[HISTORY: Adopted by the Board of Selectmen of the Town of Madison 10-9-1979; printed as last amended 4-12-1999. Subsequent amendments noted where applicable.]
Expenditures for overdrafts ordinance — See Ch. 53.
Editor's Note: An interim amendment to this policy was adopted 8-27-1991.
Said obligations of funds need not be approved by the Board of Selectmen provided the obligation of said funds will not exceed the total amount either appropriated or credited to said general fund accounts or cemetery fund. No Warrant Article "lump sum" appropriation may be overexpended by any amount without prior approval from the Board of Selectmen. Any employee who obligates public funds without prior permission will be subject to immediate discipline, up to and including dismissal. Any elected official who obligates public funds over the Warrant Article "lump sum" appropriation without prior permission will be subject to a financial assessment for the amount of the unapproved overdraft. The overdraft will be paid through payroll deductions from the elected official's paycheck.
Department heads shall be authorized to obligate funds appropriated or otherwise credited to their departmental account(s) provided the obligation of said funds will not exceed the total amount either appropriated or credited to said account(s) (as authorized by Town Meeting vote). The department heads shall exercise this right under the supervision and control of the Town Manager, except where local or state law indicates otherwise. The Town Manager and/or the Madison Board of Selectmen must approve all obligations exceeding line item recommended amounts (subject to the review criteria listed below).
The budget of the Town is prepared on a modified line basis. Expenditures during the year should follow as closely as possible the items identified in the budget document. The Board recognizes that unforeseen expenditures develop which result in the need to purchase additional items not itemized in the budget. Occasionally, circumstances arise in which items budgeted for can be deleted and the funds need not be obligated. Any obligation exceeding recommended line item appropriations in the published budget must receive approval from the Town Manager. The Town Manager must feel comfortable that the obligation of funds over the recommended amount will not cause a future need to overdraft the "lump sum" operations appropriation approved at Town Meeting. If the Town Manager does not feel that the obligation of funds is appropriate, he/she has the authority to veto the department head's decision. If the department head would like to pursue the matter further, the Town Manager will put the employee on the next agenda for the next regularly scheduled Selectmen's meeting. If the department head obligates said funds over the line item amount (without permission), he/she will be subject to discipline. No capital project will be overspent by any amount without prior approval from the Board of Selectmen. In most cases, because the capital project was approved by the voters as a Special Warrant Article, the overdraft will have to be "ratified" by a Town Meeting vote.
It is not uncommon to encounter an emergency situation that requires overdrafting an approved warrant article by drawing from "surplus" or a "general revenue" account. This is, by law, an unauthorized overdraft. When this occurs, the Board of Selectmen should prepare a Warrant Article for the next Town Meeting Warrant which very clearly seeks an appropriation of whatever sum of money was overdrafted for the purpose of covering the overdraft. If the Town Meeting refuses to authorize the overdraft, and one or more taxpayers want to press it in court, it is possible that a judge will order the municipal officers to repay the Town for the overdrawn amount out of their personal assets.
There are two exceptions to the general rule prohibiting overdrafts:
The Road or Highway Account (operational budget, not capital). 23 M.R.S.A. § 2705 allows an overdraft to occur in the road or highway account, provided the overdraft does not exceed 15% of the amount appropriated for that purpose. The Road Commissioner is authorized to incur this overdraft with the prior written consent of the majority of the Board of Selectmen. Even though the law allows up to a 15% overdraft, the Board of Selectmen are still required to include an Article in the next Town Meeting Warrant to cover the amount of the Highway Fund overdraft.
Any obligation of funds exceeding $1,500 per item may be submitted to competitive bidding. Competitive bidding procedures shall not apply when it appears after reasonable investigation that said service or supplies may be procured from only one source; or when an emergency exists and immediate procurement of services or supplies is essential; or when the nature of the service is such as not to be conducive to competitive bidding; or when derived benefits are expected to be less than the cost of preparing bid documents for services or supplies. All purchasing decisions over $1,500 will be clearly documented (i.e., list of vendors researched, quotes from vendors, elements that went into the purchasing decision, etc.) Documentation will be turned in to the Town Bookkeeper and kept on file until the financial audit for the fiscal year in which the item was purchased or the service retained has been completed by the auditors, and reviewed and approved by the Board of Selectmen. Bids may be required on other services or supplies, as the Board of Selectmen deems necessary. All aspects of all capital projects must go out to bid, unless decided otherwise by a majority vote of the Board of Selectmen at a regularly scheduled Selectmen's meeting.
The Madison Board of Selectmen shall retain the right to waive bid procedures when it is in the best interest of the Town to do so. The Board also directs that notice be placed in all "requests for proposals" that the Madison Board of Selectmen reserves the right to reject any and all bids and to waive all irregularities or informalities in any proposal. Should the Town not successfully negotiate a contract, the Town reserves the right to contract with the next lowest responsive and responsible bidder. All items placed out to bid shall have the contracts for said supplies and services awarded by the Madison Board of Selectmen or their designee. In awarding contracts, the Madison Board of Selectmen may consider responsible, responsive bidders who offer the best price and quality for their supplies, services, or equipment. The Board shall solicit and consider the recommendation of the Town Manager and (if relevant) the department head before awarding a contract or purchase.
Nothing in this policy shall negate the Board of Selectmen's responsibility to sign Warrants authorizing expenditure of funds.
No agent or official of the Town may enter into a contract for service for a period longer than one year unless approved by the Town Meeting. This should not be confused with employment contracts. The Board of Selectmen may enter into multiyear employment contracts. The term of office for appointed officials (except the Town Manager) is one year unless specified by contract (written or oral), ordinance, or charter (30-A M.R.S.A § 2601). Employees who are not officials (take no oath of office) usually serve on an indefinite basis unless otherwise stated. The Town Manager's term of office is indefinite unless otherwise specified by contract (30-A M.R.S.A § 2633, Subsection 1).
Services provided to the Town of Madison should be competitively bid every three years. These would include, but not limited to, such services as banking, waste disposal, recycling, mowing and care of Town-owned property. Bids for services and capital items over $10,000 will be reviewed and approved by the Board of Selectmen prior to acceptance.
Town Manager shall require the use of purchase orders to review all expenditures within all departments. All items in excess of $1,500 (in correlation with the bidding requirement of this policy) shall require a purchase order approved by the Town Manager prior to funds being obligated. Items under $1,500, and that fall within that year's recommended line-item budget, are subject to purchase order, yet the purchase orders shall be housed within the department in order to "streamline" procurement. Copies of the purchase orders shall be turned into the Town Bookkeeper at the same time as payroll time cards each week.
Department heads do not need to submit purchase orders for operational expenditures such as utilities, payroll, benefits, and as determined by the Town Manager.
The Town Manager is instructed to send notice to all vendors (on the Federal 1099 vendor list) in the month of January to require department heads to submit a purchase order when purchasing or obtaining services.