GREENFIELD — City Council was unable to approve 10 planned capital expenses after learning that the state Department of Revenue did not certify its free cash and retained earnings due to bookkeeping errors in the city’s Accounting Department and Treasurer/Collector’s Office.
Finance Director Stephen Nembirkow told councilors Wednesday night that the state would not be certifying Greenfield’s free cash or sewer and water retained earnings until an audit is completed and the books are balanced. Until this is done, City Council cannot approve any capital projects that would be paid for using those funds, so the council rescinded the votes taken last month to approve several capital expenses.
“We met with the DOR (Department of Revenue) this afternoon, and unfortunately, they are unable to allow us to move forward with that because they have not certified the retained earnings and free cash,” Nembirkow said. “This stems from an issue with the cash reconciliation between the Treasurer’s Office and the Accountant’s Office.”
Nembirkow explained that after the entire Finance Department resigned, the city hired new employees who did not have experience in municipal government, resulting in errors with documentation, transfers, payroll and vendor warrants.
In October 2024, city councilors had questioned the mayor about whether the city would be able to manage its finances effectively, given the loss of its more experienced staff. At the time, Treasurer Kelly Varner, Accountant Angelica Desroches and Finance Director Diana Parsons had all resigned in the months before.
“There was a six-month period where a lot of things that should have been done were not being done,” Nembirkow told councilors on Wednesday.
He said accounting errors could have resulted in discrepancies potentially worth millions of dollars. Before any further purchases can be made using the retained earnings, the city will need to find every transaction and ensure every penny is accounted for.
“I’m extremely concerned. I’m extremely concerned by the fact that it could be as high as a few million dollars, or it could be as low as someone overbooked several payroll warrants and counted them twice,” Nembirkow said. “Then that would be in the hundreds of thousands of lines of transactions. … No one stole any money. I’m 85% certain it’s a bookkeeping error.”
Nembirkow said new finance staff have been hired and trained, and systems are in place to prevent the issue from happening again in the future.
The city is looking to hire an auditor to reconcile the books, which Nembirkow said could cost approximately $150,000 and will take the rest of the summer, potentially into the fall.
The city had planned to use $937,000 of sewer and water retained earnings for repairs and upgrades at the Green River Pump Station, Water Pollution Control Facility and Millbrook Well, as well as to purchase vehicles, including a Chevrolet Equinox and a dump truck.
The $4.25 million fiscal year 2027 capital budget that city councilors had approved in May included 28 projects in all. The capital projects that the city had intended to pay for using stabilization accounts can still proceed as planned, including resurfacing the basketball court at the Green River Swimming & Recreation Area, purchasing a Ford F-250 for the Greenfield School Department and replacing the gutters at the Academy of Early Learning.
Mayor Ginny Desorgher said the city will have to look at the retained earnings projects to consider which ones are most urgently needed and may require the city to borrow money to complete, while waiting for the numbers to be certified. However, Nembirkow cautioned that until an audit is completed, the city’s ability to borrow may be impacted.
He added that the issue will only affect capital expenses, and will not impact the operating budget and daily functions of the city, but it will need to be resolved before December if the city wishes to proceed with borrowing any money for projects.
City councilors expressed frustration and said that while they were aware the free cash had not yet been certified and the city was working with the Department of Revenue, they were unaware of the accounting issues and wished they had been kept informed.
“I’m concerned about this,” Precinct 5 Councilor Marianne Bullock said. “As the chair of Ways and Means, I think this would’ve affected budget deliberations. I understand you had this conversation today with DOR, so we are receiving this information in real time. I think it’s going to be very important for us to receive updates on a monthly basis.”
“I was really thrown by this,” City Council President Lora Wondolowski said. “I’m a little bit angry that we didn’t get a heads-up sooner. … Our job as City Council is oversight. I think we have not had all the tools that we needed to be looking at the right thing.”
Desorgher said she had been under the impression that the Department of Revenue was going to certify the city’s retained earnings and free cash, and she had been surprised when it was not.
“It’s unfortunate that we can’t use it because there are things that are needed,” she said.
“I’m flabbergasted when I hear that you’ve been talking with DOR about this for months and we haven’t known about this,” said Precinct 1 Councilor Katherine Golub. “This isn’t transparency.”
Wondolowski said that at the next City Council meeting in July, she plans to make a motion requiring that the council be presented with information on budget expectations versus actual expenses, retained earnings and free cash on a quarterly basis.
“This really ties our hands,” Wondolowski said.
