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Source page 81
Capital Improvements and Financing
The Town continues to invest in infrastructure improvements such as roads, sewers, and water supply
facilities, as well as various municipal and school facility upgrades. These include: Town Hall, Library,
Public Safety Facilities, Public Works and School building improvement projects.
In addition, the Town has completed the construction of two new water filtration plants. These water
filtration plants will provide state of the art water filtration capabilities and allow for the use of local
source water to reduce operating costs, improve water availability (including redundancy) and filtrate
water for customers with the most technologically advanced system available today.
This year the Town completed renovations of a former Knights of Columbus Hall and turned it into the
new Senior Center located at 500 Pleasant Street to address the growing, aging population in need of
expanded and updated senior services. In addition the Town completed repairs to Shepard Pond dam
which was classified by the state as being a Significant Hazard Dam in poor condition. To help fund this
repair project, the Town received a grant award of $665,000 from the Commonwealth and a $335,000 low
interest loan from the Executive Office of Environmental Affairs.
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 2016 through fiscal year 2020
has an estimated cost of $25.8 million, with $8.0 million to be funded from estimated revenues with the
remainder to be funded from the issuance of bonds. The CPC’s capital plan has allocated $6.2 million for
municipal departments, $5.9 million for the school department, $9.0 million for the water enterprise
fund, $4.2 million for the sewer enterprise fund, and $415,000 for the rink enterprise fund.
The Town’s target set aside to finance its capital plan is 5% to 6% of recurring revenues. A portion of its
annual capital plan funds smaller capital projects on a pay-as-you-go basis through recurring revenues
while larger capital projects are financed through borrowing.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awards a
Certificate of Achievement for Excellence in Financial Reporting. This is a very prestigious award and
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.
The GFOA awarded this 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, 2014. This was the
ninth year that the Town has achieved this prestigious award.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report will meet the Certificate of Achievement Program’s requirements,
and we are submitting it to the GFOA to determine its eligibility for this 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 Office.
Town of Canton, Massachusetts Page 9 of 118 Comprehensive Annual Financial ReportSource page 82
Special thanks also go to the certified public accounting firm of Roselli, Clark and Associates for their
advice and assistance in the preparation of this report.
Respectfully submitted,
William T. Friel
Town Administrator
James R. Murgia
Finance Director
Town of Canton, Massachusetts Page 10 of 118 Comprehensive Annual Financial ReportSource page 83
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Canton
Text38:
Massachusetts
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2014
Executive Director/CEO
Town of Canton, Massachusetts Page 11 of 118 Comprehensive Annual Financial ReportSource page 84
Board Planning of Health Board TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Board of Selectmen Appointed Multiple Member Bodies Moderator Personnel Adv. Board Building [Renovations Committee Building & Zoning Department Building Commissioner Canton Representative Veteran's Office Veteran's Director Director Public Health -Industrial Development Commission Building Police Fire Dept. of Human Department Council Recreation Conservation Maintenance ‘ Resource of Finance ‘ ws ae Department | [Department | | Public Works Densikwank on Aging | | Commission Commission Police Fire Superintendent Human Finance CoA Recreation Conservation - _ o! Resource 2 , . Commission Chief Chief Public Works | | Administrator Director Director Director Agent Page 12 of 118 Comprehensive Annual Financial Report Town of Canton, Massachusetts an Board Board of Library Clerks y of Selectmen Trustees Office Town Town Town Planner Clerk Administrator Executive Town Counsel Assistant Town Planner Administrative Secretary Sealer of Weights and Measures Secretary 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 [Original embedded text, retained for comparison] Town of Canton, Massachusetts Page 12 of 118 Comprehensive Annual Financial Report
Source page 85
CANTON PUBLIC SCHOOLS
CANTON SCHOOL COMMITTEE
ADMINISTRATIVE ASSISTANT TO THE
SUPERINTENDENT/SCHOOL COMMITTEE
SUPERINTENDENT OF SCHOOLS
DIRECTOR .OF CURRICULUM SCHOOL BUSINESS
BUILDING PRINCIPALS DIRECTOR OF
and INSTRUCTION ADMINISTRATOR
STUDENT SERVICES
WIDE AREA EDUCATIONAL SCHOOL
NETWORK TECHNOLOGY SECRETARIES ASSISTANT
SCHOOL COUNCIL SECRETARIES
ADM. ADM.. PRINCIPALS ADMINISTRATIVE ASST.
CAPT.
SPED
K-5 READING PARENT GROUPS
PARENT
BUILDING SPECIALISTS SPECIAL EDUCATION, ADVISORY
TECHNOLOGY DISTRICT ACCOUNTS
FACULTY BUILDING 504, ALT. ED. COUNCIL PAYROLL
SPECIALISTS DEPARTMENT PAYABLE
AND STAFF DEPARTMENT STUDENT SERVICES
COORDINATORS
COORDINATORS FACULTY AND STAFF
COMPUTER PROFESSIONAL
DIRECTOR OF
TEACHERS DEVELOPMENT
CHARMSS FOOD SERVICES
COMMITTEE
CUSTODIANS COLLABORATIVE
FACILITIES
PRIVATE SCHOOLS
DIRECTOR
CAFETERIA
MANAGERS/
CUSTODIANS/ WORKERS
MAINTENANCE
TRANSPORTATION
COORDINATOR
HEALTH
SERVICES
Town of Canton, Massachusetts Page 13 of 118 Comprehensive Annual Financial ReportSource page 86
PRINCIPAL TOWN OFFICIALS
Elected Officials
Board of Selectmen John J. Connolly, Chairman
Robert E. Burr Jr., Vice Chairman
Kevin T. Feeney, Clerk
Victor D. Del Vecchio, Member
Mark J. Porter, Member
School Committee Robert Golledge, Chairman
Reuki B. Schutt, Vice Chairman
Michael Loughran, Secretary
John Bonnanzio, Member
Kristin Mirliani, Member
Principal Executive Officers
Town Administrator William T. Friel
Finance Director James R. Murgia
Town Accountant Kathy Dooley Butters
Superintendent of Schools Jennifer Henderson
School Business Administrator Barry Nectow
Police Chief Kenneth N. Berkowitz
Fire Chief Charles E. Doody
DPW Superintendent Michael T. Trotta
Town of Canton, Massachusetts Page 14 of 118 Comprehensive Annual Financial ReportSource page 87
Financial Section The Town’s Department of Public Works repaired and upgraded the Shepard Pond Dam utilizing $1 million in grants and loans from the state. Originally built in 1880 to power a mill, the dam was considered to be a significant hazard dam.
