Dorchester’s County government has lost a key credit rating in the latest fallout from years of overdue financial audits that are only now becoming available.
Moody’s Investors Service late last week formally withdrew Dorchester’s credit rating when county officials failed to produce financials under a 30 day deadline. Moody’s cited the lack of information from Dorchester in wiping out its credit rating.
County Council President Lenny Pfeffer said Dorchester officials are engaged with Moody’s to try to fix the information. The county posted the oldest of the overdue audits, for fiscal year 2021, on its website Monday.
“We’ve instructed (Moody’s) that as soon as we receive the audits that are complete, we will make sure that they have that information,” Pfeffer said. “But in the meantime, we’ve sent them everything else that we could up to this point.”
With no credit rating, the county would be forced to pay much higher interest rates on any bonds or capital leases. The difference could be 12 to 15% higher than the desirable municipal bond rating it had enjoyed until now. That’s more taxpayer dollars going to pay for higher interest.
The lack of a credit rating also means a likely discount in the resale value of at least $30 million worth of bonds the county previously issued. S&P Global, another rating service, withdrew its rating for Dorchester in April.
The county government has failed to file legally required financial audits to the state since 2020. With the 2021 audit complete, the county is still overdue on the 2022 audit. The fiscal year 2023 audit is due by the end of October.
Officials previously cited high turnover in the finance department and a 2020 computer hack as reasons for the delay. But multiple extensions granted by the state last year had expired with no completed audit submitted. Pfeffer said the current delay is a matter of time auditors need to work.
“We’re at the mercy of the third party independent auditor, so we can only go as fast as they go,” Pfeffer said. “We’ve tried to supply as much information as personnel that they’ve asked for, but we’re still at their mercy.”
Pfeffer said at a council meeting September 5th that the audits were 99 percent complete and predicted the oldest missing report, for fiscal year 2021, would be ready in two weeks. The posting on Monday of the 2021 audit comes one day inside his prediction. Pfeffer said he expects progress will accelerate.
“FY21, since they had to translate a lot of data for the system that was lost and stuff that was put in incorrect or whatever, the new information going into 22 should go much faster,” he said.
The county can submit a fee to Moody’s to reevaluate a credit rating once it has the required financial reports finished. Moody’s did not indicate how long it could take to reestablish a credit rating after financial audits are delivered.
By Jim Brady of WHCP Community Radio