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2010 Comprehensive Annual Financial Report (PDF)
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Source page 41
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to Basic Financial Statements The accompanying basic financial statements of the Town of Canton, Massachusetts (the Town) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described herein. A. Reporting Entity The Town is located in Norfolk County in southeastern Massachusetts approximately 15 miles south of Boston. The Town was incorporated in 1797 and is governed by an elected five member Board of Selectmen, an appointed Town Administrator, and the open town meeting form of government. For financial reporting purposes, the Town has included all funds, organizations, agencies, boards, commissions and institutions. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete. As required by GAAP, these basic financial statements present the Town (the primary government) and its component units. It has been determined that the Town has no component units that require inclusion in these basic financial statements. The Town is a member of the Blue Hills Regional Technical School that provides educational services to nine area communities. This joint venture assesses each community its share of operating and debt service costs based on student population and other factors. In fiscal year 2010, Canton’s share of the operating and debt expenses was $1,321,631. There is no equity interest reported in these financial statements. Complete audited financial statements can be obtained directly from the District’s administrative office located at 800 Randolph Street, Canton, MA 02021. B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements (i.e., statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government. Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported separately from business- type activities, which are supported primarily by user fees and charges. Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and displayed in a single column. Town of Canton, Massachusetts 33 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Major Fund Criteria
Major funds must be reported if the following criteria are met:
• If the total assets, liabilities, revenues, or expenditures/expenses of an individual governmental or
enterprise fund are at least 10 percent of the corresponding element (assets, liabilities, etc.) for all
funds of that category or type (total governmental or total enterprise funds), and
• If the total assets, liabilities, revenues, or expenditures/expenses of the individual governmental
fund or enterprise fund are at least 5 percent of the corresponding element for all governmental
and enterprise funds combined.
Additionally, any other governmental or enterprise fund that management believes is particularly
significant to the basic financial statements may be reported as a major fund.
Fiduciary funds are reported by fund type.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
Government-Wide Financial Statements
The government-wide financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are
recorded when the liabilities are incurred. Real estate and personal property taxes are recognized as revenues in
the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
The statement of activities demonstrates the degree to which the direct expenses of a particular function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include the following:
• Charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment.
• Grants and contributions that are restricted to meeting the operational requirements of a particular
function or segment.
• Grants and contributions that are restricted to meeting the capital requirements of a particular function or
segment.
Taxes and other items not identifiable as program revenues are reported as general revenues.
For the most part, the effect of interfund activity has been removed from the government-wide financial
statements. However, the effect of interfund services provided and used between functions is not eliminated as
the elimination of these charges would distort the direct costs and program revenues reported for the functions
affected.
Town of Canton, Massachusetts 34 Comprehensive Annual Financial ReportSource page 43
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Fund Financial Statements Governmental fund financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., measurable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. The Town considers property tax revenues available if they are collected within 60 days after fiscal year-end. Investment income is susceptible to accrual. Other receipts and tax revenues become measurable and available when the cash is received and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other grant requirements are met. The following major governmental funds are reported: The general fund is the primary operating fund. It is used to account for all financial resources, except those that are required to be accounted for in another fund. The nonmajor governmental funds consist of special revenue, other capital projects and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements. The following describes the general use of these fund types: The special revenue funds are used to account for the proceeds of specific revenue sources (other than permanent funds or capital projects funds) that are restricted by law or administrative action to expenditures for specified purposes. The capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by enterprise and trust funds). The permanent fund is used to account for financial resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. Proprietary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Town of Canton, Massachusetts 35 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The following major proprietary funds are reported: The water enterprise fund is used to account for the water activities. The sewer enterprise fund is used to account for the sewer activities. The rink enterprise fund is used to account for the skating rink activities. Additionally, the following proprietary fund type is reported: 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 fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for others that cannot be used to support the governmental programs. The following fiduciary fund types are reported: The private-purpose trust fund is used to account for trust arrangements that exclusively benefit individuals, private organizations, or other governments. Some of these trusts have donor restrictions and trustee policies that do not allow the endowment portion and any unrealized appreciation to be spent. The restrictions and trustee policies only allows the trustees to approve spending of the realized investment earnings. The Town’s private- purpose trust fund is primarily comprised of educational scholarships. The agency fund is used to account for assets held in a purely custodial capacity. Agency funds apply the accrual basis of accounting but do not have a measurement focus. The Town’s agency funds consist of off-duty work details, performance bonds, student activity accounts and fees collected on behalf of other governments. Government-Wide and Fund Financial Statements Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. Town of Canton, Massachusetts 36 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 D. Cash and Investments Government-Wide and Fund Financial Statements Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are carried at fair value. E. Accounts Receivable Government-Wide and Fund Financial Statements The recognition of revenue related to accounts receivable reported in the government-wide financial statements and the proprietary funds and fiduciary funds financial statements are reported under the accrual basis of accounting. The recognition of revenue related to accounts receivable reported in the governmental funds financial statements are reported under the modified accrual basis of accounting. Real Estate, Personal Property Taxes, Tax Deferrals and Tax Liens Property taxes are levied and based on values assessed on January 1st of every year. Assessed values are established by the Board of Assessor’s for 100% of the estimated fair market value. Taxes are due on August 1st, November 1st, February 1st and May 1st and are subject to penalties and interest if they are not paid by the respective due date. Property taxes levied are recorded as receivables in the fiscal year of the levy. Tax liens are processed within the first quarter following the close of the fiscal year on delinquent properties and are recorded as receivables in the fiscal year they are processed. Real estate receivables are secured via the tax lien process and are considered 100% collectible. Accordingly, an allowance for uncollectibles is not reported. Personal property taxes cannot be secured through the lien process. The allowance for uncollectibles is estimated based on historical trends and specific account analysis. Motor Vehicle Excise Taxes Motor vehicle excise taxes are assessed annually for each vehicle registered in the Town and are recorded as receivables in the fiscal year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and the fair values of those vehicles to the Town. The tax calculation is the fair value of the vehicle multiplied by $25 per $1,000 of value. The allowance for uncollectibles is estimated based on historical trends and specific account analysis. Town of Canton, Massachusetts 37 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 User Fees Water and Sewer fees are billed quarterly based on individual meter readings and are subject to penalties and interest if they are not paid by the respective due date. Water and sewer liens are processed in June of every year and are included as a lien on the property owner’s tax bill in the following fiscal year. Water and sewer user fees, related liens, and an unbilled estimate are recorded as receivables in the fiscal year of the levy. Water and sewer user fees are secured via the tax lien process and are considered 100% collectible. Accordingly, an allowance for uncollectibles is not reported. Departmental and Other Departmental and other receivables consist primarily of ambulance fees. The allowance for uncollectibles for ambulance is estimated based on historical trends and specific account analysis. Intergovernmental Various federal and state grants for operating and capital purposes are applied for and received annually. For non-expenditure driven grants, revenue is recognized as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants, revenue is recognized when the qualifying expenditures are incurred and all other grant requirements are met. These receivables are considered 100% collectible and therefore do not report an allowance for uncollectibles. F. Inventories Government-Wide and Fund Financial Statements Inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the government-wide and fund financial statements, and therefore are not reported. G. Capital Assets Government-Wide and Proprietary Fund Financial Statements Capital assets, which include land, land improvements, buildings, building improvements, machinery and equipment, vehicles, and infrastructure (e.g., roads, water mains, sewer mains, and similar items), are reported in the applicable governmental or business-type activity column of the government-wide financial statements. Capital assets are recorded at historical cost or at estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at the estimated fair market value at the date of donation. Construction period interest is capitalized on constructed capital assets except for the capital assets of the governmental activities column in the government-wide financial statements. All purchases and construction costs in excess of $25,000 are capitalized at the date of acquisition or construction, respectively, with expected useful lives of greater than one year. Town of Canton, Massachusetts 38 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Capital assets (excluding land and construction-in-process) are depreciated on a straight-line basis. The
estimated useful lives of capital assets being depreciated are as follows:
Estimated
Useful
Life
Capital Asset Type (in years)
Land improvements…………………………… 20-50
Buildings………………………………………… 20-50
Building improvements………………………… 20-50
Machinery and equipment……………………… 3-20
Vehicles………………………………………… 5
Infrastructure…………………………………… 40-50
The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset
lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized.