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INDEPENDENT AUDITOR’S REPORT
Honorable Board of Selectmen
Town of Canton, Massachusetts
Report on the Financial Statements
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, (the “Town”) as of and for the year ended June 30, 2015 which collectively comprise the
Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions 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 performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
out audit opinions.
Town of Canton, Massachusetts Page 15 of 118 Comprehensive Annual Financial ReportSource page 90
Town of Canton
Page Two
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, as of June 30, 2015, and the respective
changes in financial position and, where applicable, cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As disclosed in the Note III to the financial statements, the Town of Canton implemented GASB
Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement
No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date – an amendment of GASB Statement No. 68, during the fiscal year 2015. Our opinion
was not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, the schedules of the Town’s proportionate share of net pension liability and the
Town’s contributions to pension plan, the schedule of the Commonwealth’s share of the net pension
liability of the Massachusetts Teacher’s Retirement System, the funding progress and contribution
funding for other postemployment benefits, and budgetary comparison information as listed in the table
of contents, be presented to supplement the basic financial statements. Such information, although not
part of the basic financial statements, is required by the Governmental Accounting Standards Board,
who considers it to be an essential part of financial reporting for placing the basic financial statements
in an appropriate operational, economic or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The introductory section, combining and individual
nonmajor fund financial statements, and statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual
nonmajor fund financial statements are the responsibility of management and were derived from and
relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
Town of Canton, Massachusetts Page 16 of 118 Comprehensive Annual Financial ReportSource page 91
Town of Canton
Page Three
with auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in
relation to the basic financial statements as a whole. The introductory and statistical sections have not
been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report dated November 4,
2015, 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, 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 considered in
assessing the results of our audit.
Roselli, Clark and Associates
Certified Public Accountants
Woburn, Massachusetts 01801
November 4, 2015
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Management’s Discussion and Analysis Town of Canton, Massachusetts Page 19 of 118 Comprehensive Annual Financial Report
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As the management of the Town, we offer readers of the accompanying financial statements this narrative
overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2015.
Financial Highlights
The assets and deferred outflows of the Town exceeded its liabilities and deferred inflows at the close
of the most recent fiscal year by approximately $50.7 million (total net position).
The government’s total net position increased by approximately $10.2 million. This consisted
primarily of an increase in governmental activities’ net position by approximately $7.3 million
(25.9% of total governmental activities’ net position) and an increase in Business - type activities’ net
position of approximately $2.9 million (12.9% of Business-type activities).
The Town’s Unassigned Fund Balance reported in the General Fund was approximately $11.4 million
(13.9% of General Fund expenditures). Total Fund Balance in the General Fund was approximately
$12.6 million (15.3% of General Fund expenditures). The Town reported total fund balances of over
$10.6 million in the Combined Nonmajor Governmental Funds. Over $10.5 million in Restricted
Fund Balances, combined with over $0.4 million in Nonspendable Fund Balances was offset by
Unassigned Fund Deficits of over $0.3 million.
The Town’s total debt decreased by approximately $2.8 million during the fiscal year. Detail of this
net decrease is illustrated as follows:
Issuances of debt
Governmental Activities $ 2,861,150
Business-Type Activities 1,163,000
Debt payments:
Governmental Activities (3,819,900)
Business-Type Activities (2,466,765)
Amortization of premium:
Governmental Activities (414,813)
Business-Type Activities (101,497)
$ (2,778,825)
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also
contains other supplementary information in addition to the basic financial statements themselves.
The layout and relationship of the financial statements and supplementary information is visually
illustrated as follows:
Town of Canton, Massachusetts Page 21 of 118 Comprehensive Annual Financial ReportSource page 96
Required Supplementary Management Discussion and Analysis
Information
Government-wide Financial Statements
Governmental Fund Financial Statements
Basic Proprietary Fund Financial Statements
Financial Statements
Fiduciary Fund Financial Statements
Notes to the Basic Financial Statements
Required Supplementary
Information – Budgetary Reporting with Notes, Pension and
Other than MD&A Other Postemployment Benefits
Other Supplementary
Combining Fund Financial Statements/Schedules
Information
Government-wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. The statement of position presents information on all of the Town’s assets, deferred outflows,
liabilities and deferred inflows, with the net result reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the Town is
improving or deteriorating. The statement of activities presents information showing how the
government’s net position changed during the most recent fiscal year. All changes in net position 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.)
The government-wide financial statements consist of two classifications; (1) those whose activities are
principally supported by taxes and intergovernmental revenue (governmental activities), and (2) those
whose activities are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities).
The governmental activities of the Town include general government, public safety, highways and streets,
sanitation, education, economic development, debt service, fringe benefits and culture and recreation.
The business-type activities of the Town are comprised of water, sewer and rink enterprise funds.
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. The Town, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
Town of Canton, Massachusetts Page 22 of 118 Comprehensive Annual Financial ReportSource page 97
legal requirements. All of the funds of the Town can be divided into three categories: governmental
funds, proprietary funds, and fiduciary funds.
Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such
as fund balance associated with inventories, and other amounts that are classified based on the relative
strength of the constraints that control the purposes for which specific amounts can be spent. Beginning
with the most binding constraints, fund balance amounts will be reported in the following classifications:
• Restricted—amounts constrained by external parties, constitutional provision, or enabling
legislation
• Committed—amounts constrained by a government using its highest level of decision-making
authority
• Assigned—amounts a government intends to use for a particular purpose
• Unassigned—amounts that are not constrained at all will be reported in the general fund or in
other major funds if negative
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 financial statements focus on near-term
inflows and outflows 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.
The Town maintains 16 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures,
and changes in fund balances for the General Fund, and Capital Projects Funds which are considered to
be major funds. Data from the other 14 governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the
form of combining statements.
The Town adopts an annual appropriated budget for its general fund and its enterprise 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 proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The Town uses an enterprise fund to account for its water, sewer and rink enterprise funds.
Internal service funds are used to report activities that service all other Town Departments. The Town
uses internal service funds to account for self-insured health insurance claims.
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
Town of Canton, Massachusetts Page 23 of 118 Comprehensive Annual Financial ReportSource page 98
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 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.
