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2008 Comprehensive Annual Financial Report (PDF)
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the fiscal year ended
June 30, 2008Source page 2
On the cover:
New signage welcoming visitors to the revitalized Canton Center
The newly reconstructed Canton Center features welcome signs, brick sidewalks, historic street lights, pedestrian
benches and newly planted trees and shrubs.Source page 3
Town of Canton, Massachusetts
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2007 through June 30, 2008
Prepared by the Finance DepartmentSource page 4
TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2008
TABLE OF CONTENTS
Introductory Section.................................................................................................................................................1
Letter of Transmittal ................................................................................................................................................1
Organizational Chart ...............................................................................................................................................6
Principal Officials.....................................................................................................................................................7
Certificate of Achievement for Excellence in Financial Reporting ..........................................................................8
Financial Section ......................................................................................................................................................9
Independent Auditors’ Report .................................................................................................................................9
Management’s Discussion and Analysis ..............................................................................................................11
Basic Financial Statements...................................................................................................................................20
Statement of Net Assets....................................................................................................................................21
Statement of Activities.......................................................................................................................................22
Governmental Funds – Balance Sheet .............................................................................................................24
Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the
Statement of Net Assets .................................................................................................................................25
Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances ....................26
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities .......................................................................................27
Proprietary Funds – Statement of Net Assets...................................................................................................28
Proprietary Funds – Statement of Revenues, Expenses and Changes in Fund Net Assets............................29
Proprietary Funds – Statement of Cash Flows .................................................................................................30
Fiduciary Funds – Statement of Fiduciary Net Assets ......................................................................................31
Fiduciary Funds – Statement of Changes in Fiduciary Net Assets...................................................................32
Notes to Basic Financial Statements ....................................................................................................................33
Required Supplementary Information ...................................................................................................................59
Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual .60
Retirement system schedule of funding progress.............................................................................................62
Retirement system schedule of employer contributions ...................................................................................63
Notes to Required Supplementary Information.....................................................................................................64
Combining Statements..........................................................................................................................................66
Nonmajor Governmental Funds ........................................................................................................................67
Internal Service Funds ......................................................................................................................................78Source page 5
Fiduciary Funds.................................................................................................................................................82
Statistical Section...................................................................................................................................................85
Net Assets by Component – Last Six Fiscal Years ..............................................................................................86
Changes in Net Assets – Last Six Fiscal Years....................................................................................................87
Fund Balances, Governmental Funds – Last Ten Fiscal Years ...........................................................................88
Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years........................................................89
Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates –
Last Ten Fiscal Years.........................................................................................................................................90
Principal Taxpayers – Current Year and Nine Years Ago ....................................................................................91
Property Tax Levies and Collections – Last Ten Fiscal Years .............................................................................92
Ratios of Outstanding Debt and General Bonded Debt – Last Ten Fiscal Years.................................................93
Direct and Overlapping Governmental Activities Debt..........................................................................................94
Computation of Legal Debt Margin – Last Ten Fiscal Years ................................................................................95
Demographic and Economic Statistics – Last Ten Fiscal Years ..........................................................................96
Principal Employers (Excluding Town) – Current Year and Nine Years Ago .......................................................97
Full-time Equivalent Town Employees by Function - Last Ten Fiscal Years........................................................98
Operating Indicators by Function/Program – Last Ten Fiscal Years ....................................................................99
Capital Asset Statistics by Function/Program – Last Ten Fiscal Year................................................................100Source page 6
Introductory Section
A picturesque view of historic Prowse Farm, Meditech, Inc., and Ponkapoag Pond (left rear). In Colonial times,
Doty Tavern was located at Prowse Farm and was the site of the drafting of the Suffolk Resolves. Paul Revere
took the Resolves to the Continental Congress in Philadelphia where they were used as the basis of the
Declaration of Independence.Source page 7
Introductory Section Letter of Transmittal December 10, 2008 To the Honorable Selectmen and Citizens of the Town of Canton: At the close of each fiscal year, state law requires the Town of Canton to publish a complete set of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the Town of Canton, Massachusetts, for the fiscal year ending June 30, 2008 for your review. The report is designed to be used by the elected and appointed officials of the Town and others who are concerned with its management and progress such as bond analysts, banking institutions and rating agencies as well as the residents and taxpayers of Canton. This report consists of management’s representations concerning the finances of the Town of Canton. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh their benefits, the Town of Canton’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The Town of Canton’s financial statements have been audited by Powers & Sullivan, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Canton for the fiscal year ended June 30, 2008, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town of Canton’s financial statements for the fiscal year ended June 30, 2008 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town of Canton was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal Town of Canton, Massachusetts 1 Comprehensive Annual Financial Report
