HomeMy Public PortalAboutWatertown Financil Mgt Review Aug 2013_201310020955073014 �SPCHG'SB
Massachusetts Department of Revenue Division of Local Services °µ
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Amy A.Pitter,Commissioner Robert G.Nunes,Deputy Commissioner&Director of Municipal Affairs
Town of Watertown
Financial Management Review
Division of Local Services / Technical Assistance Section
August 2013
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Massachusetts Department of Revenue Division of Local Services n q
Amy A.Pitter,Commissioner Robert G.Nunes,Deputy Commissioner&Director of Municipal Affairs
August 15, 2013
Michael J. Driscoll Mark S. Sideris
Town Manager Town Council President
149 Main Street 149 Main Street
Watertown, MA 02472 Watertown, MA 02472
Gentlemen:
It is with pleasure that I transmit to you the enclosed Financial Management Review completed by
the Division of Local Services for the Town of Watertown. It is our hope that the information
presented in this report will assist the town in improving its financial management practices,
addressing areas of concern and meeting its long-term planning needs.
Our technical assistance team welcomes the opportunity to present the report at a public meeting.
As an added service,we are willing to meet with staff, earlier on the same day, to discuss
implementation of the report recommendations.
As a routine practice, we will post the completed report on the DLS website, www.mass.aov/dls,
and forward a copy of the report to the town's state senator and representatives.
If you have any questions or comments regarding our findings and recommendations, please feel
free to contact Rick Kingsley, Bureau Chief of the DLS Municipal Data Management and Technical
Assistance Bureau at 617-626-2376 or at kin2slevf(&,,dor.state.ma.us.
Sincerely,
Robert G. Nunes
Deputy Commissioner&
Director of Municipal Affairs
cc: Senator William N. Brownsberger
Representative Jonathan Hecht
Representative John J. Lawn
P.0.Box 9569,Boston,MA 02114-9569
617-626-2300.617-626-2330(fax)•www.mass.gov/dls
Division of Local Services Financial Management Review
Table of Contents
Introduction........................................................................................................................................... I
Overview...............................................................................................................................................2
PrimaryRecommendations...................................................................................................................6
1. Consider Creating a Deputy Town Manager Position............................................................6
2. Organize a Finance Department.............................................................................................6
Overall Financial Management Recommendations ..............................................................................8
3. Expand the Remote Access to the Financial System............................................................ 10
4. Automate the Personnel Action Form.................................................................................. 11
5. Revise the Personnel Ordinance........................................................................................... 11
6. Review Job Descriptions for All Positions........................................................................... 11
7. Adopt Biweekly Payroll and Require Direct Deposit for All Employees............................12
8. Appoint a Third Assessing Board Member.......................................................................... 12
9. Conduct Cyclical Inspections............................................................................................... 12
10. Count Departmental Turnovers When Presented................................................................. 13
11. Complete Weekly Statement of Receipts............................................................................. 13
12. Improve Accounting and Oversight of Police Detail Agency Fund..................................... 13
13. Consider Using Munis Excise Collection Application......................................................... 14
14. Require Departments to Submit All Contracts..................................................................... 15
15. Streamline the Student Activity Accounting........................................................................ 15
16. Reconsider Providing Insurance Benefits to Elected Officials ............................................ 15
Appendix............................................................................................................................................. 17
Acknowledgements.............................................................................................................................21
Town of Watertown Table of Contents
Division of Local Services Financial Management Review
Introduction
At the request of Watertown's Council President Mark Sideris and Town Manager Michael
Driscoll, the Department of Revenue's Division of Local Services (DLS) completed a financial
management review of the town. The recommendations contained within this report are based on
site visits by a team from the DLS Technical Assistance Section and Bureau of Accounts and in
consultation with the Bureau of Local Assessment.
The scope of this review focused on the town's financial offices and on the practices, procedures
and policies that guide municipal decisions. We examined the duties and responsibilities of finance
officers and the degree of coordination and communication that exists between and among the
various boards, committees and officials involved in financial management. We comment on the
effectiveness of financial checks and balances and on compliance with state laws and regulations
that govern fiscal matters. The municipality's technology condition was assessed and the impact of
organizational structure on financial operations was evaluated.
To complete the report, we interviewed and received information from the town manager, town
council members, town auditor, town assessor, information technology manager, personnel director,
purchasing agent, treasurer/collector, school business services director and others. A full list is
available in the Acknowledgements section of this report.
Included as part of our review, we gathered and examined information from various documents
including the Tax Recapitulation Sheet, Schedule A, Balance Sheet, and Watertown's annual
budget, warrants payable and revenue and expenditure reports, and reconciliation reports. We
reviewed the town's charter and ordinances, locally accepted statutes, special acts, as well as the
outside audit report completed by Melanson Heath & Co, and the independent credit rating reports
by Moody's and Standard &Poor's.
Town of Watertown 1 Overview
Division of Local Services Financial Management Review
Overview
Watertown is a suburban community on the banks of the Charles River and is bordered by Boston,
Newton, Belmont, Waltham and Cambridge. Watertown is one of two communities with a land
area of 4.1 square miles, making them the seventh smallest in Massachusetts. With 31,915 people
(2010 US Census), it ranks as the 13th most densely populated municipality in the state.
Accessible by Interstate 90, state Routes 20 and 16, and a network of MBTA buses, Watertown is
within easy commuting distance to downtown Boston and adjacent communities. Being well-
located and accessible, Watertown has become a predominantly residential community(94 percent
of the real estate parcels). Since 1986, condominiums were the fastest growing market and
constitute the largest share of the town's housing stock(35.0 percent), followed by multi-family
structures (33.4 percent), some of which were converted into condominiums (see Appendix).
Single family homes comprise about 30.2 percent of the town's residential parcels, and the balance
are apartment buildings (1.4 percent).