Other Information - In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information which includes the schedules of the Town's
proportionate share of the net pension liability, contributions to the pension plan, the Commonwealth's
share of the net pension liability of the Massachusetts Teachers' Retirement System, the funding progress
and contribution funding of its obligation to provide other postemployment benefits to its employees as
well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual –
General Fund and notes to this schedule.
New Significant Accounting Standards Implemented – In fiscal year 2015 the Town adopted two new
statements of financial accounting standards issued by the Governmental Accounting Standards board
(GASB) that relate to pension activity:
- Statement No. 68, “Accounting and Financial Reporting for Pensions – an amendment of
GASB Statement No. 27,” and
- Statement No. 71, “Pension Transition for Contributions Made Subsequent to the
Measurement Date – an amendment of GASB Statement No. 68”
Statement No. 68 (Statement) establishes standards of accounting and financial reporting, but not funding
or budgetary standards, for the Town’s defined benefit pension plans. This statement replaces the
requirements of prior GASB statements impacting account and disclosure of pensions.
The significant impact to the Town of implementing Statement No. 68 is the reporting of the Town’s
unfunded pension liability on the Town’s full accrual basis of accounting government-wide financial
statements. There are also new note disclosure requirements and supplementary schedules required by the
Statement.
In order to implement the Statement, a prior period adjustment was made to the Town’s July 1, 2014 net
position. This prior period adjustment decreased the Town’s net position by $36,930,901 from
$77,489,810 to $40,558,909. Specific details of this restatement are in Note IV..
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the Town, assets exceeded liabilities by approximately $50.7 million at the
close of the most recent fiscal year.
Town of Canton, Massachusetts Page 24 of 118 Comprehensive Annual Financial ReportSource page 99
Condensed net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2015 2014 2015 2014 2015 2014
Assets
Currrent and other assets $ 42,666,718 $ 39,902,504 $ 10,487,690 $ 9,002,755 $ 53,154,408 $ 48,905,259
Capital assets, net 104,451,895 100,407,535 46,382,802 47,322,552 150,834,697 147,730,087
Total assets 147,118,613 140,310,039 56,870,492 56,325,307 203,989,105 196,635,346
Deferred outflows of resources 1,517,174 651,390 102,700 - 1,619,874 651,390
Liabilities
Long-term liabilities 106,335,287 70,408,131 31,151,262 30,180,820 137,486,549 100,588,951
Other liabilities 14,305,453 15,206,827 3,092,633 4,001,148 17,398,086 19,207,975
Total liabilities 120,640,740 85,614,958 34,243,895 34,181,968 154,884,635 119,796,926
Deferred inflows of resources - - - - - -
Net Position
Net investment in capital assets 76,109,604 70,116,230 16,386,618 15,743,697 92,496,222 85,859,927
Restricted 9,193,516 8,912,488 - - 9,193,516 8,912,488
Unrestricted (57,308,073) (23,682,247) 6,342,679 6,399,642 (50,965,394) (17,282,605)
Total Net Position $ 27,995,047 $ 55,346,471 $ 22,729,297 $ 22,143,339 $ 50,724,344 $ 77,489,810
By far, the largest portion (approximately $92.5 million) of the Town’s net position reflects its investment
in capital assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used
to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town’s
investment in its capital assets is reported net of related debt, 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, approximately $9.2 million, of the Town’s net position represents resources that
are subject to external restrictions on how they may be used. Unrestricted net position is reported as a
deficit of approximately $51.0 million due to the recognition of net pension liabilities of approximately
$38.0 million in 2015 and other postemployment benefits of approximately $44.4 million since the
implementation of GASB 45 in 2009.
Town of Canton, Massachusetts Page 25 of 118 Comprehensive Annual Financial ReportSource page 100
Condensed changes in net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2015 2014 2015 2014 2015 2014
Revenues
Program revenues:
Charges for services $ 7,263,743 $ 6,884,720 $ 13,938,215 $ 13,419,115 $ 21,201,958 $ 20,303,835
Operating grants and contributions 13,609,976 18,811,622 37,338 6,250 13,647,314 18,817,872
Capital grants and contributions 2,832,069 611,930 - 463,500 2,832,069 1,075,430
General revenues:
Property taxes and tax liens 63,720,607 61,423,003 - - 63,720,607 61,423,003
Unrestricted grants and contributions 2,213,169 2,776,692 - - 2,213,169 2,776,692
Other 5,933,217 5,259,025 27,019 20,083 5,960,236 5,279,108
Total Revenues 95,572,781 95,766,992 14,002,572 13,908,948 109,575,353 109,675,940
Expenses
General government 5,683,805 6,231,894 - - 5,683,805 6,231,894
Public safety 15,312,760 16,625,726 - - 15,312,760 16,625,726
Education 54,772,830 64,153,101 - - 54,772,830 64,153,101
Public works 7,227,459 6,419,350 - - 7,227,459 6,419,350
Health and human services 1,609,060 1,346,871 - - 1,609,060 1,346,871
Culture and recreation 3,006,143 3,123,867 - - 3,006,143 3,123,867
Debt service 722,667 1,557,660 - - 722,667 1,557,660
Water - - 5,253,139 5,225,383 5,253,139 5,225,383
Sewer - - 5,416,303 5,366,166 5,416,303 5,366,166
Rink - - 405,752 353,666 405,752 353,666
Total Expenses 88,334,724 99,458,469 11,075,194 10,945,215 99,409,918 110,403,684
Change in net position before transfers 7,238,057 (3,691,477) 2,927,378 2,963,733 10,165,435 (727,744)
Transfers - 1,232,584 - (1,232,584) - -
Change in net position 7,238,057 (2,458,893) 2,927,378 1,731,149 10,165,435 (727,744)
Net position, beginning of year 55,346,471 57,805,364 22,143,339 20,412,190 77,489,810 78,217,554
Restatement for net pension liability (34,589,481) - (2,341,420) - (36,930,901) -
Net position, beginning of year,
as restated 20,756,990 57,805,364 19,801,919 20,412,190 40,558,909 78,217,554
Net position, end of year $ 27,995,047 $ 55,346,471 $ 22,729,297 $ 22,143,339 $ 50,724,344 $ 77,489,810
Governmental Activities – The governmental activities increased net position by over $7.2 million
(25.9% of governmental activities’ net position). The increase is primarily the result of capital additions
exceeding depreciation by approximately $4.0 million from the construction of a senior center and
roadway improvements; revenue surpluses of approximately $2.8 million due to higher than forecasted
motor vehicle excise and building permit revenues; and approximately $0.4 million in unspent budgeted
appropriations.