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requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Canton’s separately issued Reports of Federal Award Programs. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Canton’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town Canton was incorporated as a Town in 1797. The Town is located in eastern Massachusetts, approximately 18 miles southwest of Boston, has a population of approximately 21,000 and a land area of approximately 19 square miles. It is situated at the junction of Interstates 95 and 93, with access to Route 24, providing an excellent location for residents, businesses and commuters. The Town has a rich and varied industrial heritage, serving as the location of Paul Revere’s copper rolling mills in post-Colonial times, and as the site of rubber, chemical and woolen manufacturing in more recent times. Present commercial enterprises play a key role in the Town’s fiscal stability and are considered a major asset to the community. The prime commercial areas are well located so as to allow direct highway access without affecting the community’s small town charm. Many of the Town’s lakes, ponds and wetlands have been protected and preserved for present enjoyment and future generations. Among the protected areas are the Eleanor Cabot Bradley Reservation, an 82 acre estate that blends open fields, woodlands and gardens in the shadow of Great Blue Hill and Pequitside Farm, a town- owned 38 acre conservation and recreation area which offers playing fields, picnicking, hiking and cross country skiing. The Town offers a full range of traditional municipal services including police and fire protection, ambulance and rescue services, education, maintenance of streets and infrastructure, solid waste collection and disposal, health and human services, cultural and recreational, administrative and financial services. The Town is a member community of the Massachusetts Water Resources Authority (MWRA) for its water and sewer services. Canton prides itself on its quality school system. Canton students consistently perform well on national and state tests and over 97% of students graduating from the high school go on to higher education. The Town is the location of the Blue Hills Regional Technical School which provides expanded vocational education opportunities for high school students of Canton and eight other area communities. Canton is also home to one of the two campuses of Massasoit Community College. The campus is a multi-level facility with specialized labs and art studios that support the technical and visual arts programs of the College. The campus also includes the Milton Art Museum, Akillian Gallery and the College’s Professional Development Center. The Town has reached its 10% affordable housing requirement mandated by the Commonwealth of Massachusetts (Commonwealth), which is an important milestone as communities under the 10% threshold are subject to an appeals process that can overturn local zoning board decisions. This will allow the Town to maintain its commitment to developing much needed affordable housing units in areas of the Town that can accommodate the growth. The Town operates under the Selectmen, Town Administrator, and Open Town Meeting form of government. The five elected Selectmen make policy decisions, and the Town Administrator is responsible for carrying out the policies of the Selectmen and for managing the day-to-day operations of the Town. The policies and procedures Town of Canton, Massachusetts 2 Comprehensive Annual Financial Report
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of the Board of Selectmen are detailed in the Administrative Code that will continue to evolve and be created over time to best serve the community. An elected, five-member School Committee appoints a School Superintendent who administers the public school system of the Town. School Committee members, like the Selectmen, are elected at-large to three-year staggered terms. An annual operating budget is approved by Town Meeting two months prior to the start of the fiscal year. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government) and department (e.g. finance) allowing the department heads to allocate resources within the department as they see fit. Transfers between departments, however, need special approval by Town Meeting unless specifically exempted by state statute. Factors Affecting Economic Condition The Town maintains a strong commercial tax base which represented 22.4% of the total assessed property value in 2008. Market value per capita is approximately $200,000 and the Town’s per capita income is significantly higher than the state average, which adds to the fiscal strength of the community. Through proactive measures by Town management the Town has been able to attract and retain several large international companies such as Reebok International, LTD and Dunkin’ Brands, Inc. Recently, Organogenesis, Inc. announced that it was remaining in Canton by expanding its global headquarters, research and development labs and manufacturing facilities in a campus that will occupy over 250,000 square feet. Organogenesis, Inc., the world leader in regenerative medicine, was enticed to remain in Canton with $12.9 million in incentives as part of the Commonwealth’s $1 billion Life Sciences Initiative. The Board of Selectmen and the local Economic Development Committee (EDC) are committed to negotiating Tax Incremental Financing (TIF) agreements that enhance the Town’s tax base. A formal TIF policy has been published to provide consistent and rational evaluation criteria to better support the investment in terms of reduced taxes to the Town in exchange for promoting commercial development. Both the Selectmen and the EDC were also instrumental in developing a series of internet based presentations to encourage Canton as an attractive business destination and also a comprehensive guide to assist business with local permitting processes. The Commonwealth has pledged approximately $3,050,000 in roadway and sidewalk improvements along Route 138 and Dan Road for efficiency and safety reasons, in an area of importance for economic development. The majority of funds from a $3,400,000 grant from NSTAR have also been earmarked for further roadway and infrastructure improvements along Route 138. The Town was recently ranked 5th out of 351 municipalities by the Massachusetts High Technology Council’s MassTrack program. MassTrack was created to measure the support of state and local officials for the priorities of the technology economy, including supporting technology development and growth. One of the main factors in attaining this ranking was the Town’s adoption of the Massachusetts General Law (MGL) Chapter 43D expedited permitting law that allows Town Meeting to designate targeted developments for a streamlined permit review process. As part of adopting this legislation, a Permit Advisory Committee was also formed to bring together the key permit granting departments to assist the proponent of the commercial development through the permitting process. The Town also utilized a $150,000 state grant to purchase permitting software and to contract with a permit specialist to assist with implementing streamlined permitting procedures. The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden by a majority vote at a Town election. While revenue increases have been limited in recent years fixed costs, including health insurance and pension costs, have increased substantially. Town management has been able to work in partnership with the Town’s employee unions to negotiate health insurance changes that continues to net the Town cost savings of approximately $1,000,000 annually and to agree to fiscal year 2008 contracts that contained no salary increases. In a further effort to reduce fixed costs, the Town accepted the Town of Canton, Massachusetts 3 Comprehensive Annual Financial Report
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provisions of MGL Chapter 32B, section 18, which is a state statute requiring all Medicare-eligible retirees who are currently on self-insured plans to move to a Medicare supplement plan. It is estimated that this will save the Town approximately $300,000 annually. However, despite the best efforts of Town management to reduce expenses the Town entered fiscal year 2008 faced with a $2,400,000 budget shortfall. While $500,000 of reserves and $150,000 of new revenues were utilized to offset the shortfall, the schools and municipal departments endured budget cuts of $1,235,000 and $515,000, respectively. The cuts resulted in increased class sizes and student fees, reduced crossing guard coverage, temporary suspension of the Town’s second ambulance, and other service reductions. With the prospect of further service cuts in future years, Town management supported a $4.5 million Proposition 2 ½ tax override that was ultimately approved by Town Meeting and the voters. This vote gave the Town additional spending capacity of approximately $1.9 million in fiscal year 2009 that allowed for restoration of the budget cuts suffered in prior years. The Town still has an additional $800,000 in spending capacity from the override that is currently planned to be utilized by fiscal year 2011. When fully phased in, the cost to the average residential homeowner will be approximately $450 annually. Another positive outcome of the Proposition 2 ½ tax override was the upgrade of the Town’s Standard and Poor’s bond rating from ‘AA+’ to ‘AAA’, their highest rating given. The override and the resulting revenue flexibility to restore lost services and stabilize budgets through fiscal year 2012 were cited as prominent factors in the upgrade. Standard and Poor’s also cited the Town’s strong wealth and income levels in addition to strong reserve levels and financial management policies. The Town is one of only 16 communities in the state to currently hold the Standard and Poor’s ‘AAA’ bond rating. As the Town moves forward, the effects of the nationwide recession can not be avoided. Although the Commonwealth has spared municipalities from any cuts in local aid thus far in fiscal year 2009, it is a near certainty that cuts will be seen in fiscal year 2010 and beyond. While many cities and towns are bracing for severe service cuts that will result from this loss of state aid, the Town is well-positioned to weather this economic downturn. The revenue flexibility from the Proposition 2 ½ override and better than estimated growth in the tax base during fiscal year 2009, should allow the Town to balance its budget while maintaining current service levels in the near term. Capital Financing As part of the annual budget process, the Capital Planning Committee (CPC) recommends the capital budget for the upcoming year and prepares a five-year plan to address the long-term capital needs of the Town. The capital spending plan for the five year period from fiscal year 2009 through fiscal year 2013 has an estimated cost of $43,082,000, with $4,485,000 to be funded from estimated revenues and reserves and the remainder to be funded from grants and the issuance of bonds. The CPC’s capital plan has allocated $4,095,000 for municipal departments, $4,568,000 for the school department, $9,894,000 for the water enterprise fund, $24,275,000 for the sewer enterprise fund, and $250,000 for the rink enterprise fund. The Town funds a portion of its annual capital plan on a pay-as-you-go basis through recurring revenues. The target set aside is 6% of recurring revenues; however, largely to recent decreases in state aid, the Town has lowered the set aside for the past five fiscal years. During fiscal years 2006 and 2007, the Town received approximately $18,000,000 and $1,300,000, respectively, from the Commonwealth as a partial reimbursement for the renovation of Canton High School. The Commonwealth reimburses the Town for 61.3 percent of the cost of the project including principal and interest costs on debt issued. The remaining reimbursement of approximately $7,400,000 is expected to be received in fiscal year 2009. Town of Canton, Massachusetts 4 Comprehensive Annual Financial Report
