Canton, Massachusetts · Saved source text
Official Statement dated May 7, 2020
Saved text from 209 source pages. Transcription and OCR may contain errors; verify figures and wording against the original. Retrieved 2026-10-15.
Source page 121
Inventories – Inventories, which are not material to the basic financial statements, are considered
to be expenditures at the time of purchase.
Capital Assets – Capital assets, which include land, land improvements, buildings and
improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer
mains, and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated capital assets, donated
works of art and similar items, and capital assets received in a service concession arrangement are
reported at acquisition value rather than fair value. Interest incurred during the construction
phase of capital assets of business-type activities is included as part of the capitalized value of the
assets constructed.
All purchases and construction costs in excess of $25,000 are capitalized at the date of acquisition
or construction, respectively, with expected lives of greater than one year. The costs of normal
maintenance and repairs that do not add to the value of the asset or materially extend assets lives
are not capitalized.
Capital assets (excluding land and construction-in-process) are depreciated by the Town on a
straight-line-basis over the following estimated useful lives:
Land improvements 20-50 years
Buildings and improvements 20-50 years
Machinery and equipment 3-20 years
Vehicles 5 years
Infrastructure 40-50 years
Interfund Balances – Activity between funds that are representative of lending arrangements
outstanding at the end of the fiscal year are referred to as either due to/from other funds or
advances to/from other funds. All other outstanding balances between funds are reported as due
to/from other funds.
Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as internal balances.
Interfund Transfers – During the course of its operations, resources are permanently reallocated
between and within funds. These transactions are reported as transfers in and transfers out in the
individual fund statements. Transfers between and within governmental and fiduciary funds are
eliminated from the governmental activities in the statement of activities. Any residual balances
outstanding between the governmental activities and the business–type activities are reported in
the statement of activities as transfers, net.
Investment Income – Excluding the permanent funds, investment income derived from major and
nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by
state law. Investment income of the proprietary funds is voluntarily assigned to the general fund.
Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but
unused vacation and sick-pay benefits. Compensated absence liabilities related to both
governmental and business-type activities are normally paid from the funds reporting payroll and
related expenditures. Amounts related to these benefits are accrued when incurred in the
Town of Canton, Massachusetts Page 49 of 130 Comprehensive Annual Financial ReportSource page 122
government-wide and proprietary fund financial statements. A liability for these amounts is
reported in Governmental Funds only if they have matured.
Long-term Obligations – Long-term debt is reported as liabilities in the government-wide and
proprietary fund statement of net position. Bond premiums and discounts are amortized over the
life of the bonds using the effective interest method. Bond anticipation notes payable are reported
net of the applicable bond premium or discount.
In the governmental fund financial statements, the face amount of long-term debt issued is
reported as other financing sources. Premiums received on a debt issuance are reported as other
financing sources while discounts are reported as other financing uses. Issuance costs are
exclusively reported as general government expenditures regardless of whether they are withheld
from the actual proceeds.
Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position
will sometimes report a separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The Town has two types of items that are reported on the
government-wide statement of net position which relate to outflows from changes in the net
pension liability and the other postemployment benefit liability. The deferred pensions will be
recognized in pension expense in future years as more fully described in Note III, subsection A.
The deferred other postemployment benefits will be recognized in employee benefits expense in
future years as more fully described in Note III, subsection C.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. The Town has three
items that are reported as deferred inflows of resources. The first arises only under a modified
accrual basis of accounting and, accordingly, the item unavailable revenue is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from
four sources: property taxes, excise taxes, intergovernmental and other. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts become
available. The other items are reported on the government-wide statement of net position and
relate to inflows from changes in the net pension liability and the other postemployment benefit
liability. The deferred pensions will be recognized in pension expense in future years as more
fully described in Note III, subsection A. The deferred other postemployment benefits will be
recognized in employee benefits expense in future years as more fully described in Note III,
subsection C.
Net Position – In the government-wide financial statements, net position reported as “net
investment in capital assets” includes capital assets, net of accumulated depreciation, less the
principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital
related debt are not considered to be capital related debt.
Net position is reported as restricted when amounts are not available for appropriation or are
legally restricted by outside parties for a specific use. Net position has been restricted for the
following:
Town of Canton, Massachusetts Page 50 of 130 Comprehensive Annual Financial ReportSource page 123
Nonexpendable permanent funds represent the endowment portion of donor restricted trusts
that support governmental programs.
Expendable permanent funds represent the spendable portion of donor restricted trusts that
support governmental programs.
Debt service represents a grant to fund a portion of the debt service on outstanding school
construction debt that will be amortized over the life of the bonds in accordance with state
law.
Federal and State grants represent assets that have restrictions placed on them from federal
and state granting agencies.
Community preservation represents assets that are restricted by state law for the purposes of
acquiring or developing open space and recreational facilities, historic resources and
affordable housing.
Gift funds represent assets that are restricted by donors for specific governmental programs
and uses.
Other specific purposes represent assets that are restricted by third parties for specific
governmental programs and uses.
Fund Equity – In the fund financial statements, fund balance for governmental funds is reported
in classifications that comprise a hierarchy based primarily to the extent in which the Town is
required to honor constraints on the specific purpose for which amounts in the funds can be spent.
Fund balance is reported in five components – nonspendable, restricted, committed, assigned, and
unassigned as described below:
Nonspendable represents amounts that cannot be spent because they are either (a) not in
spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be
maintained intact such as the corpus of an endowment.
Restricted represents amounts that have constraints placed either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law
through constitutional provisions or enabling legislation. Enabling legislation authorizes the
Town to assess, levy, charge or otherwise mandate payment of resources (from external
resource providers) and includes a legally enforceable requirement (compelled by external
parties) that those resources be used only for the specific purposes stipulated in the
legislation.
Committed represents amounts that can only be used for specific purposes pursuant to
formal action of the Town Meeting through Town Meeting Articles, which represent the
most binding constraint that give rise to committed fund balance. Those committed amounts
cannot be used for any other purpose unless the Town Meeting removes or changes the
specified use by taking the same type of action (through Town Meeting Articles) it
employed previously to commit those amounts.
Assigned represents amounts that are constrained by the Town’s intent to be used for
specific purposes, but are neither restricted nor committed. The Board of Selectmen has by
ordinance authorized the Finance Director to assign fund balance. The Town Meeting may
Town of Canton, Massachusetts Page 51 of 130 Comprehensive Annual Financial ReportSource page 124
also assign fund balance as it does when appropriating fund balance to cover a gap between
estimated revenue and appropriations in the subsequent year’s appropriated budget.
Unassigned represents amounts that have not been restricted, committed or assigned to
specific purposes within the general fund. The general fund is the only fund that reports a
positive unassigned fund balance amount. Other governmental funds besides the general
fund can only report a negative unassigned fund balance amount.
When both restricted and unrestricted resources are available for use, it is the Town’s policy to
use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as
they are needed. When unrestricted resources (committed, assigned and unassigned) are available
for use it is the Town’s policy to use committed resources first, then assigned, and then
unassigned as they are needed.
The Town has not established financial policies with respect to maintaining minimum fund
balance amounts.
Stabilization Funds – The Town maintains a general stabilization fund which may be used for any
municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals
$8,490,281 at June 30, 2019 and is reported as unassigned fund balance in the General Fund.
Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify
encumbrances that arise from the issuance of purchase orders resulting from normal purchasing
activity approved by the Finance Department as assigned, and (2) classify encumbrances that
result from an action of the Town Meeting as committed. Encumbrances of funds already
restricted, or committed are included within the classification of those fund balances and not
reported separately. The Town reports $480,982 of encumbrances from normal purchasing
activity in the general fund as assigned and $976,324 of encumbrances from Town Meeting
Articles in the general fund as committed. There are no encumbrances reported in any other fund.
Town of Canton, Massachusetts Page 52 of 130 Comprehensive Annual Financial ReportSource page 125
The following table reflects the Town’s fund equity categorizations:
Capital Nonmajor
General Projects Governmental Total
Nonspendable:
Nonexpendable trust funds $ - $ - $ 532,385 $ 532,385
Prepaid items 1,609 - - 1,609
Restricted:
Recreation revolving - - 340,308 340,308
Parking revolving - - 220,108 220,108
Library revolving - - 105,393 105,393
Other Town revolving - - 373,710 373,710
School revolving - - 1,792,331 1,792,331
General municipal private grants - - 678,219 678,219
Ambulance receipts reserved - - 1,979,720 1,979,720
Community preservation - - 2,203,714 2,203,714
Police grants - - 370,823 370,823
Other Town grants - - 120,164 120,164
School grants - - 1,797,300 1,797,300
General municipal donations - - 2,334,971 2,334,971
School donations - - 208,385 208,385
Insurance recoveries - - 17,930 17,930
Roadway improvements - 191,987 - 191,987
Other capital outlay - 47,493 182,117 229,610
Library trust funds - - 565,159 565,159
Conservation trust funds - - 155,366 155,366
Other trust funds - - 36,153 36,153
Other purposes 110,803 - 403,831 514,634
Committed:
Police 96,519 - - 96,519
Education 74,163 - - 74,163
Infrastructure 490,717 - - 490,717
Public buildings 94,347 - - 94,347
Other purposes 220,578 - - 220,578
Assigned:
Purchase orders 480,982 - - 480,982
Subsequent years' budget 1,200,000 - - 1,200,000
Unassigned 17,486,817 (1,260,976) - 16,225,841
$20,256,535 $ (1,021,496) $14,418,087 $33,653,126
E. Excess of Expenditures Over Appropriations and Deficits
During fiscal year 2019, no expenditures exceeded appropriations in the General Fund.
The Town incurred individual fund deficits totaling $1,260,976 in Capital Project Major Fund.
These deficits will be funded through bond proceeds during fiscal year 2020.
Town of Canton, Massachusetts Page 53 of 130 Comprehensive Annual Financial ReportSource page 126
F. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure for contingent assets and liabilities at the date of the basic financial statements and the
reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results
could vary from estimates that were used.
II. Detailed Notes to All Funds
A. Deposits and Investments
A cash and investment pool is maintained that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The
deposits and investments of trust funds are held separately from those of other funds.
State laws and regulations require the Town to invest funds only in pre-approved investment
instruments which include but are not necessarily limited to bank deposits, money markets,
certificates of deposit, U.S. obligations, repurchase agreements, and the State Treasurer’s
investment pool (the Pool). In addition, the statutes impose various limitations on the amount and
length of investments and deposits. Repurchase agreements cannot be for a period of over ninety
days, and the underlying security must be a United States obligation.