Governmental Fund Financial Statements
Capital asset costs are recorded as expenditures in the acquiring fund in the fiscal year of the purchase.
H. Interfund Receivables and Payables
During the course of its operations, transactions occur between and within individual funds that may result in
amounts owed between funds.
Government-Wide Financial Statements
Any residual balances outstanding between the governmental activities and business-type activities are reported
in the statement of net assets as “internal balances”.
Fund Financial Statements
Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund
statements. Receivables and payables resulting from these transactions are classified as “Due from other funds”
or “Due to other funds” on the balance sheet.
I. 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.
Government-Wide Financial Statements
Transfers between and within governmental funds and fiduciary funds are eliminated from the governmental
activities in the statement of activities. Any residual balances outstanding between the governmental activities
and business-type activities are reported in the statement of activities as “Transfers, net”.
Town of Canton, Massachusetts 39 Comprehensive Annual Financial ReportSource page 48
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Fund Financial Statements Transfers between and within funds are not eliminated from the individual fund statements and are reported as transfers in and transfers out. J. Deferred Revenue Deferred revenue at the governmental fund financial statement level represents billed receivables that do not meet the available criterion in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Deferred revenue is recognized as revenue in the conversion to the government-wide (full accrual) financial statements. K. Net Assets and Fund Equity Government-Wide Financial Statements (Net Assets) Net assets reported as “invested in capital assets, net of related debt” 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 assets. Outstanding debt related to future reimbursements from the state’s school building program is not considered to be capital related debt. Net assets are reported as restricted when amounts that are not available for appropriation or are legally restricted by outside parties for a specific future use. Net assets have been “restricted for” the following: “Permanent funds - expendable” represents the amount of realized and unrealized investment earnings of donor restricted trusts. The donor restrictions and trustee policies only allows the trustees to approve spending of the realized investment earnings that support governmental programs. “Permanent funds - nonexpendable” represents the endowment portion of donor restricted trusts that support governmental programs. “Grants and gifts” represents restrictions placed on assets from outside parties and consists primarily of gifts and federal and state grants. “MSBA Grant” represents a capital grant to fund debt service on the High School debt that will be amortized over 15 years starting in FY2010 in accordance with state governmental regulations. Fund Financial Statements (Fund Balances) Fund balances are reserved for amounts that are not available for appropriation or are legally restricted by outside parties for a specific future use. Designations of fund balance represent tentative management plans that are subject to change. Fund balances have been “reserved for” the following: “Encumbrances and continuing appropriations” represents amounts obligated under purchase orders, contracts and other commitments for expenditures that are being carried over to the ensuing fiscal year. Town of Canton, Massachusetts 40 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 “Perpetual permanent funds” represents amounts held in trust for which only investment earnings may be expended. “MSBA Grant” represents a capital grant to fund debt service on the High School debt that will be amortized over 15 years starting in FY2010 in accordance with state governmental regulations. Fund balances have been “designated for” the following: “Subsequent year’s expenditures” represents amounts appropriated for the subsequent fiscal year’s operating budget. L. Long-term debt Government-Wide and Proprietary Fund Financial Statements Long-term debt is reported as liabilities in the government-wide and proprietary fund statement of net assets. Material bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Governmental Fund Financial Statements The face amount of governmental funds long-term debt is reported as other financing sources. Bond premiums and discounts, as well as issuance costs, are recognized in the current period. Bond premiums are reported as other financing sources and bond discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual bond proceeds received, are reported as general government expenditures. M. 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 Massachusetts General Law (MGL). Investment income from the proprietary funds is retained in the respective funds. N. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Government-Wide and Proprietary Fund Financial Statements Vested or accumulated vacation and sick leave are reported as liabilities and expensed as incurred. Governmental Fund Financial Statements Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial resources upon maturity of the liability, are reported as expenditures and fund liabilities. Town of Canton, Massachusetts 41 Comprehensive Annual Financial Report
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Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 O. Fund Deficits The School Grant Fund, classified as non-major governmental funds, had a deficit balance of $57,548 at June 30, 2010. This deficit will be funded from State and Federal grant funds in fiscal year 2011. Three Capital Projects Funds, classified as non-major governmental funds, had a combined deficit balance of $1,059,279 at June 30, 2010. This deficit will primarily be funded when $1,462,350 in bond anticipation notes are converted into long-term debt. P. Use of Estimates Government-Wide and Fund Financial Statements 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. Q. Total Column Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. Fund Financial Statements The total column on the fund financial statements is presented only to facilitate financial analysis. Data in this column is not the equivalent of consolidated financial information. NOTE 2 – CASH 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 the trust funds are held separately from those of other funds. Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment Pool (the Pool). The Treasurer may also invest trust funds in securities, other than mortgages or collateral loans, which are legal for the investment of funds of savings banks under the laws of the Commonwealth. The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts Municipal Depository Trust (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. Town of Canton, Massachusetts 42 Comprehensive Annual Financial Report
Source page 51
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Custodial Credit Risk – Deposits
In the case of deposits, this is the risk that in the event of a bank failure, the Town’s deposits may not be returned
to it. The Town does not have a deposit policy for custodial credit risk. At fiscal year-end, the carrying amount of
deposits totaled $25,817,215 and the bank balance totaled $26,147,019. Of the bank balance, $2,224,252 was
covered by Federal Depository Insurance, $18,530,321 was covered by the Depositors Insurance Fund,
$3,397,450 was collateralized and $1,994,996 was exposed to custodial credit risk because it was uninsured and
uncollateralized.