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Major Initiatives Town Meeting has approved the construction of two water treatment facilities at a cost of approximately $13,500,000 to improve water quality and utilize more local sources of water. Also, $7,000,000 in sewer improvements were approved to reduce MWRA assessments for sewer treatment and to reduce outflows. The cost of these projects is being funded entirely from utility rates and fees. Work is nearing completion on a comprehensive reconstruction of its Town center. The project is being funded from approximately $2,700,000 in Public Works Economic Development (PWED) grant funds and $1,600,000 in Chapter 90 and other highway appropriations from the Commonwealth. State funds will be used to make infrastructure improvements including relocating overhead wiring underground, adding new concrete and brick sidewalks, trees, historic lighting and signage. This project is expected to be completed during fiscal year 2009 and will aid in the economic revitalization of Canton center as well as provide for more open space and the general beautification of the area. Town management is continuing its efforts to assist in the redevelopment of the 42-acre Plymouth Rubber Company property. This is an important property to the Town as it occupies a location near Canton center and is adjacent to approximately 300 acres of land that includes three local ponds. The Board of Selectmen has made site cleanup and managing the water rights surrounding the property top priorities. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Canton for its comprehensive annual financial report for the fiscal year ended June 30, 2007. This was the second year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The publication of this CAFR represents an important achievement in the ability of the Town of Canton to provide enhanced financial information and accountability to its citizens, elected and appointed officials, and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department, and in particular, Town Accountant Paul Gargano. Special thanks also go to the public accounting firm of Powers & Sullivan for their advice and assistance in the preparation of this report. Respectfully submitted, William T. Friel James R. Murgia Town Administrator Finance Director Town of Canton, Massachusetts 5 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts Comprehensive Annual Financial Report TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Blue Hills Board of Regional Library of Assessors School Trustees District Board of Selectmen. Appointed Multiple Member Bodies Town Clerks Board Board Town School Board Planning Meeting Committee of Health Board of Selectmen Office -Register of Voters -Comm. on Disability -Zoning Board.of Appeals -Water/Sewer Rate Policy Commission -Youth Commission -Historical Commission -Fair Housing Committee -Cable Advisory Committee -Beautification Committee -Conservation Commission -Council on Aging -Industrial Develop. Financing Authority -Local Emergency Planning Committee -Traffic Study Committee -Industrial Development Commission Town School Director Town Town Town Director of Canton Library Moderator | | Superintendent || Public Health Planner Clerk Administrator Assessing Representative Director Finance a a Committee Executive TownCounsel -— Assistant Personnel I Town Planner Administrative Secretary Sealer of Weights| $$ and Measures Secretary Committee Veteran’s Building Police Fire Dept. of Human Zoning Maintenance Becenenl . Resource 5 tx Departament one ‘Deparimant P — — Works Department on Aging Department ——— at I Building Veteran’s Building Police Fire Buperintendent] Human Finance COA Animal Recreation | | Conservation poe . 3 A of Resource 3 7 Control “ Commission Commissioner] | Director | Superintendent Chief Chief Public Works | |Administrator| | Ditector Director Officer Director a a a Department | | Council Animal Recreation | | Conservation of Finance Control Agent 0 rganiza ionalC hart [Original embedded text, retained for comparison] Organizational Chart Town of Canton, Massachusetts 6 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts
Principal Officials
Board of Selectmen
John J. Connolly, Chair
Avril T. Elkort, Vice Chair
Gerald A. Salvatori Jr., Clerk
Robert E. Burr Jr.
Victor D. Del Vecchio
Town Administrator – William T. Friel
Finance Director – James R. Murgia
Town Accountant – Paul W. Gargano
School Superintendent – Dr. John D’Auria
School Business Administrator – Kenneth Leon
Police Chief – Kenneth N. Berkowitz
Fire Chief – Thomas J. Ronayne III
DPW Superintendent – Michael T. Trotta
Town of Canton, Massachusetts 7 Comprehensive Annual Financial ReportSource page 14
Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Canton Massachusetts For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2007 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. CPB atin DS, Corse President Wy © bw Executive Director Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report [Original embedded text, retained for comparison] Certificate of Achievement for Excellence in Financial Reporting Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report
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Financial Section A cross country skier enjoys the day at the Ponkapoag Golf Course.
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Financial Section Independent Auditors’ Report To the Honorable Board of Selectmen Town of Canton, Massachusetts We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of and for the fiscal year ended June 30, 2008, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Canton, Massachusetts' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2008, on our consideration of the Town of Canton, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The combining fund statements, as listed in the table of contents, are presented for the purpose of supplementary analysis and are not a required part of the financial statements of the Town of Canton, Massachusetts. Such supplementary information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. Town of Canton, Massachusetts 9 Comprehensive Annual Financial Report
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Management’s discussion and analysis, located on the following pages, and the schedule of revenues, expenditures and changes in fund balance – general fund – budgetary basis, the retirement system’s schedule of funding progress and schedule of employer contributions, located after the notes to the financial statements, are not a required part of the basic financial statements but are supplementary information required by accounting principals generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. December 10, 2008 Town of Canton, Massachusetts 10 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis Town of Canton, Massachusetts 11 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis As management of the Town of Canton, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2008. This is the sixth year our financial statements have been prepared under the Governmental Accounting Standards Board Statement Number 34 – Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. We encourage readers to consider the information presented in this report. The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides guidance on how to prepare financial statements in conformity with generally accepted accounting principals (GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to establish consistent reporting standards for all governments in the United States. This consistent application is the only way users (including citizens, the media, legislators and others) can assess the financial condition of one government compared to others. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Canton’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to private-sector business. The statement of net assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, education, public works, human services, culture and recreation, and interest expenditures. The business-type activities include the water, sewer, and skating rink activities. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Town of Canton, Massachusetts 12 Comprehensive Annual Financial Report
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Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Canton adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town maintains two types of propriety funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water, sewer, and skating rink activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among various functions. The Town uses internal service funds to account for health claims, workers’ compensation, unemployment claims, and building insurance activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government- wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Town of Canton, Massachusetts 13 Comprehensive Annual Financial Report
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Government-wide Financial Analysis
Governmental Activities
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For
governmental activities, assets exceeded liabilities by $81 million at the close of fiscal year 2008. The overall
financial condition of the Town’s governmental activities improved during fiscal year 2008.
Governmental net assets of $51.3 million (64%), reflects its investment in capital assets (e.g., land, buildings,
machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The
Town uses these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the investment in its capital assets is reported net of its related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
An additional portion of the net assets $4.4 million (5%) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets $25.3 million, (31%) may
be used to meet the government’s ongoing obligations to citizens and creditors.
The governmental net assets increased by $2.4 million during the current fiscal year which is primarily due to $2.3
million in capital grants. The governmental expenses totaled $73.7 million of which $20.8 million (28%) was
directly supported by program revenues. General revenues and transfers totaled $55.3 million, primarily coming
from property taxes, motor vehicle excise, non-restricted state aid and other miscellaneous charges.
Condensed financial data for fiscal years 2008 and 2007 is presented below.
