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2010 Comprehensive Annual Financial Report (PDF)
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the fiscal year ended
June 30, 2010Source page 2
On the cover: The Pecunit Street water treatment facility was dedicated to James P. Moran approximately four years after his death. Mr. Moran lived in Canton for 40 years and served the Town as a member of the Canton Housing Authority, Finance Committee, Capital Planning Committee, School Committee and the Water and Sewer Rate Policy Committee. The James P. Moran facility, which is the first of two water treatment plants being constructed by the Town, became operational during fiscal year 2011. These plants will allow the Town to treat water from its wells, estimated to be less costly than purchasing from the Massachusetts Water Resource Authority.
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Town of Canton, Massachusetts
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2009 through June 30, 2010
Prepared by the Finance DepartmentSource page 4
TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2010
TABLE OF CONTENTS
Introductory Section.................................................................................................................................................1
Letter of Transmittal ................................................................................................................................................1
Organizational Chart ...............................................................................................................................................6
Principal Officials.....................................................................................................................................................7
Certificate of Achievement for Excellence in Financial Reporting ..........................................................................8
Financial Section ......................................................................................................................................................9
Independent Auditors’ Report .................................................................................................................................9
Management’s Discussion and Analysis ..............................................................................................................11
Basic Financial Statements...................................................................................................................................20
Statement of Net Assets....................................................................................................................................21
Statement of Activities.......................................................................................................................................22
Governmental Funds – Balance Sheet .............................................................................................................24
Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the
Statement of Net Assets .................................................................................................................................25
Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances ....................26
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities .......................................................................................27
Proprietary Funds – Statement of Net Assets...................................................................................................28
Proprietary Funds – Statement of Revenues, Expenses and Changes in Fund Net Assets............................29
Proprietary Funds – Statement of Cash Flows .................................................................................................30
Fiduciary Funds – Statement of Fiduciary Net Assets ......................................................................................31
Fiduciary Funds – Statement of Changes in Fiduciary Net Assets...................................................................32
Notes to Basic Financial Statements ................................................................................................................33
Required Supplementary Information ...................................................................................................................63
Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual .64
Retirement System Schedules ..........................................................................................................................66
Retirement system schedule of funding progress ........................................................................................ 67
Retirement system schedule of employer contributions............................................................................... 68
Other Postemployment Benefits Plan Schedules .............................................................................................69
Other postemployment benefit plan funding progress & employer contributions......................................... 70
Other postemployment benefit plan actuarial methods and assumptions.................................................... 71Source page 5
Notes to Required Supplementary Information.....................................................................................................72
Combining Statements..........................................................................................................................................75
Nonmajor Governmental Funds ........................................................................................................................77
Nonmajor Governmental Funds - Combining Balance Sheet ...................................................................... 80
Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances........................................................................................................................... 84
Internal Service Funds ......................................................................................................................................89
Internal Service Funds – Combining Statement of Net Assets .................................................................... 90
Internal Service Funds – Combining Statement of Revenues, Expenses, and
Changes in Fund Net Assets ........................................................................................................................ 91
Internal Service Funds – Combining Statement of Cash Flows ................................................................... 92
Fiduciary Funds.................................................................................................................................................93
Agency Fund – Statement of Changes in Assets and Liabilities .................................................................. 94
Statistical Section...................................................................................................................................................95
Net Assets by Component – Last Eight Fiscal Years ...........................................................................................96
Changes in Net Assets – Last Eight Fiscal Years ................................................................................................97
Fund Balances, Governmental Funds – Last Ten Fiscal Years ...........................................................................98
Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years........................................................99
Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates –
Last Ten Fiscal Years.......................................................................................................................................100
Principal Taxpayers – Current Year and Nine Years Ago ..................................................................................101
Property Tax Levies and Collections – Last Ten Fiscal Years ...........................................................................102
Ratios of Outstanding Debt and General Bonded Debt – Last Ten Fiscal Years...............................................103
Direct and Overlapping Governmental Activities Debt........................................................................................104
Computation of Legal Debt Margin – Last Ten Fiscal Years ..............................................................................105
Demographic and Economic Statistics – Last Ten Fiscal Years ........................................................................106
Principal Employers (Excluding Town) – Current Year and Nine Years Ago .....................................................107
Full-time Equivalent Town Employees by Function - Last Ten Fiscal Years......................................................108
Operating Indicators by Function/Program – Last Ten Fiscal Years ..................................................................109
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years..............................................................110Source page 6
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Introductory Section The new message board, located on the front lawn of the Canton Public Library, will provide the community with timely information on town programs, services and emergencies. The message board is a cooperative project of the Board of Selectmen, Library Trustees, and the Friends of the Library.
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Introductory Section Letter of Transmittal December 16, 2010 To the Honorable Selectmen and Citizens of the Town of Canton: At the close of each fiscal year, state law requires the Town of Canton to publish a complete set of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the Town of Canton, Massachusetts, for the fiscal year ending June 30, 2010 for your review. The report is designed to be used by the elected and appointed officials of the Town and others who are concerned with its management and progress such as bond analysts, banking institutions and rating agencies as well as the residents and taxpayers of Canton. This report consists of management’s representations concerning the finances of the Town of Canton. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh their benefits, the Town of Canton’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The Town of Canton’s financial statements have been audited by Powers & Sullivan, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Canton for the fiscal year ended June 30, 2010, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town of Canton’s financial statements for the fiscal year ended June 30, 2010 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town of Canton was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of Town of Canton, Massachusetts 1 Comprehensive Annual Financial Report