The Pool meets the criteria of an external investment pool. The Pool is administered by the
Massachusetts Municipal Depository Trust (the MMDT), which was established by the Treasurer
of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the
same as the value of the Pool shares.
Custodial Credit Risk: Deposits - In the case of deposits, this is the risk that in the event of a bank
failure, the government’s deposits may not be returned to it. The Town has adopted a policy that
no more than 25% of the Town’s cash may be comprised of unsecured bank deposits, except for a
30 day reprieve during times of heavy collections. The credit worthiness of banks will be tracked
by Veribanc, or other bank credit worthiness reporting systems, and the Treasurer will move or
collateralize deposits as a result of negative reports. At year-end, the carrying amount of the
Town's deposits was $34,827,193 and the bank balance was $36,397,497. Of the Town's bank
balance, $32,813,449 was covered by federal depository insurance or the Depositor’s Insurance
Fund; $3,379,966 was collateralized and the remainder was exposed to custodial credit risk
because it was uninsured and uncollateralized.
Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of
the invested party not being able to provide required payments to investors, ceasing to exist, or
filing of bankruptcy, the Town may not be able to recover the full amount of its principal
investment and/or investment earnings. The Town has adopted a policy to review the financial
institutions financial statements and the background of each advisor. All securities not held
directly by the Town will be held in the Town’s name and tax identification number by a third
party custodian and evidenced by safekeeping receipts showing individual CUSIP numbers for
each security. The investments in the MMDT are not exposed to custodial credit risk as their
existence is not evidenced by securities that exist in physical or book form. The Town’s
investment in a repurchase agreement is held by a counterparty, but not in the Town’s name. The
Town of Canton, Massachusetts Page 54 of 130 Comprehensive Annual Financial ReportSource page 127
repurchase agreement is fully collateralized with U.S. government securities. The Town’s
investments in negotiable certificates of deposit are fully covered by federal depository insurance.
Fair Value of Investments – The Town reports its investments at fair value. The Town
categorizes its fair value measurements within the fair value hierarchy established by GAAP.
This hierarchy is based on valuation inputs used to measure the fair value of the asset or liability.
The three levels of the hierarchy are as follows:
• Level 1 – Inputs are quoted prices in active markets for identical investments at the
measurement date.
• Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or
indirectly observable for the investment through correlation with market data at the
measurement date and for the duration of the instrument’s anticipated life.
• Level 3 – Inputs reflect the Town’s best estimate of what market participants would use
in pricing the investment at the measurement date.
The following table presents the Town’s investments carried at fair value on a recurring basis in
the statement of net position at June 30, 2019:
Fair Value Measurements Using
6/30/19 Level 1 Level 2 Level 3
Investments by fair value level
Debt securities:
U.S. government obligations $ 7,459,002 $ 1,073,409 $ 6,385,593 $ -
Corporate fixed income securities 2,076,645 - 2,076,645 -
Negotiable certificates of deposit 1,454,900 - 1,454,900 -
Bond mutual funds 1,711,450 - 1,711,450 -
Repurchase agreements 2,330,000 - 2,330,000 -
Total debt securities 15,031,997 1,073,409 13,958,588 -
Equity securities:
Common stock 2,195,647 2,195,647 - -
Equity mutual funds 3,783,258 - 3,783,258 -
Total equity securities 5,978,905 2,195,647 3,783,258 -
Total investments by fair value level 21,010,902 $ 3,269,056 $ 17,741,846 $ -
Investments measured at amortized cost
State investment pool 8,603,527
Total investments measured at fair value $ 29,614,429
Debt and equity securities classified in Level 1 are valued using prices quoted in active markets
for those securities. Corporate fixed income securities, U.S. governmental obligations, negotiable
certificates of deposit, bond mutual funds and repurchase agreements classified in Level 2 are
valued using matrix pricing based on the securities’ relationship to benchmark quoted prices.
The State Treasurer’s investment pool (MMDT) is valued at amortized cost. The MMDT’s
Town of Canton, Massachusetts Page 55 of 130 Comprehensive Annual Financial ReportSource page 128
investment advisor may value the pool using an alternative valuation method that more accurately
reflects the fair value in accordance with the pools fair value pricing policies should amortized
cost not approximate the fair value of the pool. There are no restrictions or limits on withdrawals
from the pool and no direct fees are charged to participants.
Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates. The Town’s policy limits investments
of operating funds to one year or less.
At June 30, 2019, the Town had the following investments with maturities:
Maturities in Years
Investments 6/30/19 Less than 1 1-5 6 - 10
Corporate fixed income securities $ 2,076,645 $ 713,289 $ 1,173,897 $ 189,459
U.S. government obligations 7,459,002 1,345,282 5,824,034 289,686
Negotiable certificates of deposit 1,454,900 1,454,900 - -
Repurchase agreements 2,330,000 2,330,000 - -
State investment pool 8,603,527 8,603,527 - -
Total investments with maturities $ 21,924,074 $14,446,998 $ 6,997,931 $ 479,145
Concentration of Credit Risk – The Town has adopted a policy to limit the amount of investments
that may be invested in a single issuer to 10% of the Town’s investments, except for U.S
government obligations, investments fully collateralized with U.S. government obligations and
the Pool (MMDT). At June 30, 2019, Town has 25% of its investments in U.S. government
obligations and 29% of its investments in the MMDT.
Credit Risk – The Town has adopted a policy to only purchase investment grade securities with a
high concentration in securities rated ‘A’ or better.
At June 30, 2019, the credit quality ratings of investments were as follows:
Corporate U.S. Government Negotiable State
Quality Ratings Fixed Agency Certificates Repurchase Investment
(Moody's) Income Obligations of Deposit Agreements Pool Totals
AAA $ - $ 6,385,593 $ - $ - $ - $ 6,385,593
A1 186,580 - - - - 186,580
A2 368,302 - - - - 368,302
A3 628,288 - - - - 628,288
BAA1 639,477 - - - - 639,477
BAA2 253,998 - - - - 253,998
Not rated - - 1,454,900 2,330,000 8,603,527 12,388,427
Totals - All $2,076,645 $ 6,385,593 $ 1,454,900 $ 2,330,000 $ 8,603,527 $20,850,665
Town of Canton, Massachusetts Page 56 of 130 Comprehensive Annual Financial ReportSource page 129
B. Receivables
Receivables as of year-end for the Town's individual major and non-major governmental funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes $ 158,381 $ - $ 158,381
Tax liens and foreclosures 1,312,844 - 1,312,844
Community preservation surcharges 828 - 828
Motor vehicle and other excise taxes 681,298 (291,168) 390,130
Ambulance fees 645,954 (344,260) 301,694
Public safety details 148,087 - 148,087
Intergovernmental 2,812,072 - 2,812,072
Total $ 5,759,464 $ (635,428) $ 5,124,036
Receivables as of year-end for Town's proprietary funds are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Water user charges $ 1,675,772 $ - $ 1,675,772
Water liens 15,592 - 15,592
Sewer user charges 1,653,731 - 1,653,731
Sewer liens 15,594 - 15,594
Rink user charges 19,710 (19,710) -
Stop loss receivables 224,395 - 224,395
Total $ 3,604,794 $ (19,710) $ 3,585,084
Governmental funds report deferred inflows of resources in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period. The following
identifies the components of deferred inflows of resources in the governmental funds:
Other
General Governmental
Fund Funds Total
Receivable type:
Real estate and personal property taxes $ 2,106 $ - $ 2,106
Tax liens and foreclosures 1,309,397 3,447 1,312,844
Motor vehicle and other excise taxes 390,130 - 390,130
Community preservation surcharges - 828 828
Ambulance fees - 301,694 301,694
Intergovernmental 929,952 - 929,952
Total $ 2,631,585 $ 305,969 $ 2,937,554
Town of Canton, Massachusetts Page 57 of 130 Comprehensive Annual Financial ReportSource page 130
School Building Assistance Reimbursement – As of June 30, 2019, the Town expects to receive
the balance of grants from the Commonwealth of Massachusetts under various construction
reimbursement regulations totaling approximately $1.0 million applicable to approved school
construction costs which includes both principal and interest. These costs are reimbursed to the
Town in equal installments over the life of the related bond issues and are subject to appropriation
only by the State Legislature. In the Governmental funds, a receivable of approximately $0.9
million under the caption Intergovernmental has been recorded for the reimbursable portion of the
principal balance as of June 30, 2019.
C. Interfund Receivables, Payables and Transfers
The composition of interfund balances at June 30, 2019 is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds - $ 668,748
Roadway Improvements
$ 668,748
The outstanding balances between funds result mainly from the timing difference between the
dates that (1) reimburseable expenditures occur, (2) the intergovernmental reimbursements are
received and (3) the payments to the general fund are made.
The composition of interfund transfers for the fiscal year ended June 30, 2019 is as follows:
Transfers In
Capital Nonmajor Rink
General Projects Governmental Enterprise
Transfers Out Fund Fund Funds Fund Total
General Fund $ - $ 447,610 $ 797,117 $ 1,500,000 $ 2,744,727 (1)
Nonmajor Governmental Funds 1,477,213 - 6,392 - 1,483,605 (2)
Total $ 1,477,213 $ 447,610 $ 803,509 $ 1,500,000 $ 4,228,332
(1) Transfers to capital projects fund for various capital purposes, transfers to nonmajor governmental funds for
retirement buyback reserves and special education purposes, transfers to rink enterprise fund for capital outlays.
(2) Transfers to general fund to supplement operating budgets, transfers between nonmajor governmental funds
for capital purposes.