Town of Canton, Massachusetts Page 26 of 118 Comprehensive Annual Financial ReportSource page 101
Fiscal Year 2015 Expenses and Program Revenues – governmental activities are graphically presented as
follows:
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
Functional expenses
$20,000,000
Program Revenues
$10,000,000
$0
Major revenue sources of governmental activities consist of revenue from; (1) Operating grants and
contributions which comprised approximately 14.2% of the total governmental activity revenues; down
from 19.6% due to developer contributions of approximately $1.7 million in the prior year and a
decrease of approximately $4.7 million due to the recognition of nonemployee special funding payments
from the Commonwealth reported in a manner required under GASB 68; and (2) Property taxes which
represented 66.7% of total revenues. This increased over the prior year by $2.3 million which
approximated the statutory allowable 2 1/2% increase in assessment and new growth. No other revenue
sources exceeded 10% of total revenues in either fiscal 2015 or 2014.
Revenues
2%
6%
3% 8%
Property taxes
14% Operating grants and contributions
Capital grants and contributions
67% Charges for services
Other
Intergovernmental (unrestricted)
Town of Canton, Massachusetts Page 27 of 118 Comprehensive Annual Financial ReportSource page 102
Major operating expenses were consistent with the prior year as the Town devoted nearly 80% of its
budget to education and public safety. More specifically, educational expenses, whose level is driven by
minimum per pupil spending requirements under State law was down to 62.0% as compared to 64.5%.
This was due primarily to the implementation of GASB 68 as described in the revenue explanation
above as the expense side of the nonemployer contributions from the Commonwealth were also reduced
by $4.7 million. Public safety expenses were up slightly to 17.3% from 16.7% in the prior year due to
capital spending not classified as capital assets. No other expenses represented greater than 10.0% of
total expenses in either fiscal 2015 or 2014.
Expenses
2% 1%
3% 7%
8%
17% General government
Public safety
Education
Public works
Health and human services
62% Culture and recreation
Interest expense
Business-type Activities – Net position of the business-type activities increased $2.9 million over the
prior year. This was due to an increase in the sewer usage rate, an increase in water and sewer
consumption, and a reduction in the reliance on water from outside sources. Predominantly all business-
type activities revenues were from user charges.
Business – type activities
20
15
10
5
User charges Expenses and indirect
charges
Town of Canton, Massachusetts Page 28 of 118 Comprehensive Annual Financial ReportSource page 103
Fund-wide 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 the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a
combined ending fund balance of approximately $23.3 million, an increase of approximately $1.5 million
over the prior year. The increase was primarily the result of revenues exceeding expenditures in the
general fund due to higher than expected motor vehicle excise and building permit revenues.
Unassigned fund balance in the general fund was approximately $11.4 million or 13.9% of general fund
expenditures. This is available for spending at the government’s discretion. Assigned fund balance, as a
result of encumbrances and amounts budgeted for next fiscal year of approximately $0.8 million, and
committed fund balance for carryover articles of approximately $0.4 million bring total fund balance in
the general fund to approximately $12.6 million or 15.3% of general fund expenditures.
The remainder of governmental fund balances are included as Combined Nonmajor Fund Balances and
are classified as either (1) non-spendable, due to being the corpus of an endowment in the amount of
approximately $0.4 million; (2) restricted due to constraints placed externally by third-parties in the
amount of approximately $10.5 million; (3) amounts restricted for capital projects of approximately $0.4
million, or (4) unassigned as they reflect negative balances due to grant deficits and the use of short-term
notes as funding sources for construction of approximately $0.6 million. These are expected to be funded
in future years through grant reimbursements and permanent financing.
Proprietary funds – The Town’s proprietary funds are made up of (1) the Water, Sewer and Rink
Enterprise Funds which provides the same type of information found in the government-wide
financial statements under business-type activities and discussed in that section, but in more detail;
and (2) the Town’s Internal Service Fund which accounts for the Town’s Health Claims Fund.
The Health Claims Fund has a Net Position balance of approximately $5.3 million. This represents an
increase of approximately $1.9 million over the prior year as claims were down from the prior year.
Health Claims Fund
15
14
13
12
11
10
Revenues Expenses
Town of Canton, Massachusetts Page 29 of 118 Comprehensive Annual Financial ReportSource page 104
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget included revisions to the following
line items:
Approximately $0.2 million in increases allocated to public safety.
Approximately $0.2 million in decreases allocated to general government.
Approximately $1.0 million in increases allocated to public works.
Approximately $0.1 million in increases to education.
Approximately $0.1 million in increases to culture and recreation.
All of the amendments were between operating line items in the original budget and were for operating
purposes. The overall bottom line final budget increased $1.2 million from the original budget,
primarily as a result of funding snow and ice removal costs.
Major budget to actual differences on the revenue side included property tax and excise, which exceeded
budget by approximately $1.8 million, licenses and permits which exceeded budget by $0.6 million and
departmental revenues which exceeded budget by $0.4 million.
On the expenditure side, numerous minor favorable variances which in total approximated $0.5 million
existed.
Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary
Information following the footnotes to the report.
Capital Asset and Debt Administration
Capital Assets – The Town’s investment in capital assets for its governmental and business type
activities as of June 30, 2015 amounts to approximately $150.8 million (net of accumulated
depreciation) an increase from the previous year’s balance of approximately $3.1 million. as additions
exceeded the annual depreciation provision.
Major capital asset additions included a renovated senior center, school building improvements, dam
reconstruction and roadway improvements.
Additional information on the Town’s capital assets can be found in Note II subsection D.
Long-term Debt – State statutes limit the amount of general obligation debt a governmental entity may
issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately
$204.2 million, which is significantly in excess of the Town’s outstanding general obligation debt
classified as inside the debt limit.
At the end of the current fiscal year, the Town had total debt outstanding of approximately $59.4 million.
The entire amount comprises debt backed by the full faith and credit of the government.
Town of Canton, Massachusetts Page 30 of 118 Comprehensive Annual Financial ReportSource page 105
The Town’s most recent credit evaluation resulted in the Town maintaining its “AAA” rating
from Standard and Poor‘s Investment Services for general obligation debt. This is the highest
investment grade possible.
The Town’s total debt decreased by approximately $2.8 million during the fiscal year as previously
detailed.