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the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Canton’s separately issued Reports of Federal Award Programs. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Canton’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town Canton was incorporated as a Town in 1797. The Town is located in eastern Massachusetts, approximately 18 miles southwest of Boston, has a population of approximately 21,000 and a land area of approximately 19 square miles. It is situated at the junction of Interstates 95 and 93, with access to Route 24, providing an excellent location for residents, businesses and commuters. The Town has a rich and varied industrial heritage, serving as the location of Paul Revere’s copper rolling mills in post-Colonial times, and as the site of rubber, chemical and woolen manufacturing in more recent times. Present commercial enterprises play a key role in the Town’s fiscal stability and are considered a major asset to the community. The prime commercial areas are well located so as to allow direct highway access without affecting the community’s small town charm. Many of the Town’s lakes, ponds and wetlands have been protected and preserved for present enjoyment and future generations. Among the protected areas are the Eleanor Cabot Bradley Reservation, an 82 acre estate that blends open fields, woodlands and gardens in the shadow of Great Blue Hill and Pequitside Farm, a town- owned 38 acre conservation and recreation area which offers playing fields, picnicking, hiking and cross country skiing. The Town offers a full range of traditional municipal services including police and fire protection, ambulance and rescue services, education, maintenance of streets and infrastructure, solid waste collection and disposal, health and human services, cultural and recreational, administrative and financial services. The Town is a member community of the Massachusetts Water Resources Authority (MWRA) for its water and sewer services. Canton prides itself on its quality school system. Canton students consistently perform well on national and state tests and over 95% of students graduating from the high school go on to higher education. The Town is the location of the Blue Hills Regional Technical School which provides expanded vocational education opportunities for high school students of Canton and eight other area communities. Canton is also home to one of the two campuses of Massasoit Community College. The campus is a multi-level facility with specialized labs and art studios that support the technical and visual arts programs of the College. The campus also includes the Milton Art Museum, Akillian Gallery and the College’s Professional Development Center. The Town has reached its 10% affordable housing requirement mandated by the Commonwealth of Massachusetts (Commonwealth), which is an important milestone as communities under the 10% threshold are subject to an appeals process that can overturn local zoning board decisions. This will allow the Town to maintain its commitment to developing much needed affordable housing units in areas of the Town that can accommodate the growth. The Town operates under the Selectmen, Town Administrator and Open Town Meeting form of government. The five elected Selectmen make policy decisions, and the Town Administrator is responsible for carrying out the policies of the Selectmen and for managing the day-to-day operations of the Town. The policies and procedures Town of Canton, Massachusetts 2 Comprehensive Annual Financial Report
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of the Board of Selectmen are detailed in the Administrative Code that will continue to evolve and be created over time to best serve the community. An elected, five-member School Committee appoints a School Superintendent who administers the public school system of the Town. School Committee members, like the Selectmen, are elected at-large to three-year staggered terms. An annual operating budget is approved by Town Meeting two months prior to the start of the fiscal year. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government) and department (e.g. finance) allowing the department heads to allocate resources within the department as they see fit. Transfers between departments, however, need special approval by Town Meeting unless specifically exempted by state statute. Factors Affecting Economic Condition The Town maintains a strong commercial tax base which represented 24% of the total assessed property value in 2010. Market value per capita is approximately $200,000 and the Town’s per capita income is significantly higher than the state average, which adds to the fiscal strength of the community. Through proactive measures by Town management the Town has been able to attract and retain several large international companies such as Reebok International, LTD and Dunkin’ Brands, Inc. Recently, Organogenesis, Inc. announced that it was remaining in Canton by expanding its global headquarters, research and development labs and manufacturing facilities in a campus that will occupy over 250,000 square feet. Organogenesis, Inc., the world leader in regenerative medicine, was enticed to remain in Canton with $12.9 million in incentives as part of the Commonwealth’s $1.0 billion Life Sciences Initiative. The Town also received approximately $850,000 in State grant funds to upgrade roads and sidewalks in the Dan Road area where Organogenesis resides. The Board of Selectmen and the local Economic Development Committee (EDC) are committed to negotiating Tax Incremental Financing (TIF) agreements that enhance the Town’s tax base. A formal TIF policy has been published to provide consistent and rational evaluation criteria to better support the investment in terms of reduced taxes to the Town in exchange for promoting commercial development. Both the Selectmen and the EDC were also instrumental in developing a series of internet based presentations to encourage Canton as an attractive business destination and also a comprehensive guide to assist business with local permitting processes. Recently, the Selectmen approved a building permit fee waiver program for qualifying permit types to spur local building projects and submitted approximately $76,000,000 in requests for Federal stimulus funding for a variety of infrastructure projects. The Town was recently ranked 5th out of 351 municipalities by the Massachusetts High Technology Council’s MassTrack program. MassTrack was created to measure the support of state and local officials for the priorities of the technology economy, including supporting technology development and growth. One of the main factors in attaining this ranking was the Town’s adoption of the Massachusetts General Law (MGL) chapter 43D expedited permitting law that allows Town Meeting to designate targeted developments for a streamlined permit review process. As part of adopting this legislation, a Permit Advisory Committee was also formed to bring together the key permit granting departments to assist the proponent of the commercial development through the permitting process. The Town also utilized a $150,000 state grant to purchase permitting software and to contract with a permit specialist to assist with implementing streamlined permitting procedures. The Town has also been lauded as a prime destination for the biotechnology industry by the Massachusetts Biotechnology Council (MBC). Through its BioReady Communities Campaign, the MBC rates a community’s readiness to host and attract biotechnology research and manufacturing facilities. The Town was one of only 19 Massachusetts communities to receive a Platinum ranking from the MBC, which is the highest attainable. To achieve this ranking a community must have a building that is already permitted for biotechnology uses and has at least 20,000 square feet available for biotechnology uses or has a shovel ready, pre-permitted land site that has already completed a state environmental review. Town of Canton, Massachusetts 3 Comprehensive Annual Financial Report
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The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden by a majority vote at a Town election. While revenue increases have been limited in recent years fixed costs, including health insurance and pension costs, have increased substantially. Several years ago, the Town’s management made the difficult choice to cut services and raise fees in order to balance the budget. With more cuts looming in future years, the Town’s voters approved a $4.5 million Proposition 2 ½ tax override for fiscal year 2009 that allowed for the restoration of most of the budget cuts from the prior years. The tax override was planned to be phased in over a three year period with an annual cost to the average residential homeowner of $450. As a result of the Proposition 2 ½ tax override, Standard and Poor’s upgraded the Town’s bond rating from ‘AA+’ to ‘AAA’, their highest rating given. The override and the resulting revenue flexibility to restore lost services and stabilize budgets in future fiscal years were cited as prominent factors in the upgrade. Standard and Poor’s also cited the Town’s strong wealth and income levels in addition to strong reserve levels and financial management policies. Unfortunately for the Town, due to the national recession, the Commonwealth has been forced to cut state aid. The state aid cuts combined with the unexpected costs of snow and ice removal from the winter months and increased special education tuitions caused the Town to use approximately $760,000 of its cash reserves in fiscal year 2010. This leaves a balance in the Town’s reserves of approximately $5.5 million, which is 7.8% of the fiscal year 2011 general fund operating budget. The Town is committed to building up its reserves once the fiscal crisis is over and the fiscal year 2011 budget set by Town Meeting includes a $200,000 transfer to the Town’s stabilization fund. The financial challenges will continue in fiscal year 2011 as the Commonwealth cut state aid to local cities and towns by an additional 4%. However, due to the passage of the Proposition 2 ½ tax override the Town has been utilizing its excess property tax revenue capacity to avoid the severe service cuts that other municipalities are facing. The Town also took the prudent step of balancing the fiscal year 2011 budget without the usage of significant reserves. Capital Financing As part of the annual budget process, the Capital Planning Committee (CPC) recommends the capital budget for the upcoming year and prepares a five-year plan to address the long-term capital needs of the Town. The capital spending plan for the five year period from fiscal year 2011 through fiscal year 2015 has an estimated cost of $52,239,000, with $4,284,000 to be funded from estimated revenues and reserves and the remainder to be funded from grants and the issuance of bonds. The CPC’s capital plan has allocated $4,348,000 for municipal departments, $4,171,000 for the school department, $7,235,000 for the water enterprise fund, $36,325,000 for the sewer enterprise fund and $160,000 for the rink enterprise fund. The Town funds a portion of its annual capital plan on a pay-as-you-go basis through recurring revenues. The target set aside is 6% of recurring revenues; however, largely due to recent decreases in state aid, the Town has lowered the set aside for the past several fiscal years. Major Initiatives During fiscal year, 2010 the Town implemented several ‘green’ initiatives. The Selectmen appointed a Green Team to study the use and promotion of alternative energies including solar, wind and hydro-electric as well as energy reduction and conservation. Town Meeting also approved an article to allow the site of the Town’s former landfill to be leased for the purposes of installing or constructing solar panels that can generate, store and transmit electricity. Finally, Town Meeting appropriated approximately $950,000 for the Town to enter into energy performance contracts for various energy efficient building upgrades. The energy savings from these projects are Town of Canton, Massachusetts 4 Comprehensive Annual Financial Report
