Follow-up Letter

March 1, 2010

Mr. Charles Benevento , Chairman
Amesbury Retirement Board
Town Hall
62 Friend Street
Amesbury , MA 01913

REFERENCE: Report of the Examination of the Amesbury Retirement Board for the three-year period from January 1, 2006 through December 31, 2008.

Dear Mr. Benevento:

The Public Employee Retirement Administration Commission has completed a follow-up review of the findings and recommendations contained in its audit report of the Amesbury Retirement Board for the most recent period referenced above. We conduct these visits as a regular part of the oversight process. They are designed to ensure the timely implementation of corrective action for the recommendations cited in that report. The examination addressed two specific findings and recommendations included in the audit report for the period referenced above. The results are as follows:

1. The Audit Report cited a finding that the term of the Board member appointed by the other members (fifth member) expired in January 2009 without the Board voting to reappoint him in the time allowed.

Follow-up Result: The Board contacted the mayor in order to fill the fifth member’s position. The member is now serving according to statute, and the administrator has put in place an automated calendar reminder to assure timely appointment for the next and following terms. This finding is resolved.

2. The Audit Report cited a finding that regular deductions were not being withheld from the annual clothing allowances negotiated in Amesbury police officers’ and fire fighters’ contracts. In PERAC’s opinion, these allowances met the definition of regular compensation pursuant to Chapter 32 of the Massachusetts General Laws in effect at the time of the audit. Subsequent passage of Chapter 21 of the Acts of 2009 provides that, if clothing allowances qualify as regular compensation in collective bargaining agreements adopted no later than May 1, 2009, they remain regular compensation through either the date a new contract becomes effective or June 30, 2012, whichever occurs first.

The Amesbury Police Officer’s Association contract expires June 30, 2011. The Amesbury International Association of Firefighters’ contract expired June 30, 2007, but a new contract has not yet been executed. Until a new contract is accepted, the existing contract remains in effect.

Follow-up Result: An examination of the July 17, 2009 payroll showed that deductions were not withheld from police officers’ and fire fighters’ clothing allowances. However, these deductions are still due the retirement system in order to be credited to members’ accounts.

The payroll office must withhold retirement deductions from the annual clothing allowance due to be paid the first week of July 2010 to Amesbury police officers and to Amesbury firefighters if the existing firefighters’ contract is still in force. If a new firefighters’ contract has been executed before then, the allowance will no longer qualify as regular compensation.

Clothing allowances payable to police officers and firefighters the first week of July 2011 will not qualify as regular compensation if new contracts have been adopted, but will continue to qualify if existing contracts remain in effect. In no case will clothing allowances qualify as regular compensation after June 30, 2012. This finding is not resolved.

The Commission wishes to acknowledge the effort demonstrated by the staff of the Amesbury Retirement Board to correct the deficiencies cited in the most recent examination of the system. PERAC auditors may conduct an additional follow-up visit to ensure appropriate progress is being made in those areas that have not been corrected adequately at this time.

We anticipate your continued cooperation in resolving this important matter.

Sincerely,

Joseph E. Connarton
Executive Director

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