Town of Canton, Massachusetts Page 58 of 130 Comprehensive Annual Financial ReportSource page 131
D. Capital Assets
Capital asset activity for the year ended June 30, 2019, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets not being depreciated:
Land $ 11,158,868 $ 2,065,500 $ - $ 13,224,368
Construction in process 104,967 1,665,012 (104,967) 1,665,012
Total capital assets not being depreciated 11,263,835 3,730,512 (104,967) 14,889,380
Capital assets being depreciated:
Land improvements 3,389,961 202,958 - 3,592,919
Buildings 79,996,182 70,084 - 80,066,266
Building improvements 33,173,104 548,884 - 33,721,988
Machinery and equipment 10,281,079 1,332,379 - 11,613,458
Vehicles 6,542,634 1,319,335 (772,878) 7,089,091
Infrastructure 27,686,389 3,134,098 - 30,820,487
Total capital assets being depreciated 161,069,349 6,607,738 (772,878) 166,904,209
Less accumulated depreciation for:
Land improvements (2,001,488) (195,804) - (2,197,292)
Buildings (30,208,112) (1,807,824) - (32,015,936)
Building improvements (15,174,967) (1,389,665) - (16,564,632)
Machinery and equipment (5,998,317) (690,858) - (6,689,175)
Vehicles (5,016,521) (760,884) 745,185 (5,032,220)
Infrastructure (7,210,533) (759,707) - (7,970,240)
Total accumulated depreciation (65,609,938) (5,604,742) 745,185 (70,469,495)
Total capital assets being depreciated, net 95,459,411 1,002,996 (27,693) 96,434,714
Total governmental activities capital assets, net $ 106,723,246 $ 4,733,508 $ (132,660) $ 111,324,094
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Construction in process 85,935 2,056,101 - 2,142,036
Total capital assets not being depreciated 710,787 2,056,101 - 2,766,888
Capital assets being depreciated:
Buildings 18,758,743 - - 18,758,743
Building improvements 341,427 - - 341,427
Machinery and equipment 2,954,826 106,000 - 3,060,826
Vehicles 1,161,120 - - 1,161,120
Infrastructure 59,319,337 345,799 - 59,665,136
Total capital assets being depreciated 82,535,453 451,799 - 82,987,252
Less accumulated depreciation for:
Buildings (5,218,675) (438,653) - (5,657,328)
Building improvements (34,624) (17,071) - (51,695)
Machinery and equipment (1,760,914) (224,980) - (1,985,894)
Vehicles (963,152) (61,808) - (1,024,960)
Infrastructure (29,712,118) (1,066,784) - (30,778,902)
Total accumulated depreciation (37,689,483) (1,809,296) - (39,498,779)
Total capital assets being depreciated, net 44,845,970 (1,357,497) - 43,488,473
Total business-type activities capital assets, net $ 45,556,757 $ 698,604 $ - $ 46,255,361
Town of Canton, Massachusetts Page 59 of 130 Comprehensive Annual Financial ReportSource page 132
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Water
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Construction in process - 665,776 - 665,776
Total capital assets not being depreciated 624,852 665,776 - 1,290,628
Capital assets being depreciated:
Buildings 17,495,139 - - 17,495,139
Building improvements 241,742 - - 241,742
Machinery and equipment 2,228,335 106,000 - 2,334,335
Vehicles 804,504 - - 804,504
Infrastructure 28,864,361 236,470 - 29,100,831
Total capital assets being depreciated 49,634,081 342,470 - 49,976,551
Less accumulated depreciation for:
Buildings (4,752,077) (408,530) - (5,160,607)
Building improvements (32,132) (12,087) - (44,219)
Machinery and equipment (1,335,044) (165,566) - (1,500,610)
Vehicles (620,306) (52,628) - (672,934)
Infrastructure (11,970,998) (552,064) - (12,523,062)
Total accumulated depreciation (18,710,557) (1,190,875) - (19,901,432)
Total capital assets being depreciated, net 30,923,524 (848,405) - 30,075,119
Total Water capital assets, net $ 31,548,376 $ (182,629) $ - $ 31,365,747
Business-type Activities: Sewer
Capital assets being depreciated:
Buildings $ 1,263,604 $ - $ - $ 1,263,604
Buildings and improvements 99,685 - - 99,685
Machinery and equipment 726,491 - - 726,491
Vehicles 356,616 - - 356,616
Infrastructure 30,454,976 109,329 - 30,564,305
Total capital assets being depreciated 32,901,372 109,329 - 33,010,701
Less accumulated depreciation for:
Buildings (466,598) (30,123) - (496,721)
Buildings and improvements (2,492) (4,984) - (7,476)
Machinery and equipment (425,870) (59,414) - (485,284)
Vehicles (342,846) (9,180) - (352,026)
Infrastructure (17,741,120) (514,720) - (18,255,840)
Total accumulated depreciation (18,978,926) (618,421) - (19,597,347)
Total capital assets being depreciated, net 13,922,446 (509,092) - 13,413,354
Total Sewer capital assets, net $ 13,922,446 $ (509,092) $ - $ 13,413,354
Town of Canton, Massachusetts Page 60 of 130 Comprehensive Annual Financial ReportSource page 133
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Rink
Capital assets not being depreciated:
Land $ - $ - $ - $ -
Construction in process 85,935 1,390,325 - 1,476,260
Total capital assets not being depreciated 85,935 1,390,325 - 1,476,260
Total capital assets being depreciated, net - - - -
Total Rink capital assets, net $ 85,935 $ 1,390,325 $ - $ 1,476,260
Depreciation expense was charged to functions/programs as follows:
Governmental Activities: Business-Type Activities:
General government $ 200,304 Water $ 1,190,875
Public safety 929,592 Sewer 618,421
Education 2,888,593 $ 1,809,296
Public works 1,123,361
Health and human services 82,854
Culture and recreation 380,038
$ 5,604,742
Rink Capital Assets – During a prior fiscal year, a portion of the roof of the ice rink used in the
Rink Enterprise Fund operations collapsed due to the significant snowfall in the area. The ice
rink is leased from the Commonwealth and, therefore, the building is not a capital asset of the
Rink Enterprise Fund. The remaining capital assets of the Rink Enterprise Fund were sold or
disposed during fiscal year 2017. The Town is currently reconstructing the rink with available
insurance recoveries, grants, bond proceeds and other available local funds.
E. Leases
The Town entered into a non-cancelable lease for the purchase of a school bus. This lease
qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the
present value of the future minimum lease payments as of the inception date.
Assets acquired through capital leases are as follows:
Amount
Asset:
School bus $ 104,250
Less: accumulated depreciation (83,400)
Total $ 20,850
Town of Canton, Massachusetts Page 61 of 130 Comprehensive Annual Financial ReportSource page 134
The future minimum lease payments and the present value of the minimum lease payments at
June 30, 2019, are as follows:
Fiscal Year Ended June 30, Amount
2020 21,713
Total minimum lease payments 21,713
Less: amounts representing interest -
Present value of minimum lease payments $ 21,713
F. Temporary Debt
The Town is authorized to borrow on a temporary basis to fund the following:
Current Operating Costs – Prior to collection of revenues, expenditures may be financed through
the issuance of revenue or tax anticipation notes (RANS or TANS).
Capital Projects and Other Approved Costs – Projects may be temporarily funded through the
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases,
prior to the issuance of these temporary notes, the governing body must take the necessary legal
steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed
the aggregate amount of bonds authorized or the grant award amount.
Temporary notes are general obligations of the Town and carry maturity dates that are limited by
state law. Interest expenditures and expenses for temporary borrowings are accounted for in the
general fund and enterprise funds, respectively.
Temporary notes outstanding as of June 30, 2019, are payable as follows:
Interest Maturity July 1, June 30,
Type Rate Date 2018 Additions Retirements 2019
BAN 2.25% 05/22/20 $ - $ 1,500,000 $ - $ 1,500,000
Total Governmental Notes - 1,500,000 - 1,500,000
BAN 2.25% 05/22/20 - 1,000,000 - 1,000,000
Total Business-Type Notes - 1,000,000 - 1,000,000
Total Notes Payable $ - $ 2,500,000 $ - $ 2,500,000
Governmental activities notes were issued for school modular classrooms and business-type
activities notes were issued for water treatment facility improvements.
Town of Canton, Massachusetts Page 62 of 130 Comprehensive Annual Financial ReportSource page 135
G. Long–Term Obligations and Debt
The Town issues general obligation bonds and notes to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds and notes have been issued for
both governmental and business-type activities. Additionally, the Town incurs various other
long-term obligations relative to associated personnel costs.
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize
indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance
with this section of the law is designated as being “inside the debt limit.” In addition, the Town
may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is
designated as being “outside the debt limit”.
The following reflects the current year activity in the long-term liability accounts:
Beginning Ending Due within
Balance Additions Deletions Balance one year
Governmental Activities:
General obligation bonds (a) $ 24,821,400 $ 5,368,300 $ (5,253,800) $ 24,935,900 $ 3,869,900
Unamortized bond premium 1,046,816 510,063 (277,772) 1,279,107 321,261
Notes from direct borrowings and placements (a) 292,843 - (14,621) 278,222 14,916
Capital leases 42,986 - (21,273) 21,713 21,713
Compensated absences 1,916,862 583,994 (479,216) 2,021,640 505,410
Net pension liability 38,809,535 18,384,003 (11,477,376) 45,716,162 -
Net other postemployment benefits liability (b) 87,533,609 5,236,332 (12,175,915) 80,594,026 -
Total Governmental Activities $ 154,464,051 $ 30,082,692 $ (29,699,973) $ 154,846,770 $ 4,733,200
Business-Type Activities - Water:
General obligation bonds (a) $ 17,309,100 $ 2,783,100 $ (4,521,700) $ 15,570,500 $ 1,437,300
Unamortized bond premium 486,780 323,184 (89,934) 720,030 127,696
Notes from direct borrowings and placements (a) 977,000 - (200,000) 777,000 200,000
Compensated absences 97,705 13,768 (24,426) 87,047 21,762
Net pension liability 1,330,115 630,073 (393,362) 1,566,826 -
Net other postemployment benefits liability (b) 2,153,614 128,848 (299,585) 1,982,877 -
Total Water 22,354,314 3,878,973 (5,529,007) 20,704,280 1,786,758
Business-Type Activities - Sewer:
General obligation bonds (a) 3,408,500 123,600 (763,500) 2,768,600 547,800
Unamortized bond premium 51,561 - (15,680) 35,881 9,423
Notes from direct borrowings and placements (a) 2,714,526 - (290,271) 2,424,255 180,546
Compensated absences 7,044 26,222 (1,761) 31,505 7,876
Net pension liability 1,060,777 502,488 (313,709) 1,249,556 -
Net other postemployment benefits liability (b) 828,215 49,558 (115,219) 762,554 -
Total Sewer 8,070,623 701,868 (1,500,140) 7,272,351 745,645
Business-Type Activities - Rink:
Bond and note debt 6,000 - (6,000) - -
Net pension liability 236,189 111,883 (69,851) 278,221 -
Net other postemployment benefits liability (b) 140,278 8,392 (19,512) 129,158 -
Total Rink 382,467 120,275 (95,363) 407,379 -
Total Business-Type Activities $ 30,807,404 $ 4,701,116 $ (7,124,510) $ 28,384,010 $ 2,532,403
(a) Reclassifications were made to beginning balances for the adoption of GASB Statement No. 88.