Investments
As of June 30, 2010, the Town of Canton had the following investments:
Maturity
Fair Value 1-5 Years 6-10 Years
Investment Type
Debt Securities:
Federal Home Loan Banks……………………$ 70,754 $ 29,989 $ 40,765
Federal Home Loan Mortgage Corp………… 260,172 136,542 123,630
Federal Home Loan Mortgage Corp. Gold…. 2,445 2,445 -
Federal National Mortgage Association……… 257,025 257,025 -
Federal Farm Credit Bank…………. ………… 105,665 - 105,665
United States Treasury Notes………………… 601,489 498,169 103,320
Total Debt Securities................................... 1,297,550 $ 924,170 $ 373,380
Other Investments:
Repurchase Agreement………………………… 4,670,000
MMDT…………………………………………… 6,522,278
Total Investments........................................$ 12,489,828
The Town participates in MMDT, which maintains a cash portfolio and a short-term bond fund with combined
average maturities of approximately 3 months.
Custodial Credit Risk – Investments
For an investment, this is the risk that, in the event of a failure by the counterparty, the Town will not be able to
recover the value of its investments or collateral security that are in the possession of an outside party. The Town
has a custodial credit risk exposure of $1,297,550 because the related debt securities are uninsured, unregistered
and held by the counterparty. The investments in MMDT are not exposed to custodial credit risk because their
existence is not evidenced by securities that exist in physical or book entry form. The Town does not have an
investment policy related to custodial credit risk.
The Town’s $4,670,000 investment in a Repurchase Agreement (REPO) is held by a counterparty. The REPO is
not in the Town’s name; however, it is fully collateralized. The collateralization consists of Fannie Mae, Freddie
Mac, Ginnie Mae and Federal Home Loan Bank (FHLB) investments.
Town of Canton, Massachusetts 43 Comprehensive Annual Financial ReportSource page 52
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Interest Rate Risk
The Town does not have a formal investment policy that limits investment maturities as a means of managing its
exposure to fair value losses arising from increasing interest rates.
Credit Risk
The Town has not adopted a formal policy related to Credit Risk. Moody’s Investors Service rated all debt
securities as AAA and MMDT is unrated.
Concentration of Credit Risk
The Town places no limit on the amount the government may invest in any one issuer. The Town has 48% of
investments in US government backed securities and 52% in MMDT.
NOTE 3 – RECEIVABLES
At June 30, 2010, receivables for the individual major and non-major governmental funds in the aggregate,
including the applicable allowances for uncollectible accounts, are as follows:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes…………$ 1,185,081 $ (81,448) $ 1,103,633
Tax liens…………………………………………… 788,169 - 788,169
Motor vehicle and other excise taxes…………… 505,436 (331,633) 173,803
Departmental and other…………………………… 352,616 (130,929) 221,687
Intergovernmental………………………………… 5,861,305 - 5,861,305
Total…………………………………………………
$ 8,692,607 $ (544,010) $ 8,148,597
At June 30, 2010, receivables for the proprietary funds consist of the following:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
Water fees……………………………………………$ 1,769,730 $ - $ 1,769,730
Sewer fees…………………………………………… 1,143,335 - 1,143,335
Rink fees…………………………………………… 11,410 - 11,410
Special assessments……………………………… 18,179 - 18,179
Intergovernmental…………………………………… 4,114,750 - 4,114,750
Total…………………………………………………
$ 7,057,404 $ - $ 7,057,404
Town of Canton, Massachusetts 44 Comprehensive Annual Financial ReportSource page 53
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Governmental funds report deferred revenue in connection with receivables and other assets for revenues that
are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year,
the various components of deferred revenue reported in the governmental funds were as follows:
Other
General Governmental
Fund Funds Total
Receivable and other asset type:
Real estate and personal property taxes…………$ 1,000,356 $ - $ 1,000,356
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 8,267 4,404,402
Tax foreclosures…………………………………… 190,764 - 190,764
Total…………………………………………………$ 6,549,227 $ 229,954 $ 6,779,181
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2010, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets not being depreciated:
Land……………………………………………………$ 11,158,868 $ - $ - $ 11,158,868
Construction in progress…………………………… 1,800,261 990,821 (1,011,397) 1,779,685
Total capital assets not being depreciated…… 12,959,129 990,821 (1,011,397) 12,938,553
Capital assets being depreciated:
Land improvements………………………………… 2,555,735 83,308 - 2,639,043
Buildings……………………………………………… 76,560,039 149,715 - 76,709,754
Building improvements……………………………… 15,876,312 270,945 - 16,147,257
Machinery and equipment…………………………… 4,328,417 222,975 (67,750) 4,483,642
Vehicles……………………………………………… 4,023,030 241,409 (30,000) 4,234,439
Infrastructure………………………………………… 14,903,879 1,547,244 - 16,451,123
Total capital assets being depreciated………… 118,247,412 2,515,596 (97,750) 120,665,258
Less accumulated depreciation for:
Land improvements………………………………… (521,712) (129,869) - (651,581)
Buildings.……………………………………………… (14,170,536) (1,809,698) - (15,980,234)
Building improvements……………………………… (6,874,461) (774,089) - (7,648,550)
Machinery and equipment…………………………… (1,474,499) (410,553) 67,750 (1,817,302)
Vehicles……………………………………………… (3,351,517) (253,258) 30,000 (3,574,775)
Infrastructure………………………………………… (2,518,335) (391,938) - (2,910,273)
Total accumulated depreciation………………… (28,911,060) (3,769,405) 97,750 (32,582,715)
Total capital assets being depreciated, net…………… 89,336,352 (1,253,809) - 88,082,543
Total governmental activities capital assets, net………$ 102,295,481 $ (262,988) $ (1,011,397) $ 101,021,096
Town of Canton, Massachusetts 45 Comprehensive Annual Financial ReportSource page 54
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Beginning Ending
Balance Increases Decreases Balance
Water Activities:
Capital assets not being depreciated:
Land……………………………………………………$ 624,852 $ - $ - $ 624,852
Construction in progress…………………………… 6,633,084 2,404,625 (1,244,681) 7,793,028
Total capital assets not being depreciated…… 7,257,936 2,404,625 (1,244,681) 8,417,880
Capital assets being depreciated:
Buildings.……………………………………………… 4,139,989 - - 4,139,989
Machinery and equipment…………………………… 658,164 266,568 - 924,732
Vehicles……………………………………………… 422,824 37,512 (40,000) 420,336
Infrastructure………………………………………… 14,819,074 1,244,682 - 16,063,756