Watertown was first settled in 1630. Originally known as Saltonstall Plantation, it was incorporated
in the same year and renamed Watertown. It began as an agricultural community. However, the
power of the Charles River's flow attracted grist and manufacturing mills to the town. With jobs to
be filled, immigrants began settling in the community. As the town developed and grew, some
residents petitioned the legislature to secede. Portions of the town were annexed by neighboring
Cambridge, while other parts formed the towns of Weston(1713), Waltham(1738), Lincoln(1754)
and Belmont(1759). Today, Watertown's acreage is only a fraction of its original expanse.
While known as a town, Watertown's local government is structured as a city. In 1980, the Town
of Watertown adopted a home rule charter, creating a council-manager form of government. A
nine-member town council is elected every two years and serves as the legislative body. There are
four at-large seats and four district councilors. Elected separately on the town ballot, the council
president is the presiding officer of the council, is a member of the school committee, and is the
official head of the town for all ceremonial purposes. The council appoints and supervises a town
auditor, a clerk of the council, and a town manager, who is the chief administrative officer. The
town manager is responsible for the administrative and financial affairs of most departments and
non-elected boards and committees (see Organizational Chart on page 5).
As the chief administrative officer, the town manager has an extensive list of duties. He appoints
staff responsible to him, subject to confirmation by council, and oversees departmental operations.
He coordinates activities with agencies and elected offices not reporting to him. With the assistance
of the personnel director, the manager oversees the administration of human resource matters and
civil service issues. He prepares the annual budget (which includes goals and performance
measurements for each department), revenue and expenditure forecasts and multi-year capital
Town of Watertown 2 Overview
Division of Local Services Financial Management Review
planning programs with the assistance of the town auditor and treasurer/collector. He approves
warrants, giving the treasurer the authority to release payments. He advises and keeps the council
informed, making recommendations on matters he deems necessary, providing financial and
administrative reports at least monthly, and publishing an annual town report. He is responsible for
the maintenance, repair and use of non-school and non-library facilities, and he executes contracts
and deeds, which may be subject to council approval.
The town council adopts the annual operating budget and capital outlay program, approves
supplemental spending, and authorizes debt. The council has nine subcommittees' that review
items referred to them and report recommendations back to the full council. The council has
adopted policies for the administration of town government and its programs. Its financial policies
include funding budgets with current revenues, using conservative revenue estimates, having
reserves on hand that are seven to ten percent of the budget, and making annual capital expenditures
(including debt but excluding enterprise funds)that are at least 7.5 percent of budget. These
policies are supplemented with a set of annual budget guidelines ranking the council's cost-saving
and spending priorities that the council adopts after the manager briefs them in the fall on
Watertown's fiscal condition and provides the five-year revenue and expenditure forecast.
To ensure that fiscal stability is maintained while essential services are provided, Watertown has
established strong financial management practices. The town manages its budget well and has tight
financial controls in place. As required, the town annually engages a private accounting firm to
conduct an independent audit of its financial statements. As a prudent measure, the town puts its
audit services out to bid every three years. The council's budget and fiscal oversight subcommittee
reviews the annual audit findings. In compliance with Governmental Accounting Standards Board
(GASB)requirements, the town annually updates the capital and infrastructure inventory data
(Statement 34) and biannually initiates the actuarial analysis of Watertown's liability for other post-
employment benefits, or OPEB (Statement 45).
Watertown has had success in generating free cash and building reserves for general and dedicated
purposes. Since FY2000, certified free cash has averaged over$4.8 million annually, and only once
was it below $3 million. As of June 30, 2013, the town has a general stabilization fund($1.22
million). Five special purpose stabilization funds for capital acquisitions, the OPEB liability, the
unfunded pension liability, the energy service company(ESCO) capital costs, and collective
bargaining have a combined balance of$5.77 million (see Appendix). With the recent conclusion
of FY2013, the town is in the process of closing its books and preparing for an audit. When the
balance sheet is completed, the town will seek certification of free cash, which typically occurs in
the third quarter of the fiscal year.
1 These include Budget and Fiscal Oversight,Rules and Ordinances,Economic Development and Planning,Education and School
System Matters,Human Services,Personnel and Town Organization,Public Safety,Public Works,and State,Federal and Regional
Government.
Town of Watertown 3 Overview
Division of Local Services Financial Management Review
The combination of sound business practices and accumulation of reserves has resulted in ratings of
Aa3 from Moody's and AA+ from Standard&Poor's. Both rating agencies cite the community's
stable economic base, strong household income levels, good financial management policies,
conservative budgeting practices, and manageable debt burden as positive factors. Watertown also
has an accelerated pension contribution schedule that is projected to achieve full funding in
FY2022, subject to future market performance, and the town has rapid debt amortization.
Since the charter was adopted, it has been reviewed every ten years. Twice, modifications have
been made. However, none have involved substantive changes to the organizational structure (see
Organizational Chart on the next page). More recently, the council commissioned a series of
management and organizational studies. A public safety study was conducted to assess the current
police, fire and dispatch services to identify potential operational improvements. The consultant,
Matrix Group, prepared a report having more than 20 recommendations. Another consultant, The
Collins Center for Public Management, was hired to perform two studies: one was a review of the
administrative organization of the town and the other was a staffing and operational assessment of
the public works department. The organizational study recommendations have been presented to
the town and the public works report was recently received though not reviewed. The town also
requested that the Division of Local Services prepare this financial management review. The public
safety,personnel and public works subcommittees are reviewing these studies and will be reporting
back to the full council.
Overall, we found that the department heads and their staff are capable and experienced. There are
financial procedures and controls in place that are followed. There is long-term planning that is
continually updated as new information becomes available.
In this report, our primary recommendations are to create a deputy town manager position and to
consider organizing a finance department, preferably run by the proposed deputy manager. In
addition, we offer other financial management recommendations aimed at fine-tuning overall and
departmental operations. We recommend that the town expand the remote entry access by
departments to the financial system to enter payroll, vendor payments and departmental receipts.
The town's personnel ordinance should be revised, all job descriptions reviewed, and the personnel
action form automated. We recommend that a third assessing board member be appointed and
cyclical inspection be conducted. The treasurer/collector's office should complete weekly
statements of receipts for the town auditor, and the town should consider improvements to the
accounting and oversight of the police detail agency fund.