(b) As restated (see Note IV)
Town of Canton, Massachusetts Page 63 of 130 Comprehensive Annual Financial ReportSource page 136
The governmental activities liabilities will be liquidated by the general fund. The business-type
liabilities will be liquidated by the enterprise fund reporting the liabilities.
The following is a summary of outstanding long-term debt obligations as of June 30, 2019:
Interest Beginning Ending
Description of Issue Rate Balance Additions Maturities Balance
Governmental Activities:
General Obligation Bonds 2.00 - 5.00% $ 13,794,000 $ 3,970,000 $ (2,083,000) $ 15,681,000
General Obligation Refunding Bonds 2.00 - 4.00% 11,027,400 1,398,300 (3,170,800) 9,254,900
Total General Obligation Bonds 24,821,400 5,368,300 (5,253,800) 24,935,900
Add: Unamortized bond premium 1,046,816 510,063 (277,772) 1,279,107
Total General Obligation Bonds, net 25,868,216 5,878,363 (5,531,572) 26,215,007
MA Office of Energy & Enivronmental Affairs 2.00% 292,843 - (14,621) 278,222
Total notes from direct borrowings and placements 292,843 - (14,621) 278,222
Total Governmental Activities debt $ 26,161,059 $ 5,878,363 $ (5,546,193) $ 26,493,229
Business-Type Activities - Water:
General Obligation Bonds 2.00 - 5.00% $ 12,600,000 $ - $ (4,026,000) $ 8,574,000
General Obligation Refunding Bonds 3.25 - 4.00% 4,709,100 2,783,100 (495,700) 6,996,500
Total General Obligation Bonds 17,309,100 2,783,100 (4,521,700) 15,570,500
Add: Unamortized bond premium 486,780 323,184 (89,934) 720,030
Total General Obligation Bonds, net 17,795,880 3,106,284 (4,611,634) 16,290,530
Massachusetts Water Resource Authority 0.00% 977,000 - (200,000) 777,000
Total notes from direct borrowings and placements 977,000 - (200,000) 777,000
Total Water debt $ 18,772,880 $ 3,106,284 $ (4,811,634) $ 17,067,530
Business-Type Activities - Sewer:
General Obligation Bonds 2.00 - 5.00% $ 2,366,000 $ - $ (277,000) $ 2,089,000
General Obligation Refunding Bonds 3.25 - 4.00% 1,042,500 123,600 (486,500) 679,600
Total General Obligation Bonds 3,408,500 123,600 (763,500) 2,768,600
Add: Unamortized bond premium 51,561 - (15,680) 35,881
Total General Obligation Bonds, net 3,460,061 123,600 (779,180) 2,804,481
Massachusetts Water Resource Authority 0.00% 113,300 - (113,300) -
Massachusetts Clean Water Trust 2.00% 2,601,226 - (176,971) 2,424,255
Total notes from direct borrowings and placements 2,714,526 - (290,271) 2,424,255
Total Sewer debt $ 6,174,587 $ 123,600 $ (1,069,451) $ 5,228,736
Business-Type Activities - Rink:
General Obligation Bonds 2.00% $ 6,000 $ - $ (6,000) $ -
Total Rink Debt $ 6,000 $ - $ (6,000) $ -
Total Business-Type Activities, net $ 24,953,467 $ 3,229,884 $ (5,887,085) $ 22,296,266
On May 1, 2019, the Town issued general obligation bonds of $3,970,000 paying interest at 2% -
5% per annum. The issuance was utilized for dam repairs ($1,571,000), land acquisition
($1,849,000), vehicles and equipment ($361,000) and roadway improvements ($189,000).
Town of Canton, Massachusetts Page 64 of 130 Comprehensive Annual Financial ReportSource page 137
Payments on outstanding bond balances due in future years consist of the following:
Direct Borrowings
Year Ending General Obligation Bonds and Placements
June 30 Principal Interest Principal Interest
Governmental Activities
2020 $ 3,869,900 $ 918,531 $ 14,916 $ 5,490
2021 3,817,200 761,931 15,215 5,190
2022 3,250,100 601,169 15,521 4,884
2023 2,857,400 469,063 15,833 4,573
2024 2,184,900 359,880 16,151 4,254
2025-2029 6,039,400 962,733 85,756 16,271
2030-2034 1,877,000 309,971 94,727 7,299
2035-2039 1,040,000 77,400 20,103 302
Total $ 24,935,900 $ 4,460,678 $ 278,222 $ 48,263
Business-Type Activities - Water
2020 $ 1,437,300 $ 538,494 $ 200,000 $ -
2021 1,388,400 484,464 200,000 -
2022 1,392,900 431,246 159,000 -
2023 1,393,100 374,758 109,000 -
2024 1,366,900 323,553 109,000 -
2025-2029 5,703,900 981,860 - -
2030-2034 2,498,000 227,122 - -
2035-2037 390,000 23,400 - -
Total $ 15,570,500 $ 3,384,897 $ 777,000 $ -
Business-Type Activities - Sewer
2020 $ 547,800 $ 83,979 $ 180,546 $ 46,680
2021 364,400 68,611 184,194 43,032
2022 307,000 55,141 187,915 39,311
2023 289,500 45,535 191,711 35,515
2024 288,200 36,586 195,584 31,642
2025-2029 671,700 100,131 1,038,808 97,321
2030-2032 300,000 19,875 445,497 8,955
Total $ 2,768,600 $ 409,858 $ 2,424,255 $ 302,456
Town of Canton, Massachusetts Page 65 of 130 Comprehensive Annual Financial ReportSource page 138
Massachusetts Office of Energy and Environmental Affairs (EEA)
The Town’s has an outstanding note from direct borrowings and placements issued to the EEA
under the Commonwealth’s Dam and Seawall Repair and Removal Fund. The note was issued on
February 24, 2015, payable at a 2% interest rate with payments through March 6, 2035.
Massachusetts Water Resource Authority (MWRA)
The Town’s has three outstanding notes from direct borrowings and placements issued to the
MWRA on November 15, 2010, May 7, 2012 and August 19, 2013 for $410,000, $500,000, and
$1,090,000, respectively. The notes are payable without interest in ten equal installments. Any
imputed interest is immaterial to the water enterprise fund.
Massachusetts Clean Water Trust (MCWT)
The Town’s has an outstanding note from direct borrowings and placements issued to the MCWT
for $3,745,695 with interest payable at 2% and payments through July 15, 2030. The financing
agreement with the MCWT contain a provision that in the event of default, outstanding amounts
due and payable shall be paid from any undisbursed proceeds on account or be deducted from any
state local aid distributions owed to the Town. This provision also allows the MCWT to declare
the entire outstanding principal amount due immediately.
Current Refunding
On May 1, 2019, the Town issued general obligation refunding bonds of $4,305,000, paying
interest at rates of 2% - 5% per annum. The proceeds, along with $437,684 of premiums, were
used to retire $4,670,000 of callable general obligation bonds. As a result of the current
refunding, the Town reduced its total debt service requirements by $389,554, which resulted in an
economic gain (difference between the present value of the debt service payments on the old and
new debt) of $343,257.
The following represents authorized and unissued debt as of June 30, 2019:
Project Amount
Governmental:
Infrastructure $ 9,172,000
School building improvements 3,130,000
Pool project 5,900,000
Other capital projects 766,500
Business-type:
Water projects 3,270,000
Sewer projects 864,790
Rink repairs 5,983,000
Total Authorized and Unissued $ 29,086,290
Town of Canton, Massachusetts Page 66 of 130 Comprehensive Annual Financial ReportSource page 139
III. Other Information
A. Retirement System
Retirement System Description – The Town contributes to the Norfolk County Retirement System
(the “System”), a cost-sharing multiple-employer defined benefit pension plan. The System was
established under Chapter 32 of the Commonwealth of Massachusetts General Laws (MGL) and
is administered by Norfolk County Retirement Board (the “Board”). Standalone audited financial
statements for the year ended December 31, 2018 were issued and are available at the Norfolk
County Retirement System, 480 Neponset Street, Canton, MA 02021.
The System provides retirement, disability and death benefits to plan members and beneficiaries.
Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan.
Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits
imposed by the Commonwealth’s state law during those years are borne by the Commonwealth
and are deposited into the pension fund directly. Cost-of-living adjustments granted after 1997
must be approved by the Board and are borne by the System.
Contributions Requirements – The System has elected provisions of Chapter 32, Section 22D (as
amended) of Massachusetts General Laws, which require that a funding schedule be established
to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating
employers are assessed their share of the total retirement cost based on the entry age, normal
actuarial cost method. The Town contributed $5,245,794 to the System in fiscal year 2019,
which equaled the actuarially-determined contribution requirement for the fiscal year.
Net Pension Liability – At June 30, 2019, the Town reported a liability of $48,810,765 for its
proportionate share of the net pension liability. The net pension liability was measured as of
December 31, 2018 and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation as of December 31, 2017. There were no material changes
to the System’s benefit terms since the previous actuarial valuation.
The Town’s proportion of the net pension liability is based on a projection of the Town’s long-
term share of contributions to the System relative to the projected contributions of all employers.
The Town’s proportion was approximately 7.50% at December 31, 2018, which was consistent
with the proportion measured at December 31, 2017.
Fiduciary Net Position –The System’s fiduciary net position was determined using the accrual
basis of accounting. The System’s accounting records are maintained on a calendar-year basis in
accordance with the standards and procedures established by PERAC. Contributions from
employers and employees are recognized in the period in which they become due pursuant to
formal commitments, statutory or contractual requirements. Benefit payments (including refunds
of employee contributions) are recorded when incurred, regardless of the timing of payment.
Investments are reported at fair value; fair value is determined as the price one would receive in
an orderly transaction between market participants at a measurement date.
Pension Expense – The Town recognized $6,325,433 in pension expense in the statement of
activities in fiscal year 2019; which was allocated to all functional expenses that applied.