Balance at Balance at
June 30, June 30,
2008 2007
Assets:
Current assets……………………………………… $ 35,034,017 $ 33,055,867
Noncurrent assets (excluding capital)…………… 9,610,280 10,085,435
Capital assets………………………………………… 98,668,035 98,491,403
Total assets……………………………………… 143,312,332 141,632,705
Liabilities:
Current liabilities (excluding debt)………………… 8,035,765 7,087,098
Noncurrent liabilities (excluding debt)……………… 1,228,354 1,345,400
Current debt………………………………………… 8,605,020 8,170,020
Noncurrent debt……………………………………… 44,465,045 46,473,065
Total liabilities…………………………………… 62,334,184 63,075,583
Net Assets:
Capital assets net of related debt………………… 51,291,396 50,777,183
Restricted…………………………………………… 4,432,975 3,824,685
Unrestricted…………………………………………… 25,253,777 23,955,254
Total net assets………………………………… $ 80,978,148 $ 78,557,122
Town of Canton, Massachusetts 14 Comprehensive Annual Financial ReportSource page 22
Year Ended Year Ended
June 30, June 30,
2008 2007
Program revenues:
Charges for services………………………………… $ 5,322,763 $ 4,883,968
Operating grants and contributions………………… 13,251,876 12,582,237
Capital grants and contributions…………………… 2,251,419 1,011,723
Total program revenues……………………… 20,826,058 18,477,928
General Revenues:
Real estate and personal property taxes………… 46,074,751 45,318,005
Tax liens……………………………………………… 204,174 137,473
Motor vehicle excise taxes………………………… 3,622,335 3,364,215
Penalties and interest on taxes…………………… 188,163 206,817
Payments in lieu of taxes…………………………… 191,827 160,827
Nonrestricted grants and contributions…………… 2,974,443 3,607,674
Unrestricted investment income…………………… 909,900 955,736
Miscellaneous revenues…………………………… 189,784 198,983
Total general revenues………………………… 54,355,377 53,949,730
Total revenues………………………………… 75,181,435 72,427,658
Expenses:
General government………………………………… 5,142,280 4,365,873
Public safety………………………………………… 12,501,298 12,151,151
Education…………………………………………… 45,669,483 42,723,738
Public works………………………………………… 5,002,096 4,267,313
Human services……………………………………… 810,319 850,334
Culture and recreation……………………………… 2,498,364 2,397,635
Interest………………………………………………… 2,105,670 2,654,749
Total expenses………………………………… 73,729,510 69,410,793
Excess before transfers……………………………… 1,451,925 3,016,865
Transfers………………………………………………… 969,101 907,569
Change in net assets………………………………… $ 2,421,026 $ 3,924,434
Town of Canton, Massachusetts 15 Comprehensive Annual Financial ReportSource page 23
Business-type Activities
The Town’s business-type activities include water, sewer, and skating rink services. They are self-supporting and
each fund maintained their financial condition in fiscal year 2008.
Business-type water net assets of $7.4 million (77%) represent the investment in capital assets while $2.3 million
(23%) is unrestricted. Net assets increased by $792 thousand which is the result of rates being set to fund debt
service cash payments and to match the primary objective of the fund where rates cover the cost of operations.
Business-type sewer net assets of $6.3 million (70%) represent the investment in capital assets while $2.7 million
(30%) is unrestricted. Net assets increased by $237 thousand which is the result of rates being set to fund debt
service cash payments, and a $40 thousand capital contribution to match the primary objective of the fund where
rates cover the cost of operations.
Business-type rink net assets of $212 thousand (72%) represent the investment in capital assets while $81 (28%)
is unrestricted. Net assets decreased by $64 thousand on revenues of $354 thousand. The decrease is equal to
the indirect costs charged to by the general fund.
At the end of the current fiscal year, the business-type activities were able to report positive balances in all
categories of net assets. The same situation held true for the prior fiscal year.
Condensed financial data for fiscal years 2008 and 2007 is presented below.
Balance at Balance at
June 30, June 30,
2008 2007
Assets:
Current assets……………………………………… $ 8,595,910 $ 6,470,838
Noncurrent assets (excluding capital)…………… 38,895 42,456
Capital assets………………………………………… 24,553,886 23,613,058
Total assets……………………………………… 33,188,691 30,126,352
Liabilities:
Current liabilities (excluding debt)………………… 411,260 310,825
Noncurrent liabilities (excluding debt)……………… 80,000 78,000
Current debt………………………………………… 4,890,420 3,803,720
Noncurrent debt……………………………………… 8,765,035 7,857,055
Total liabilities…………………………………… 14,146,715 12,049,600
Net Assets:
Capital assets net of related debt………………… 13,948,369 11,952,283
Unrestricted…………………………………………… 5,093,607 6,124,469
Total net assets………………………………… $ 19,041,976 $ 18,076,752
Town of Canton, Massachusetts 16 Comprehensive Annual Financial ReportSource page 24
Year Ended Year Ended
June 30, June 30,
2008 2007
Program revenues:
Charges for services - Water……………………… $ 5,148,323 $ 4,308,918
Charges for services - Sewer……………………… 5,159,490 4,491,655
Charges for services - Rink………………………… 356,953 370,110
Capital grants and contributions…………………… 39,941 46,294
Total revenues………………………………… 10,704,707 9,216,977
Expenses:
Water………………………………………………… 3,769,301 3,570,802
Sewer………………………………………………… 4,643,878 4,202,101
Rink…………………………………………………… 357,203 344,198
Total expenses………………………………… 8,770,382 8,117,101
Excess before transfers……………………………… 1,934,325 1,099,876
Transfers………………………………………………… (969,101) (907,569)
Change in net assets………………………………… $ 965,224 $ 192,307
Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing financing requirements. In
particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year.
The General Fund is the chief operating fund. At the end of the current fiscal year, unreserved fund balance of
the general fund was $4.8 million, while total fund balance was $5.5 million. Reservation of Fund Balance for
Encumbrances and Continuing Appropriations totaled $689 thousand and $900 thousand was designated for
amounts voted to be used in fiscal year 2009. Unreserved fund balance represents 7.1% of total general fund
expenditures, while total fund balance represents 8.1% of that same amount. The General Fund’s fund balance
decreased by $342 thousand which was expected as the budget was balanced by using prior year reserves.
The High School Construction Fund is accounting for a $40.4 million project that has been completed in fiscal
year 2008. The Massachusetts School Building Authority has awarded the Town a capital grant equal to 61.3% of
allowable costs and short-term interest with a final payment of $4.5 million expected to be received in fiscal year
2009. During fiscal year 2008, very little activity occurred and at June 30, 2008 the fund balance was $418
thousand.
The Roadway Improvement Fund accounts for the Town’s activity related to State funded roadway construction
projects. Temporary notes are used for cash flow purposes to fund the expenditures until the State grants are
received.
Town of Canton, Massachusetts 17 Comprehensive Annual Financial ReportSource page 25
General Fund Budgetary Highlights
The Town has adopted a budget for the General Fund. Actual revenues exceeded the budget by $927,000.
Unexpended appropriations totaled $822,000 of which $689,000 was carried forward to fiscal year 2009. At June
30, 2008 State and County charges assessed by other governments exceeded their estimates by $25,000. The
deficit will be funded through available funds in fiscal year 2009. There were no significant changes between the
original and final budget.
Capital Asset and Debt Administration
In prior fiscal years, the Town had refunded general obligation bonds by placing the proceeds in an irrevocable
trust to provide for future debt service payments. Accordingly, neither the asset nor the liability for the defeased
bonds is included in the Town’s financial statements. At June 30, 2008 a total of $5,340,000 of outstanding bonds
are considered defeased.
During fiscal year 2008, the Town issued $3,599,000 of general obligation bonds to retire maturing bond
anticipation notes and to provide permanent financing for several capital projects. The Town also issued long-
term debt of $1,539,000 to refund $1,520,000 of old bond issues. This transaction will reduce total debt service
payments by approximately $89,900 over the 9 year term of the refunding bonds resulting in an economic gain of
approximately $74,800.
Outstanding long-term debt of governmental activities, as of June 30, 2008, totaled $48,394,065. Total debt
service expenditures on long-term governmental debt for the next five years averages $5.4 million annually. The
Town had $4,676,000 in governmental bond anticipation notes (BANs) outstanding at fiscal year-end.
The Water Enterprise Fund had $4,450,415 of long-term debt and $3,796,400 of BANs outstanding at year end.
The Sewer Enterprise Fund had $5,103,640 of long-term debt and $305,000 of BANs outstanding at year end.
Major capital additions and projects include the following:
• The governmental activities acquired over $4 million of various capital assets in FY2008.