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guaranteed to cover the construction costs thereby allowing the Town to complete these upgrades with no cost to the taxpayer. Town Meeting has approved the construction of two water treatment facilities at a cost of approximately $13,500,000 to improve water quality and utilize more local sources of water. The construction of the first of these facilities was nearing completion at the end of fiscal year 2010 and is expected to begin operation during fiscal year 2011. Also, $7,000,000 in sewer improvements were approved to reduce MWRA assessments for sewer treatment and to reduce outflows. To help finance this sewer project, the Town will use a $4.2 million loan from the Massachusetts Water Pollution Abatement Trust. The interest rate on this 20 year loan is fixed at 2% with potential principal forgiveness amounting to almost $500,000. The cost of these water and sewer projects is being funded entirely from utility rates and fees. Town management is continuing its efforts to assist in the redevelopment of the 42-acre Plymouth Rubber Company property. This is an important property to the Town as it occupies a location near Canton center and is adjacent to approximately 300 acres of land that includes three local ponds. The Board of Selectmen has made site cleanup and managing the water rights surrounding the property top priorities. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Canton for its comprehensive annual financial report for the fiscal year ended June 30, 2009. This was the fourth year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The publication of this CAFR represents an important achievement in the ability of the Town of Canton to provide enhanced financial information and accountability to its citizens, elected and appointed officials, and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. Special thanks also go to the public accounting firm of Powers & Sullivan for their advice and assistance in the preparation of this report. Respectfully submitted, William T. Friel James R. Murgia Town Administrator Finance Director Town of Canton, Massachusetts 5 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts Comprehensive Annual Financial Report TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Blue Hills Board of Regional Library of Assessors School Trustees District Board of Selectmen. Appointed Multiple Member Bodies Town Clerks Board Board Town School Board Planning Meeting Committee of Health Board of Selectmen Office -Register of Voters -Comm. on Disability -Zoning Board.of Appeals -Water/Sewer Rate Policy Commission -Youth Commission -Historical Commission -Fair Housing Committee -Cable Advisory Committee -Beautification Committee -Conservation Commission -Council on Aging -Industrial Develop. Financing Authority -Local Emergency Planning Committee -Traffic Study Committee -Industrial Development Commission Town School Director Town Town Town Director of Canton Library Moderator | | Superintendent || Public Health Planner Clerk Administrator Assessing Representative Director Finance a a Committee Executive TownCounsel -— Assistant Personnel I Town Planner Administrative Secretary Sealer of Weights| $$ and Measures Secretary Committee Veteran’s Building Police Fire Dept. of Human Zoning Maintenance Becenenl . Resource 5 tx Departament one ‘Deparimant P — — Works Department on Aging Department ——— at I Building Veteran’s Building Police Fire Buperintendent] Human Finance COA Animal Recreation | | Conservation poe . 3 A of Resource 3 7 Control “ Commission Commissioner] | Director | Superintendent Chief Chief Public Works | |Administrator| | Ditector Director Officer Director a a a Department | | Council Animal Recreation | | Conservation of Finance Control Agent 0 rganiza ionalC hart [Original embedded text, retained for comparison] Organizational Chart Town of Canton, Massachusetts 6 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts
Principal Officials
Board of Selectmen
Victor D. Del Vecchio, Chair
Avril T. Elkort, Vice Chair
Robert E. Burr Jr., Clerk
Gerald A. Salvatori Jr.
John J. Connolly
Town Administrator – William T. Friel
Finance Director – James R. Murgia
Town Accountant – Kathleen Dooley Butters
School Superintendent – Jeffrey W. Granatino
School Business Administrator – Kenneth Leon
Police Chief – Kenneth N. Berkowitz
Fire Chief – Charles E. Doody
DPW Superintendent – Michael T. Trotta
Town of Canton, Massachusetts 7 Comprehensive Annual Financial ReportSource page 15
Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Canton Massachusetts For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President Wo } Gree Executive Director Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report [Original embedded text, retained for comparison] Certificate of Achievement for Excellence in Financial Reporting Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report
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Financial Section The Town recently acquired two new vehicles for the Fire Department. One vehicle is used by the Fire Chief while the other is used by the Shift Commander and Training and Safety Captain. Both vehicles will provide enhanced response capabilities, especially during inclement weather.
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Financial Section Independent Auditors’ Report To the Honorable Board of Selectmen Town of Canton, Massachusetts We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of and for the fiscal year ended June 30, 2010, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Canton, Massachusetts' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2010, on our consideration of the Town of Canton, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The combining fund statements, as listed in the table of contents, are presented for the purpose of supplementary analysis and are not a required part of the financial statements of the Town of Canton, Massachusetts. Such supplementary information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. Town of Canton, Massachusetts 9 Comprehensive Annual Financial Report
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Management’s discussion and analysis, located on the following pages, and the schedule of revenues, expenditures and changes in fund balance – general fund – budgetary basis, the retirement system’s schedule of funding progress and schedule of employer contributions, other postemployment benefit plan schedule of funding progress and employer contributions, as well as the other postemployment benefit plan actuarial methods and assumptions, located after the notes to the financial statements, are not a required part of the basic financial statements but are supplementary information required by accounting principals generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. December 16, 2010 Town of Canton, Massachusetts 10 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis Town of Canton, Massachusetts 11 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis As management of the Town of Canton, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2010. This is the eighth year our financial statements have been prepared under the Governmental Accounting Standards Board Statement Number 34 – Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. We encourage readers to consider the information presented in this report. The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides guidance on how to prepare financial statements in conformity with generally accepted accounting principals (GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to establish consistent reporting standards for all governments in the United States. This consistent application is the only way users (including citizens, the media, legislators and others) can assess the financial condition of one government compared to others. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Canton’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to private-sector business. The statement of net assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, education, public works, human services, culture and recreation, and interest expenditures. The business-type activities include the water, sewer and skating rink activities. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Town of Canton, Massachusetts 12 Comprehensive Annual Financial Report
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Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Canton adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town maintains two types of propriety funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water, sewer and skating rink activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among various functions. The Town uses internal service funds to account for health claims, workers’ compensation, unemployment claims and building insurance activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government- wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Town of Canton, Massachusetts 13 Comprehensive Annual Financial Report
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Government-wide Financial Analysis
Governmental Activities
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For
governmental activities, assets exceeded liabilities by $78.3 million at the close of fiscal year 2010. The overall
financial condition of the Town’s governmental activities remained stable during fiscal year 2010.
Governmental net assets of $57.9 million (74%), reflects its investment in capital assets (e.g., land, buildings,
machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The
Town uses these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the investment in its capital assets is reported net of its related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
An additional portion of the net assets, $7.8 million (10%), represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $12.6 million (16%),
may be used to meet the government’s ongoing obligations to citizens and creditors.