Total capital assets being depreciated………… 20,040,051 1,548,762 (40,000) 21,548,813
Less accumulated depreciation for:
Buildings.……………………………………………… (1,779,807) (77,764) - (1,857,571)
Machinery and equipment…………………………… (92,226) (79,145) - (171,371)
Vehicles……………………………………………… (350,487) (28,359) 40,000 (338,846)
Infrastructure………………………………………… (7,889,851) (306,101) - (8,195,952)
Total accumulated depreciation………………… (10,112,371) (491,369) 40,000 (10,563,740)
Total capital assets being depreciated, net…………… 9,927,680 1,057,393 - 10,985,073
Total business-type activities capital assets, net………$ 17,185,616 $ 3,462,018 $ (1,244,681) $ 19,402,953
Beginning Ending
Balance Increases Decreases Balance
Sewer Activities:
Capital assets not being depreciated:
Construction in progress…………………………… $ 951,913 $ 538,504 $ (55,098) $ 1,435,319
Total capital assets not being depreciated…… 951,913 538,504 (55,098) 1,435,319
Capital assets being depreciated:
Buildings.……………………………………………… 1,263,604 - - 1,263,604
Machinery and equipment…………………………… 264,697 - - 264,697
Vehicles……………………………………………… 265,462 - - 265,462
Infrastructure………………………………………… 22,044,021 55,098 - 22,099,119
Total capital assets being depreciated………… 23,837,784 55,098 - 23,892,882
Less accumulated depreciation for:
Buildings.……………………………………………… (194,027) (31,590) - (225,617)
Machinery and equipment…………………………… (13,235) (26,470) - (39,705)
Vehicles……………………………………………… (197,918) (21,143) - (219,061)
Infrastructure………………………………………… (13,153,363) (406,716) - (13,560,079)
Total accumulated depreciation………………… (13,558,543) (485,919) - (14,044,462)
Total capital assets being depreciated, net…………… 10,279,241 (430,821) - 9,848,420
Total business-type activities capital assets, net………$ 11,231,154 $ 107,683 $ (55,098) $ 11,283,739
Town of Canton, Massachusetts 46 Comprehensive Annual Financial ReportSource page 55
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Beginning Ending
Balance Increases Decreases Balance
Rink Activities:
Capital assets being depreciated:
Building improvements……………………………… $ 139,960 $ - $ - $ 139,960
Machinery and equipment…………………………… 257,797 - - 257,797
Vehicles……………………………………………… 29,160 - - 29,160
Total capital assets being depreciated………… 426,917 - - 426,917
Less accumulated depreciation for:
Building improvements……………………………… (31,491) (6,998) - (38,489)
Machinery and equipment…………………………… (89,815) (17,130) - (106,945)
Vehicles……………………………………………… (29,160) - - (29,160)
Total accumulated depreciation………………… (150,466) (24,128) - (174,594)
Total business-type activities capital assets, net………$ 276,451 $ (24,128) $ - $ 252,323
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
General government…………………………………………………… $ 65,981
Public safety…………………………………………………………… 570,335
Education………………………………………………………………… 2,267,133
Public works…………………………………………………………… 520,578
Human services………………………………………………………… 10,236
Culture and recreation………………………………………………… 335,143
Total depreciation expense - governmental activities…………………… $ 3,769,406
Business-Type Activities:
Water…………………………………………………………………… $ 491,369
Sewer…………………………………………………………………… 485,919
Rink……………………………………………………………………… 24,128
Total depreciation expense - business-type activities…………………… $ 1,001,416
Town of Canton, Massachusetts 47 Comprehensive Annual Financial ReportSource page 56
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables and payables for the fiscal year ended June 30, 2010, are summarized as follows:
Receivable Fund Payable Fund Amount
Stoughton Mitigation Fund… Water Fund………………………………………………………………$ 108,600 (1)
General Fund………………… Nonmajor Governmental Funds (School Grants Fund)…………… 74,027 (2)
Total………………………………………………………………………………………………………… $ 182,627
1) Represents a 10 year non-interest bearing loan between the Stoughton Mitigation Fund
and the Water Fund with annual payments of $36,200 through FY2013.
2) Represents advances between funds to meet temporary cash flow needs.
Interfund transfers for the fiscal year ended June 30, 2010, are summarized as follows:
Transfers In:
Nonmajor
General Governmental
Transfers Out: Fund Funds Total
General Fund……………………… $ - $ 260,800 $ 260,800
Nonmajor Governmental Funds… 1,104,300 25,826 1,130,126
Water Enterprise Fund…………… 638,471 - 638,471
Sewer Enterprise Fund…………… 346,085 - 346,085
Rink Enterprise Fund……………… 69,614 - 69,614
Total…………………………………$ 2,158,470 $ 286,626 $ 2,445,096
The enterprise transfers to the general fund are for their share of indirect charges. The general fund transfers out
are $100,000 to fund the stabilization fund, $110,800 to fund capital projects funds and $50,000 for retirement buy
back reserves. The nonmajor funds transferred $25,826 between other nonmajor funds; and $1,104,300 to the
general fund to fund budgeted expenditures.
NOTE 6 – SHORT-TERM FINANCING
Short-term debt may be authorized and issued to fund the following:
• Current operating costs prior to the collection of revenues through issuance of revenue or tax anticipation
notes (RANS or TANS).
• Capital project costs and other approved expenditures incurred prior to obtaining permanent financing through
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS).
Short-term loans are general obligations and carry maturity dates that are limited by statute. Interest
expenditures and expenses for short-term borrowings are accounted for in the General Fund and Enterprise
Funds, respectively.
Town of Canton, Massachusetts 48 Comprehensive Annual Financial ReportSource page 57
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Details related to the short-term debt activity for the fiscal year ended June 30, 2010, is as follows:
Balance at Balance at
Rate June 30, Renewed/ Retired/ June 30,
Type Purpose (%) Due Date 2009 Issued Redeemed 2010
BAN Capital improvements………………… 1.3% 05/28/10 $ 1,751,000 $ - $ 1,751,000 $ -
GAN Highway……………………………… 1.6% 07/21/09 2,000,000 - 2,000,000 -
GAN Highway……………………………… 1.6% 07/21/09 1,200,000 - 1,200,000 -
BAN Capital improvements………………… 1.5% 05/27/11 - 1,524,700 - 1,524,700
GAN Highway……………………………… 1.4% 07/19/10 - 1,400,000 - 1,400,000
Sub-total governmental notes……… 4,951,000 2,924,700 4,951,000 2,924,700
BAN Sewer System Improvements……… 1.3% 05/28/10 215,000 - 215,000 -
BAN Water System Improvements……… 1.3% 05/28/10 3,435,600 - 3,435,600 -
BAN Sewer System Improvements……… 1.5% 05/27/11 - 150,000 - 150,000
BAN Water System Improvements……… 1.5% 05/27/11 - 5,562,800 - 5,562,800
-
Sub-total business-type notes……… 3,650,600 5,712,800 3,650,600 5,712,800
Total notes payable…………………… $ 8,601,600 $ 8,637,500 $ 8,601,600 $ 8,637,500
The GAN was paid down on July 19, 2010, with available funds.