• Business type activities include water additions of $1.5 million and sewer additions of $295 thousand.
• Depreciation expense was $3.5 million for governmental activities and $889,000 for business-type
activities.
Please refer to the Notes 4, 6, and 7 for further discussion of the capital asset and debt activity.
Economic Factors and Next Year’s Budget and Rates
The fiscal year 2009 general fund operating budget of $66.5 million represents a $3.8 million, or 6.1%, increase
from the fiscal year 2008 budget. This is primarily due to a $385 thousand (4.8%) increase in public safety
expenditures, a $2.4 million increase (8.8%) in education expenditures and an $880 thousand (11.2%) increase in
health insurance costs. The fiscal year 2009 operating budget includes $689,000 of appropriations carried
forward from fiscal year 2008.
Town of Canton, Massachusetts 18 Comprehensive Annual Financial ReportSource page 26
Property taxes in Massachusetts municipalities are limited to a levy growth of 2 ½% plus a factor for new construction, unless voters at an election approve an increase for operating expenses or debt service for a specific project (Proposition 2 ½). Due to the recent passage of a $4.5 million Proposition 2 ½ tax levy override, the Town calculated the tax levy growth from fiscal year 2008 to fiscal year 2009, exclusive of debt service excluded from Proposition 2 ½, will be approximately $3.4 million or 7.8%. The Town is scheduled to receive $7.5 million in state aid in fiscal year 2009. This amount is $400,000, or 5.8%, more than received in fiscal year 2008. Both the Water and Sewer Enterprise Fund’s rates were increased for fiscal year 2009. The average water and sewer rate increase were 15% and 3.5%, respectively. In addition, the Rink Enterprise Fund’s rates were increased by 8.1% for fiscal year 2009. Requests for Information This financial report is designed to provide a general overview of the Town of Canton’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 801 Washington Street, Canton, Massachusetts 02021. Town of Canton, Massachusetts 19 Comprehensive Annual Financial Report
Source page 27
Basic Financial Statements Town of Canton, Massachusetts 20 Comprehensive Annual Financial Report
Source page 28
STATEMENT OF NET ASSETS
JUNE 30, 2008
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
CURRENT:
Cash and cash equivalents………………………………… $ 25,817,037 $ 6,075,632 $ 31,892,669
Investments………………………………………………… 988,676 - 988,676
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes……………… 432,377 - 432,377
Tax liens………………………………………………… 826,097 46,654 872,751
Motor vehicle excise taxes……………………………… 517,021 - 517,021
User fees………………………………………………… - 2,458,965 2,458,965
Departmental and other………………………………… 339,138 - 339,138
Special assessments…………………………………… - 21,710 21,710
Intergovernmental……………………………………… 4,431,903 - 4,431,903
Tax foreclosures…………………………………………… 136,821 - 136,821
Internal balances…………………………………………… 36,200 (36,200) -
Working capital deposit…………………………………… 1,461,600 - 1,461,600
Other assets………………………………………………… 3,298 - 3,298
Deferred loss on refunding………………………………… 43,849 29,149 72,998
Total current assets………………………………………… 35,034,017 8,595,910 43,629,927
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Intergovernmental……………………………………… 9,250,641 - 9,250,641
Special assessments…………………………………… - 6,874 6,874
Internal balances…………………………………………… 144,800 (144,800) -
Deferred loss on refunding………………………………… 214,839 176,821 391,660
Capital assets:
Nondepreciable………………………………………… 15,536,782 3,713,347 19,250,129
Depreciable……………………………………………… 83,131,253 20,840,539 103,971,792
Total noncurrent assets…………………………………… 108,278,315 24,592,781 132,871,096
TOTAL ASSETS………………………………………………… 143,312,332 33,188,691 176,501,023
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 2,313,814 203,765 2,517,579
Accrued payroll……………………………………………… 2,243,140 29,352 2,272,492
Health claims payable……………………………………… 1,221,000 - 1,221,000
Tax refunds payable………………………………………… 426,000 - 426,000
Accrued interest…………………………………………… 497,877 90,143 588,020
Other liabilities……………………………………………… 329,888 - 329,888
Landfill closure……………………………………………… 83,000 - 83,000
Compensated absences…………………………………… 724,000 88,000 812,000
Workers' compensation…………………………………… 145,000 - 145,000
Unamortized premium on bonds payable………………… 52,046 - 52,046
Bonds and notes payable………………………………… 8,605,020 4,890,420 13,495,440
Total current liabilities……………………………………… 16,640,785 5,301,680 21,942,465
NONCURRENT:
Landfill closure……………………………………………… 310,000 - 310,000
Compensated absences…………………………………… 437,000 80,000 517,000
Workers' compensation…………………………………… 70,000 - 70,000
Unamortized premium on bonds payable………………… 411,354 - 411,354
Bonds and notes payable………………………………… 44,465,045 8,765,035 53,230,080
Total noncurrent liabilities………………………………… 45,693,399 8,845,035 54,538,434
TOTAL LIABILITIES…………………………………………… 62,334,184 14,146,715 76,480,899
NET ASSETS
Invested in capital assets, net of related debt……………… 51,291,396 13,948,369 65,239,765
Restricted for:
Permanent funds:
Expendable……….……………………………………… 456,618 - 456,618
Nonexpendable………………………………………… 325,985 - 325,985
Other specific purposes…………………………………… 3,650,372 - 3,650,372
Unrestricted……………………………………………………… 25,253,777 5,093,607 30,347,384
TOTAL NET ASSETS………………………………………… $ 80,978,148 $ 19,041,976 $ 100,020,124
See notes to basic financial statements.