The governmental net assets decreased by $2.6 million during the current fiscal year which is due to a
combination of factors. Net assets increased due to $1.3 million in capital grants mainly received from the
MassHighway Department for its share road improvement projects, as well as from the Dan Road MORE Jobs
grant. Net assets decreased by $1.1 million due to using prior year reserves to balance the general fund’s
budget. Net assets decreased due to a $2.9 million increase in the other postemployment benefit liability. The
Town currently funds the postemployment benefits on a pay-as-you-go basis which is lower than the annual
required contribution. The governmental expenses totaled $84.8 million of which $21.8 million (26%) was directly
supported by program revenues. General revenues and transfers totaled $60.5 million, primarily coming from
property taxes, motor vehicle excise, non-restricted state aid and other miscellaneous charges.
Condensed financial data for fiscal years 2010 and 2009 is presented below.
Balance at Balance at
June 30, June 30,
2010 2009
Assets:
Current assets……………………………………… $ 36,592,461 $ 39,573,940
Noncurrent assets (excluding capital)…………… 4,073,429 4,676,268
Capital assets………………………………………… 101,021,096 102,295,481
Total assets……………………………………… 141,686,986 146,545,689
Liabilities:
Current liabilities (excluding debt)………………… 8,587,942 8,480,938
Noncurrent liabilities (excluding debt)……………… 6,856,966 4,165,321
Current debt………………………………………… 6,941,071 8,898,750
Noncurrent debt……………………………………… 40,957,652 44,058,295
Total liabilities…………………………………… 63,343,631 65,603,304
Net Assets:
Capital assets net of related debt………………… 57,942,064 54,948,512
Restricted…………………………………………… 7,781,249 8,844,047
Unrestricted…………………………………………… 12,620,042 17,149,826
Total net assets………………………………… $ 78,343,355 $ 80,942,385
Town of Canton, Massachusetts 14 Comprehensive Annual Financial ReportSource page 23
Year Ended Year Ended
June 30, June 30,
2010 2009
Program revenues:
Charges for services………………………………… $ 5,651,515 $ 4,732,432
Operating grants and contributions………………… 14,937,773 14,389,625
Capital grants and contributions…………………… 1,170,098 3,291,089
Total program revenues……………………… 21,759,386 22,413,146
General Revenues:
Real estate and personal property taxes………… 52,922,668 49,643,467
Tax liens……………………………………………… 210,666 186,291
Motor vehicle excise taxes………………………… 3,082,341 3,170,275
Penalties and interest on taxes…………………… 317,161 246,950
Payments in lieu of taxes…………………………… 199,299 194,559
Nonrestricted grants and contributions…………… 2,165,199 2,727,082
Unrestricted investment income…………………… 212,187 488,112
Miscellaneous revenues…………………………… 312,573 245,317
Total general revenues………………………… 59,422,094 56,902,053
Total revenues………………………………… 81,181,480 79,315,199
Expenses:
General government………………………………… 5,687,721 6,292,728
Public safety………………………………………… 14,053,007 13,435,861
Education…………………………………………… 53,936,191 50,203,533
Public works………………………………………… 5,534,429 4,868,008
Human services……………………………………… 1,046,171 941,217
Culture and recreation……………………………… 2,657,453 2,623,016
Interest………………………………………………… 1,919,708 1,996,528
Total expenses………………………………… 84,834,680 80,360,891
Excess before transfers……………………………… (3,653,200) (1,045,692)
Transfers………………………………………………… 1,054,170 1,009,929
Change in net assets………………………………… $ (2,599,030) $ (35,763)
Town of Canton, Massachusetts 15 Comprehensive Annual Financial ReportSource page 24
Business-type Activities
The Town’s business-type activities include water, sewer and skating rink services. They are self-supporting and
each fund maintained their financial condition in fiscal year 2010.
Business-type water net assets of $8.2 million (84%) represent the investment in capital assets while $1.6 million
(16%) is unrestricted. Net assets increased by $456,000 which due to the combined effect of an increase in user
fee revenue due to a consolidation of water rates, offset by a $71,000 increase of the other postemployment
benefit liability.
Business-type sewer net assets of $6.8 million (73%) represent the investment in capital assets while $2.6 million
(27%) is unrestricted. Net assets increased by $370,000 which is primarily due to the recognition of a $497,000
capital grant received from the Massachusetts Water Pollution Abatement Trust.
Business-type rink net assets of $180,000 represent the investment in capital assets while unrestricted net assets
had a deficit balance of $7,000. Net assets decreased by $68,000 which was due to a revenue deficit of $35,000,
as well as a $15,000 increase in the other postemployment benefit liability.
At the end of the current fiscal year, aside from the deficit unrestricted net assets reported in the business-type
rink fund noted above, all remaining business-type activities were able to report positive balances in all categories
of net assets. The same situation held true for the prior fiscal year.
Condensed financial data for fiscal years 2010 and 2009 is presented below.
Balance at Balance at
June 30, June 30,
2010 2009
Assets:
Current assets……………………………………… $ 13,696,558 $ 5,710,567
Noncurrent assets (excluding capital)…………… 5,986 45,414
Capital assets………………………………………… 30,939,015 28,693,221
Total assets……………………………………… 44,641,559 34,449,202
Liabilities:
Current liabilities (excluding debt)………………… 519,080 410,734
Noncurrent liabilities (excluding debt)……………… 326,000 205,000
Current debt………………………………………… 7,050,132 4,782,223
Noncurrent debt……………………………………… 17,428,648 10,491,745
Total liabilities…………………………………… 25,323,860 15,889,702
Net Assets:
Capital assets net of related debt………………… 15,188,472 14,483,253
Unrestricted…………………………………………… 4,129,227 4,076,247
Total net assets………………………………… $ 19,317,699 $ 18,559,500
Town of Canton, Massachusetts 16 Comprehensive Annual Financial ReportSource page 25
Year Ended Year Ended
June 30, June 30,
2010 2009
Program revenues:
Charges for services - Water……………………… $ 5,693,293 $ 4,727,025
Charges for services - Sewer……………………… 4,772,693 4,747,421
Charges for services - Rink………………………… 404,449 391,991
Capital grants and contributions…………………… 497,305 2,362
Total revenues………………………………… 11,367,740 9,868,799
Expenses:
Water………………………………………………… 4,599,182 4,521,904
Sewer………………………………………………… 4,553,414 4,442,173
Rink…………………………………………………… 402,775 377,269
Total expenses………………………………… 9,555,371 9,341,346
Excess before transfers……………………………… 1,812,369 527,453
Transfers………………………………………………… (1,054,170) (1,009,929)
Change in net assets………………………………… $ 758,199 $ (482,476)
Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows
and balances of spendable resources. Such information is useful in assessing financing requirements. In
particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year.
The General Fund is the chief operating fund. At the end of the current fiscal year, unreserved fund balance of
the general fund was $3.1 million, while total fund balance was $10.2 million. Reservation of Fund Balance for
Encumbrances and Continuing Appropriations totaled $464,000, reserved for MSBA grant funds of $6.6 million
and $1.1 million was designated for amounts voted to be used in fiscal year 2011. Unreserved fund balance
represents 4% of total general fund expenditures, while total fund balance represents 13% of that same amount.
The General Fund’s fund balance decreased by $1.1 million which was the result of balancing the budget by
using ($2.2) million of prior year reserves, offset by an appropriation budget to actual surplus of $535,000.