NOTE 7 – CAPITAL LEASE OBLIGATIONS
In Fiscal 2009 the Town entered into non-cancelable long-term leases for the purchase of two vehicles utilized by
the Town. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been
recorded at the present value of their future minimum lease payments as of the inception date. Assets acquired
through capital leases are as follows:
Governmental
Activities
Asset:
Vehicles………………………………………………………$ 90,392
Less: accumulated depreciation………………………… (27,118)
Total………………………………………………………$ 63,274
The following is a schedule of the future minimum lease payments under these capital leases, together with the
present value of the net minimum lease payments, as of June 30, 2010:
Town of Canton, Massachusetts 49 Comprehensive Annual Financial ReportSource page 58
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Fiscal Years Governmental
Ending June 30 Activities
2011………………………………………………………$ 22,598
2012……………………………………………………… 22,598
Total minimum lease payments……………………… 45,196
Less: amounts representing interest………………… (4,099)
Present value of minimum lease payments………… $ 41,097
NOTE 8 – LONG-TERM DEBT
Under the provisions of Chapter 44, Section 10, Municipal Law authorizes indebtedness up to a limit of 5% of the
equalized valuation. Debt issued in accordance with this section of the law is designated as being "inside the
debt limit". In addition, however, debt may be authorized in excess of that limit for specific purposes. Such debt,
when issued, is designated as being "outside the debt limit".
In May 2010, the Town issued $5.8 million of new general obligation bonds. The proceeds of these bonds were
used to retire $4 million of maturing bond anticipation notes and to provide permanent financing for several capital
projects primarily including $4.7 million for the Water System Expansion project, and $1.1 million for other
governmental projects. All water debt is expected to be self-supporting through user fees.
The Town also issued $3.7 million of long-term debt in the sewer fund for the Green Lodge Interceptor Sewer
Replacement Project. Proceeds of this debt are drawn down through the Massachusetts Water Abatement Trust
as eligible expenditures for the project are submitted.
In prior fiscal years, certain general obligation bonds were defeased by placing the proceeds of bonds in an
irrevocable trust to provide for all future debt service payments on the refunded bonds. Accordingly, neither the
assets in escrow nor the liability for the defeased bonds are included in the Town’s financial statements. At June
30, 2010, $5,340,000 of bonds outstanding is considered defeased.
Town of Canton, Massachusetts 50 Comprehensive Annual Financial ReportSource page 59
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Details related to the outstanding indebtedness at June 30, 2010, and the debt service requirements are as
follows:
Interest Outstanding Outstanding
Rate at June 30, at June 30,
Project (%) 2009 Issued Redeemed 2010
Land acquisition……………………………………… 4.75-5.75% $ 172,000 $ - $ 172,000 $ -
Building remodeling………………………………… 4.75-5.75% 203,000 - 203,000 -
Building remodeling………………………………… 3.50-5.00% 855,000 - 95,000 760,000
School project………………………………………… 3.50-5.00% 5,855,000 - 490,000 5,365,000
Drainage……………………………………………… 2.00-4.75% 165,000 - 15,000 150,000
Land acquisition……………………………………… 2.00-4.75% 1,255,205 - 29,140 1,226,065
School construction………………………………… 2.00-4.75% 15,000,000 - 1,000,000 14,000,000
Building remodeling………………………………… 2.00-4.75% 9,300,000 - 705,000 8,595,000
Energy conservation - school……………………… 2.00-4.75% 325,000 - 30,000 295,000
Departmental equipment…………………………… 2.00-4.75% 175,000 - 35,000 140,000
Refunding…………………………………………… 2.00-4.75% 2,134,840 - 29,610 2,105,230
ADA renovations…………………………………… 4.10% 1,423,000 - 92,000 1,331,000
Fire station…………………………………………… 4.10% 1,402,000 - 96,000 1,306,000
Revere fire station…………………………………… 4.10% 628,000 - 40,000 588,000
Fire engine…………………………………………… 3.90% 78,000 - 16,000 62,000
School remodeling…………………………………… 4.00% 229,000 - 17,000 212,000
Hansen school plumbing…………………………… 4.00% 114,000 - 9,000 105,000
Kennedy school boiler……………………………… 4.10% 238,000 - 16,000 222,000
School remodeling…………………………………… 4.00-4.10% 1,234,000 - 99,000 1,135,000
Highway truck………………………………………… 4.00% 99,000 - 17,000 82,000
Ladder truck………………………………………… 4.00% 420,000 - 60,000 360,000
Fire tanker truck……………………………………… 4.00% 205,000 - 30,000 175,000
Streetlights…………………………………………… 4.00% 229,000 - 33,000 196,000
Surface drain………………………………………… 4.10% 82,000 - 6,000 76,000
Land acquisition……………………………………… 3.50-4.00% 352,000 - 52,000 300,000
Building remodeling………………………………… 3.50-4.00% 401,000 - 53,000 348,000
School remodeling…………………………………… 3.50-4.00% 166,000 - 56,000 110,000
Outdoor recreational facility………………………… 3.50-3.85% 65,000 - 5,000 60,000
Departmental equipment…………………………… 3.50% 694,000 - 91,000 603,000
Building remodeling--School……………………… 3.50-4.00% 517,000 - 34,000 483,000
Dam construction…………………………………… 3.50% 309,000 - 41,000 268,000
Surface Drain………………………………………… 3.50-4.00% 140,000 - 10,000 130,000
Remodeling & Renovations………………………… 2.00-4.25% 3,541,000 - 271,000 3,270,000
General Obligation Bonds of 2010………………… 2.00-4.00% - 1,087,261 - 1,087,261
Total governmental bonds payable………………… 48,006,045 1,087,261 3,947,750 45,145,556
Add unamoritzed premium………………………… 411,305 - 50,081 361,224
Less unamortized loss on bond refunding, net…. (214,839) - (43,306) (171,533)
Total governmental bonds payable, net…………… $ 48,202,511 $ 1,087,261 $ 3,954,525 $ 45,335,247
Town of Canton, Massachusetts 51 Comprehensive Annual Financial ReportSource page 60
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for Governmental bonds payable in future fiscal years are as
follows:
Fiscal Year Principal Interest Total
2011…………… $ 4,029,141 $ 1,857,554 $ 5,886,695
2012…………… 4,005,220 1,716,474 5,721,694
2013…………… 3,913,270 1,574,776 5,488,046
2014…………… 3,883,245 1,429,042 5,312,287
2015…………… 3,769,190 1,279,172 5,048,362