Town of Canton, Massachusetts 21 Comprehensive Annual Financial ReportSource page 29
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2008
Program Revenues
Operating Capital
Charges for Grants and Grants and Net (Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental Activities:
General government…………………… $ 5,142,280 $ 368,111 $ 200,734 $ - $ (4,573,435)
Public safety……………………………… 12,501,298 2,253,015 393,564 7,700 (9,847,019)
Education………………………………… 45,669,483 2,202,573 12,423,210 373 (31,043,327)
Public works……………………………… 5,002,096 71,911 14,125 2,243,346 (2,672,714)
Human services………………………… 810,319 50,162 67,855 - (692,302)
Culture and recreation…………………… 2,498,364 376,991 36,809 - (2,084,564)
Interest…………………………………… 2,105,670 - 115,579 - (1,990,091)
Total Governmental Activities………… 73,729,510 5,322,763 13,251,876 2,251,419 (52,903,452)
Business-Type Activities:
Water……………………………………… 3,769,301 5,148,323 - - 1,379,022
Sewer……………………………………… 4,643,878 5,159,490 - 39,941 555,553
Rink……………………………………….… 357,203 356,953 - - (250)
Total Business-Type Activities………… 8,770,382 10,664,766 - 39,941 1,934,325
Total Primary Government…………… $ 82,499,892 $ 15,987,529 $ 13,251,876 $ 2,291,360 $ (50,969,127)
See notes to basic financial statements. (Continued)
Town of Canton, Massachusetts 22 Comprehensive Annual Financial ReportSource page 30
STATEMENT OF ACTIVITIES (Continued)
FISCAL YEAR ENDED JUNE 30, 2008
Primary Government
Governmental Business-Type
Activities Activities Total
Changes in net assets:
Net (expense) revenue from previous page…………… $ (52,903,452) $ 1,934,325 $ (50,969,127)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable………………………… 46,074,751 - 46,074,751
Tax liens……………………………………………… 204,174 - 204,174
Motor vehicle excise taxes…………………………… 3,622,335 - 3,622,335
Penalties and interest on taxes……………………… 188,163 - 188,163
Payments in lieu of taxes…………………………… 191,827 - 191,827
Grants and contributions not restricted to
specific programs…………………………………… 2,974,443 - 2,974,443
Unrestricted investment income…………………… 909,900 - 909,900
Miscellaneous………………………………………… 189,784 - 189,784
Transfers, net …………………………………………… 969,101 (969,101) -
Total general revenues and transfers………………… 55,324,478 (969,101) 54,355,377
Change in net assets……………………………… 2,421,026 965,224 3,386,250
Net Assets:
Beginning of year……………………………………… 78,557,122 18,076,752 96,633,874
End of year…………………………………………… $ 80,978,148 $ 19,041,976 $ 100,020,124
(Concluded)
Town of Canton, Massachusetts 23 Comprehensive Annual Financial ReportSource page 31
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2008
High Nonmajor Total
Roadway School Governmental Governmental
ASSETS General Improvements Construction Funds Funds
Cash and cash equivalents…………………………………$ 9,179,521 $ 1,136,610 $ 417,854 $ 11,717,224 $ 22,451,209
Investments………………………………………………… - - - 656,280 656,280
Receivables, net of uncollectibles:
Real estate and personal property taxes……………… 432,377 - - - 432,377
Tax liens………………………………………………… 826,097 - - - 826,097
Motor vehicle excise taxes……………………………… 517,021 - - - 517,021
Departmental and other………………………………… - - - 339,138 339,138
Intergovernmental……………………………………… 5,186,347 4,036,797 4,459,400 - 13,682,544
Tax foreclosures…………………………………………… 136,821 - - - 136,821
Due from other funds……………………………………… - - - 181,000 181,000
Other assets………………………………………………… 3,298 - - - 3,298
TOTAL ASSETS…………………………………………… $ 16,281,482 $ 5,173,407 $ 4,877,254 $ 12,893,642 $ 39,225,785
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable……………………………………… $ 1,061,966 $ 99,817 $ - $ 382,092 $ 1,543,875
Accrued payroll………………………………………… 2,100,890 4,270 - 136,978 2,242,138
Tax refunds payable…………………………………… 426,000 - - - 426,000
Other liabilities…………………………………………… 319,888 - - 10,000 329,888
Deferred revenues……………………………………… 6,833,826 3,069,320 4,459,400 339,138 14,701,684
Notes payable…………………………………………… - 2,000,000 - 2,676,000 4,676,000
TOTAL LIABILITIES………………………………………… 10,742,570 5,173,407 4,459,400 3,544,208 23,919,585
FUND BALANCES:
Reserved for:
Encumbrances and continuing appropriations…… 689,430 - - - 689,430
Perpetual permanent funds………………………… - - - 325,985 325,985
Unreserved:
Designated for subsequent year's expenditures… 900,000 - - - 900,000
Undesignated, reported in:
General fund……………………………………… 3,949,482 - - - 3,949,482
Special revenue funds…………………………… - - - 10,819,169 10,819,169
Capital projects funds…………………………… - - 417,854 (2,252,338) (1,834,484)
Permanent funds………………………………… - - - 456,618 456,618
TOTAL FUND BALANCES………………………………… 5,538,912 - 417,854 9,349,434 15,306,200
TOTAL LIABILITIES AND FUND BALANCES……………$ 16,281,482 $ 5,173,407 $ 4,877,254 $ 12,893,642 $ 39,225,785
See notes to basic financial statements.
Town of Canton, Massachusetts 24 Comprehensive Annual Financial ReportSource page 32
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2008
Total governmental fund balances……………………………………………………………………… $ 15,306,200
Capital assets (net) used in governmental activities are not financial resources
and, therefore, are not reported in the funds…………………………………………………… 98,668,035
Accounts receivable are not available to pay for current-period
expenditures and, therefore, are deferred in the funds………………………………………… 14,701,684
Internal service funds are used by management to account for health insurance,
municipal insurance, workers' compensation, and unemployment activities.
The assets and liabilities of the internal service funds are included in
the governmental activities in the statement of net assets……………………………… 3,127,883
In the statement of net assets, interest is accrued on outstanding long-term debt,
whereas in governmental funds interest is not reported until due…………………………… (497,877)
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported in the governmental funds
Bonds and notes payable……………………………………………………………………… (48,394,065)
Landfill closure…………………………………………………………………………………… (393,000)
Unamortized premium on bonds payable……………………………………………………… (463,400)
Workers compensation………………………………………………………………………… (175,000)
Compensated absences………………………………………………………………………… (1,161,000)
Net effect of reporting long-term liabilities……………………………………………… (50,586,465)
In the statement of net assets, deferred losses are reported for refundings of
debt, which are amortized over the shorter of the remaining life of the
refunding bonds or refunded bonds. In governmental funds, defeasances
of debt are expensed when the refunding bonds are issued…………………………………… 258,688
Net assets of governmental activities………………………………………………………………… $ 80,978,148
See notes to basic financial statements.
Town of Canton, Massachusetts 25 Comprehensive Annual Financial ReportSource page 33
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2008
High Nonmajor Total
Roadway School Governmental Governmental
General Improvements Construction Funds Funds
REVENUES:
Real estate and personal property taxes,
net of tax refunds………………………………………… $ 46,128,837 $ - $ - $ - $ 46,128,837
Tax liens……………………………………………………… 62,100 - - - 62,100
Motor vehicle excise taxes………………………………… 3,426,512 - - - 3,426,512
Charges for services………………………………………… - - - 1,488,941 1,488,941
Penalties and interest on taxes……………………………… 188,163 - - - 188,163
Payments in lieu of taxes…………………………………… 191,827 - - - 191,827
Licenses and permits………………………………………… 669,240 - - - 669,240
Fines and forfeitures………………………………………… 175,091 - - 14,471 189,562
Intergovernmental…………………………………………… 14,519,115 1,482,959 - 1,971,417 17,973,491
Departmental and other……………………………………… 457,932 - - 2,378,978 2,836,910
Contributions………………………………………………… - - 373 624,546 624,919
Investment income…………………………………………… 634,568 - - 160,018 794,586
TOTAL REVENUES…………………………………… 66,453,385 1,482,959 373 6,638,371 74,575,088
EXPENDITURES:
Current:
General government……………………………………… 3,147,778 - - 1,470,506 4,618,284
Public safety……………………………………………… 7,984,911 - - 1,459,025 9,443,936
Education………………………………………………… 26,744,441 - 51,198 4,150,508 30,946,147
Public works……………………………………………… 3,999,628 1,482,959 - 294,425 5,777,012
Human services…………………………………………… 548,790 - - 129,217 678,007
Culture and recreation…………………………………… 1,377,524 - - 394,993 1,772,517
Pension benefits………………………………………… 9,252,069 - - - 9,252,069
Employee benefits………………………………………… 8,293,944 - - - 8,293,944
State and county charges…………………………………… 894,634 - - - 894,634
Debt service:
Principal…………………………………………………… 3,827,020 - - - 3,827,020
Interest……………………………………………………… 2,111,050 - - - 2,111,050
TOTAL EXPENDITURES…………………………… 68,181,789 1,482,959 51,198 7,898,674 77,614,620
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES………………………… (1,728,404) - (50,825) (1,260,303) (3,039,532)
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes……………………………… - - - 1,907,000 1,907,000
Issuance of refunding bonds………………………………… 1,084,000 - - - 1,084,000
Premium from issuance of debt…………………………… 10,307 - - 71,173 81,480
Payments of refunded bonds……………………………… (1,070,000) - - - (1,070,000)
Transfers in…………………………………………………… 2,055,779 - - 771,424 2,827,203
Transfers out………………………………………………… (694,124) - - (1,163,978) (1,858,102)
TOTAL OTHER FINANCING SOURCES (USES)… 1,385,962 - - 1,585,619 2,971,581
NET CHANGE IN FUND BALANCES………………………… (342,442) - (50,825) 325,316 (67,951)
FUND BALANCES AT BEGINNING OF YEAR……………… 5,881,354 - 468,679 9,024,118 15,374,151
FUND BALANCES AT END OF YEAR…………………………$ 5,538,912 $ - $ 417,854 $ 9,349,434 $ 15,306,200
See notes to basic financial statements.
