 17 cities and towns
• Full implementation in all 351 cities and towns
  and 144 utility districts in 2009

5
DLS Gateway System, contd.

• Forms included of DLS Gateway, Phase I
• Tax rate setting (including assessment
  certification), forms for Local Assessment and
  Bureau of Accounts
• Schedule A
• LA-3 Real Estate Sales Reporting for
  certification and EQV

6
DLS Gateway System, contd.

• Roles of different departments in DLS Gateway
• Town Manager/Administrator
• Local account administrator, in the absence of IT
  staff.
• Create/update/delete accounts for local officials
  to submit data for their respective departments
• IT Director/Coordinator
• Act as local account administrator, as above

7
DLS Gateway System, contd.

• Board of Assessors
• Enter Bureau of Local Assessment forms related to
  triennial certification and tax rate setting
• Assessors who would normally sign a printed form
  must be present in the online local officials
  directory and must be enabled with a Gateway
  account for submitting and signing forms
  electronically
• Accountant/Auditor
• Enter Bureau of Account forms related to annual
  tax rate setting, Schedule A, and miscellaneous
  end of year reports
• Accountants who would normally sign a printed
  form must be present in the online local
  officials directory and must be enabled with a
  Gateway account for submitting and signing forms
  electronically

8
DLS Gateway System, contd.

• Town Clerk
• Data enter newly elected/appointed officials and
  make updates in the Local Officials Directory
• All officials would need convenient access to the
  Internet, preferable high-speed broadband access
  (DSL or Cable)

9
DLS Gateway on DLS Website
DLS Gateway appears here and on Mass.gov
10
Main page shows users permitted tabs
11
Forms Reports on left, FY in center
12
A2 1st Fund ready for entry
13
Digitally sign form by checking box while
logged in
14
Prior year data always available
15
Other tax rate forms
16
Transparency in Review Approval
17
(No Transcript)
18
BOA Comparison Reports all possible errors or
items needing explanation flagged
19
(No Transcript)
20
Select expenditure functions/sub-functions in
dropdown, then.
21
data enter.
22
(No Transcript)
23
Calculate, Save, Sign, Submit
24
(No Transcript)
25
Misc. forms everything going into Gateway
26
(No Transcript)
27
Considerations

• Keep Excel-based Recap Sched. A programs
  active, but try to phase out
• Make system work on dial-up lines, even if slow
  push for broadband in all towns
• Make local account administrators responsible for
  password maintenance
• Any technical questions
• David Davies, 617-626-2383
• Kirsten Shirer, 413-784-1000 ext. 20613

28
Enterprise Funds

• Brief History
• The enterprise fund statute, M.G.L. c.44, 53F½,
  was initially enacted in 1986 (see Appendix A).
• Previously communities used special revenue funds
  authorized by various general laws or special
  acts to separately account for their business
  type services. These special revenue funds were
  limited, however, with regard to the services and
  costs covered.

29
Enterprise Funds

• What Is An Enterprise Fund?
• An enterprise fund gives communities the
  flexibility to account separately for all
  financial activities associated with a broad
  range of municipal services.
• It establishes a separate accounting and
  financial reporting mechanism for municipal
  services for which a fee is charged in exchange
  for goods or services. It does NOT create a
  separate entity from the city or town.
• Revenues and expenses of the service are
  segregated into a fund with financial statements
  separate from all other governmental activities.

30
Enterprise Funds

• Why Adopt An Enterprise Fund?
• A community may account for certain services in
  the General Fund, special revenue or enterprise
  fund. Advantages of an enterprise fund include
  that it
• Identifies a total service cost
• Provides useful management information
• Retains investment income and surplus

31
Enterprise Funds

• For What Services Can A Community Adopt An
  Enterprise Fund?
• Enterprise funds may be established, for a
  utility, health care, recreational or
  transportation facility. Examples include
• Public utilities water, sewer, trash disposal
• Health care ambulance service, nursing homes
• Recreation skating rinks, pools, golf courses
  and
• Transportation airports, dock and wharf
  facilities.
• A community may not establish enterprise funds
  for normal government operations or services such
  as public safety, inspectional services or
  cemeteries.