2016…………… 3,674,140 1,109,797 4,783,937
2017…………… 3,466,100 946,094 4,412,194
2018…………… 3,152,475 794,986 3,947,461
2019…………… 2,941,000 656,849 3,597,849
2020…………… 2,786,775 537,725 3,324,500
2021…………… 2,753,000 420,624 3,173,624
2022…………… 2,223,000 304,221 2,527,221
2023…………… 2,003,000 202,825 2,205,825
2024…………… 1,544,000 111,225 1,655,225
2025…………… 384,000 43,807 427,807
2026…………… 206,000 25,292 231,292
2027…………… 170,000 17,040 187,040
2028…………… 136,000 10,072 146,072
2029…………… 91,000 4,380 95,380
2030…………… 15,000 600 15,600
Totals……………$ 45,145,556 $ 13,042,555 $ 58,188,111
Bonds and Notes Payable Schedule – Water Enterprise Fund
Interest Outstanding Outstanding
Rate at June 30, at June 30,
Project (%) 2009 Issued Redeemed 2010
Water………………………………………………… 4.75-5.75% $ 4,000 $ - $ 4,000 $ -
Well…………………………………………………… 4.75-5.75% 9,000 - 9,000 -
Pumping Station……………………………………… 4.75-5.75% 18,000 - 18,000 -
Well…………………………………………………… 2.00-4.75% 1,060,000 - 70,000 990,000
Refunding…………………………………………… 2.00-4.75% 300,210 - 4,495 295,715
Water Pipe…………………………………………… 4.10% 274,000 - 18,000 256,000
Water Main Replacement…………………………… 4.10% 574,000 - 36,000 538,000
Water………………………………………………… 3.50-4.00% 201,000 - 27,000 174,000
Well Field Development…………………………… 3.50-4.00% 200,000 - 27,000 173,000
Water Departmental Equipment…………………… 3.50% 350,000 - 45,000 305,000
Water Departmental Equipment…………………… 3.50% 175,000 - 25,000 150,000
Water Mains………………………………………… 3.50-4.00% 943,000 - 57,000 886,000
Water Treatement Improvements………………… 2.00-4.25% 2,508,333 - 302,333 2,206,000
Water System Improvement……………………… 2.00-4.00% - 4,676,568 - 4,676,568
Total water bonds payable………………………… 6,616,543 4,676,568 642,828 10,650,283
Less unamortized loss on bond refunding, net…. (21,609) - (3,581) (18,028)
Total water bonds payable, net……….…………… $ 6,594,934 $ 4,676,568 $ 639,247 $ 10,632,255
Town of Canton, Massachusetts 52 Comprehensive Annual Financial ReportSource page 61
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for the water enterprise fund bonds and notes payable in
future fiscal years are as follows:
Fiscal Year Principal Interest Total
2011…………… $ 882,168 $ 377,072 $ 1,259,240
2012…………… 810,135 349,077 1,159,212
2013…………… 741,675 325,361 1,067,036
2014…………… 674,440 302,726 977,166
2015…………… 671,960 280,415 952,375
2016…………… 671,465 269,706 941,171
2017…………… 639,735 228,957 868,692
2018…………… 551,315 204,105 755,420
2019…………… 549,000 185,243 734,243
2020…………… 548,390 167,495 715,885
2021…………… 492,000 149,415 641,415
2022…………… 492,000 132,119 624,119
2023…………… 487,000 114,053 601,053
2024…………… 486,000 95,602 581,602
2025…………… 421,000 76,896 497,896
2026…………… 369,000 60,998 429,998
2027…………… 315,000 47,110 362,110
2028…………… 314,000 34,390 348,390
2029…………… 314,000 21,596 335,596
2030…………… 220,000 8,800 228,800
Totals……………$ 10,650,283 $ 3,431,133 $ 14,081,416
Bonds and Notes Payable Schedule – Sewer Enterprise Fund
Interest Outstanding Outstanding
Rate at June 30, at June 30,
Project (%) 2009 Issued Redeemed 2010
Sewer………………………………………………… 4.75-5.75% $ 219,000 $ - $ 219,000 $ -
Sewer………………………………………………… 3.50-5.00% 900,000 - 75,000 825,000
Sewer………………………………………………… 2.00-4.75% 275,000 - 20,000 255,000
Refunding…………………………………………… 3.25-4.00% 2,264,745 - 31,755 2,232,990
Sewer I&I……………………………………………… 4.10% 474,000 - 30,000 444,000
Estey Way Sewer…………………………………… 4.10% 178,000 - 12,000 166,000
Wardwell Sewer……………………………………… 4.10% 179,000 - 13,000 166,000
MWRA………………………………………………… 0% 80,080 - 40,040 40,040
Sewer………………………………………………… 3.50-4.00% 87,000 - 7,000 80,000
SCADA System……………………………………… 2.00-3.00% 265,000 - 28,000 237,000
MWPAT……………………………………………… 2.00% - 3,745,695 - 3,745,695
Total sewer bonds payable……………………….. 4,921,825 3,745,695 475,795 8,191,725
Less unamortized loss on bond refunding, net…. (155,212) - (25,212) (130,000)
Total sewer bonds payable, net……….…………… $ 4,766,613 $ 3,745,695 $ 450,583 $ 8,061,725
Town of Canton, Massachusetts 53 Comprehensive Annual Financial ReportSource page 62
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for the sewer enterprise fund bonds and notes payable in
future fiscal years are as follows:
Fiscal Year Principal Interest Total
2011…………… $ 470,560 $ 204,681 $ 675,241
2012…………… 573,496 224,486 797,982
2013…………… 569,014 206,923 775,937
2014…………… 569,445 189,073 758,518
2015…………… 569,215 170,426 739,641
2016…………… 568,060 151,814 719,874
2017…………… 563,197 133,092 696,289
2018…………… 563,677 114,232 677,909
2019…………… 560,971 94,871 655,842
2020…………… 525,381 75,550 600,931
2021…………… 329,194 61,306 390,500
2022…………… 257,915 50,964 308,879
2023…………… 261,711 44,164 305,875
2024…………… 265,584 37,254 302,838
2025…………… 254,535 30,241 284,776
2026…………… 208,566 23,860 232,426
2027…………… 207,679 19,547 227,226
2028…………… 211,874 15,352 227,226
2029…………… 216,154 11,072 227,226
2030…………… 220,521 6,705 227,226
2031…………… 224,976 2,250 227,226
Totals……………$ 8,191,725 $ 1,867,859 $ 10,059,584
Bonds and Notes Payable Schedule – Ice Rink Enterprise Fund
Interest Outstanding Outstanding
Rate at June 30, at June 30,
Project (%) 2009 Issued Redeemed 2010
Zamboni……………………………………………… 2.00-3.00% $ 85,000 $ - $ 13,000 $ 72,000
Town of Canton, Massachusetts 54 Comprehensive Annual Financial ReportSource page 63
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for the sewer enterprise fund bonds and notes payable in
future fiscal years are as follows:
Fiscal Year Principal Interest Total
2011…………… $ 12,000 $ 1,880 $ 13,880
2012…………… 10,000 1,520 11,520
2013…………… 8,000 1,320 9,320
2014…………… 8,000 1,160 9,160
2015…………… 8,000 980 8,980
2016…………… 8,000 780 8,780
2017…………… 6,000 540 6,540
2018…………… 6,000 360 6,360
2019…………… 6,000 180 6,180
Totals……………$ 72,000 $ 8,720 $ 80,720
In FY2010 the Town borrowed $3,745,695 from the MWPAT for the water infrastructure projects under a program
where there is no principal subsidy and the interest rate is set at a below market rate of 2%. Management has
estimated that the value of the imputed future interest subsidy is approximately $837,741 over the life of the loan.