Town of Canton, Massachusetts 26 Comprehensive Annual Financial ReportSource page 34
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2008
Net change in fund balances - total governmental funds…………………………………………………………. $ (67,951)
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
Capital outlay…………………………………………………………………………………………………… 4,039,135
Disposal of capital assets……………………………………………………………………………………… (342,000)
Depreciation expense………………………………………………………………………………………… (3,520,503)
Net effect of reporting capital assets………………………………………………………………… 176,632
Revenues in the Statement of Activities that do not provide current financial
resources are fully deferred in the Statement of Revenues, Expenditures and
Changes in Fund Balances. Therefore, the recognition of revenue for various
types of accounts receivable (i.e., real estate and personal property, motor
vehicle excise, etc.) differ between the two statements. This amount represents
the net change in deferred revenue…………………………………………………………………………… 409,553
The issuance of long-term debt (e.g., bonds and leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-
term debt consumes the financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of premiums, discounts, and similar items when debt is
first issued, whereas these amounts are deferred and amortized in the
Statement of Activities.
Issuance of bonds and notes………………………………………………………………………………… (1,907,000)
Debt service principal payments……………………………………………………………………………… 3,827,020
Amortization of bond premiums……………………………………………………………………………… 54,144
Amortization of deferred charge on refunding……………………………………………………………… (44,375)
Issuance of refunding bonds…………………………………………………………………………………… (1,084,000)
Payments of refunded bonds…………………………………..……………………………………………… 1,070,000
Net effect of reporting long-term debt………………………………………………………………… 1,915,789
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Net change in compensated absences accrual……………………………………………………………… 42,000
Net change in accrued interest on long-term debt………………………………………………………… (4,389)
Net change in worker's compensation accrual……………………………………………………………… (75,000)
Net change in landfill accrual………………………………………………………………………………… 89,000
Net effect of recording long-term liabilities and amortizing deferred losses………………….. 51,611
Internal service funds are used by management to account for health
insurance and workers' compensation activities.
The net activity of internal service funds is reported with Governmental Activities…………………… (64,608)
Change in net assets of governmental activities……………………………………………………………………… $ 2,421,026
See notes to basic financial statements.
Town of Canton, Massachusetts 27 Comprehensive Annual Financial ReportSource page 35
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2008
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
ASSETS
CURRENT:
Cash and cash equivalents……………………………$ 4,031,804 $ 1,946,607 $ 97,221 $ 6,075,632 $ 3,365,828
Investments…………………………………………… - - - - 332,396
Receivables, net of allowance for uncollectibles:
Tax liens……………………………………………… 21,553 25,101 - 46,654 -
User fees…………………………………………… 1,307,749 1,150,476 740 2,458,965 -
Special assessments……………………………… - 21,710 - 21,710 -
Working capital deposit……………………………… - - - - 1,461,600
Deferred loss on refunding…………………………… 3,626 25,523 - 29,149 -
Total current assets……………………………… 5,364,732 3,169,417 97,961 8,632,110 5,159,824
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Special assessments……………………………… - 6,874 - 6,874 -
Deferred loss on refunding…………………………… 21,609 155,212 - 176,821 -
Capital assets:
Nondepreciable……………………………………… 2,858,165 855,182 - 3,713,347 -
Depreciable………………………………………… 10,228,119 10,400,877 211,543 20,840,539 -
Total noncurrent assets………………………… 13,107,893 11,418,145 211,543 24,737,581 -
TOTAL ASSETS………………………………………… 18,472,625 14,587,562 309,504 33,369,691 5,159,824
LIABILITIES
CURRENT:
Warrants payable……………………………………… 126,789 70,026 6,950 203,765 769,939
Accrued payroll………………………………………… 18,389 8,338 2,625 29,352 1,002
Due to other funds…………………………………… 36,200 - - 36,200 -
Health claims payable………………………………… - - - - 1,221,000
Accrued interest……………………………………… 62,456 27,687 - 90,143 -
Compensated absences……………………………… 66,000 17,000 5,000 88,000 -
Workers' compensation……………………………… - - - - 20,000
Bonds and notes payable…………………………… 4,138,605 751,815 - 4,890,420 -
Total current liabilities…………………………… 4,448,439 874,866 14,575 5,337,880 2,011,941
NONCURRENT:
Due to other funds…………………………………… 144,800 - - 144,800 -
Compensated absences……………………………… 63,000 15,000 2,000 80,000 -
Workers' compensation……………………………… - - - - 20,000
Bonds and notes payable…………………………… 4,108,210 4,656,825 - 8,765,035 -
Total noncurrent liabilities……………………… 4,316,010 4,671,825 2,000 8,989,835 20,000
TOTAL LIABILITIES……………………………………… 8,764,449 5,546,691 16,575 14,327,715 2,031,941
NET ASSETS
Invested in capital assets, net of related debt………… 7,435,520 6,301,306 211,543 13,948,369 -
Unrestricted……………………………………………… 2,272,656 2,739,565 81,386 5,093,607 3,127,883
TOTAL NET ASSETS……………………………………$ 9,708,176 9,040,871 $ 292,929 $ 19,041,976 $ 3,127,883
See notes to basic financial statements.
Town of Canton, Massachusetts 28 Comprehensive Annual Financial ReportSource page 36
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2008
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
OPERATING REVENUES:
Employee contributions ……………………………………$ - $ - $ - $ - $ 2,531,234
Contributions……………………………………………… - - - - 7,577,605
Charges for services ……………………………………… 5,042,672 5,071,920 353,912 10,468,504 -
Other………………………………………………………… - - - - 72,499
TOTAL OPERATING REVENUES …………………… 5,042,672 5,071,920 353,912 10,468,504 10,181,338
OPERATING EXPENSES:
Cost of services and administration ……………………… 1,355,558 596,816 341,555 2,293,929 -
MWRA Assessment……………………………………… 1,752,541 3,342,320 - 5,094,861 -
Depreciation………………………………………………… 412,831 460,314 15,648 888,793 -
Employee benefits ………………………………………… - - - - 10,361,260
TOTAL OPERATING EXPENSES …………………… 3,520,930 4,399,450 357,203 8,277,583 10,361,260
OPERATING INCOME (LOSS)………………………… 1,521,742 672,470 (3,291) 2,190,921 (179,922)
NONOPERATING REVENUES (EXPENSES):
Investment income………………………………………… 87,500 68,453 3,041 158,994 115,314
Interest expense…………………………………………… (248,371) (244,428) - (492,799) -
Other revenues…………………………………………… 18,151 19,117 - 37,268 -
TOTAL NONOPERATING REVENUES,
(EXPENSES), NET………………………………… (142,720) (156,858) 3,041 (296,537) 115,314
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS……………… 1,379,022 515,612 (250) 1,894,384 (64,608)
CAPITAL CONTRIBUTIONS………………………………… - 39,941 - 39,941 -
TRANSFERS:
Transfers in………………………………………………… - - - - 50,000
Transfers out……………………………………………… (586,759) (318,943) (63,399) (969,101) (50,000)
TOTAL TRANSFERS…………………………………… (586,759) (318,943) (63,399) (969,101) -
CHANGE IN NET ASSETS…………………………… 792,263 236,610 (63,649) 965,224 (64,608)
NET ASSETS AT BEGINNING OF YEAR………………… 8,915,913 8,804,261 356,578 18,076,752 3,192,491
NET ASSETS AT END OF YEAR………………………… $ 9,708,176 $ 9,040,871 $ 292,929 $ 19,041,976 $ 3,127,883
See notes to basic financial statements.
