Open ledgers ensure transparency in Paris

PARIS — Paris is undergoing an enormous change this year, but, to most residents, it will be an invisible one.

That's because the change will be enshrined in accountancy documents, and bookkeeping procedures, the types of dry topics that often escape public notice.

Dry they may be, but town leaders predict that they will revolutionize the way that Paris leaders think of their money.

Traditional fiscal practices have led to charges of dishonesty and inconsistency, charges which often stem from apparent misunderstandings about what rules apply to the daily transactions of the town.

"This will be a huge advance toward more transparency," said Selectman Ted Kurtz.

Put simply, the old accounting system emphasized where money came from, while the new accounting system emphasizes how the money can be spent.

The new process was first implemented in June, and its effects will be most obvious after a full year has elapsed.

"Next year, if all goes as planned, we will have a much better handle on the town's finances during the year than we have had in the past," said Kurtz.

Another important feature of the changeover is that, due to new federal requirements, Paris will now be using the same accounting procedures as every other town in the country. This means that expenditures and revenues can be easily measured against those of other municipalities.

For the first time, Paris will be able to easily compare its plowing costs, for example, with those of comparable towns, an important step in learning how to identify and emulate the most efficient municipal systems in the state.

"One purpose is to put all towns nationwide on the same reporting footing," said Kurtz. "Then, from a local perspective, we can compare Paris with Norway, and will not be comparing apples to oranges."

All town assets are now being classified in one of five different categories. These include Non-spendable (such as a building or vehicle);  Restricted (such as a government grant given with the condition that it be spent on a specific item); Committed (such as tax monies that have been earmarked for a specific purpose by town meeting); Assigned (money which is intended for a specific purpose by the town manager or the board), and Unassigned, which applies to everything else.

The change comes at a time when members of the board have begun questioning any purchase that seems like it might not have followed proper procedure.

The golf cart

A recent example is the purchase of a golf cart by the Paris Police Department, when a perceived $291 price discrepancy demonstrated that the town manager, departments heads, and select persons are not on the same page when it comes to financial procedure.

"Believe me," said Town Manager Phil Tarr at one point, speaking about purchasing policies. "It's all over the place."

Police Chief Dave Verrier appeared at a meeting of the board in early November to request that the town accept a grant in the amount of $1,608 dollars in order to purchase a golf cart. The cart is to be used to patrol a recently-finished walking path on SAD 17 school grounds.

At the time, board members questioned Verrier on whether additional, recurring revenues would be needed to support the golf cart. Verrier said that there would be no other expenditures needed in the carrying out of the golf cart's patrols.

Two weeks later, Verrier appeared again, and was blasted by members of the board, who had since learned that the sticker price of the golf cart was actually $1,899, and that a purchase order had been signed by Verrier without formal approval by the board.

The board withheld approval of the expenditure, pending further investigation.

"I came walking away from that meeting feeling that we had just spent $1,608 out of a grant that was earmarked for this golf cart," said Selectman Lloyd Herrick. "Then I finally find out through the warrant that, in fact, it wasn't $1,608, that it was $1,899, almost $1,900."

"So I guess either I didn't ask the right questions, or you weren't forthcoming on the information about above and beyond the $1,600," said Herrick.

Verrier indicated that he was confused about what, exactly, he had been asked to talk about at the prior meeting.

"I was asked, by the town manager, that you were just going to approve receiving the grant. That was it," said Verrier. "I wasn't really discussing with you guys the purchase of the whole golf cart."

The debate demonstrates an underlying issue about the lack of clear, universally applied financial procedures.

"The extra money that I had was coming out of a forfeiture account, which isn't in my budget," said Verrier.

"Well it may not be in the budget, chief, but it still has to have authorization for expenditure by the board of selectmen here," said Herrick.

"Right," responded Verrier. "I guess there was miscommunication. Again, I didn't know that that had to happen."

Department purchases

Kurtz was concerned about the fact that the purchase order had been signed by Verrier on October 30, before he had appeared before the board the first time.

"Is it normal for a department head in the town of Paris to sign a purchase order with a vendor for a specific item at a specific price without checking with you first?" he asked Tarr. "Is that a normal procedure?"

"It's not normal, but I would tell you that the purchasing system in the town of Paris leaves a lot to be desired," said Tarr.

When pressed by Kurtz, Tarr said that "usually, [on] capital items, they talk to me first."

"What items would they sign without talking to you first?" asked Kurtz.

"General operating expenses," said Tarr. "Like I said, it's inconsistent, so one person would say, 'I've got this part I have to buy for one of my trucks, I have a choice to buy a new one or a used one or rebuilt one, what should I do?' Someone else will come in and say, 'I've got to put a set of tires on a dump truck. Here are my plans."

Tarr added that he did have general knowledge about the purchase of the golf cart.

"David and I have had conversations on this two or three times," said Tarr. "I knew he was doing it. I knew that the grant had been awarded."

The issue raises the question of how much autonomy departments heads should have in expending funds.

Kurtz said that Tarr should have known the total cost of the vehicle.

"I think that a department head that spends almost $2,000 on a capital acquisition should have a conversation with the town manager first ... so that the town manager understands exactly what the parameters are, and then could come to a meeting of the board ... and be fully knowledgeable."

Kurtz then pressed Tarr, after which Tarr admitted that this had not happened with the purchase of the golf cart.

After the meeting, Tarr said that the issuance of a purchase order is different from the expenditure of taxpayer money.

"It is a common practice for a department head to issue a purchase order prior to the purchase," said Tarr. "The order is referred to our finance department to assure that funds are available to make the purchase. The order is then attached to the invoice when the invoice comes in. In the case of the golf cart, the purchase order was written, but not issued to the vendor, pending acceptance of the grant by the selectmen."

New purchasing policy

Tarr said that the town is in the process of drafting a new comprehensive purchasing policy that will help to eliminate the inconsistencies in common practice.

"We have before the Policy and Procedures committee, about 75 percent done, a comprehensive purchasing policy, which places restrictions on who can spend what and how much, at what time does it require board approval, and it's a very sequentially-constructed document that I think we need."

Tarr said that the new process would have prevented the golf cart debacle from happening.

"I think the question now is whether that should have come to me first," said Tarr. "Under the new plan it would have, but we didn't have the new plan in place."

"Past practice has been for department heads to have limits on their spending authority, for example $500, and the manager has a limit of $3,000," said Tarr. "I have not found any reference to where the selectmen would become involved in the process except for an over-the-limit $3,000, and the vote to accept a grant."

"The current board wants more involvement in financial matters," said Tarr. "It appears that they will reserve for themselves the right to approve all expenditures from reserve accounts, grant accounts and capital accounts."

"This is fine as long as it is clearly articulated, which the emerging purchasing policy will do," said Tarr. "However, it is still a couple of months away from a final version."