In subsequent years, the Town will record the value of the below market subsidy by increasing intergovernmental
revenue and interest expense.
The Commonwealth has approved school construction assistance to the Town. The assistance program, which is
administered by the Massachusetts School Building Authority (MSBA), provides resources for future debt service
of general obligation school bonds outstanding. During fiscal year 2010, $483,915 of such assistance was
received. The Town will receive $5,391,610 in future fiscal years. Of this amount, $995,475 represents
reimbursement of long-term interest costs, and $4,396,135 represents reimbursement of approved construction
costs. Accordingly, a $4,396,135 intergovernmental receivable and corresponding deferred revenue have been
reported in the general fund. The net change in deferred revenue has been recognized as revenue in the
conversion to the government-wide financial statements.
Town of Canton, Massachusetts 55 Comprehensive Annual Financial ReportSource page 64
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The Town is subject to various debt limits by statute and may issue additional general obligation debt under the
normal debt limit. At June 30, 2010, the Town had the following authorized and unissued debt:
Purpose Amount
Ambulance Mangement System……………$ 40,000
Ambulance Replacement…………………… 6,739
Building A Elevator…………………………… 50,000
Dedham Street Drainage…………………..… 50,000
DPW Dump Truck…………………………… 4,650
DPW Garage…………………….…………… 150,000
Fiber Cables………………………………… 25,000
Greenlodge Street Interceptor……………… 3,273,305
Middle School Roof Replacement………… 30,000
Police Station Flooring……………………… 100,000
Ponkapoag Fire Station Roof Repairs……… 20,000
Rodman Building Asbestos Removal……… 20,000
Scada Upgrade & Trucks…………………… 295,000
School HVAC………………………………… 146,000
School Plumbing……………………………… 101,000
Senior Center ………………………………… 450,000
Senior Center Study………………………… 210,000
Septic Title V………………………………… 200,000
Sewer Infiltration & Inflow…………………… 1,586,290
Shepards Pond Dam………………………… 175,000
Washington Street Culvert Design………… 60,000
Water Mains………………………………… 200,000
Water Resource Management Plan……… 100,000
Water System Improvements……………… 3,190,000
Water Treatment Facility …………………… 3,800,000
Water Trucks………………………………… 51,200
Well # 9 Supplement………………………… 237,000
Fire Department Equipment………………… 17,800
Luce School Roof Replacement…………… 95,000
GMS Acoustic Panels……………………… 2,850
Town Hall Repairs…………………………… 35,000
Recreation Truck…………………………… 10,000
Street Sweeper……………………………… 332,000
School Equipment & Textbooks…………… 1,349,000
Municipal Performance Contracting………… 848,908
Sewer Capital Improvements……………… 809,432
Total……………………………………………$ 18,071,174
Town of Canton, Massachusetts 56 Comprehensive Annual Financial ReportSource page 65
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Changes in long-term liabilities
During the fiscal year ended June 30, 2010, the following changes occurred in long-term liabilities:
Beginning Ending Current
Balance Additions Reductions Balance Portion
Governmental Activities:
Long-term bonds and notes……………………$ 48,006,045 $ 1,087,261 $ (3,947,750) $ 45,145,556 $ 4,029,141
Unamortized premium on bonds payable…… 411,305 - (50,081) 361,224 47,461
Unamortized deferred loss on refunding…… (214,839) - 43,306 (171,533) (40,338)
Other postemployment benefits……………… 3,017,000 5,481,000 (2,614,000) 5,884,000 -
Landfill closure………………………………… 361,000 - (119,000) 242,000 46,000
Workers' compensation……………………… 115,000 - (115,000) - -
Capital lease obligations……………………… 59,764 - (18,667) 41,097 19,894
Compensated absences……………………… 1,229,000 795,000 (786,000) 1,238,000 796,000
Total governmental activities………………… $ 52,984,275 $ 7,363,261 $ (7,607,192) $ 52,740,344 $ 4,898,158
Business-Type Activities:
Long-term bonds and notes……………………$ 11,623,368 $ 8,422,263 $ (1,131,623) $ 18,914,008 $ 1,364,728
Unamortized deferred loss on refunding…… (176,821) - 28,793 (148,028) (27,396)
Other postemployment benefits……………… 121,000 221,000 (105,000) 237,000 -
Compensated absences……………………… 186,000 99,000 (102,000) 183,000 94,000
Total business-type activities………………… $ 11,753,547 $ 8,742,263 $ (1,309,830) $ 19,185,980 $ 1,431,332
The governmental activities liabilities will be liquidated by the general fund with the exception of the workers’
compensation liability which was liquidated by the internal service fund. The business-type liabilities will be
liquidated by the enterprise fund reporting the liability.
NOTE 9 – 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.
The Town is self-insured for its health insurance and workers’ compensation activities. These activities are
accounted for in the Town’s internal service funds where revenues are recorded when earned and expenses are
recorded when the liability is incurred.
(a) Health Insurance
The estimate of Incurred But Not Reported (IBNR) claims based on a one and a half-month claims paid
average for twelve months prior to fiscal year-end. The Town purchases individual stop loss insurance
for claims in excess of the coverage provided by the Town in the amount of $100,000. At June 30, 2010,
the amount of the liability for health insurance claims totaled $1,336,000. This liability is the best estimate
based on available information. Changes in the reported liability since July 1, 2008, are as follows:
Town of Canton, Massachusetts 57 Comprehensive Annual Financial ReportSource page 66
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Current Year
Balance at Claims and Balance at
Beginning of Changes in Claims Fiscal Current
Fiscal Year Estimate Payments Year-End Portion
Fiscal Year 2010…………$ 1,220,000 $ 12,221,322 $ (12,105,322) $ 1,336,000 $ 1,336,000
Fiscal Year 2009………… 1,221,000 9,958,225 (9,959,225) 1,220,000 1,220,000
(b) Workers’ Compensation
Workers’ compensation claims submitted prior to July 1, 2008 are administered by a third party
administrator and are funded on a pay-as-you-go basis from annual appropriations. The Town is
premium based for all claims after July 1, 2008. The Town purchases individual stop loss insurance in
excess of the coverage provided in the amount of $300,000. The estimated future workers’
compensation liability is based on history and injury type.