Town of Canton, Massachusetts Page 67 of 130 Comprehensive Annual Financial ReportSource page 140
Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2019, the
Town reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net differences between projected and
actual earnings on pension plan investments $ 5,924,570 $ -
Differences between expected and
actual experience 2,655,515 -
Changes in assumptions 1,443,336 792,193
Changes in proportion and differences
between Town contributions and
proportionate share of contributions 164,880 440,565
Total $ 10,188,301 $ 1,232,758
The deferred outflows of resources and deferred inflows of resources are expected to be
recognized in the Town’s pension expense as follows:
Year ended June 30,
2019 $ 3,058,757
2020 2,525,364
2021 1,454,179
2022 1,917,243
Total $ 8,955,543
Actuarial Valuation – The measurement of the System’s total pension liability is developed by an
independent actuary. The latest actuarial valuation was performed as of December 31, 2017. The
significant actuarial assumptions used in the actuarial valuation included:
Actuarial cost method: Individual entry age normal
Amortization method: 4.0% increasing payments
Remaining amortization period: 11 years
Investment rate of return: 7.75%
Projected salary increases: 3.5% - 5.5%
Asset valuation method: Market value
Cost of living adjustments: 3.0% on the first $17,000 of benefits
Inflation rate: 4.0%
Mortality rates: Pre-retirement and post-retirement rates reflect the
RP-2014 Blue Collar Mortality with Scale MP-2014,
fully generational
Town of Canton, Massachusetts Page 68 of 130 Comprehensive Annual Financial ReportSource page 141
The investment rate of return assumption is a long-term assumption and is based on capital
market expectations by asset class, historical returns and professional judgment. The market
expectations analysis used a building-block approach, which included expected returns by asset
class and the target asset allocation. The target allocation and best estimates of arithmetic real
returns for each major asset class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Domestic Equity 32.0% 8.1%
International Equity 17.5% 8.2%
Fixed Income 19.0% 3.2%
Real Estate 9.0% 7.3%
Private Equity 8.5% 10.4%
Hedge Fund 9.0% 7.4%
Real Assets 5.0% 10.4%
Total 100.0%
The System’s investment policy’s total, blended expected rate of return seeks to meet or exceed
the assumed actuarial rate of return.
Discount Rate – The discount rate used to measure the total pension liability in the December 31,
2017 actuarial valuation report was 7.75%. This represents a reduction from the 8.0% discount
rate used in the previous actuarial valuation. The projection of cash flows used to determine the
discount rate assumed plan member contributions were made at the current contribution rate and
that employer contributions will be made at rates equal to the actuarially-determined contribution
rates and the member rate. Based on those assumptions, the System’s fiduciary net position was
projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Sensitivity Analysis – The following presents the Town’s proportionate share of the net pension
liability calculated using the discount rate of 7.75% as well as the Town’s proportionate share of
the net pension liability using a discount rate that is one percentage point lower (6.75%) or one
percentage point higher (8.75%) than the current rate (dollar amounts are in thousands):
Current
1% Decrease Discount 1% Increase
(6.75%) (7.75%) (8.75%)
Town’s proportionate share of
the net pension liability $ 61,213 $ 48,811 $ 38,267
B. Massachusetts Teachers’ Retirement System
Teachers and certain administrative employees of the School Department participate in the
Massachusetts Teachers’ Retirement System (“MTRS”), a cost-sharing multiple employer
defined benefit pension plan. The MTRS is managed by the Commonwealth on behalf of
municipal teachers and municipal teacher retirees. Like the System, MTRS was established
Town of Canton, Massachusetts Page 69 of 130 Comprehensive Annual Financial ReportSource page 142
under Chapter 32 of Massachusetts General Laws. The Commonwealth’s legislature has the
authority to amend or modify the MTRS’s funding policies.
The Commonwealth is a nonemployer contributor to the MTRS and is legally responsible by
statute for all actuarially determined employer contributions and future benefit requirements of
the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by
GASB Statement No. 68, Accounting and Financial Reporting for Pensions.
For the year ended June 30, 2019, the Commonwealth contributed $4,988,460 to the MTRS on
behalf of the Town. The Town’s proportionate share of the collective MTRS net pension liability
at this reporting date was 0.379413%, which was based on the actual, actuarially determined
contribution made by the Commonwealth on behalf of the Town as a percentage of the total
annual contribution made by the Commonwealth on behalf of all employers.
The table below presents the Town’s proportionate share of the following:
Paid (or assumed)
Commonwealth On Behalf Town
Portion of the Town Portion
Net pension liability $ 89,963,752 $ (89,963,752) $ —
Pension expense 9,116,524 (9,116,524) —
In addition to pension expense reported as previously discussed, the Town has recognized
intergovernmental revenue and pension expense of $9,116,524 associated with this arrangement.
C. Other Postemployment Benefits (OPEB)
The Town administers a single-employer defined benefit healthcare plan (the “OPEB Plan”). The
OPEB Plan provides health, dental and life insurance benefits (other postemployment benefits) to
current and future retirees, their dependents and beneficiaries in accordance with Section 20 of
Massachusetts General Law Chapter 32B.
Specific benefit provisions and contribution rates are established by collective bargaining
agreements, state law and Town ordinance. All benefits are provided through the Town’s
premium-based insurance program. The OPEB Plan does not issue a stand-alone financial report
and is presented as a fiduciary fund in the Town’s financial statements.
With respect to OPEB plan reporting, GASB issued GASB Statement No.’s 74, Financial
Reporting for Postemployment Benefit Plans Other Than Pensions, and Statement No, 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.
Reporting requirements for governments who administer an OPEB plan as defined under the
accounting standard are required to present disclosures under both GASB 74 and GASB 75.
GASB 74 requires specific disclosures and required supplementary information that relate
directly to the fiduciary fund in which the OPEB Plan is recorded. GASB 75 address disclosures
related to the net OPEB liability required to be recorded by the government in its applicable
financial statements. A number of these disclosures are identical, especially if the measurement
date under GASB 75 is the same as the plan year-end date. When a different measurement date is
used different assumptions and calculations will result.
Town of Canton, Massachusetts Page 70 of 130 Comprehensive Annual Financial ReportSource page 143
For the year ended June 30, 2019, the Town elected to use a measurement date that was the same
as the plan year-end date thus the majority of the same disclosures are used and will not be
repeated.
GASB Statement No. 75
OPEB Plan disclosures that impact the Town’s net OPEB liability using a measurement date of
June 30, 2019 are summarized as follows:
Employees Covered by Benefit Terms – The following employees were covered by the benefit
terms as of June 30, 2019:
Active employees 675
Inactive employees 592
Total 1,267
Contributions – The contribution requirements of OPEB Plan members and the Town are
established and may be amended by the Town. Retirees contribute 25% of the set premium for
medical, dental and life insurance plans. The remainder of the cost is funded by general revenues
of the Town. The Town currently contributes enough money to the Plan to satisfy current
obligations on a pay-as-you-go basis. The costs of administering the OPEB Plan are paid by the
Town. For the year ended June 30, 2019, the Town’s average contribution rate was 9.7% of
covered payroll.
Net OPEB Liability – The Town’s net OPEB liability was measured as of June 30, 2019 using an
actuarial valuation as of July 1, 2018. The components of the net OPEB liability of the Town at
June 30, 2019 were as follows:
Total OPEB Liability $ 88,688,109
Plan fiduciary net position (5,219,494)
Net OPEB liability $ 83,468,615
Plan fiduciary net position as
a percentage of the total
OPEB liability 5.9%
Town of Canton, Massachusetts Page 71 of 130 Comprehensive Annual Financial ReportSource page 144
The total OPEB liability in the most recent actuarial valuation was determined using the
following key actuarial assumptions applied to all periods included in the measurement, unless
otherwise specified:
Investment rate of return 7.05%, net of OPEB plan investment expense,
including inflation.
Muncipal bond rate 2.79% as of June 30, 2019
Discount Rate 5.75%, net of OPEB plan investment
expense including inflation.
Inflation 2.75% annually as of June 30, 2019 and for future periods
Health Care Trend Rate 4.5%
Salary Increases 3.00% annually as of June 30, 2019 and for future periods
Cost of Living Adjustment Not applicable.
Pre-Retirement Mortality RP-2000 Employees Mortality Table projected generationally
with scale BB and a base year 2009 for males and females
Post-Retirement Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2009 for males and females
Disabled Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2012 for males and females
Actuarial Cost Method Individual entry age normal
Key assumption changes effective Fiscal Year ending June 30, 2019
Single Equivalent Discount Rate 5.75% previously 5.25%
Health Care Trend Rate 4.5% previously 5.0%
Discount Rate – The discount rate used to measure the total OPEB liability was 5.75%.
Long Term Expected Rate of Return – The long-term expected rate of return on OPEB Plan
investments was determined using a building-block method in which best-estimate ranges of
expected future real rates of return (expected returns, net of OPEB Plan investment expense and
inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the
expected future real rates of return by the target asset allocation percentage and by adding
expected inflation.
Town of Canton, Massachusetts Page 72 of 130 Comprehensive Annual Financial ReportSource page 145
The target allocation and best estimates of arithmetic real rates of return were as reflected in the
following table:
Expected
Target Investment Rate
Asset Class Allocation of Return
Domestic Equity - Large Cap 23.33% 4.00%
Domestic Equity - Small/Mid Cap 11.67% 6.00%
Interntional Equity - Developed Market 13.33% 4.50%
Interntional Equity - Emerging Market 6.67% 7.00%
Domestic Fixed Income 20.00% 2.00%
International Fixed Income 5.00% 3.00%
Alternatives 20.00% 6.50%
Cash 0.00% 0.00%
100.00%
Real rate of return 4.55%
Inflation assumption 2.75%
Total nominal rate of return 7.30%
Investment expense -0.25%
Net investment return 7.05%
Sensitivity Analyses – The following presents the Town’s net OPEB liability as well as what the
Town’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower or
1% higher than the current discount rate as well as if the healthcare cost trend rates are 1% lower
or higher than the current healthcare cost trend rates:
Discount Rate
1% Decrease (4.75%) Trend Rate (5.75%) 1% Increase (6.75%)
Net OPEB Liability $ 95,718,380 $ 83,468,615 $ 73,702,982
Health Care Rate
1% Decrease (3.5%) Current (4.5%) 1% Increase (5.5%)
Net OPEB Liability $ 72,612,791 $ 83,468,615 $ 96,870,548
Town of Canton, Massachusetts Page 73 of 130 Comprehensive Annual Financial ReportSource page 146
Changes in the Net OPEB Liability – The following table summarizes the changes in the net
OPEB liability for the year ended June 30, 2019:
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a) - (b)
Balances at June 30, 2018 $ 90,505,695 $ 2,980,371 $ 87,525,324
Changes for the year:
Service cost 2,040,579 - 2,040,579
Interest 5,463,438 - 5,463,438
Other 4,305,815 1,175,423 3,130,392
Changes of assumptions (3,907,488) - (3,907,488)
Difference between expected
and actual experience (5,996,352) - (5,996,352)
Net investment income - 263,700 (263,700)
Employer contributions - 4,523,578 (4,523,578)
Benefit payments withdrawn from trust - (3,723,578) 3,723,578
Benefit payments (3,723,578) - (3,723,578)
Net changes (1,817,586) 2,239,123 (4,056,709)
Balances at June 30, 2019 $ 88,688,109 $ 5,219,494 $ 83,468,615
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the year
ended June 30, 2019, the Town recognized OPEB expense of $5,369,556. Deferred outflows of
resources and deferred inflows of resources related to OPEB at June 30, 2019 were reported as
follows:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and actual earnings $ 21,779 $ -
Changes of assumptions - 3,190,518
Differences between expected and actual experience - 4,896,104
$ 21,779 $ 8,086,622
Town of Canton, Massachusetts Page 74 of 130 Comprehensive Annual Financial ReportSource page 147
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
OPEB will be recognized in OPEB expense (benefit) as follows:
June 30
2020 $ (1,813,758)
2021 (1,813,758)
2022 (1,813,758)
2023 (1,805,819)
2024 (817,750)
$ (8,064,843)
GASB Statement No. 74
OPEB Plan disclosures that impact the Town’s net OPEB liability using a measurement date of
June 30, 2019 are summarized in this section except disclosures under GASB 74 that are identical
to GASB 75 are not repeated.