Town of Watertown 4 Overview
Division of Local Services Financial Management Review
Watertown Organizational Chart
VOTERS
Watertown Town Council Library School
Retirement Board Trustees Corn m ittee
-Town Auditor(ex-officio)
-Manager's appointment
-Two elected employee _l Town Auditor Town Manager Clerk of the Director Superintendent
or retired members Council
-Non-official/employee/
------------------------------------'
retiree selected by board
Purchasing Agent
Treasurer/ Town Personnel CD&P IT Manager Fire Police Health
Collector Assessor Director Director Chief Chief Director
Veterans'Services Senior Services Town Hall Recreation Skating Rink Town Town
DPW Supt� � �- Boards and Committees
Director Director Custodian Director Manager Clerk Attorney
-Board of Assessors
-Board of Health
-Bicycle&Pedestrian Committee
-Cable Access Corporation
-Commission on Disability
-Conservation Commission
-Council on Aging
-Cultural Council
-Election Commission
-Environment&Energy Efficiency
-Historical Commission
-Historic District Commission
-Licensing Board
-Planning Board
-Recycling Advisory Board:
-Traffic Commission
-Watertown Housing Authority
-Zoning Board of Appeals
Town of Watertown 5 Overview
Division of Local Services Financial Management Review
Primary Recommendations
1. Consider Creating a Deputy Town Manager Position
We recommend that the town consider creating a deputy town manager's position. The current
town manager has been employed in the town since 1977 and was appointed as the town manager in
1993. When the new form of government was implemented in FYI 982, the town manager's office
had an administrative assistant and oversaw a budget of over$32 million. Today, the town manager
has two confidential secretaries in his office, and the FY2013 budget was over$115.7 million, more
than tripling in size over the last three decades (see Appendix). In addition, seventeen department
heads and eighteen standing committees report directly to him.
Despite budget growth and the continually increasing challenges facing municipal management,the
structure of the town manager's office remains relatively the same, with only one professional
position. Unlike the auditor, treasurer/collector, and assessor, the town manager does not have an
assistant, who is trained on all the responsibilities of the office. In his absence, the manager
appoints either the community development &planning director or the treasurer/collector to serve
for brief periods of time. Of added concern are the responsibilities performed by the manager.
While he has not given any indication of leaving the town's service, the council may be hard-
pressed to find a replacement, who would perform all the manager's current duties without another
professional position to assist in handling the workload of the office.
Adding a deputy town manager position would require creating a new position and adding the
requisite salary and benefit costs to the town manager's budget to attract a professional with the
necessary experience and skills to serve in this role. The deputy town manager would assist the
town manager and should be assigned specific management responsibilities. For example, he/she
would oversee departments or offices with similar responsibilities and services. This would
improve the coordination of departments and reduce the number of direct reports to the town
manager.
2. Organize a Finance Department
We recommend that the town consider organizing a finance department. Currently, the finance-
related offices—assessing, auditing, collection, treasury, and purchasing—operate independently
and all, with the exception of the town auditor, report directly to the town manager. A more
efficient organizational model would be to have these offices combined into a finance department.
The deputy town manager could be assigned the responsibility for managing the finance department
operations, coordinating activities, and supervising staff. This would reduce the number of direct
reports to the town manager and ensure the coordination of financial services.
Some officials have raised concerns about having the town auditor included in a finance department
that falls under the town manager's oversight. They expressed apprehension because it would
Town of Watertown 6 Primary Recommendations
Division of Local Services Financial Management Review
eliminate perceived checks and balances between the town manager and town auditor. However,
we would argue that the town auditor actively participates in the manager's budgeting and financial
planning processes and therefore does not have true independency. The auditor has significant
responsibilities,which if not coordinated with the other financial activities, would impact the town's
operations and fiscal position. As such, the office of the town auditor should be included in the
finance department. If the town were to pursue this recommendation, the inclusion of the auditor's
office in the finance department would require special legislation to amend the town's charter.
However, if the town does not want to pursue the new deputy town manager position, DOR still
supports the creation of a finance department. While not preferable, it would be feasible for one of
the finance-related department heads to be promoted, adding the role of the finance department
director to his/her current responsibilities. This would require creating the new position,but the
impact of the salary increase on the town's budget would be significantly reduced.
Town of Watertown 7 Primary Recommendations
Division of Local Services Financial Management Review
Overall Financial Management Recommendations
During the course of this engagement, we reviewed Watertown's overall financial management
practices and procedures. This included interviewing staff, observing operations, and reviewing
documentation in the information technology,personnel, assessing,purchasing, treasurer/
collector's, town auditor's, and school business services departments.
The information technology(IT) staff consists of a manager and a computer systems analyst. IT
administers Watertown's wide-area fiber network and oversees the network security, offsite back-
up systems, and a disaster recovery plan. IT offers advice on proposed software and capital
purchases, provides training and computer support, and responds to hardware and software
problems. IT also manages the telephone system, the website (www.watertown-ma.gov), and the
wireless Internet access in council's chambers, enabling councilors to view electronically
distributed information on town-issued laptops during meetings. Town departments have email
capability and Internet access, employee use of which is subject to written policies. Microsoft
Office applications and other specialty software also are installed on desktops. The town and
school departments use Munis, a Tyler Technologies integrated financial system. The assessors use
Patriot Properties' AssessPro computer assisted mass appraisal (CAMA) system for real estate and
personal property. IT manages the geographic information system(GIS) in cooperation with the
planning department.
The personnel department is comprised of a director and an administrative assistant. In addition,
there is an intern, who provides support to the Watertown Commission on Disability. The
personnel department is responsible for maintaining the official town personnel files,job
descriptions, performance evaluations, and the compensation and classification plans. The
department oversees the town staff attendance records, which have historically been kept manually
but will be automated this year using the Munis time and attendance module. The director provides
assistance and advice to department heads on personnel matters, including recruitment, selection,
training, discipline, and contract interpretation. She participates in collective bargaining
negotiations along with the town auditor, and she prepares personnel and compensation worksheets
for town departments during the budget process. The office also oversees workers compensation
and unemployment benefits as well as the sick time buyback program.
