A little knowledge is a dangerous thing when it is held by a majority of the Charlestown Town Council. This was recently demonstrated when they refused to acknowledge that the most recent $3 million “oops” problem actually exposed a serious breach of internal financial controls within the town’s financial management system.
The CCA’s Steering Committee doubled down on their lack of knowledge with Thursday’s letter to the editor of The Sun titled, “Truth missing in Charlestown’s savings allegations,” written by Ruth Platner, also known as “Where have all the cars gone?”
Their letter also states that Charlestown’s fund balance is essentially the town’s savings and resembles multiple cars parked in different garages around town. Really? If that is the CCA’s intellectual response to the $3 million “oops” then Charlestown taxpayers better buckle up their seat belts while at the same time keeping a firm hand on the cash in their wallets. As their letter literally states, “$3 million is not missing; it is parked in the garage.”
Total Fund Balance is “not” simply the town’s savings, as they stated. Only 53% of it is, the Unassigned Fund Balance portion $5.8 million. And that $5.8 million can now be spent on emergencies, more long-lived capital projects, or transferred to other garages around town. And if you really want to be technical, which they don’t, the town has additional liabilities previously incurred that have never been funded that would wipe out the full $5.8 million if paid.
Twenty-eight percent ($3 million) of the total Fund Balance was spent during the current year and is now gone ... “oops.” Six percent ($0.7 million) of it is for severance expenses already incurred. We still owe another 5% that has never been funded. Another 6% ($0.7 million) has either been specifically allocated for expenditure or deemed unspendable by the auditors.
Only 7% ($0.7 million) is set aside for risks identified in the Government Finance Officer’s Association core risk analysis study.
The CCA letter continues to beat the car analogy into the ground, stating that while their car is not still in the driveway but in a garage somewhere, it is still available to drive to work and that it still has the same value. Absolute poppycock. Their car was sold in the current-year budget for cash to pay for two long-lived building projects that would have been bonded if the town had been able to simply balance its own checkbook, which is understandably difficult when you forget how much in Unassigned Funds you really have to spend.
I am a CPA and you can take my numbers to the bank, but not so much the theoretical $3 million parked in someone else’s garage that supposedly still has value.
Stephen Hoff Charlestown
A version of this article appeared as a Letter To the Editor in The Westerly Sun on February 27, 2022