Investment Custody – In accordance with Massachusetts General Laws, the Town Treasurer is the
custodian of the OPEB Plan and since the Town has not designated a Board of Trustees, the
Town Treasurer is also the Trustee and as such is responsible for the general supervision of the
management, investment and reinvestment of the OPEB Plan assets. OPEB Plan assets may be
invested and reinvested by the custodian consistent with the prudent investor rule established in
Chapter 203C and may, with the approval of the State Retiree Benefits Trust Fund Board of
Trustees, be invested in the State Retiree Benefits Trust Fund established in Section 24 of Chapter
32A. OPEB Plan assets must be segregated from other funds and not be subject to the claims of
any general creditor of the Town.
Investment Policy – The OPEB Plan has a formal investment policy to invest in Domestic Equity,
Domestic Fixed Income, International Equity, International Fixed Income, Alternative
Investments and Cash Equivalents with target allocations highlighted previously under the
caption long-term expected rate of return.
Investment Rate of Return – For the year ended June 30, 2019 the annual money-weighted rate of
return on investments, net of investment expense, was 5.55%. The money-weighted rate of return
expresses investment performance, net of investment expense, adjusted for the changing amounts
actually invested.
D. Risk Financing
The Town is exposed to various risks of loss related to torts: theft of, damage to and destruction
of assets; errors and omissions; and natural disasters for which the Town carries commercial
insurance. The amount of claim settlements has not exceeded insurance coverage in any of the
previous three years.
Group Health Insurance Plan – The Town maintains a "reinsured cost reimbursement program"
which covers the group health and dental insurance requirements of the Town employees. The
Plan is essentially a self-insurance program and employee claims in excess of $150,000 are
Town of Canton, Massachusetts Page 75 of 130 Comprehensive Annual Financial ReportSource page 148
reinsured by the Plan. The Plan allows employees to participate in a Health Maintenance
Organization (HMO) or Preferred Provider Organization (PPO). The Town reimburses the costs
of the HMO and PPO 75 percent. The Town accrues an amount representing claims incurred but
not reported (IBNR), which is based on historical claims paid averages for the twelve months
prior to fiscal year end. At June 30, 2019, the amount of the liability for incurred but not reported
(IBNR) health insurance claims totaled $884,633. This liability is the best estimate based on
available information. In the fund-wide financial statements, the Town reports the activities of
the Group Insurance Health Plan in the Internal Service Fund where revenues are recorded when
earned and expenses are recorded when the liability is incurred. Changes in the reported liability
since July 1, 2017, are as follows:
Balance at Claims and
Beginning Changes in Claims Balance at Current
of Year Estimates Payments End of Year Portion
Fiscal Year 2019 $ 878,641 $ 17,608,427 $(17,602,435) $ 884,633 $ 884,633
Fiscal Year 2018 878,641 12,690,057 (12,690,057) 878,641 878,641
Workers’ Compensation – The Town is also self-insured for their workers’ compensation
activities which are accounted for in the Internal Service Fund. Workers’ compensation claims
are administered by a third-party and are funded on a pay-as-you-go basis from annual
appropriations. The Town is premium based for all claims after July 1, 2009. The Town
purchases individual stop loss insurance in excess of the coverage provided in the amount of
$300,000. The estimated future workers’ compensation liability is not material at June 30, 2019
and is therefore not reported.
E. Commitments
The Town has entered or is planning to enter into contracts for various projects for which it has
authorized approximately $27.0 million in debt.
F. Contingencies
The Town is party to other certain legal claims, which are subject to many uncertainties, and the
outcome of individual litigation matters in these situations cannot be reasonably estimated.
Although the amount of liability, if any, in these situations at June 30, 2019, cannot be
ascertained, management believes that the resulting liability, if any, should not materially affect
the basic financial statements of the Town at June 30, 2019. Other amounts received or
receivable from grantor agencies are subject to audit and adjustment by grantor agencies,
principally the federal and state governments. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures
which may be disallowed by the grantor cannot be determined at this time although the Town
expects such amounts, if any, to be immaterial.
The Town is subject to certain Federal arbitrage laws in accordance with long-term borrowing
agreements. Failure to comply with the rules could result in the payment of penalties. The Town
does not believe it has failed to comply with any of these agreements.
Town of Canton, Massachusetts Page 76 of 130 Comprehensive Annual Financial ReportSource page 149
G. Tax Abatements
The Town enters into property tax abatements with local businesses as an incentive for economic
growth, including expansion of current facilities and job opportunities for local residents. The
agreements are commonly referred to as tax increment financing, or TIF, agreements. Under
Massachusetts General Law Chapter 40, Section 59, property owners may be granted property tax
abatements of up to 100% of the value of a tax increment for a maximum term of twenty years
provided the property is located in a TIF zone. TIF zones are approved by the Massachusetts
Economic Assistance Coordinating Council. Furthermore, the Town Meeting must approve all
TIF agreements.
The Town has four such agreements for which the assessed value of the related properties have
been reduced by a percentage between 20 and 70 percent of the incremental assessed value. For
the fiscal year ended June 30, 2019, the Town’s total tax revenues were reduced by
approximately $1.3 million as a result of these tax abatement agreements.
H. Implementation of GASB pronouncements
Current Year Implementations –
In November 2016, the GASB issued GASB Statement No. 83, Certain Asset Retirement
Obligations. The objective of the Statement was to address accounting and financial reporting for
certain asset retirement obligations that have legally enforceable liability associated with the
retirement of a tangible capital asset. The provisions of this Statement became effective in fiscal
year 2019 and did not have a material impact on the Town’s financial statements.
In April 2018, the GASB issued GASB Statement No. 88, Certain Disclosures Related to Debt,
Including Direct Borrowings and Direct Placements. The objective of this Statement was to
improve the information that is disclosed in notes to government financial statements related to
debt, including direct borrowings and direct placements. It also clarified which liabilities
governments should include when disclosing information related to debt. The provisions of this
Statement became effective in fiscal year 2019 and did not have a material impact on the Town’s
financial statements.
Future Implementations –
In January 2017, the GASB issued GASB Statement No. 84, Fiduciary Activities. The objective
of the Statement is to improve guidance regarding the identification of fiduciary activities for
accounting and financial reporting purposes and how these activities should be reported. The
provisions of this Statement are effective for financial reporting periods beginning after
December 15, 2018 (fiscal year 2020). The Town is currently evaluating whether adoption will
have a material impact on the financial statements.
In June 2017, the GASB issued GASB Statement No. 87, Leases. This Statement redefines the
manner in which long-term leases are accounted and reported. The provisions of this Statement
are effective for financial reporting periods beginning after December 15, 2019 (fiscal year 2021).
The Town is currently evaluating whether adoption will have a material impact on the financial
statements.
In June 2018, the GASB issued GASB Statement No. 89, Accounting for Interest Cost Incurred
Before the End of a Construction Period. This statement establishes accounting requirements for
Town of Canton, Massachusetts Page 77 of 130 Comprehensive Annual Financial ReportSource page 150
interest costs incurred before the end of a construction period. The provisions of this Statement
are effective for financial reporting periods beginning after December 15, 2019 (fiscal year 2021).
The Town is currently evaluating whether adoption will have a material impact on the financial
statements.
In August 2018, the GASB issued GASB Statement No. 90, Majority Equity Interest – An
Amendment of GASB Statements No. 14 and No. 61. The objective of this Statement is to
improve the consistency and comparability of reporting a government’s majority equity interest in
a legally separate organization and to improve the relevance of financial statement information
for certain component units. The provisions of this Statement are effective for financial reporting
periods beginning after December 15, 2018 (fiscal year 2020). The Town is currently evaluating
whether adoption will have a material impact on the financial statements.
In May 2019, the GASB issued GASB Statement No. 91, Conduit Debt Obligations. The
objective of this Statement is to standardize the reporting of conduit debt obligations by issuers
by clarifying the existing definition of conduit debt obligation, among other matters. The
provisions of this Statement are effective for financial reporting periods beginning after
December 15, 2020 (fiscal year 2022). The Town is currently evaluating whether adoption will
have a material impact on the financial statements.
IV. Prior Period Restatements
As a result of the Town completing its most recent actuarial valuation of its net OPEB liability, a
prior period restatement was required to properly reflect the net OPEB liability as of June 30,
2018.