The Town also holds a proportionate share of debt of other governmental units that provide services
within the Town’s boundaries. The debt service from such arrangements is assessed annually to the
Town.
Bond anticipation note payable balances outstanding at year-end amount to approximately $0.8 million
and relate to departmental equipment, building repairs and school improvements.
Additional information on the Town’s short-term and long-term debt can be found in Note II under
subsections F and G.
Economic Factors and Next Year’s Budgets and Rates
Consistent with both State and National work force trends, the Town’s unemployment rates improved
dramatically and are exceeding historical unemployment rate data dating back at least 10 years.
The Town’s property tax base is made up predominantly of residential real estate taxes, which
comprise nearly 62.4% of the Town’s property tax base. The Town also relies heavily on its
commercial and industrial property tax base, which in aggregate comprise 37.6% of the Town’s
property tax base. The Town uses a split rate in assessing taxes, thus commercial, industrial and
personal property tax rates are just over double the residential rate. In addition, Chapter 580 of the
Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase
taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy.
Consistent with both State and National indices, the Town’s housing market experienced a downward
trend from 2005 – 2010. Housing prices began to stabilize during fiscal year 2011 and recently are
beginning to see an upward trend. During 2015, houses in the Town continued selling at greater than
their assessed values, as a result, the Town expects its housing market to continue to maintain or
slightly outpace National indices. In addition, The Town has residential developments in various
stages of completion. These are expected to be completed in the near future.
The Town has responded well to the recent economic challenges. Reductions in local revenue,
primarily interest income and other reductions in revenue have caused the Town to aggressively seek
other revenue producing initiatives in order to maintain appropriations in ways that preserved local
service levels. The Town has been very successful in that regard.
All of the above items were considered when the Town developed its budget for fiscal year 2016. The
budget was adopted in May 2015 and the Town expects its tax rate to be certified in December 2015.
Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for all those with
an interest in the government’s finances. Questions concerning any of the information provided in this
report or request for additional financial information should be addressed to the Office of the Finance
Director, 801 Washington Street, Canton, Massachusetts 02021.
Town of Canton, Massachusetts Page 31 of 118 Comprehensive Annual Financial ReportSource page 106
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Basic Financial Statements Town of Canton, Massachusetts Page 33 of 118 Comprehensive Annual Financial Report
Source page 108
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2015
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 28,966,626 $ 6,539,892 $ 35,506,518
Investments 6,217,821 - 6,217,821
Receivables, net:
Property taxes 544,527 - 544,527
Tax liens and foreclosures 1,205,218 40,990 1,246,208
User fees - 3,906,808 3,906,808
Departmental and other 1,145,243 - 1,145,243
Intergovernmental 3,315,807 - 3,315,807
Prepaid items 1,213,076 - 1,213,076
Deposit held by third party 58,400 - 58,400
Capital assets not being depreciated 11,158,868 624,852 11,783,720
Capital assets, net of accumulated depreciation 93,293,027 45,757,950 139,050,977
Total Assets 147,118,613 56,870,492 203,989,105
Deferred Outflows of Resources
Net difference between projected and actual
earnings on pension plan investments 1,517,174 102,700 1,619,874
Total Deferred Outflows of Resources 1,517,174 102,700 1,619,874
Liabilities
Warrants and accounts payable 1,973,562 89,097 2,062,659
Accrued payroll and withholdings 4,057,754 32,753 4,090,507
Tax refunds payable 1,925,000 - 1,925,000
Health claims incurred but not reported 496,023 - 496,023
Accrued interest 285,292 220,752 506,044
Other liabilities 42,595 10,000 52,595
Bond anticipation notes payable 797,786 - 797,786
Noncurrent liabilities:
Due within one year 4,727,441 2,740,031 7,467,472
Due in more than one year 106,335,287 31,151,262 137,486,549
Total Liabilities 120,640,740 34,243,895 154,884,635
Deferred Inflows of Resources - - -
Net Position
Net investment in capital assets 76,109,604 16,386,618 92,496,222
Restricted for:
Nonexpendable permanent funds 445,985 - 445,985
Expendable permanent funds 342,562 - 342,562
Debt service 2,499,064 - 2,499,064
Federal and State grants 1,979,810 - 1,979,810
Community preservation 1,070,045 - 1,070,045
Gift funds 1,942,301 - 1,942,301
Other specific purposes 913,749 - 913,749
Unrestricted (57,308,073) 6,342,679 (50,965,394)
Total Net Position $ 27,995,047 $ 22,729,297 $ 50,724,344
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 34 of 118 Comprehensive Annual Financial ReportSource page 109
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2015
Program Revenues Net (Expenses) Revenues and Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary government:
Governmental activities:
General government $ 5,683,805 $ 881,979 $ 763,428 $ - $ (4,038,398) $ (4,038,398)
Public safety 15,312,760 2,908,421 260,572 - (12,143,767) (12,143,767)
Education 54,772,830 2,640,969 11,965,095 541,545 (39,625,221) (39,625,221)
Public works 7,227,459 281,025 201,533 2,136,702 (4,608,199) (4,608,199)
Health and human services 1,609,060 151,953 288,922 - (1,168,185) (1,168,185)
Culture and recreation 3,006,143 399,396 35,410 153,822 (2,417,515) (2,417,515)
Interest expense 722,667 - 95,016 - (627,651) (627,651)
Total governmental activities 88,334,724 7,263,743 13,609,976 2,832,069 (64,628,936) (64,628,936)
Business-type activities:
Water 5,253,139 7,011,223 37,338 - $ 1,795,422 1,795,422
Sewer 5,416,303 6,559,894 - - 1,143,591 1,143,591
Rink 405,752 367,098 - - (38,654) (38,654)
Total business-type activities 11,075,194 13,938,215 37,338 - 2,900,359 2,900,359
Total Primary Government $ 99,409,918 $ 21,201,958 $ 13,647,314 $ 2,832,069 (64,628,936) 2,900,359 (61,728,577)
General Revenues:
Property taxes 63,720,607 - 63,720,607
Tax liens 213,952 - 213,952
Motor vehicle and other excise 4,385,878 - 4,385,878
Hotel and meals taxes 581,621 - 581,621
Payments in lieu of taxes 222,149 - 222,149
Grants and contributions not restricted
to specific programs 2,213,169 - 2,213,169
Penalties and interest on taxes 310,740 - 310,740
Unrestricted investment income 218,877 27,019 245,896
Total general revenues 71,866,993 27,019 71,894,012
Change in Net Position 7,238,057 2,927,378 10,165,435
Net Position:
Beginning of year, as restated (See Note IV) 20,756,990 19,801,919 40,558,909
End of year $ 27,995,047 $ 22,729,297 $ 50,724,344
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 35 of 118 Comprehensive Annual Financial ReportSource page 110
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2015