Town of Canton, Massachusetts 17 Comprehensive Annual Financial ReportSource page 26
General Fund Budgetary Highlights
The Town has adopted a budget for the General Fund. Actual revenues were less than budget by $107,000.
Unexpended appropriations totaled $1.0 million of which $464,000 was carried forward to fiscal year 2011.
Capital Asset and Debt Administration
In prior fiscal years, the Town had refunded general obligation bonds by placing the proceeds in an irrevocable
trust to provide for future debt service payments. Accordingly, neither the asset nor the liability for the defeased
bonds is included in the Town’s financial statements. At June 30, 2010 a total of $5,340,000 of outstanding bonds
are considered defeased.
During fiscal year 2010, the Town issued $9.5 million of general obligation bonds to retire maturing bond
anticipation notes and to provide permanent financing for several capital projects.
Outstanding long-term debt of governmental activities, as of June 30, 2010, totaled $45.1 million. Total debt
service expenditures on long-term governmental debt for the next five years average $5.5 million annually. The
Town had $1.5 million in governmental bond anticipation notes (BANs) and $1.4 million of grant anticipation notes
(GANS) outstanding at fiscal year-end.
The Water Enterprise Fund had $10.7 million of long-term debt and $5.6 million of BANs outstanding at year end.
The Sewer Enterprise Fund had $8.2 million of long-term debt and $150,000 of BANs outstanding at year end.
The Ice Rink Enterprise Fund had $72,000 of long-term debt outstanding at year end.
Major capital additions and projects include the following:
• The governmental activities acquired over $2.5 million of various capital assets in FY2010.
• Business type activities include water additions of $2.7 million, and sewer additions of $539,000. There
were no rink additions in fiscal year 2010.
• Depreciation expense was $3.8 million for governmental activities and $1.0 million for business-type
activities.
Please refer to the Notes 4, 6 and 8 for further discussion of the capital asset and debt activity.
Town of Canton, Massachusetts 18 Comprehensive Annual Financial ReportSource page 27
Economic Factors and Next Year’s Budget and Rates The fiscal year 2011 general fund operating budget of $71.3 million represents a $3.1 million or 4.5% increase from the fiscal year 2010 budget. This is primarily due to a $1.5 million or 5.1% increase in education expenditures. The fiscal year 2011 operating budget includes $464,000 of appropriations carried forward from fiscal year 2010. Property taxes in Massachusetts municipalities are limited to a levy growth of 2 ½% plus a factor for new construction, unless voters at an election approve an increase for operating expenses or debt service for a specific project (Proposition 2 ½). Due to the recent passage of a $4.5 million Proposition 2 ½ tax levy override, the Town calculated that the tax levy growth from fiscal year 2010 to fiscal year 2011, exclusive of debt service excluded from Proposition 2 ½, will be approximately $3.0 million or 5.5%. The Town is scheduled to receive $5.8 million in state aid in fiscal year 2011, net of school construction grants. This amount is $144,000 or 2.4%, less than received in fiscal year 2010. The Water and Sewer Enterprise Funds’ rates were significantly changed in FY2011 after an outside consultant was engaged to conduct a rate study. The new rate structure includes quarterly base charges, which increase with meter size. The new rate structure will increase water revenue in fiscal year 2011 by 20% and sewer revenue by 5%. For the Skating Rink, hourly rates were increased to generate an additional $40,000 of revenue in fiscal 2011. Requests for Information This financial report is designed to provide a general overview of the Town of Canton’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 801 Washington Street, Canton, Massachusetts 02021. Town of Canton, Massachusetts 19 Comprehensive Annual Financial Report
Source page 28
Basic Financial Statements Town of Canton, Massachusetts 20 Comprehensive Annual Financial Report
Source page 29
STATEMENT OF NET ASSETS
JUNE 30, 2010
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
CURRENT:
Cash and cash equivalents………………………………… $ 29,457,033 $ 6,681,340 $ 36,138,373
Investments………………………………………………… 1,273,721 - 1,273,721
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes……………… 1,103,633 - 1,103,633
Tax liens………………………………………………… 788,169 20,402 808,571
Motor vehicle excise taxes……………………………… 173,803 - 173,803
User fees………………………………………………… - 2,904,073 2,904,073
Departmental and other………………………………… 221,687 - 221,687
Special assessments…………………………………… - 12,193 12,193
Intergovernmental……………………………………… 1,860,276 4,114,750 5,975,026
Tax foreclosures…………………………………………… 190,764 - 190,764
Internal balances…………………………………………… 36,200 (36,200) -
Working capital deposit…………………………………… 1,476,600 - 1,476,600
Other assets………………………………………………… 10,575 - 10,575
Total current assets………………………………………… 36,592,461 13,696,558 50,289,019
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Intergovernmental……………………………………… 4,001,029 - 4,001,029
Special assessments…………………………………… - 5,986 5,986
Internal balances…………………………………………… 72,400 (72,400) -
Capital assets:
Nondepreciable………………………………………… 12,938,553 9,853,199 22,791,752
Depreciable……………………………………………… 88,082,543 21,085,816 109,168,359
Total noncurrent assets…………………………………… 105,094,525 30,872,601 135,967,126
TOTAL ASSETS………………………………………………… 141,686,986 44,569,159 186,256,145
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 2,098,807 212,047 2,310,854
Accrued payroll……………………………………………… 2,816,448 36,391 2,852,839
Health claims payable……………………………………… 1,336,000 - 1,336,000
Tax refunds payable………………………………………… 584,000 - 584,000
Accrued interest…………………………………………… 462,223 104,242 566,465
Other liabilities……………………………………………… 381,109 - 381,109
Capital lease obligations…………………………………… 19,894 - 19,894
Landfill closure……………………………………………… 46,000 - 46,000
Compensated absences…………………………………… 796,000 94,000 890,000
Unamortized premium on bonds payable………………… 47,461 - 47,461
Bonds and notes payable………………………………… 6,941,071 7,050,132 13,991,203
Total current liabilities……………………………………… 15,529,013 7,496,812 23,025,825
NONCURRENT:
Capital lease obligations…………………………………… 21,203 - 21,203
Landfill closure……………………………………………… 196,000 - 196,000
Compensated absences…………………………………… 442,000 89,000 531,000
Unamortized premium on bonds payable………………… 313,763 - 313,763
Other postemployment benefits…………………………… 5,884,000 237,000 6,121,000
Bonds and notes payable………………………………… 40,957,652 17,428,648 58,386,300
Total noncurrent liabilities………………………………… 47,814,618 17,754,648 65,569,266
TOTAL LIABILITIES…………………………………………… 63,343,631 25,251,460 88,595,091
NET ASSETS
Invested in capital assets, net of related debt……………… 57,942,064 15,188,472 73,130,536
Restricted for:
Permanent funds:
Expendable……….……………………………………… 469,601 - 469,601
Nonexpendable………………………………………… 356,385 - 356,385
Grants and gifts……………………………………………… 359,949 - 359,949
MSBA Grant………………………………………………… 6,595,314 - 6,595,314
Unrestricted……………………………………………………… 12,620,042 4,129,227 16,749,269
TOTAL NET ASSETS………………………………………… $ 78,343,355 $ 19,317,699 $ 97,661,054
See notes to basic financial statements.