The impact is illustrated in the table below:
Governmental Business-type
Activities Activities Water Sewer Rink
Prior year as presented $ 6,018,851 $ 28,050,146 $14,410,483 $ 11,253,154 $ 2,386,509
Restate net OPEB liability (6,829,428) (140,314) (94,286) (39,634) (6,394)
As restated $ (810,577) $ 27,909,832 $14,316,197 $ 11,213,520 $ 2,380,115
Town of Canton, Massachusetts Page 78 of 130 Comprehensive Annual Financial ReportSource page 151
Required Supplementary Information Town of Canton, Massachusetts Page 79 of 130 Comprehensive Annual Financial Report
Source page 152
TOWN OF CANTON, MASSACHUSETTS
REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS
YEAR ENDED JUNE 30, 2019
SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
(dollar amounts are in thousands)
Year Ended June 30,
2019 2018 2017 2016 2015
Town's proportion of the net pension
liability (asset) 7.50% 7.49% 7.65% 7.65% 7.56%
Town's proportionate share of the net
pension liability (asset) $ 48,811 $ 41,437 $ 39,940 $ 41,562 $ 39,227
Town's covered payroll $ 22,792 $ 22,021 $ 20,827 $ 20,288 $ 19,140
Town's proportionate share of the net
pension liability (asset) as a percentage
of its covered payroll 214.2% 188.2% 191.8% 204.9% 204.9%
Plan fiduciary net position as a percentage
of the total pension liability 58.3% 63.5% 61.6% 58.6% 60.1%
SCHEDULE OF THE TOWN'S CONTRIBUTIONS TO PENSION PLAN
(dollar amounts are in thousands)
Year Ended June 30,
2019 2018 2017 2016 2015
Actuarially determined contribution $ 5,246 $ 4,796 $ 4,394 $ 3,991 $ 3,571
Contributions in relation to the
actuarially determined contribution 5,246 4,796 4,394 3,991 3,571
Contribution deficiency (excess) $ - $ - $ - $ - $ -
Town's covered payroll $ 22,391 $ 21,439 $ 20,408 $ 19,831 $ 18,924
Contributions as a percentage of
covered payroll 23.4% 22.4% 21.5% 20.1% 18.9%
This schedule is presented to illustrate the requirement to show information for ten years.
However, until a full ten-year trend is compiled, information is presented for those years
in which information is available.
See accompanying independent auditor's report.
Town of Canton, Massachusetts Page 80 of 130 Comprehensive Annual Financial ReportSource page 153
TOWN OF CANTON, MASSACHUSETTS
REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS
YEAR ENDED JUNE 30, 2019
SCHEDULE OF THE COMMONWEALTH'S COLLECTIVE SHARE OF THE NET PENSION LIABILITY
MASSACHUSETTS TEACHER'S RETIREMENT SYSTEM
(dollar amounts are in thousands)
Year Ended June 30,
2018 2017 2016 2015 2014
Commonwealth's proportion of the
collective net pension liability (asset) 100.0% 100.0% 100.0% 100.0% 100.0%
Town's proportion of the collective
net pension liability (asset) 0.0% 0.0% 0.0% 0.0% 0.0%
Commonwealth's proportionate share of
the net pension liability (asset) $ 23,711,289 $ 22,885,391 $ 22,357,928 $ 20,489,643 $ 15,896,354
Commonwealth's actuarially
determined contribution $ 1,314,783 $ 1,235,515 $ 1,124,583 $ 1,021,930 $ 937,379
Contributions to MTRS are the responsibility of the Commonwealth of Massachusetts.
This schedule is presented to illustrate the requirement to show information for ten years.
However, until a full ten-year trend is compiled, information is presented for those years
in which information is available.
See accompanying independent auditor's report.
Town of Canton, Massachusetts Page 81 of 130 Comprehensive Annual Financial ReportSource page 154
TOWN OF CANTON, MASSACHUSETTS
REQUIRED SUPPLEMENTARY INFORMATION - OPEB
YEAR ENDED JUNE 30, 2019
SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS
Year Ended June 30,
2019 2018 2017
Total OPEB liability:
Service cost $ 2,040,579 $ 2,675,741 $ 2,515,860
Interest 5,463,438 4,809,630 4,590,666
Difference between actual and plan experience (5,996,352) - -
Changes of assumptions (3,907,488) - -
Benefit payments (3,723,578) (3,179,556) (3,013,880)
Net change in total OPEB liability (6,123,401) 4,305,815 4,092,646
Total OPEB liability - beginning of year 94,811,510 90,505,695 86,413,049
Total OPEB liability - end of year (a) $ 88,688,109 $ 94,811,510 $ 90,505,695
Plan fiduciary net position:
Contributions - employer $ 4,523,578 $ 4,179,556 $ 3,783,880
Net investment income 263,700 175,423 202,021
Benefit payments (3,723,578) (3,179,556) (3,013,880)
Net change in Plan fiduciary net position 1,063,700 1,175,423 972,021
Plan fiduciary net position - beginning of year 4,155,794 2,980,371 2,008,350
Plan fiduciary net position - end of year (b) $ 5,219,494 $ 4,155,794 $ 2,980,371
Net OPEB liability - end of year (a) - (b) $ 83,468,615 $ 90,655,716 $ 87,525,324
Plan fiduciary net position as a percentage of the total
OPEB liability 5.89% 4.38% 3.29%
Covered payroll $ 46,591,956 $ 45,486,461 $ 44,161,613
Net OPEB liability as a percentage of covered payroll 179.15% 199.30% 198.19%
Note: This schedule is presented to illustrate the requirement to show information for 10 years.
However, until a full 10-year trend is compiled, information is presented for those years
in which information is available.
Note: This schedule is presented using the optional format of combining the required schedules
in paragraph 36a and 36b of GASB 74.
See accompanying independent auditor's report.
Town of Canton, Massachusetts Page 82 of 130 Comprehensive Annual Financial ReportSource page 155
TOWN OF CANTON, MASSACHUSETTS
REQUIRED SUPPLEMENTARY INFORMATION - OPEB
YEAR ENDED JUNE 30, 2019
SCHEDULE OF CONTRIBUTIONS
Year Ended June 30,
2019 2018 2017
Actuarially-determined contribution $ 7,622,221 $ 8,240,517 $ 7,882,229
Contributions in relation to the actuarially-
determined contribution (4,523,578) (4,179,556) (3,783,880)
Contribution deficiency (excess) $ 3,098,643 $ 4,060,961 $ 4,098,349
Covered payroll $ 46,591,956 $ 45,486,461 $ 44,161,613
Contribution as a percentage of covered payroll 9.71% 9.19% 8.57%
Valuation Date July 1, 2018 July 1, 2016 July 1, 2016
Amortization Period 30 years 30 years 30 years
Investment rate of return 7.05% 6.80% 6.97%
Municipal bond rate 2.79% 3.45% 3.13%
Single equivalent discount rate 5.75% 5.25% 5.25%
Inflation 2.75% 2.75% 2.75%
Healthcare cost trend rates 4.50% 5.00% 5.00%
Salary increases 3.00% 3.00% 3.00%
Actuarial Cost Method Individual Entry Age Normal (for all years presented)
Asset Valuation Method Market Value of Assets as of Reporting Date (for all years presented)
SCHEDULE OF INVESTMENT RETURNS
Year Ended June 30,
2019 2018 2017
Annual money-weighted rate of return, net of
investment expense 5.55% 5.05% 8.23%
Note: These schedules are presented to illustrate the requirement to show information for 10 years. However, until a
full 10-year trend is compiled, information is presented for those years in which information is available.
See accompanying independent auditor's report.
Town of Canton, Massachusetts Page 83 of 130 Comprehensive Annual Financial ReportSource page 156
TOWN OF CANTON, MASSACHUSETTS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
YEAR ENDED JUNE 30, 2019
Budgeted Amounts Actual Actual Variance
Original Final Budgetary Budgetary Positive
Budget Budget Amounts Encumbrances Adjusted (Negative)
Revenues:
Taxes:
Real estate and personal property taxes $ 76,454,654 $ 76,454,654 $ 76,579,699 76,579,699 125,045
Tax title - - 220,536 220,536 220,536
Payments in lieu of taxes 242,736 242,736 242,736 242,736 -
Motor vehicle excise 4,000,000 4,000,000 4,903,303 4,903,303 903,303
Meals taxes 350,000 350,000 391,091 391,091 41,091
Room occupancy excise 200,000 200,000 226,657 226,657 26,657
81,247,390 81,247,390 82,564,022 - 82,564,022 1,316,632
Intergovernmental:
State aid - chapter 70 6,127,065 6,127,065 6,127,065 6,127,065 -
State aid - charter school 61,933 61,933 79,083 79,083 17,150
State aid - unrestricted 2,217,268 2,217,268 2,217,268 2,217,268 -
State aid - veterans 116,443 116,443 115,710 115,710 (733)
State aid - exemptions 134,758 134,758 138,518 138,518 3,760
State aid - state owned land 37,835 37,835 37,835 37,835 -
State aid - other 100,000 100,000 213,409 213,409 113,409
MSBA school construction reimbursement 456,305 456,305 456,305 456,305 -
9,251,607 9,251,607 9,385,193 - 9,385,193 133,586
Departmental fees, charges, and other:
Municipal lien fees 40,000 40,000 36,350 - 36,350 (3,650)
Town clerk fees 30,000 30,000 35,895 - 35,895 5,895
Public safety detail fees 30,000 30,000 62,390 - 62,390 32,390
Other departmental fees 50,000 50,000 50,256 - 50,256 256
Rental of municipal property 200,000 200,000 227,884 - 227,884 27,884
Conservation department revenues 55,000 55,000 48,492 - 48,492 (6,508)
Grave openings and care 30,000 30,000 32,288 - 32,288 2,288
Solar revenues 339,422 339,422 512,303 - 512,303 172,881
Other departmental revenues 65,000 65,000 553,953 - 553,953 488,953
839,422 839,422 1,559,811 - 1,559,811 720,389
Licenses and permits:
Alcohol licenses 70,000 70,000 90,410 - 90,410 20,410
Other licenses 80,000 80,000 71,740 - 71,740 (8,260)
Building permits 740,000 740,000 1,066,041 - 1,066,041 326,041
Other permits 10,000 10,000 29,690 - 29,690 19,690
900,000 900,000 1,257,881 - 1,257,881 357,881
Fines and forfeitures:
Motor vehicle fines 85,000 85,000 79,289 - 79,289 (5,711)
Other fines 15,000 15,000 7,773 - 7,773 (7,227)
100,000 100,000 87,062 - 87,062 (12,938)
Penalties and interest on taxes 300,000 300,000 284,011 - 284,011 (15,989)
Interest and investment income 80,000 80,000 462,953 - 462,953 382,953
Total Revenues 92,718,419 92,718,419 95,600,933 - 95,600,933 2,882,514
Town of Canton, Massachusetts Page 84 of 130 Comprehensive Annual Financial ReportSource page 157
TOWN OF CANTON, MASSACHUSETTS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
YEAR ENDED JUNE 30, 2019
Budgeted Amounts Actual Actual Variance
Original Final Budgetary Budgetary Positive