32

• Significant Rule Changes
• The following are significant rule changes
  incorporated in this Manual. Their effective
  date is June 30, 2008.
• Use of retained earnings.
• Retained earnings may be transferred for
• -Direct costs of the enterprise fund for the
  current fiscal year
• Reimbursement to the General or other fund for
  subsidized indirect costs of the enterprise
  for the current fiscal year
• - Reimbursement to the General or other fund for
  subsidized capital costs of the service not
  already reimbursed for the two full, immediately
  prior, fiscal years.

33
Retained Earnings

• Reporting of a retained earnings reimbursement.
• Retained earnings transferred to the General Fund
  specifically to reimburse that fund for capital
  costs incurred should be reported on page 2, part
  IIID of the Tax Rate Recap for use prior to tax
  rate certification or may not be reported at all
  to reimburse the General Fund as of June 30. If
  for tax rate use, city/town Clerks are advised to
  provide a copy of such vote to the Bureau of
  Accounts for tax rate certification purposes.

34
Enterprise Funds

• Provision for a Retained earnings deficit.
• A retained earnings deficit must be reported in
  part 3 of the next Schedule A-2 and be provided
  for on the next Tax Rate Recap. A community need
  no longer report or provide for an enterprise
  fund revenue deficit as such. A retained
  earnings deficit may be provided for by
• - legislative body appropriation
• - reporting on the Tax Rate Recap as an Other
  Amount to be Raised
• - reporting current fiscal year enterprise
  revenues in excess of direct and indirect cost
  appropriations on Schedule A-2 and reporting
  estimated revenues in excess of direct and
  indirect appropriations on the Tax Rate Recap.
  If the deficit is not reported as indicated in
  2 above, the Bureau of Accounts will require
  documentation to determine if the deficit has
  been appropriated to be certain that the
  enterprise fund is not supporting municipal
  operations.

35
Enterprise Funds

• Indirect cost allocation methodology.
• - The Bureau recommends that every community
  with an enterprise fund establish a written,
  internal policy regarding indirect cost
  allocation and should review this policy
  annually. The policy should be reasonable and
  calculated in a fair and consistent basis. Local
  financial officials should understand and agree
  on what indirect costs are appropriated as part
  of the communitys operating budget and what
  percentage of these costs should be allocated to
  the enterprise fund.
• - The Director of Accounts may reject any
  communitys methodology, written or
  otherwise, as unreasonable for tax rate setting
  purposes.

36
Enterprise Funds

• Appropriation for indirect costs.
• Indirect costs are appropriated as part of
  the communitys operating budget and are
  allocated to the enterprise fund as reported on
  Schedule A-2. They should not be appropriated
  both in the operating budget and in the
  enterprise fund budget. Local financial
  officials may wish to show the public all costs
  of the enterprise fund, but there is no need to
  duplicate their appropriation in the enterprise
  fund budget. Therefore, reporting of enterprise
  fund estimated receipts on page 3 of the Tax Rate
  Recap to offset such duplication should no longer
  be necessary.

37
Enterprise Funds

• In the Bureau of Accounts FY2007 end-of-year
  letter, the Bureau advised that should a fund
  balance deficit occur as of June 30, 2007 and as
  of June 30, 2008 (two consecutive years), General
  Fund free cash as of June 30, 2008 will be
  reduced by the enterprise fund deficit balance.
  The policy has been revised and such General Fund
  reduction will not occur.

38
State Aid Projections FY2009
39
Major Local Aid Accounts
40
Miscellaneous Topics

• Estimated Receipts
• Motor Vehicle Excise/Investment Income
• Sale of real estate on Page 3 of Recap (Chapter
  44 section 63 Sale of Land)
• Red Light Video Camera Citation Revenue
• Chapter 61 of the Acts of 2004
• (Self-Insurance Trust Funds FY2009 is last year)
• Medicare Part D General Fund Revenue
• Community Preservation Fund
• Levy Limit Instructions on the web shortly
• Potential OPEB legislation for trust funds