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Assets
Cash and cash equivalents $ 14,516,851 $ 1,189,216 $ 10,092,522 $ 25,798,589
Investments 2,960,871 - 551,656 3,512,527
Receivables, net of allowance for uncollectibles:
Property taxes 541,545 - 2,982 544,527
Tax liens and foreclosures 1,203,433 - 1,785 1,205,218
Motor vehicle excise 478,923 - - 478,923
Intergovernmental 2,499,064 122,279 694,464 3,315,807
Departmental and other - - 346,442 346,442
Prepaid items 1,213,076 - - 1,213,076
Due from other funds 293,589 - - 293,589
Total Assets 23,707,352 1,311,495 11,689,851 36,708,698
Deferred Outflows of Resources - - - -
Total Assets and Deferred Outflows of Resources $ 23,707,352 $ 1,311,495 $ 11,689,851 $ 36,708,698
Liabilities
Warrants and accounts payable $ 957,884 $ 404,619 $ 192,577 $ 1,555,080
Accrued payroll and withholdings 3,849,178 - 208,576 4,057,754
Tax refunds payable 1,925,000 - - 1,925,000
Other liabilities 41,894 - - 41,894
Due to other funds - - 293,589 293,589
Bond anticipation notes payable - 797,786 - 797,786
Total Liabilities 6,773,956 1,202,405 694,742 8,671,103
Deferred Inflows of Resources
Unavailable revenues - property taxes 1,366,880 - 4,767 1,371,647
Unavailable revenues - motor vehicle excise 478,923 - - 478,923
Unavailable revenues - intergovernmental 2,499,064 - - 2,499,064
Unavailable revenues - other - - 346,442 346,442
Total Deferred Inflows of Resources 4,344,867 - 351,209 4,696,076
Fund Balances
Nonspendable - - 445,985 445,985
Restricted - 413,646 10,525,669 10,939,315
Committed 364,246 - - 364,246
Assigned 793,408 - - 793,408
Unassigned 11,430,875 (304,556) (327,754) 10,798,565
Total Fund Balances 12,588,529 109,090 10,643,900 23,341,519
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $ 23,707,352 $ 1,311,495 $ 11,689,851 $ 36,708,698
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 36 of 118 Comprehensive Annual Financial ReportSource page 111
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2015
Total Governmental Fund Balances $ 23,341,519
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 104,451,895
Other long-term assets are unavailable to pay current-period expenditures 4,696,076
Deferred outflows and inflows of resources to be recognized in future pension expense
are not available resources and, therefore, are not reported in the funds:
Net difference between projected and actual earnings on pension plan investments 1,517,174
Assets, deferred outflows of resources and liabilities and deferred inflows of resources of the
Town's internal service funds are included in the Statement of Net Position, but are not
reported in the governmental funds. 5,336,403
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in the governmental funds interest is not reported until due. (285,292)
Long-term liabilities are not due and payable in the current period and therefore are not
reported in the government funds:
Bonds and notes payable (28,180,650)
Unamortized premiums on bonds (1,485,677)
Capital leases payable (104,250)
Landfill closure (78,000)
Compensated absences (1,584,469)
Net pension liability (36,739,917)
Other postemployment benefits (42,889,765)
Net effect of reporting long-term liabilities (111,062,728)
Net Position of Governmental Activities $ 27,995,047
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 118 Comprehensive Annual Financial ReportSource page 112
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2015
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Revenues:
Property taxes $ 63,274,078 $ - $ 493,510 $ 63,767,588
Tax liens 351,721 - - 351,721
Intergovernmental 11,910,279 1,206,545 4,654,269 17,771,093
Motor vehicle and other excises 4,119,643 - - 4,119,643
Hotel and meals taxes 581,621 - - 581,621
Licenses and permits 1,282,441 - - 1,282,441
Penalties and interest on taxes 310,740 - - 310,740
Payments in lieu of taxes 222,149 - - 222,149
Fines and forfeitures 113,467 - - 113,467
Charges for services - - 1,627,494 1,627,494
Departmental and other revenue 1,102,209 - 3,017,540 4,119,749
Investment income 142,310 - 28,870 171,180
Contributions and donations - 17,000 1,228,410 1,245,410
Total Revenues 83,410,658 1,223,545 11,050,093 95,684,296
Expenditures:
Current:
General government 3,805,782 17,668 186,341 4,009,791
Public safety 10,037,984 1,036,442 1,037,543 12,111,969
Education 36,051,564 1,643,654 4,800,836 42,496,054
Public works 5,024,286 2,385,965 2,059,709 9,469,960
Health and human services 825,985 1,256,883 115,116 2,197,984
Culture and recreation 1,697,749 - 407,503 2,105,252
Pension benefits 7,321,245 - - 7,321,245
Employee benefits 11,499,848 - 175,479 11,675,327
State and county assessments 944,583 - - 944,583
Debt service:
Principal 3,819,900 - - 3,819,900
Interest 1,166,454 - - 1,166,454
Total Expenditures 82,195,380 6,340,612 8,782,527 97,318,519
Excess (Deficiency) of Revenues Over (Under) Expenditures 1,215,278 (5,117,067) 2,267,566 (1,634,223)
Other Financing Sources (Uses):
Issuance of bonds and notes - 2,861,150 - 2,861,150
Premiums from bonds and notes 109,077 - 43,965 153,042
Capital lease financing - 104,250 - 104,250
Transfers in 1,026,376 750,000 80,000 1,856,376
Transfers out (830,000) (27,752) (998,624) (1,856,376)
Total Other Financing Sources (Uses) 305,453 3,687,648 (874,659) 3,118,442
Net Change in Fund Balances 1,520,731 (1,429,419) 1,392,907 1,484,219
FUND BALANCES - Beginning of year, as restated (See Note IV) 11,067,798 1,538,509 9,250,993 21,857,300
FUND BALANCES - End of year $ 12,588,529 $ 109,090 $ 10,643,900 $ 23,341,519
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 118 Comprehensive Annual Financial ReportSource page 113
TOWN OF CANTON, MASSACHUSETTS
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, 2015
Net Change in Fund Balances - Total Governmental Fund Balances $ 1,484,219
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. The net amounts are reflected here as reconciling items:
Capital outlays 8,445,932
Disposal of assets (7,500)
Depreciation expense (4,394,072)
Net effect of reporting capital assets 4,044,360
In the Statement of Activities, Internal Service Funds established to administer the Town's
health insurance and worker's compensation activities are included within the Statement of
activities whereas these activities are not presented in the Statement of Revenues,
Expenditures and Changes in Fund Balances. 1,870,398
The issuance of long-term debt 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 has any effect on net position. Also governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when debt is first issued,
whereas these amounts are amortized in the Statement of Activities. The net amounts are
reflected here as reconciling items:
Issuance of general obligation bonds and notes (2,861,150)
Capital lease obligations (104,250)
Amortization of premiums on bonds and notes payable 414,813
Payments on capital leases 13,022
Repayments of debt 3,819,900
Net effect of reporting long-term debt 1,282,335
Revenues in the Statement of Activities that do not provide current financial resources are
unavailable in the Statement of Revenues, Expenditures and Changes in Fund Balances.