Town of Canton, Massachusetts 21 Comprehensive Annual Financial ReportSource page 30
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2010
Program Revenues
Operating Capital
Charges for Grants and Grants and Net (Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental Activities:
General government…………………… $ 5,687,721 $ 919,070 $ 82,024 $ - $ (4,686,627)
Public safety……………………………… 14,053,007 2,076,797 157,748 - (11,818,462)
Education………………………………… 53,936,191 2,105,396 14,413,702 8,790 (37,408,303)
Public works……………………………… 5,534,429 129,056 35,050 1,161,308 (4,209,015)
Human services………………………… 1,046,171 41,527 135,523 - (869,121)
Culture and recreation…………………… 2,657,453 379,669 24,917 - (2,252,867)
Interest…………………………………… 1,919,708 - 88,809 - (1,830,899)
Total Governmental Activities………… 84,834,680 5,651,515 14,937,773 1,170,098 (63,075,294)
Business-Type Activities:
Water……………………………………… 4,599,182 5,693,293 - - 1,094,111
Sewer……………………………………… 4,553,414 4,772,693 - 497,305 716,584
Rink……………………………………….… 402,775 404,449 - - 1,674
Total Business-Type Activities………… 9,555,371 10,870,435 - 497,305 1,812,369
Total Primary Government…………… $ 94,390,051 $ 16,521,950 $ 14,937,773 $ 1,667,403 $ (61,262,925)
See notes to basic financial statements. (Continued)
Town of Canton, Massachusetts 22 Comprehensive Annual Financial ReportSource page 31
STATEMENT OF ACTIVITIES (Continued)
FISCAL YEAR ENDED JUNE 30, 2010
Primary Government
Governmental Business-Type
Activities Activities Total
Changes in net assets:
Net (expense) revenue from previous page…………… $ (63,075,294) $ 1,812,369 $ (61,262,925)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable………………………… 52,922,668 - 52,922,668
Tax liens……………………………………………… 210,666 - 210,666
Motor vehicle excise taxes…………………………… 3,082,341 - 3,082,341
Penalties and interest on taxes……………………… 317,161 - 317,161
Payments in lieu of taxes…………………………… 199,299 - 199,299
Grants and contributions not restricted to
specific programs…………………………………… 2,165,199 - 2,165,199
Unrestricted investment income…………………… 212,187 - 212,187
Miscellaneous………………………………………… 312,573 - 312,573
Transfers, net …………………………………………… 1,054,170 (1,054,170) -
Total general revenues and transfers………………… 60,476,264 (1,054,170) 59,422,094
Change in net assets……………………………… (2,599,030) 758,199 (1,840,831)
Net Assets:
Beginning of year……………………………………… 80,942,385 18,559,500 99,501,885
End of year…………………………………………… $ 78,343,355 $ 19,317,699 $ 97,661,054
(Concluded)
Town of Canton, Massachusetts 23 Comprehensive Annual Financial ReportSource page 32
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2010
Nonmajor Total
Governmental Governmental
ASSETS General Funds Funds
Cash and cash equivalents…………………………………$ 14,563,128 $ 11,135,298 $ 25,698,426
Investments………………………………………………… - 862,779 862,779
Receivables, net of uncollectibles:
Real estate and personal property taxes……………… 1,103,633 - 1,103,633
Tax liens………………………………………………… 788,169 - 788,169
Motor vehicle excise taxes……………………………… 173,803 - 173,803
Departmental and other………………………………… - 221,687 221,687
Intergovernmental……………………………………… 4,396,135 1,465,170 5,861,305
Tax foreclosures…………………………………………… 190,764 - 190,764
Due from other funds……………………………………… 74,027 108,600 182,627
Other assets………………………………………………… 10,575 - 10,575
TOTAL ASSETS…………………………………………… $ 21,300,234 $ 13,793,534 $ 35,093,768
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable…………………………………………$ 1,037,871 $ 119,475 $ 1,157,346
Accrued payroll…………………………………………… 2,602,887 213,561 2,816,448
Tax refunds payable…………………………………… 584,000 - 584,000
Other liabilities…………………………………………… 367,778 13,331 381,109
Deferred revenues……………………………………… 6,549,227 229,954 6,779,181
Due to other funds……………………………………… - 74,027 74,027
Notes payable…………………………………………… - 2,924,700 2,924,700
TOTAL LIABILITIES………………………………………… 11,141,763 3,575,048 14,716,811
FUND BALANCES:
Reserved for:
Encumbrances and continuing appropriations…… 463,609 - 463,609
Perpetual permanent funds………………………… - 356,385 356,385
MSBA Grant…………………………………………… 6,595,314 - 6,595,314
Unreserved:
Designated for subsequent year's expenditures… 1,140,000 - 1,140,000
Undesignated, reported in:
General fund……………………………………… 1,959,548 - 1,959,548
Special revenue funds…………………………… - 10,091,323 10,091,323
Capital projects funds…………………………… - (698,823) (698,823)
Permanent funds………………………………… - 469,601 469,601
TOTAL FUND BALANCES………………………………… 10,158,471 10,218,486 20,376,957
TOTAL LIABILITIES AND FUND BALANCES……………$ 21,300,234 $ 13,793,534 $ 35,093,768
See notes to basic financial statements.
Town of Canton, Massachusetts 24 Comprehensive Annual Financial ReportSource page 33
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2010
Total governmental fund balances……………………………………………………………………… $ 20,376,957
Capital assets (net) used in governmental activities are not financial resources
and, therefore, are not reported in the funds…………………………………………………… 101,021,096
Accounts receivable are not available to pay for current-period
expenditures and, therefore, are deferred in the funds………………………………………… 6,779,181
Internal service funds are used by management to account for health insurance,
municipal insurance, workers' compensation, and unemployment activities.
The assets and liabilities of the internal service funds are included in
the governmental activities in the statement of net assets……………………………… 3,368,688
In the statement of net assets, interest is accrued on outstanding long-term debt,
whereas in governmental funds interest is not reported until due…………………………… (462,223)
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported in the governmental funds
Bonds and notes payable……………………………………………………………………… (45,145,556)
Landfill closure…………………………………………………………………………………… (242,000)
Capital leases…………………………………………………………………………………… (41,097)
Unamortized premium on bonds payable……………………………………………………… (361,224)
Other postemployment benefits………………………………………………………………… (5,884,000)
Compensated absences………………………………………………………………………… (1,238,000)
Net effect of reporting long-term liabilities……………………………………………… (52,911,877)
In the statement of net assets, deferred losses are reported for refundings of
debt, which are amortized over the shorter of the remaining life of the
refunding bonds or refunded bonds. In governmental funds, defeasances
of debt are expensed when the refunding bonds are issued…………………………………… 171,533
Net assets of governmental activities………………………………………………………………… $ 78,343,355
See notes to basic financial statements.