The assessing office is staffed by the town assessor,who also serves as the chair of the board, an
assistant assessor, a full-time clerk, and a part-time clerk. In addition, there is a full-time clerk
whose time is split with the treasurer's office. Great care is taken to limit her access in the
AssessPro and Munis systems, and her work is reviewed by supervisors in order to preserve the
independency and checks and balances between the two offices. The assessing office is responsible
for determining full and fair cash valuations, classifying all property, assigning tax payments to
owners, and generating the commitment authorizing the treasurer/collector to collect property taxes
Town of Watertown 8 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
and excise. Field work (e.g., inspections of building permit, sale and abatement properties), interim
year value adjustments, and AssessPro data table updates are done in-house. Watertown contracts
with Patriot Properties to collect commercial, industrial and personal property class data and to
provide some assistance to the town assessor in the triennial revaluation review and analysis. The
assessors' maps are digitized,updated annually by the planning department, and posted on-line
along with the property record cards.
The town's purchasing department has a staff of two, the purchasing agent and her clerk. The office
is responsible for overseeing town purchasing practices, disposal of unwanted surplus property, and
maintenance of the town's copiers. Town departments complete a quote form for $1,000-$25,000
purchases and remote enter the requisition into Munis. The purchasing agent reviews each to make
sure the community gets the highest quality at the best price and, if approved, forwards it to the
town auditor's office,where the purchase order is produced and the funds encumbered. The
purchasing agent prepares bids for construction projects and directly handles all requests that are
greater than$25,000 for both the town and school departments. The purchasing agent also serves
on the town's environment& energy efficiency committee and manages the town energy service
company(ESCO)project, which included an energy audit, mechanical systems upgrades, and
installation of solar panels on town buildings.
The treasurer/collector's department oversees treasury, collection and parking enforcement. The
office staff consists of a treasurer/collector, assistant treasurer, and five clerks (one of whom is
shared with the assessors' office), who have primary responsibilities and are cross-trained. In
addition, the treasurer/collector supervises two parking enforcement officers and a hearing officer.
Treasury responsibilities include managing the town's cash, debt and tax title accounts. The office
staff take in departmental turnovers and print the vendor and payroll checks. The assistant treasurer
reconciles cash with the town auditor's office monthly. Currently, the cash book is a combination
of manual and static Excel spreadsheets. After the assistant treasurer retires this fall, the treasurer
plans to transfer the cash book to the Munis system using the integrated module.
The collector's staff process property tax and combined water/sewer bills quarterly, motor vehicle
and boat excise annually, parking tickets when issued, and municipal lien certificates at the time of
a property sale or refinancing. The staff reconcile the receivables with the town auditor's office
monthly. Watertown uses Mass Mailers, Inc. to print and mail tax and utility bills, and contracts
with Kelley&Ryan to serve as its deputy collector and to print and mail motor vehicle and boat
excise bills. Payments are taken in by lock box, mail, in the office, from escrow services and on-
line through the town's website. The office uses the Tyler Cashiering system to collect and post tax
and utility payments received in the office. Once a property tax or excise bill becomes past due, the
treasurer/collector issues a demand notice, and then completes tax takings and initiates foreclosure
proceedings on real estate accounts. She warrants outstanding excise and personal property to the
Town of Watertown 9 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
deputy collector. Any outstanding utility charges at the end of the fiscal year are liened on the
subsequent year's real estate tax bill.
The town auditor's office oversees financial activity of the municipality, maintains the general
ledger, and handles payroll as well as employee benefits administration. The town auditor
supervises a staff of four: an assistant auditor, an accounts payable clerk, a benefits clerk, and a
part-time payroll clerk. The auditor's office reviews and processes vendor invoices and payroll,
data enters town department information into Munis, and produces warrants for the town manager's
approval. The office enrolls employees and retirees in the Group Insurance Commission's (GIC)
health insurance plans as well as other benefit programs. The office submits timely reports to DOR
and prepares schedules for the external audit firm. The staff are cross-trained in the various
functions of the office. In addition, the town auditor also serves as a member of the Watertown
Retirement Board and participates on behalf of management in the town labor negotiations.
Reporting to the school committee and superintendent, the school business services office is staffed
by a director, a grants administrator, an accounts payable clerk, a transportation/maintenance/hall
rental clerk, a budget analyst, and a part-time payroll clerk. This office oversees the school
department's budget and accounting, facilities, food services, and transportation services. The staff
process payroll and vendor invoices and input them into Munis. These are approved by the school
committee and the superintendent before they are forwarded to the town auditor's office for review
and inclusion on the final warrant.
3. Expand the Remote Access to the Financial System
We recommend that all town departments receive training to enter payroll summaries on an
exception basis into the Munis system from the office desktop computers. Currently, town
departments have read-only access to their own budgets and can remotely enter purchase order
requisitions into Munis. Town departments submit payroll summaries to the town auditor's office
in hard copy for review and data entry to Munis. Only the school department has remote access to
enter payroll, which is reviewed against backup documentation by the town auditor. With training,
the remote entry of payroll would be performed by all departments. The auditor's office would then
review the electronic entries against the original approved payroll summaries forwarded by each
department, and, if acceptable, add them to the warrant and post them to the general ledger. Once
established, the electronic transmission of financial data will greatly reduce the amount of manual
entries the auditor's office is performing, thereby freeing up staff to complete other tasks and
analyses.
We also recommend that all town departments receive training to enter vendor bills into the Munis
system. Once town departments have been taught the remote entry of payroll, they should be
trained to enter vendor payments, which the school department already does. Again, the auditor's
office would review the electronic entries against the original invoices submitted, and, if acceptable,
Town of Watertown 10 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
add them to the warrant and post them to the general ledger. Delegating the data entry
responsibility to the departmental level would further free up the auditor's staff time.