Therefore, the recognition of revenue for various types of accounts receivable differ between
the two statements. The amount presented represents the difference in unavailable revenue. (312,254)
In the Statement of Activities, interest is accrued on outstanding long-term debt;
whereas in governmental funds interest is not reported until due. The net
amount presented here as a reconciling item represents the difference in
accruals between this year and the prior year. 28,974
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:
Landfill closure 26,000
Compensated absences (2,201)
Pension benefits (633,262)
Other postemployment benefits (550,512)
Net effect of reporting long-term liabilities (1,159,975)
Change in Net Position of Governmental Activities $ 7,238,057
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 118 Comprehensive Annual Financial ReportSource page 114
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2015
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 3,792,862 $ 2,710,646 $ 36,384 $ 6,539,892 $ 3,168,037
Investments - - - - 2,705,294
Receivables (net):
User charges 2,077,979 1,789,119 39,710 3,906,808 -
Tax liens 20,381 20,609 - 40,990 -
Departmental and other - - - - 319,878
Deposit held by third party - - - - 58,400
Total current assets 5,891,222 4,520,374 76,094 10,487,690 6,251,609
Noncurrent assets:
Nondepreciable capital assets 624,852 - - 624,852 -
Capital assets (net of depreciation) 30,540,945 15,091,741 125,264 45,757,950 -
Total noncurrent assets 31,165,797 15,091,741 125,264 46,382,802 -
Total Assets 37,057,019 19,612,115 201,358 56,870,492 6,251,609
Deferred Outflows of Resources
Net difference between projected and actual
earnings on pension plan investments 51,998 41,469 9,233 102,700 -
Total Deferred Outflows of Resources 51,998 41,469 9,233 102,700 -
Liabilities
Current liabilities:
Warrants and accounts payable 80,875 4,627 3,595 89,097 419,183
Accrued payroll and withholdings 23,856 8,354 543 32,753 -
Health claims incurred but not reported - - - - 496,023
Accrued interest 153,987 66,765 - 220,752 -
Other liabilities 10,000 - - 10,000 -
Compensated absences 27,586 3,351 4,396 35,333 -
Bonds and notes payable 1,762,059 934,639 8,000 2,704,698 -
Total current liabilities 2,058,363 1,017,736 16,534 3,092,633 915,206
Noncurrent liabilities:
Compensated absences 82,758 10,053 13,189 106,000 -
Other postemployment benefits 862,376 390,866 234,300 1,487,542 -
Net pension liability 1,259,184 1,004,209 223,593 2,486,986 -
Bonds and notes payable 19,490,442 7,562,292 18,000 27,070,734 -
Total noncurrent liabilities 21,694,760 8,967,420 489,082 31,151,262 -
Total Liabilities 23,753,123 9,985,156 505,616 34,243,895 915,206
Deferred Inflows of Resources - - - - -
Net Position
Net investment in capital assets 9,759,309 6,528,045 99,264 16,386,618 -
Unrestricted 3,596,585 3,140,383 (394,289) 6,342,679 5,336,403
Total Net Position $ 13,355,894 $ 9,668,428 $ (295,025) $ 22,729,297 $ 5,336,403
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 118 Comprehensive Annual Financial ReportSource page 115
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2015
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 7,011,223 $ 6,559,894 $ 367,098 $ 13,938,215 $ -
Employee contributions - - - - 3,578,511
Employer contributions - - - - 10,597,701
Stop loss reimbursements - - - - 618,860
Total Operating Revenues 7,011,223 6,559,894 367,098 13,938,215 14,795,072
Operating Expenses:
Operating costs 2,496,630 968,690 379,360 3,844,680 -
Massachusetts Water Resources Authority assessment 1,004,356 3,584,952 - 4,589,308 -
Depreciation 1,113,005 669,965 25,412 1,808,382 -
Employee benefits - - - - 12,972,371
Total Operating Expenses 4,613,991 5,223,607 404,772 10,242,370 12,972,371
Operating Income (Loss) 2,397,232 1,336,287 (37,674) 3,695,845 1,822,701
Nonoperating Revenues (Expenses):
Intergovernmental 37,338 - - 37,338 -
Investment income 17,065 9,768 186 27,019 47,697
Interest expense (639,148) (192,696) (980) (832,824) -
Total Nonoperating Revenues (Expenses) (584,745) (182,928) (794) (768,467) 47,697
Change in Net Position 1,812,487 1,153,359 (38,468) 2,927,378 1,870,398
Total Net Position - Beginning of the Year, as
restated (See Note IV) 11,543,407 8,515,069 (256,557) 19,801,919 3,466,005
Total Net Position - End of the Year $ 13,355,894 $ 9,668,428 $ (295,025) $ 22,729,297 $ 5,336,403
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 118 Comprehensive Annual Financial ReportSource page 116
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2015
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,766,055 $ 6,420,883 $ 330,585 $ 13,517,523 $ -
Receipts from interfund services provided - - - - 14,540,079
Payments to employees (804,344) (318,726) (123,233) (1,246,303) -
Payments to vendors (2,649,008) (4,334,117) (239,452) (7,222,577) -
Payments for interfund services used - - - - (13,300,996)
Net Cash Provided by (Used in) Operating
Activities 3,312,703 1,768,040 (32,100) 5,048,643 1,239,083
Cash Flows from Noncapital Financing Activities:
Intergovernmental operating grants 37,338 - - 37,338 -
Net Cash Provided by (Used in) Noncapital
Financing Activities 37,338 - - 37,338 -
Cash Flows from Capital and Related Financing Activities:
Proceeds from the issuance of bonds and notes 631,250 531,750 - 1,163,000 -
Acquisition and construction of capital assets (658,699) (209,933) - (868,632) -
Principal payments on bonds and notes (2,172,500) (1,216,265) (8,000) (3,396,765) -
Interest payments on bonds and notes (708,570) (236,810) (980) (946,360) -
Net Cash Used in Capital and Related
Financing Activities (2,908,519) (1,131,258) (8,980) (4,048,757) -
Cash Flows from Investing Activities:
Investment income 17,065 9,768 186 27,019 47,697
Investment of operating cash - - - - (143,720)
Net Cash Provided by (Used in) Investing Activities 17,065 9,768 186 27,019 (96,023)
Net Change in Cash and Cash Equivalents 458,587 646,550 (40,894) 1,064,243 1,143,060
Cash and Cash Equivalents:
Beginning of the year 3,334,275 2,064,096 77,278 5,475,649 2,024,977
End of the year $ 3,792,862 $ 2,710,646 $ 36,384 $ 6,539,892 $ 3,168,037
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 2,397,232 $ 1,336,287 $ (37,674) $ 3,695,845 $ 1,822,701
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,113,005 669,965 25,412 1,808,382 -
Changes in assets and liabilities:
Receivables (245,168) (139,011) (36,513) (420,692) (254,993)
Accounts payable and accrued expenses 25,931 (116,510) 12,821 (77,758) 113,938