Town of Canton, Massachusetts 25 Comprehensive Annual Financial ReportSource page 34
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2010
Nonmajor Total
Governmental Governmental
General Funds Funds
REVENUES:
Real estate and personal property taxes,
net of tax refunds…………………………………………$ 52,217,093 $ - $ 52,217,093
Tax liens……………………………………………………… 193,859 - 193,859
Motor vehicle excise taxes………………………………… 3,080,023 - 3,080,023
Charges for services………………………………………… - 1,611,311 1,611,311
Penalties and interest on taxes…………………………… 317,161 - 317,161
Payments in lieu of taxes…………………………………… 199,299 - 199,299
Licenses and permits……………………………………… 658,905 - 658,905
Fines and forfeitures………………………………………… 123,576 15,882 139,458
Intergovernmental…………………………………………… 14,315,178 4,298,709 18,613,887
Departmental and other…………………………………… 1,067,808 2,326,973 3,394,781
Contributions………………………………………………… - 416,991 416,991
Investment income………………………………………… 125,703 62,014 187,717
TOTAL REVENUES………………………………… 72,298,605 8,731,880 81,030,485
EXPENDITURES:
Current:
General government…………………………………… 3,818,793 548,324 4,367,117
Public safety……………………………………………… 8,615,672 1,217,597 9,833,269
Education………………………………………………… 30,333,470 5,135,858 35,469,328
Public works……………………………………………… 4,063,656 1,406,374 5,470,030
Human services………………………………………… 655,099 111,978 767,077
Culture and recreation………………………………… 1,382,213 389,359 1,771,572
Pension benefits………………………………………… 10,482,808 - 10,482,808
Employee benefits……………………………………… 9,107,798 - 9,107,798
State and county charges………………………………… 932,878 - 932,878
Debt service:
Principal…………………………………………………… 3,947,750 - 3,947,750
Interest…………………………………………………… 1,955,945 - 1,955,945
TOTAL EXPENDITURES…………………………… 75,296,082 8,809,490 84,105,572
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES……………………… (2,997,477) (77,610) (3,075,087)
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes……………………………… - 1,087,261 1,087,261
Premium from issuance of debt…………………………… 8,793 60,329 69,122
Transfers in………………………………………………… 2,158,470 286,626 2,445,096
Transfers out………………………………………………… (260,800) (1,130,126) (1,390,926)
TOTAL OTHER FINANCING
SOURCES (USES)……………………………… 1,906,463 304,090 2,210,553
NET CHANGE IN FUND BALANCES………………………… (1,091,014) 226,480 (864,534)
FUND BALANCES AT BEGINNING OF YEAR……………… 11,249,485 9,992,006 21,241,491
FUND BALANCES AT END OF YEAR……………………… $ 10,158,471 $ 10,218,486 $ 20,376,957
See notes to basic financial statements.
Town of Canton, Massachusetts 26 Comprehensive Annual Financial ReportSource page 35
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2010
Net change in fund balances - total governmental funds…………………………………………………………. $ (864,534)
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
Capital outlay…………………………………………………………………………………………………… 2,495,020
Depreciation expense………………………………………………………………………………………… (3,769,405)
Net effect of reporting capital assets………………………………………………………………… (1,274,385)
Revenues in the Statement of Activities that do not provide current financial
resources are fully deferred in the Statement of Revenues, Expenditures and
Changes in Fund Balances. Therefore, the recognition of revenue for various
types of accounts receivable (i.e., real estate and personal property, motor
vehicle excise, etc.) differ between the two statements. This amount represents
the net change in deferred revenue…………………………………………………………………………… 5,295
The issuance of long-term debt (e.g., bonds and leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-
term debt consumes the financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of premiums, discounts, and similar items when debt is
first issued, whereas these amounts are deferred and amortized in the
Statement of Activities.
Capital lease financing……………………………………………………………………………………… 18,667
Issuance of bonds and notes………………………………………………………………………………… (1,087,261)
Debt service principal payments…………………………………………………………………………… 3,947,750
Amortization of bond premiums……………………………………………………………………………… 50,081
Amortization of deferred charge on refunding……………………………………………………………… (43,306)
Net effect of reporting long-term debt………………………………………………………………… 2,885,931
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Net change in compensated absences accrual…………………………………………………………… (9,000)
Net change in accrued interest on long-term debt………………………………………………………… 29,462
Net change in worker's compensation accrual…………………………………………………………… 75,000
Net change in other postemployment benefits……………………………………………………………… (2,867,000)
Net change in landfill accrual………………………………………………………………………………… 119,000
Net effect of recording long-term liabilities and amortizing deferred losses………………….. (2,652,538)
Internal service funds are used by management to account for health
insurance and workers' compensation activities.
The net activity of internal service funds is reported with Governmental Activities…………………… (698,799)
Change in net assets of governmental activities……………………………………………………………………… $ (2,599,030)
See notes to basic financial statements.
Town of Canton, Massachusetts 27 Comprehensive Annual Financial ReportSource page 36
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2010
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
ASSETS
CURRENT:
Cash and cash equivalents……………………………$ 5,460,207 $ 1,188,504 $ 32,629 $ 6,681,340 $ 3,758,607
Investments…………………………………………… - - - - 410,942
Receivables, net of allowance for uncollectibles:
Tax liens……………………………………………… 11,771 8,631 - 20,402 -
User fees…………………………………………… 1,757,959 1,134,704 11,410 2,904,073 -
Special assessments……………………………… - 12,193 - 12,193 -
Intergovernmental…………………………………… - 4,114,750 - 4,114,750 -
Working capital deposit……………………………… - - - - 1,476,600
Total current assets……………………………… 7,229,937 6,458,782 44,039 13,732,758 5,646,149
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Special assessments……………………………… - 5,986 - 5,986 -
Capital assets:
Nondepreciable……………………………………… 8,417,880 1,435,319 - 9,853,199 -
Depreciable………………………………………… 10,985,073 9,848,420 252,323 21,085,816 -
Total noncurrent assets………………………… 19,402,953 11,289,725 252,323 30,945,001 -
TOTAL ASSETS………………………………………… 26,632,890 17,748,507 296,362 44,677,759 5,646,149
LIABILITIES
CURRENT:
Warrants payable……………………………………… 199,293 11,186 1,568 212,047 941,461
Accrued payroll………………………………………… 16,404 15,683 4,304 36,391 -
Due to other funds…………………………………… 36,200 - - 36,200 -
Health claims payable………………………………… - - - - 1,336,000
Accrued interest……………………………………… 79,249 24,758 235 104,242 -
Compensated absences……………………………… 62,000 21,000 11,000 94,000 -
Bonds and notes payable…………………………… 6,441,581 596,551 12,000 7,050,132 -
Total current liabilities…………………………… 6,834,727 669,178 29,107 7,533,012 2,277,461
NONCURRENT:
Due to other funds…………………………………… 72,400 - - 72,400 -
Compensated absences……………………………… 70,000 16,000 3,000 89,000 -
Other postemployment benefits……………………… 145,000 61,000 31,000 237,000 -
Bonds and notes payable…………………………… 9,753,474 7,615,174 60,000 17,428,648 -
Total noncurrent liabilities……………………… 10,040,874 7,692,174 94,000 17,827,048 -
TOTAL LIABILITIES……………………………………… 16,875,601 8,361,352 123,107 25,360,060 2,277,461
NET ASSETS
Invested in capital assets, net of related debt………… 8,196,632 6,811,517 180,323 15,188,472 -
Unrestricted……………………………………………… 1,560,657 2,575,638 (7,068) 4,129,227 3,368,688
TOTAL NET ASSETS……………………………………$ 9,757,289 $ 9,387,155 $ 173,255 $ 19,317,699 $ 3,368,688
See notes to basic financial statements.
