PARIS — Selectmen are undecided how to use nearly $250,000 from overpayment to the state retirement system.
Town Clerk Liz Knox said Monday that the check for $247,012.35 was deposited. It was dated July 31, according to bookkeeper Paula Locke, who asked the town’s auditor, Bill Hall, to attend last week’s Board of Selectmen meeting to explain what’s going on.
Hall said that over a period of years during the 1990s some municipalities overpaid the state’s retirement system. Others weren’t as charged as much as they should have been and now have to pay up.
He said there are no restrictions on how the money is used and the state retirement system isn’t going to ask for it back.
He advised that there are two options for the money. The first is to establish retirement credit reserve account.
“Every year when you build your budget, in that budget you build an expense line for the town for its retirement costs,” he said. “You wouldn’t do this because you’d have this stash of money in a reserve account and you would use that.”
The second option is to post the revenue to the general fund and let it lapse into the undesignated fund balance. He said this is normally used to pay short-term bills for the town so it won’t be forced to borrow and pay interest.
“You could use your undesignated fund balance as a budgeting tool so your taxes wouldn’t increase as fast as it would if you didn’t have this undesignated fund balance,” Hall said. “If you do choose to use a lot of that money to offset the taxes in one year, make sure that next year there’s not something that’s going to pop up that now makes the tax base go even higher because (you) didn’t forecast capital projects.”
Hall said, “I tell selectboards it’s your job to make sure your townspeople are happy and things are budgeted properly and everything is all set,” Hall said. “I always tell them when you get a chunk of change . . . make sure you’re financially savvy with the money.”
Selectman Vic Hodgkins asked Hall what the town’s surplus balance should be.
Hall said a town the size of Paris should have between $800,000 or $900,000 to $1.2 million in reserves. When he did the 2014 audit, the town had around $820,000.