Health claims incurred but not reported - - - - (442,563)
Net pension liability 21,703 17,309 3,854 42,866 -
Net Cash Provided by (Used in) Operating
Activities $ 3,312,703 $ 1,768,040 $ (32,100) $ 5,048,643 $ 1,239,083
Noncash capital and related financing activities:
Amortization of bond premium $ 59,949 $ 41,548 $ - $ 101,497 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 118 Comprehensive Annual Financial ReportSource page 117
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2015
Other Private
Postemployment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 5,683 $ 112,092 $ 1,322,170
Investments 1,185,110 - -
Total Assets 1,190,793 112,092 1,322,170
Liabilities
Warrants payable - - 30,013
Agency liabilities - - 1,292,157
Total Liabilities - - 1,322,170
Net Position
Held in trust for other postemployment benefits 1,190,793 - -
Held in trust for private purposes - 112,092 -
Total Net Position $ 1,190,793 $ 112,092 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 118 Comprehensive Annual Financial ReportSource page 118
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2015
Other Private
Postemployment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employee $ 497,177 $ -
Employer 2,127,256 -
Other - 1,000
Total contributions 2,624,433 1,000
Investment income:
Interest and dividends 17,964 1,186
Total Additions 2,642,397 2,186
Deductions
Education - scholarships - 6,000
Retiree benefits 2,073,433 -
Total Deductions 2,073,433 6,000
CHANGE IN NET POSITION 568,964 (3,814)
NET POSITION AT BEGINNING OF YEAR 621,829 115,906
NET POSITION AT END OF YEAR $ 1,190,793 $ 112,092
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 118 Comprehensive Annual Financial ReportSource page 119
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2015
I. Summary of Significant Accounting Policies
The accompanying basic financial statements of the Town have been prepared in conformity with
generally accepted accounting principles (GAAP) as applied to state and local governments. GAAP
is prescribed by the Governmental Accounting Standards Board (GASB), which is the primary
standard-setting body for state and local government entities. The following is a summary of the more
significant policies and practices used by the Town:
A. Reporting Entity
The Town is located in Norfolk County, fifteen miles southwest of Boston and was incorporated
as a Town in 1797. An elected five member Board of Selectmen (“Selectmen”) governs the
Town and an appointed Town Administrator oversees the Town’s daily executive and
administrative duties. The Town follows the open town meeting form of government. The Town
provides governmental services for the territory within its boundaries, including police and fire
protection, disposal of garbage and rubbish, public education in grades K-12, water and sewer
services, street maintenance, parks and recreational facilities.
Component units, while separate entities, are in substance part of the governmental operations if
the significance of their operations and/or financial relationship with the Town meet certain
criteria. Pursuant to these criteria there are no component units required to be included in the
financial statements.
The Town is a member community of the Blue Hills Regional Technical School that provides
educational services to nine area communities. This joint venture assesses each community its
share of operational and debt service costs based on student population and other factors. In
fiscal year 2015, the Town’s share of the operating and debt service expenses was $1,098,642.
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, Massachusetts 02021.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the non-fiduciary activities of the primary government and
its component units. For the most part, the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which
primariliy on fees and charges for support.
Separate financial statements are provided for governmental funds, proprietary funds and
fiduciary funds, even though the fiduciary funds are excluded from the government-wide
financial statements. Major individual government funds and major individual enterprise funds
are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated
and presented in a single column.
Town of Canton, Massachusetts Page 45 of 118 Comprehensive Annual Financial ReportSource page 120
Major Fund Criteria – Major funds must be reported if both of the following criteria are met:
1) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of an individual governmental or enterprise fund are at least ten
percent of the corresponding element (assets and deferred outflows, liabilities and
deferred inflows, etc.) for all funds of that category or type (total governmental or total
enterprise funds), and
2) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of the individual governmental fund or enterprise fund are at least
five percent of the corresponding element for all governmental and enterprise funds
combined.
Additionally, any other governmental or enterprise fund that management believes is particularly
significant to the basic financial statements may be reported as a major fund.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when a liability is incurred. Property taxes are
recognized as revenues in the fiscal year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider are met.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
The governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized when
susceptible to accrual (i.e. measurable and available). Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities of
the current period. Expenditures are recorded when the related fund liability is incurred, except
for unmatured interest on general long-term debt which is recognized when due, certain
compensated absences, claims and judgments which are recognized when the obligations are
expected to be liquidated with current expendable available resources.
The Town considers property tax revenues to be available if they are material and collected
within 60 days after the end of the fiscal year. Investment income associated with the current
fiscal period is susceptible to accrual and has been recognized as revenue of the current fiscal
period. All other revenue items are considered to be measurable and available only when the
cash is received and are recognized as revenue at that time.
Town of Canton, Massachusetts Page 46 of 118 Comprehensive Annual Financial Report