Finally, we recommend that the school and town departments receive instruction on the Munis
remote entry for departmental receipts. At least weekly, departments prepare a turnover sheet for
the treasurer/collector's staff, who data enter the information into Munis. With remote access, each
department would post moneys received to the appropriate funds and revenue codes in Munis and
print out the turnover sheet. The cash and turnover sheet would be presented to the treasurer's
office and then a signed copy of the turnover sheet would be submitted to the auditor's office. The
treasurer's staff would use the turnover sheet to verify that entries posted. The auditor should meet
with each department head to review current revenue codes and to discuss potential changes if
necessary. By streamlining this function, it will free up the treasurer's staff time.
4. Automate the Personnel Action Form
We recommend that the town convert the personnel action form for town employees to an electronic
format. For all personnel and payroll changes affecting an employees' status, a three-part form is
manually produced at the department level, reviewed by the personnel director, approved by the
town manager, and entered into Munis by the auditor's office. Alternatively, the process could be
done electronically. Working collectively, the personnel department, town auditor's office, and the
information technology department would decide the content and design of the form. The form
would be routed to the appropriate party for each required step in the process, providing an
electronic signature for each official. As a final step, the electronic document complete with
required signatures would be printed out and placed into the employee's personnel file.
5. Revise the Personnel Ordinance
We recommend that the town review and revise the personnel ordinance immediately. For over
three decades, Watertown has had a council-manager form of government under which the manager
appoints a director to oversee the town's personnel administration. However, Chapter 30 of the
ordinances provides for the appointment of a personnel board by the town moderator and the
adoption of the classification and compensation plans by town meeting. This needs to be revised to
reflect the current town organization and personnel director's responsibilities. The ordinance
should contain at least the compensation and classification plans for non-union positions,
definitions, types of leave granted, overtime, fringe benefits and town policies.
6. Review Job Descriptions for All Positions
We recommend that the personnel director review all job descriptions, ensuring one exists for each
position and that it is accurate and current. In reviewing job descriptions, we found that some were
recently updated and others had no clear last review date. At least one position referenced the
town's ordinance in lieu of a job description. We would expect a full review to be a bottom-up
exercise in which staff and department heads update or create their own job description by listing
what they actually do and are responsible for. The personnel director should develop and provide a
Town of Watertown 11 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
template or outline to be followed. Staff would present their work product to a department head
who would then review descriptions with the personnel director. Department heads would provide
their own job descriptions too. When complete, all employees will have a clear understanding of
their responsibilities and the expectations placed on them,while management may discover
overlapping work or gaps in job duties that would need to be corrected. Going forward,job
descriptions would be reviewed periodically, revised if needed, and dated to document action.
7. Adopt Biweekly Payroll and Require Direct Deposit for All Employees
We recommend that the town adopt biweekly payroll for all town and school employees. The
current payroll system is primarily weekly and only the teachers are paid biweekly. An increasing
number of employers in both the public and private sectors, including the Commonwealth,
compensate employees on a biweekly basis.
We recommend that the town require direct deposit of payroll for all employees. Watertown has
negotiated with the unions terms that require all new employees to sign up for direct deposit.
Approximately 40 percent of the town's workforce continues to receive paper checks. Direct
deposit for all employees would reduce the cost of issuing checks,prevent the need to reissue
checks when lost, and simplify the reconciliation of the payroll bank accounts because there would
be no outstanding checks. For the employee, the benefit is that the money generally is deposited in
the bank account overnight, is available immediately, and saves the time necessary to go to the bank
and wait in line.
With biweekly payroll and direct deposit for all employees, staff would then be freed up to perform
other activities. To implement these changes will require negotiations with collective bargaining
unions and any changes should be included in the personnel ordinance.
8. Appoint a Third Assessing Board Member
We recommend that the town manager appoint a third assessing board member as soon as possible.
This position has been vacant since May 2012. On the town's website, citizens interested in serving
on boards, commissions and committees are encouraged to submit a letter of interest accompanied
by a resume or other information concerning background or experience. As vacancies occur,
positions are advertised on the town's website, on the town clerk's bulletin board, and in the local
newspapers. Despite this effort, the assessor position remains vacant. One option is to actively
recruit to fill the position. Using the town census listing, obtained from the town clerk, the town
manager would solicit residents with professional positions in value-related activities (e.g.,
appraisers, engineers, realtors and attorneys)who may be interested in serving.
9. Conduct Cyclical Inspections
We recommend that the assessing office develop a cyclical inspection plan so that each parcel in the
town is inspected by FY2019. The last full cyclical re-inspection program was completed in 2010
by Patriot Properties. The Bureau of Local Assessment(BLA)requires that cities and towns inspect
Town of Watertown 12 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
the interior and exterior of each residential, commercial, industrial, and tax-exempt property at least
once every nine years. The commercial and industrial property data were recollected in FY2013,
and some residential parcels have been revisited by the town assessor since FY2010 due to property
sales,building permits and abatement applications. Watertown is predominantly residential, and the
condominiums and multi-family parcels can be labor intensive to recollect the descriptive property
data. A cyclical program enables the community to plan for and to spread the workload over a
longer period of time, taking into account other building permit, sales and abatement inspections
performed. Otherwise, if the town delays and closes in on the FY2019 deadline, Watertown would
be forced to measure and list properties in a shorter period of time that may require contracting out
at a higher cost.
To help complete this project, the town could hire an appraisal contractor to work on a set number
of the cyclical inspections to supplement the work performed in-house. Annually, the town would
budget for the fee appraisal service in the range of$10,000-$15,000 for example. This work would
be managed closely by the town assessor to ensure his data collection standards are met.
10. Count Departmental Turnovers When Presented
We recommend that the treasurer/collector's office always count out departmental receipts turned
over when presented. At least weekly, departments prepare a turnover sheet and present it, along
with the departmental receipts taken in, to the treasurer/collector. If the treasurer/collector's staff is
otherwise occupied with other customers, the turnover is placed in the safe and counted later. On
occasion, the report has not reconciled with the funds presented, and the reporting department has to
be contacted to rectify the difference. Each turnover should be counted out in the presence of the
reporting department. If the treasurer/collector's office is unavailable, the department making the
turnover should wait or return at a later time. If there is a variance between the report and cash and
checks turned over, the treasurer/collector staff should refuse to accept the package. The
department should take everything back and resubmit the turnover once corrected.