Town of Canton, Massachusetts 28 Comprehensive Annual Financial ReportSource page 37
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2010
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
OPERATING REVENUES:
Employee contributions …………………………………… $ - $ - $ - $ - $ 2,872,403
Contributions………………………………………………… - - - - 8,504,363
Charges for services ……………………………………… 5,629,407 4,741,100 404,198 10,774,705 -
Other………………………………………………………… - - - - 263,332
TOTAL OPERATING REVENUES …………………… 5,629,407 4,741,100 404,198 10,774,705 11,640,098
OPERATING EXPENSES:
Cost of services and administration ……………………… 1,483,839 602,479 376,426 2,462,744 -
MWRA Assessment………………………………………… 2,329,408 3,256,556 - 5,585,964 -
Depreciation………………………………………………… 491,369 485,919 24,128 1,001,416 -
Employee benefits ………………………………………… - - - - 12,415,475
TOTAL OPERATING EXPENSES …………………… 4,304,616 4,344,954 400,554 9,050,124 12,415,475
OPERATING INCOME (LOSS)………………………… 1,324,791 396,146 3,644 1,724,581 (775,377)
NONOPERATING REVENUES (EXPENSES):
Investment income………………………………………… 8,027 9,425 251 17,703 24,470
Interest expense…………………………………………… (294,566) (208,460) (2,221) (505,247) -
Intergovernmental…………………………………………… - 497,305 - 497,305 -
Other revenues……………………………………………… 55,859 22,168 - 78,027 52,108
TOTAL NONOPERATING REVENUES,
(EXPENSES), NET…………………………………… (230,680) 320,438 (1,970) 87,788 76,578
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS……………… 1,094,111 716,584 1,674 1,812,369 (698,799)
TRANSFERS:
Transfers out………………………………………………… (638,471) (346,085) (69,614) (1,054,170) -
CHANGE IN NET ASSETS……………………………… 455,640 370,499 (67,940) 758,199 (698,799)
NET ASSETS AT BEGINNING OF YEAR………………… 9,301,649 9,016,656 241,195 18,559,500 4,067,487
NET ASSETS AT END OF YEAR……………………………$ 9,757,289 $ 9,387,155 $ 173,255 $ 19,317,699 $ 3,368,688
See notes to basic financial statements.
Town of Canton, Massachusetts 29 Comprehensive Annual Financial ReportSource page 38
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30, 2010
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users…………………………………………… $ 5,064,879 $ 4,745,815 $ 393,528 $ 10,204,222 $ -
Receipts from interfund services provided……………………………………… - - - - 11,640,098
Receipts from other revenues…………………………………………………… 55,859 22,168 - 78,027 52,108
Payments to vendors……………………………………………………………… (2,868,523) (3,466,185) (166,673) (6,501,381) -
Payments to employees………………………………………………………… (851,952) (355,143) (192,883) (1,399,978) -
Payments for interfund services used…………………………………………… - - - - (12,235,039)
NET CASH FROM OPERATING ACTIVITIES…………………………………… 1,400,263 946,655 33,972 2,380,890 (542,833)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out……………………………………………………………………… (638,471) (346,085) (69,614) (1,054,170) -
Advances to other funds………………………………………………………… (36,200) - - (36,200) -
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………… (674,671) (346,085) (69,614) (1,090,370) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes……………………………… 10,239,368 278,250 - 10,517,618 -
Acquisition and construction of capital assets………………………………… (2,708,706) (538,504) - (3,247,210) -
Principal payments on bonds and notes………………………………………… (4,078,428) (690,795) (13,000) (4,782,223) -
Interest expense…………………………………………………………………… (279,376) (185,211) (2,270) (466,857) -
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… 3,172,858 (1,136,260) (15,270) 2,021,328 -
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of investments………………………………………………… - - - - (63,075)
Investment income………………………………………………………………… 8,027 9,425 251 17,703 24,470
NET CASH FROM INVESTING ACTIVITIES……………………………………… 8,027 9,425 251 17,703 (38,605)
NET CHANGE IN CASH AND CASH EQUIVALENTS…………………………… 3,906,477 (526,265) (50,661) 3,329,551 (581,438)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR…… 1,553,730 1,714,769 83,290 3,351,789 4,340,045
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR………………$ 5,460,207 $ 1,188,504 $ 32,629 $ 6,681,340 $ 3,758,607
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)………………………………………………………… $ 1,324,791 $ 396,146 $ 3,644 $ 1,724,581 $ (775,377)
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation…………………………………………………………………… 491,369 485,919 24,128 1,001,416 -
Other revenues………………………………………………………………… 55,859 22,168 - 78,027 52,108
Changes in assets and liabilities:
Water and sewer liens…………………………………………………… 3,286 7,965 - 11,251 -
User fees…………………………………………………………………… (567,814) (3,250) (10,670) (581,734) -
Working capital deposit…………………………………………………… - - - - (11,200)
Warrants payable…………………………………………………………… 37,779 833 (5,097) 33,515 115,636
Accrued payroll…………………………………………………………… (8,007) 6,874 1,967 834 -
Health claims payable……………………………………………………… - - - - 116,000
Other postemployment benefits………………………………………… 71,000 30,000 15,000 116,000 -
Accrued compensated absences………………………………………… (8,000) - 5,000 (3,000) -
Workers' compensation…………………………………………………… - - - - (40,000)
Total adjustments……………………………………………………… 75,472 550,509 30,328 656,309 232,544
NET CASH FROM OPERATING ACTIVITIES…………………………………… $ 1,400,263 $ 946,655 $ 33,972 $ 2,380,890 $ (542,833)
See notes to basic financial statements.
Town of Canton, Massachusetts 30 Comprehensive Annual Financial ReportSource page 39
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2010
Private
Purpose Agency
Trust Funds Fund
ASSETS
CURRENT:
Cash and cash equivalents……………………………………$ 65,439 $ 805,681
Investments…………………………………………………… 23,829 -
TOTAL ASSETS…………………………………………………… 89,268 805,681
LIABILITIES
Warrants payable……………………………………………… - 17,360
Liabilities due depositors……………………………………… - 788,321
TOTAL LIABILITIES……………………………………………… - 805,681
NET ASSETS
Held in trust..…………………………………………………… $ 89,268 $ -
See notes to basic financial statements.
Town of Canton, Massachusetts 31 Comprehensive Annual Financial ReportSource page 40
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2010
Private
Purpose
Trust Funds
ADDITIONS:
Net investment income:
Investment income………………………….…………………………………………………$ 2,127
DEDUCTIONS:
Educational scholarships…………………………………………………………………… 6,600
CHANGE IN NET ASSETS……………………………………………………………… (4,473)
NET ASSETS AT BEGINNING OF YEAR…………………………………………………… 93,741
NET ASSETS AT END OF YEAR……………………………………………………………… $ 89,268
See notes to basic financial statements.
Town of Canton, Massachusetts 32 Comprehensive Annual Financial Report