Budget Budget Amounts Encumbrances Adjusted (Negative)
Expenditures:
Current:
General Government:
Executive Branch 1,249,250 1,134,420 1,122,224 11,978 1,134,202 218
Executive Branch Articles 28,860 28,860 1,863 26,997 28,860 -
Commitees and Commissions 35,203 35,203 18,746 - 18,746 16,457
Reserve Fund 500,000 216,000 - - - 216,000
Finance Department 1,169,331 1,179,987 1,091,285 85,846 1,177,131 2,856
Finance Department Articles 202,675 202,675 199,459 3,178 202,637 38
Assessors 415,376 417,620 304,571 113,000 417,571 49
Town Clerk & Elections 263,983 276,196 275,884 - 275,884 312
Town Clerk & Elections Articles 5,756 5,756 - - - 5,756
Conservation Commission 141,952 144,333 122,732 11,618 134,350 9,983
Conservation Commission Articles 23,435 23,435 - 23,435 23,435 -
Planning Board 68,940 68,940 60,800 2,021 62,821 6,119
Planning Board Articles 141,762 141,762 107,259 34,503 141,762 -
Town Insurance 1,209,715 1,209,715 1,137,649 - 1,137,649 72,066
Total General Government 5,456,238 5,084,902 4,442,472 312,576 4,755,048 329,854
Public Safety
Fire Department 6,123,743 6,195,567 6,147,674 8,308 6,155,982 39,585
Fire Department Articles 155,000 155,000 154,773 - 154,773 227
Police Department 5,111,024 5,175,734 5,138,574 37,100 5,175,674 60
Police Department Articles 237,315 237,315 140,790 96,519 237,309 6
Building & Zoning 384,695 389,245 346,515 - 346,515 42,730
Total Public Safety 12,011,777 12,152,861 11,928,326 141,927 12,070,253 82,608
Education:
School 45,090,474 45,090,474 42,228,189 2,862,285 45,090,474 -
School Articles 955,561 955,561 881,382 74,163 955,545 16
Blue Hill Regional 1,214,066 1,214,066 1,207,788 - 1,207,788 6,278
Norfolk County Agricultural HS 20,000 20,000 13,755 - 13,755 6,245
Total Education 47,280,101 47,280,101 44,331,114 2,936,448 47,267,562 12,539
Public Works:
Public Works 2,989,363 3,043,069 2,841,690 192,890 3,034,580 8,489
Public Works Articles 1,007,215 1,007,215 384,393 621,942 1,006,335 880
Street Lighting 95,966 95,966 86,783 2,982 89,765 6,201
Snow & Ice 600,500 714,500 714,458 - 714,458 42
Trash Collection 2,008,894 2,008,894 1,952,943 2,000 1,954,943 53,951
Total Public Works 6,701,938 6,869,644 5,980,267 819,814 6,800,081 69,563
Health and Human Services:
Health Department 362,737 368,932 350,062 - 350,062 18,870
Council on Aging 392,510 398,479 383,690 10,814 394,504 3,975
Veteran's Services 293,913 295,231 243,682 - 243,682 51,549
Total Health and Human Services 1,049,160 1,062,642 977,434 10,814 988,248 74,394
(continued)
Town of Canton, Massachusetts Page 85 of 130 Comprehensive Annual Financial ReportSource page 158
TOWN OF CANTON, MASSACHUSETTS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GENERAL FUND
YEAR ENDED JUNE 30, 2019
Budgeted Amounts Actual Actual Variance
Original Final Budgetary Budgetary Positive
Budget Budget Amounts Encumbrances Adjusted (Negative)
Culture and Recreation:
Recreation & Playground 781,205 783,909 730,546 1,891 732,437 51,472
Recreation & Playground Articles 128,309 163,309 126,889 33,892 160,781 2,528
Public Library 1,318,745 1,319,105 1,304,022 - 1,304,022 15,083
Public Library Articles 92,340 92,340 30,645 61,695 92,340 -
Total Culture and Recreation 2,320,599 2,358,663 2,192,102 97,478 2,289,580 69,083
Pension Benefits: 5,249,494 5,249,494 5,249,461 - 5,249,461 33
Employee Benefits:
Unemployment Compensation 100,000 100,000 100,000 - 100,000 -
Employer Share- Health 12,596,658 12,469,658 12,419,882 8,650 12,428,532 41,126
Employer Share- Life 62,250 62,250 60,202 - 60,202 2,048
Employer Share- OPEB 800,000 800,000 800,000 - 800,000 -
Total Employee Benefits 13,558,908 13,431,908 13,380,084 8,650 13,388,734 43,174
State and County Charges: 1,182,721 1,230,721 1,230,700 - 1,230,700 21
Debt Service: 4,745,068 4,745,068 4,661,371 - 4,661,371 83,697
Total Expenditures 99,556,004 99,466,004 94,373,331 4,327,707 98,701,038 764,966
Other Financing Sources (Uses)
Transfers in 2,286,952 2,286,952 2,388,727 2,388,727 101,775
Transfers out (795,918) (3,344,727) (3,344,727) (3,344,727) -
Total Other Financing Sources (Uses) 1,491,034 (1,057,775) (956,000) $ (956,000) 101,775
Excess (Deficiency) of Revenues and Other
Financing Sources Over Expenditures/Uses
Of Prior Year Budgetary Fund Balance (5,346,551) (7,805,360) $ 271,602 $ 3,749,255
Other Budgetary Items
Use of unassigned fund balance $ 1,154,000 $ 2,112,809
Use of overlay surplus - 1,500,000
Prior year encumbrances 4,192,551 4,192,551
Total Other Budgetary Items 5,346,551 7,805,360
Net budget and actual $ - $ -
(Concluded)
The notes to the financial statements are an integral part of this statement.
The notes to the required supplementary information are and integral part of this statement.
Town of Canton, Massachusetts Page 86 of 130 Comprehensive Annual Financial ReportSource page 159
TOWN OF CANTON, MASSACHUSETTS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
YEAR ENDED JUNE 30, 2019
I. Pension Plan
Pension Contributions – The Town contributes to the Norfolk County Retirement System (the
System), a cost-sharing multiple-employer contributory defined benefit pension plan established
under Chapter 32 of Massachusetts General Law Chapter 32. Under provisions of this law,
participating employers are assessed their share of the total retirement cost based on the entry age,
normal actuarial cost method. The pension appropriations are established by the Public Employee
Retirement Administration Commission (PERAC) based on a funding schedule approved by the
System.
Changes in Assumptions – None.
II. Other Postemployment Benefit Plan
The Town administers a single employer defined benefit healthcare plan that provides health, dental
and life insurance benefits (other postemployment benefits) to retirees and their
dependents/beneficiaries in accordance with Section 20 of Massachusetts General Law Chapter 32B.
The Town is not required to fully fund the actuarially determined contribution.
Methods and assumptions used to determine contribution rates are as follows:
Investment rate of return 7.05%, net of OPEB plan investment expense,
including inflation.
Muncipal bond rate 2.79% as of June 30, 2019
Discount Rate 5.75%, net of OPEB plan investment
expense including inflation.
Inflation 2.75% annually as of June 30, 2019 and for future periods
Health Care Trend Rate 4.5%
Salary Increases 3.00% annually as of June 30, 2019 and for future periods
Cost of Living Adjustment Not applicable.
Pre-Retirement Mortality RP-2000 Employees Mortality Table projected generationally
with scale BB and a base year 2009 for males and females
Post-Retirement Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2009 for males and females
Disabled Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2012 for males and females
Actuarial Cost Method Individual entry age normal
Town of Canton, Massachusetts Page 87 of 130 Comprehensive Annual Financial ReportSource page 160
Changes in Assumptions – The discount rate increased from 5.25% to 5.75% and the health care
trend rate decreased from 5.0% to 4.5%.
III. Budgetary Basis of Accounting
Budgetary Information – An annual budget is legally adopted for the General Fund and the
Enterprise Fund. The budget is recommended by the Finance Committee and approved by Town
Meeting at the Town’s annual meeting in May. Changes subsequent to the approved Town Meeting
budget require majority Town Meeting approval at a Special Town Meeting. Expenditures may not
legally exceed appropriations at the department level. Department heads may transfer, without
Town Meeting approval, appropriation balances from one account to another within their department
or budget, and within the categories of salaries and expenses. At the close of each fiscal year,
unencumbered appropriation balances lapse and revert to unassigned fund balance.
The Town adopts an annual budget for the general fund in conformity with the guidelines described
above. During fiscal year 2019, Town Meeting approved various supplemental budgetary
appropriations which resulted in a net increase of approximately $2.5 million from the original voted
budget. These appropriations were primarily utilized for capital outlay funding ($1.8 million) and
increased stabilization reserves ($0.6 million).
The Town Accountant has the responsibility to ensure that budgetary control is maintained in the
manner in which the appropriations were voted by Town Meeting. Budgetary control is exercised
through the Town’s accounting system.
Budgetary-to-GAAP Reconciliation – The Town’s general fund is prepared on a basis of accounting
other than GAAP. A reconciliation of the budgetary-basis to GAAP-basis results for the General
Fund for the fiscal year ended June 30, 2019, is as follows:
Basis of
Accounting Fund Perspective
Differences Differences Total
Revenues on a budgetary basis $ 95,600,933
Stabilization revenue $ - $ 197,444 197,444
Change in accruing tax revenues (46,541) - (46,541)
Change in recording tax refunds payable (497,951) - (497,951)
On behalf payments 9,116,524 - 9,116,524
Revenues on a GAAP basis $ 8,572,032 $ 197,444 $ 104,370,409
Expenditures on a budgetary basis $ 94,373,331
Reclass of enterprise indirects cost to expenditures $ (911,514) $ - (911,514)
Change in accruing payroll expenditures 149,570 - 149,570
On behalf payments 9,116,524 - 9,116,524
Expenditures on a GAAP basis $ 8,354,580 $ - $ 102,727,911
Other financing sources (uses) on a budgetary basis $ (956,000)
Reclass of enterprise indirects cost to expenditures $ (911,514) $ - (911,514)
Stabilization transfers - 600,000 600,000
Other financing sources (uses) on a GAAP basis $ (911,514) $ 600,000 $ (1,267,514)
Town of Canton, Massachusetts Page 88 of 130 Comprehensive Annual Financial Report