11. Complete Weekly Statement of Receipts
We recommend that the treasurer/collector complete and transmit its statements of receipts to the
town auditor weekly. Currently, the treasurer/collector's office prepares a monthly statement for
the auditor's office. The assistant auditor compares it against turnover reports received from
departments before posting them to the general ledger. Given the amount of revenue handled by the
treasurer/collector's office, it is advisable that the office prepare a report weekly. Providing more
frequent cash receipts reports would enable the town to maintain a more current general ledger and
readily identify variances and missing turnover reports.
12. Improve Accounting and Oversight of Police Detail Agency Fund
We recommend that the town improve the accounting and oversight of the police detail agency fund
by using the Munis system to bill parties that contract for work details and transferring the
collection function to the treasurer/collector's office. Over the last three years, the town has
Town of Watertown 13 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
incurred deficits—$56,178 (6/30/10), $63,369 (6/30/11) and$113,926 (6/30/12)—that negatively
impacted the town certification of free cash. While police detail information is sent to the payroll
department for payments to the officers, the police department maintains a separate electronic
billing and collection system. Consequently, the fund's activity is not kept in Munis, the town
auditor cannot monitor it and keep other officials apprised, and some outstanding charges may have
become stale and possibly uncollectable. The town auditor has proposed a write-off policy,but
nothing further has been done.
The town should consider billing and collecting police details in Munis. When the police
department submits payroll, an accompanying commitment for police work details should be
submitted to the treasurer/collector for billing and collection. This would enable the town to create
an accounting of work detail charges, listing each billed amount, the responsible party, and date of
the transaction. When payment is made, the treasurer/collector's staff, who are bonded and
established to receive volume collections, would accept and post the payments. It would be the
treasurer/collector's responsibility to resolve any past-due amounts by sending demand letters and
initiating small claims court action. The police department should be given read access to view the
billing and collections,thus enabling them to see if a particular party is current before scheduling
additional work details.
The town also should consider a policy requiring the cost of police details be paid in advance. As
such, a party would contact the police department, who would estimate the cost of the proposed job
and draft a bill. When the estimated bill is paid at the treasurer/collector's office, a receipt would be
issued and the work detail scheduled. Monthly, the treasurer's office would review the status of all
work details, comparing the pre-payments against the charges submitted to the auditor's office. If
an advanced payment is less than the actual cost of the service then a balance due bill would be
issued and collected timely, avoiding growing outstanding charges that could become uncollectible.
Conversely, if the pre-payment exceeds the cost of the job, the treasurer/collector would issue a
refund.
13. Consider Using Munis Excise Collection Application
We recommend that the town consider using the Munis excise collection application. While the
town has the Munis excise collection software application, the staff use Kelley&Ryan's excise
collection system. Because the receivable detail resides outside of the Munis system, excise
collections do not run through the Tyler Cashiering system. A batch report of receipts from the
Kelley&Ryan excise system is processed as a department turnover by the treasurer and keyed into
Munis. Switching to the Munis integrated application, the deputy collector would still print and
mail the bills. However, Kelley& Ryan would provide a commitment file that would be uploaded
to Munis, which would be used to post payments to individual accounts. The treasurer/collector's
staff would be able to use the Tyler Cashiering system to scan the bills, to post payments, and to
capture check images,which cannot be done with the off system collection program.
Town of Watertown 14 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
14. Require Departments to Submit All Contracts
We recommend that copies of all contracts, including grants,be submitted to the town auditor's
office in compliance with Article 2, Section 2-7 of the town charter and M.G.L. c. 41, §57. While
the auditor has town department contracts, he does not always receive all school contracts and grant
agreements. All departments (including the schools),boards and commissions that enter into
contracts or receive grants must submit them to the town auditor's office. With valid copies on file,
the town auditor's staff will be able to verify that the terms of the contract or grant are met when
reviewing payment requests. If a bill is submitted for payment and the contract or grant that
contains information relating to payment terms is not on file, the town auditor's office cannot
process the payment request until said contract or grant is presented.
We also recommend that the town auditor consider scanning all contracts and grants and placing
them in a shared drive on the network. This will enable the town to store and easily retrieve
contract and grant information as well as identify missing items.
15. Streamline the Student Activity Accounting
We recommend that the school business services office simplify the record keeping system for
student activity accounts. In response to an embezzlement case at the middle school, the town and
schools tightened up processes and procedures to improve accountability. Each of the five schools
handles money related to organized student activities. Each activity's advisor prepares a detailed
report of the amounts taken in,presents it to the principal for review and approval, and turns the
report and the funds over to the school business services office within a week. The funds are
counted and, if they agree with the report, are turned over to the treasurer/collector's office for
deposit at the bank and posting into Munis. Any expenditure relating to an activity is submitted to
the school business service office for review and entry into Munis and paid through the warrant
process. To track each activity and reconcile to Munis revenue and expenditure reports, the school
business office maintains off-system records in Quicken and Excel, which are redundant and time-
consuming to maintain. The private auditor is just completing a special assignment to review these
funds. Based on the results, the school business services office should discuss with the private
auditor the preferred way to manage and account for these funds without having to keep multiple
off-system applications.
16. Reconsider Providing Insurance Benefits to Elected Officials
We recommend that the town review its practice of allowing certain elected officials to enroll in its
insurance programs. According to M.G.L. c. 32B, §2(d), an"employee" eligible for healthcare
benefits is one that receives either a salary or stipend and works at least 20 hours per week. Paid
elected officials, however, have no minimum hourly requirement to qualify. Once "vested" in the
retirement system, that employee is eligible for retirement benefits, including healthcare, at a
significant cost to the municipality. Currently, some councilors and school committee members are
enrolled in the town's health insurance plan at an FY2014 estimated expense of over $75,000.
