Above: Auditor Paul Dansereau addresses the Town Council Monday night.
By Elizabeth F. McNamara
It could have been a lot worse. That’s the takeaway from the fiscal year 2018 audit, which was completed earlier this month and officially presented to the Town Council Monday night.
While the final numbers show a $1.1 million deficit, that includes a $1.7 million legal judgment against the town that was not included in the budget.
The deficit was a combination of a $1 million deficit on the town side and a $169,506 deficit on the school side.
Finance consultant Mike D’Amico (brought in after the departure of both Finance Director Linda Dykeman and the dismissal of Town Manager Gayle Corrigan after the November election) was pretty spot on in terms of the town’s deficit (he’d put it at $986,000) but the school deficit came in $270,000 lower than he’d forecast. D’Amico said that was due to payment adjustments for health care premiums.
The audit, completed by Baxter, Dansereau & Assoc., a West Warwick firm that has been doing the town’s audit since 2011, took three months longer than the state-dictated six-month deadline of Dec. 31. (Find the audit here.)
“Obviously, there were circumstances that made it more difficult to get that done in a timely basis,” said auditor Paul Dansereau. The town was able to get an extension from the state Auditor General in light of staff changes (for the second year in a row).
Dansereau and D’Amico spoke at length in response to council questions about the town’s pension and OPEB (other post-employment benefits) liabilities.
The audit lists the town’s total pension liability at $46 million and its OPEB liability (which only this year must be listed in the audit) is $39 million.
“The OPEB liability is a very, very conservative number,” D’Amico said, based on a 3.5 percent rate of return. The pension liability number, alternatively, is based on a 7 percent rate of return.
Councilman Mike Donegan noted that OPEB liability is not like actual debt. “That’s a modeled obligation with a number of assumptions,” he said. “One change in our contract terms, we could make a significant change in the OPEB calculations.”