Town of Canton, Massachusetts 29 Comprehensive Annual Financial ReportSource page 37
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30, 2008
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users…………………………………………… $ 4,915,654 $ 4,916,370 $ 372,235 $ 10,204,259 $ -
Receipts from interfund services provided…………………………………… - - - - 10,181,338
Receipts from other revenues…………………………………………………… 18,151 19,117 - 37,268 -
Payments to vendors…………………………………………………………… (2,261,460) (3,558,577) (164,388) (5,984,425) -
Payments to employees………………………………………………………… (800,297) (351,401) (177,388) (1,329,086) -
Payments for interfund services used………………………………………… - - - - (9,708,965)
NET CASH FROM OPERATING ACTIVITIES…………………………………… 1,872,048 1,025,509 30,459 2,928,016 472,373
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in……………………………………………………………………… - - - - 50,000
Transfers out……………………………………………………………………… (586,759) (318,943) (63,399) (969,101) (50,000)
Advances to other funds………………………………………………………… (36,200) - - (36,200) -
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………… (622,959) (318,943) (63,399) (1,005,301) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes…………………………… 5,392,400 401,000 - 5,793,400 -
Proceeds from the issuance of refunding bonds……………………………… 455,000 - - 455,000 -
Capital contributions……………………………………………………………… - 39,941 - 39,941 -
Acquisition and construction of capital assets………………………………… (1,534,392) (295,229) - (1,829,621) -
Principal payments on bonds and notes……………………………………… (3,061,905) (741,815) - (3,803,720) -
Principal payments on refunded bonds………………………………………… (450,000) - - (450,000) -
Interest expense………………………………………………………………… (217,430) (218,721) - (436,151) -
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… 583,673 (814,824) - (231,151) -
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of investments………………………………………………… - - - - 1,980
Investment income……………………………………………………………… 87,500 68,453 3,041 158,994 115,314
NET CASH FROM INVESTING ACTIVITIES…………………………………… 87,500 68,453 3,041 158,994 117,294
NET CHANGE IN CASH AND CASH EQUIVALENTS………………………… 1,920,262 (39,805) (29,899) 1,850,558 589,667
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR…… 2,111,542 1,986,412 127,120 4,225,074 2,776,161
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR…………… $ 4,031,804 $ 1,946,607 $ 97,221 $ 6,075,632 $ 3,365,828
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)………………………………………………………… $ 1,521,742 $ 672,470 $ (3,291) $ 2,190,921 $ (179,922)
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation…………………………………………………………………… 412,831 460,314 15,648 888,793 -
Other revenues……………………………………………………………… 18,151 19,117 - 37,268 -
Changes in assets and liabilities:
Water and sewer liens…………………………………………………… (6,821) (5,150) - (11,971) -
User fees…………………………………………………………………… (120,197) (161,012) 18,323 (262,886) -
Special assessments……………………………………………………… - 10,612 - 10,612 -
Working capital deposit…………………………………………………… - - - - (2,500)
Warrants payable………………………………………………………… 36,171 23,562 593 60,326 727,154
Accrued payroll…………………………………………………………… 2,171 2,596 186 4,953 (359)
Health claims payable…………………………………………………… - - - - 70,000
Accrued compensated absences………………………………………… 8,000 3,000 (1,000) 10,000 -
Workers' compensation…………………………………………………… - - - - (142,000)
Total adjustments……………………………………………………… 350,306 353,039 33,750 737,095 652,295
NET CASH FROM OPERATING ACTIVITIES……………………………………$ 1,872,048 $ 1,025,509 $ 30,459 $ 2,928,016 $ 472,373
See notes to basic financial statements.
Town of Canton, Massachusetts 30 Comprehensive Annual Financial ReportSource page 38
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2008
Private
Purpose Agency
Trust Funds Fund
ASSETS
CURRENT:
Cash and cash equivalents……………………………………$ 54,610 $ 1,030,995
Investments…………………………………………………… 44,509 -
TOTAL ASSETS…………………………………………………… 99,119 1,030,995
LIABILITIES
Warrants payable……………………………………………… 700 21,798
Liabilities due depositors……………………………………… - 1,009,197
TOTAL LIABILITIES……………………………………………… 700 1,030,995
NET ASSETS
Held in trust..…………………………………………………… $ 98,419 $ -
See notes to basic financial statements.
Town of Canton, Massachusetts 31 Comprehensive Annual Financial ReportSource page 39
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2008
Private
Purpose
Trust Funds
ADDITIONS:
Contributions:
Private donations………………………………………………………………………………$ 50,000
Net investment income:
Investment income………………………….………………………………………………… 2,785
TOTAL ADDITIONS……………………………………………………………………… 52,785
DEDUCTIONS:
Educational scholarships…………………………………………………………………… 1,201
CHANGE IN NET ASSETS……………………………………………………………… 51,584
NET ASSETS AT BEGINNING OF YEAR…………………………………………………… 46,835
NET ASSETS AT END OF YEAR……………………………………………………………… $ 98,419
See notes to basic financial statements.
Town of Canton, Massachusetts 32 Comprehensive Annual Financial ReportSource page 40
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to Basic Financial Statements The accompanying basic financial statements of the Town of Canton, Massachusetts (the Town) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described herein. A. Reporting Entity The Town is located in Norfolk County in southeastern Massachusetts approximately 15 miles south of Boston. The Town was incorporated in 1797 and is governed by an elected five member Board of Selectmen, an appointed Town Administrator, and the open town meeting form of government. For financial reporting purposes, the Town has included all funds, organizations, agencies, boards, commissions and institutions. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete. As required by GAAP, these basic financial statements present the Town (the primary government) and its component units. It has been determined that the Town has no component units that require inclusion in these basic financial statements. The Town is a member of the Blue Hills Regional Technical School that provides educational services to nine area communities. This joint venture assesses each community its share of operating and debt service costs based on student population and other factors. In fiscal year 2008, Canton’s share of the operating and debt expenses was $1,274,599. There is no equity interest reported in these financial statements. Complete audited financial statements can be obtained directly from the District’s administrative office located at 800 Randolph Street, Canton, MA 02021. B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements (i.e., statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government. Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported separately from business- type activities, which are supported primarily by user fees and charges. Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and displayed in a single column. Town of Canton, Massachusetts 33 Comprehensive Annual Financial Report