Town of Watertown 15 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
Therefore, the town should consider its current liability and the long-term impact of providing
health insurance to elected officials. With a city form of government but not a mayor, town
officials should consult with town counsel to determine who is responsible for setting this policy
under the charter.
Town of Watertown 16 Overall Financial Management Recommendations
Division of Local Services Financial Management Review
Appendix
Watertown Residential Development
10,000
9,000 _
8,000
7,000
6,000
0 5,000
a�
a
z
4,000
3,000
2,000
1,000
0
1986 1990 1995 2000 2005 2010 2013
Fiscal Year
■Single Family ■Multi Family Condos ■Apartments
Watertown Residential Development
Fiscal Year Single Family Multi Family Condos Apartments
1986 3,028 3,647 1,249 149
1990 2,981 3,601 1,616 156
1995 2,955 3,602 1,804 154
2000 2,943 3,582 1,897 154
2005 2,925 3,431 2,311 150
2010 2,895 3,265 3,183 134
2013 2,899 3,203 3,349 131
Source:Massachusetts Department of Revenue,Division of Local Service,Data Bank reports
Town of Watertown 17 Appendix
Financial Management Review
Division of Local Services
Watertown Reserves
18 Water Retained
Earnings
16 Sewer Retained
Earnings
14
Collective
Bargaining
12 Stabilization
ESCO Capital
Project
10 Stabilization
.Q ■Unfunded
E
8 Pension Liability
Stabilization
to ■OPEB
0 6 Stabilization
Capital
4 Stabilization
■General
2
Stabilization
0 0 a
Fiscal Year
Unfunded ESCO Capital Collective Sewer Water
General Capital OPEB Pension Liability Project Bargaining Retained Retained
Fiscal Year Free Cash Stabilization Stabilization Stabilization Stabilization Stabilization Stabilization Earnings Earnings Total
1,898,987 2,063,096 12,474,387
2010 4,753,849 1,146,876 1,545,674 1,065,905
2011 6,075,642 1,201,566 1,054,320 1,071,867 1,938,600 2,025,492 13,367,487
2012 4,333,181 1,213,615 557,865 1,075,446 2,040,313 2,316,750 11,537,170
2013 7,694,406 1,224,655 1,501,623 1,077,724 750,000 1,919,840 2,579,910 16 ,
2014* na 1,219,562 2,004,528 1,079,878 1,503,104 473,257 710,000 na na 6,99090330
Source:Massachusetts Department of Revenue,Division of Local Service,Data Bank reports and town auditor's reports
*Due to the timing of this report,Watertown is in the process of closing its books. It has not prepared the balance sheet for submission to DOR for cer6ficabon of tee cash or enterprise funds'retained earnings.
Town of Watertown
18 Appendix
Division of Local Services Financial Management Review
120 Watertown Budqeted Revenues by Source
100
c
° 80
£ I c
=- 60
N ' 1
0 40
20
O^ 0� 0� ti 00 00 0 00 00 e 1 O� 00 e 41 oi0 00 00
'��' '��' �O n0 'O �O '��' '°j '��' '��' '��' '��' lO ti ti ti ti ti0 ti0 ti0 ti0 'V ti0 NO ti0 ti ti
Fiscal Year
■Levy ■State Aid ■Receipts ■Other
Watertown Budgeted Revenues by Source
Fiscal Year Levy State Aid Local Receiots Other Total Fiscal Year Levy StatB Aid Local Receipts Other Total
1981 24,214,769 4,079,281 4,032,500 3,096,116 35,422,666 1998 37,691,567 10,312,644 14,406,437 1,652,000 64,062,648
1982 20,574,462 4,762,611 2,900,000 3,853,818 32,090,891 1999 38,945,631 11,856,507 16,143,869 1,650,000 68,596,007
1983 20,440,602 7,607,473 3,002,000 5,713,939 36,764,014 2000 41,258,266 12,407,019 16,528,851 2,600,000 72,794,136
1984 21,742,558 8,006,287 3,400,000 2,547,717 35,696,562 2001 44,600,121 13,168,884 16,708,860 2,472,125 76,949,990
1985 22,715,509 8,910,010 3,450,000 2,876,403 37,951,922 2002 47,383,825 13,317,123 16,622,220 2,682,600 80,005,768
1986 24,231,467 9,358,477 3,977,707 2,611,497 40,179,148 2003 50,894,357 12,934,733 18,233,456 2,410,000 84,472,546
1987 25,188,690 10,803,267 4,708,400 1,596,902 42,297,259 2004 54,345,745 10,978,539 19,043,169 2,230,000 86,597,453
1988 26,315,541 11,571,124 5,249,000 2,648,937 45,784,602 2005 56,885,844 10,966,066 19,574,869 2,257,990 89,684,769
1989 27,420,588 11,684,454 7,217,995 2,719,918 49,042,955 2006 59,585,238 11,416,427 24,103,254 2,352,954 97,457,873
1990 28,587,108 10,083,715 8,769,609 2,231,109 49,671,541 2007 62,224,126 12,246,447 22,247,261 2,245,000 98,962,834
1991 29,553,915 9,682,200 8,915,250 3,448,047 51,599,412 2008 65,035,715 12,599,983 23,041,865 2,662,000 103,339,563
1992 30,432,644 8,258,741 9,910,223 2,567,949 51,169,557 2009 67,547,778 12,991,546 23,845,190 3,090,000 107,474,514
1993 31,284,656 8,379,905 11,123,329 1,923,193 52,711,083 2010 69,789,887 10,642,170 26,159,060 3,115,000 109,706,117
1994 32,236,882 8,719,502 11,112,951 1,458,409 53,527,744 2011 72,331,734 10,062,057 24,278,707 2,635,000 109,307,498
1995 33,313,096 9,131,119 11,275,226 1,175,781 54,895,222 2012 75,082,744 9,644,420 25,497,678 2,729,100 112,953,942
1996 34,382,955 9,715,238 11,831,392 872,781 56,802,366 2013 78,371,419 10,165,988 24,790,451 2,375,000 115,702,858
1997 35,765,373 9,924,256 12,939,447 1,623,756 60,252,832
Source:Massachusetts Depart rent of Revenue,Division of Local Service,Dab Bank reports
Town of Watertown 19 Appendix
Division of Local Services Financial Management Review
Watertown FY2012 General Fund Expenditures
General Government,
4% /
Fixed Costs&Other Public Safety
15% 12%
Debt Service 7%-/ '00""/
Human Svc.,Culture-110
&Recreation 2%
-Education 52%
Public Works 8%
Human Svc.,
Fiscal General Culture& Fixed Costs Total
Year Government �� Public Safety \� Education \� Public Works \� Recreation \� Debt Service �� &Other 0 Expenditures
2000 2,577,626 4.1 10,020,561 16.1 23,249,035 37.3 5,928,882 9.5 2,522,954 4.0 4,316,793 6.9 13,686,375 22.0 62,302,226
2001 2,820,690 4.3 10,453,725 16.0 24,127,224 36.9 7,144,271 10.9 2,403,017 3.7 4,028,504 6.2 14,333,631 21.9 65,311,062
2002 3,037,113 4.5 11,270,477 16.5 25,446,330 37.3 6,606,945 9.7 2,669,901 3.9 4,838,748 7.1 14,328,721 21.0 68,198,235
2003 3,176,829 4.4 12,853,809 17.7 26,055,151 35.8 6,870,271 9.4 2,677,957 3.7 4,817,784 6.6 16,286,699 22.4 72,738,500
2004 3,223,881 4.4 11,828,822 16.3 26,790,319 36.9 6,687,320 9.2 2,683,852 3.7 4,334,601 6.0 16,990,121 23.4 72,538,916
2005 3,136,875 4.0 12,524,043 16.1 28,670,719 36.8 7,490,803 9.6 2,672,692 3.4 5,382,069 6.9 18,059,557 23.2 77,936,758
2006 3,831,341 4.8 13,305,911 16.5 28,348,429 35.2 7,153,439 8.9 2,822,366 3.5 5,182,150 6.4 19,965,565 24.8 80,609,201
2007 3,645,860 4.3 13,087,570 15.5 29,348,491 34.8 7,517,692 8.9 3,012,967 3.6 5,507,032 6.5 22,101,099 26.2 84,220,711
2008 3,918,485 4.4 14,103,664 16.0 30,345,050 34.4 8,201,467 9.3 3,388,319 3.8 6,075,457 6.9 22,206,345 25.2 88,238,787
2009 3,801,065 4.1 17,134,309 18.6 31,317,146 33.9 8,964,917 9.7 3,418,722 3.7 5,045,298 5.5 22,647,144 24.5 92,328,601
2010 3,954,119 4.6 14,175,102 16.3 32,927,685 37.9 4,688,287 5.4 3,473,331 4.0 6,610,727 7.6 21,058,008 24.2 86,887,259
2011 3,835,795 4.2 14,494,722 15.9 33,470,005 36.8 6,055,120 6.7 3,472,430 3.8 6,907,661 7.6 22,784,136 25.0 91,019,869
2012 4,028,273 4.4 14,513,770 16.0 33,887,665 37.4 4,838,216 5.3 3,603,599 4.0 6,539,019 7.2 23,202,546 25.6 90,613,088
Source:Massachusetts Departrnentof Revenue,Division of Local Service,Data Bank reports. These figures do notinclude enterprise funds.
Town of Watertown 20 Appendix
Division of Local Services Financial Management Review
Acknowledgements
This report was prepared by the
Department of Revenue, Division of Local Services:
Robert G. Nunes, Deputy Commissioner&Director of Municipal Affairs
Frederick E. Kingsley, Bureau Chief,
Municipal Data Management and Technical Assistance Bureau
Joe Markarian, Director, Technical Assistance Section
Melinda Ordway, Senior Financial Management Analyst &Project Manager,
Technical Assistance Section
Tara Lynch, Financial Management Analyst, Technical Assistance Section
Maura O'Neil, Field Representative, Bureau of Accounts
Joanne Graziano, Chief, Bureau of Local Assessment
For this review, DLS staff interviewed and/or received information from the following local officials:
Mark Sideris, Town Council President Michael Driscoll, Town Manager
Steve Corbett, Town Councilor JoAnna Hand, Confidential Secretary
John Donohue, Town Councilor Marsha Osmond, Confidential Secretary
Susan Falkoff, Town Councilor Francis Golden, Assessor
Anthony Palomba, Town Councilor Joseph Malay, Assistant Assessor
Angeline Kounelis, Town Councilor Irene Frain, Clerk
Cecilia Lenk, Town Councilor Cleo Poravas, Clerk
Vincent Piccirilli, Town Councilor Phyllis Marshall-Hartman, Treasurer/Collector
Kenneth Woodland, Town Councilor Barbara White, Assistant Treasurer
Thomas Tracy, Town Auditor Kathleen Morrison, Parking Clerk
Sharon Gallagher, Assistant Auditor Kellie Connelly, Clerk
Patricia Bernier, Clerk Danielle Foley, Clerk
Joanne Johnson, Clerk Karen Norton, Clerk
Diane Ryan, Clerk Barbara Zuccala, Clerk
John T. Loughran, Director of Business Services Joseph Mahoney, IT Manager
Jennifer Atwood, Clerk Mitzi Philogene, Computer Systems Analyst
Kerrilyn Daley, Clerk Raeleen Parsons, Purchasing Agent
Charlene DeAngelis, Analyst Pamela McGoldrick, Purchasing Clerk
James Salvas, Grant Administrator Gerald Mee, DPW Superintendent
Jae Smith, Clerk Jay Pelletier, Water& Sewer Superintendent
Gayle McCracken, School Personnel Director John Perino, Supervisor
George Skuse, School IT Manager Mary Haley, Clerk
Gayle Shattuck, Town Personnel Director Frances Leonardi, Clerk
Maureen Aquilano, Administrative Assistant Lori Moran, Clerk
Town of Watertown 21 Acknowledgements