At June 30, 2010, the amount of the liability for workers’ compensation claims was not material to the
financial position of the Town, and is therefore not reported. Changes in the reported liability since July 1,
2008, are as follows:
Current Year
Balance at Claims and Balance at
Beginning of Changes in Claims Fiscal Current
Fiscal Year Estimate Payments Year-End Portion
Fiscal Year 2010…………$ 115,000 $ (109,095) $ (5,905) $ - $ -
Fiscal Year 2009………… 215,000 (83,839) (16,161) 115,000 95,000
NOTE 10 – PENSION PLAN
Plan Description - The Town contributes to the System, a cost-sharing multiple-employer defined benefit
pension plan administered by the Norfolk County Retirement Board (Board). Substantially all employees are
members of the System, except for public school teachers and certain administrators who are members of the
Massachusetts Teachers Retirement System, to which the Town does not contribute. Pension benefits and
administrative expenses paid by the Teachers Retirement Board are the legal responsibility of the
Commonwealth. The amount of these on-behalf payments totaled approximately $7,613,000 for the fiscal year
ended June 30, 2010, and, accordingly, are reported in the general fund as intergovernmental revenues and
pension expenditures.
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. Cost-of-living
adjustments granted after 1997 must be approved by the Norfolk County Retirement Board and are borne by the
System. The System issues a publicly available unaudited financial report in accordance with guidelines
established by the Commonwealth’s PERAC. That report may be obtained by contacting the System located at
480 Neponset Street, Building #15, P.O. Box 188, Canton, Massachusetts 02021-0188.
Town of Canton, Massachusetts 58 Comprehensive Annual Financial ReportSource page 67
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Funding Policy - Plan members are required to contribute to the System at rates ranging from 5% to 11% of annual covered compensation. The Town is required to pay into the System its share of the system-wide actuarial determined contribution that is apportioned among the employers based on active current payroll. Administrative expenses are funded through investment earnings. Chapter 32 of the MGL governs the contributions of plan members and the Town. Annual Pension Cost - The Town’s contributions to the System for the fiscal years ended June 30, 2010, 2009, and 2008, were $2,826,638, $2,672,418 and $2,297,249, respectively, which equaled its required contribution for each fiscal year. NOTE 11 – LANDFILL POSTCLOSURE CARE COSTS State and Federal laws and regulations require the Town to perform certain maintenance and monitoring functions at the site after closure. The Town has closed the landfill and has recorded its estimated postclosure care costs to be $242,000 which has been recorded as a governmental activity liability at June 30, 20010. Actual costs may be higher due to inflation, changes in technology or changes in regulations. NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Fiscal year 2009 was the initial year that the Town has implemented GASB Statement 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions (GASB 45). As allowed by GASB 45, the Town established the net Other Postemployment Benefits (OPEB) obligation at zero at the beginning of the transition year and has applied the measurement and recognition requirements of GASB 45 on a prospective basis. Plan Description – The Town of Canton administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the Town’s group health insurance plan, which covers both active and retired members. Chapter 32B of the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are negotiated between the Town and the unions representing Town employees and are renegotiated each bargaining period. The Retiree Health Plan does not issue a publicly available financial report. Funding Policy – Contribution requirements are also negotiated between the Town and union representatives. The required contribution is based on a pay-as-you-go financing requirement. The Town contributes 75 percent of the cost of current-year premiums for eligible retired plan members and their spouses. Plan members receiving benefits contribute the remaining 25 percent of their premium costs. For fiscal year 2010, the Town contributed $2.7 million to the plan, and member contributions totaled $965,000. Annual OPEB Cost and Net OPEB Obligation – The Town’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the Town’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town’s net OPEB obligation are summarized in the following table: Town of Canton, Massachusetts 59 Comprehensive Annual Financial Report
Source page 68
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Normal cost………………………………………………………$ 5,684,000
Interest on net OPEB obligation……………………………… 133,000
Adjustment to ARC……………………………………………… (115,000)
Annual OPEB cost (expense)……………………………… 5,702,000
Contributions made……………………………………………… (2,719,000)
Increase in net OPEB obligation……………………………… 2,983,000
Net OPEB obligation--beginning of year……………………… 3,138,000
Net OPEB obligation--end of year………………………………$ 6,121,000
The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation for fiscal year 2010 and the preceding year is as follows:
Percentage of
Fiscal Year Annual Annual OPEB Net OPEB
Ended OPEB Cost Cost Contributed Obligation
6/30/2010 $ 5,702,000 48% $ 6,121,000
6/30/2009 5,490,000 43% 3,138,000
Funded Status and Funding Progress – As of January 1, 2009, the most recent actuarial valuation date, the
actuarial accrued liability for benefits was $80.3 million, all of which was unfunded. The covered payroll (annual
payroll of active employees covered by the plan) was $32.2 million, and the ratio of the UAAL to the covered
payroll was 249 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques that
are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
In the January 1, 2009 actuarial valuation, actuarial liabilities were determined using the projected unit credit cost
method. The actuarial assumptions included a 4.25% investment return assumption, which is based on the
expected yield on the assets of the Town, calculated based on the funded level of the plan at the valuation date,
and an annual medical/drug cost trend rate of 10% initially, graded to 5% over ten years and included a 3.5%
inflation assumption. The UAAL is being amortized over a 30 year period, with amortization payments increasing
at 3.5% per year on a closed basis. The remaining amortization period at June 30, 2010 is 28 years.
Town of Canton, Massachusetts 60 Comprehensive Annual Financial ReportSource page 69
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 13 – COMMITMENTS
During fiscal year 2010 the Town began construction on a Waste Water Treatment Facility. As of June 30, 2010,
the Town has outstanding contracts totaling approximately $6.9 million relating to the project. It is anticipated that
the project will be completed during fiscal year 2011.
NOTE 14 – CONTINGENCIES
The Town participates in a number of federal award programs. Although the grant programs have been audited
in accordance with the provisions of the Single Audit Act Amendments of 1996 through June 30, 2010, these
programs are still subject to financial and compliance audits. The amount, if any, of expenditures which may be
disallowed by the granting agencies cannot be determined at this time, although it is expected such amounts, if
any, to be immaterial.
Various legal actions and claims are pending. Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not always predictable. Although the amount of liability, if any, at June 30, 2010,
cannot be ascertained, management believes any resulting liability should not materially affect the financial
position at June 30, 2010.
NOTE 15 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS
During fiscal year 2010, the following GASB pronouncements were implemented:
• The GASB issued Statement #57, OPEB Measurements by Agent Employers and Agent Multiple-
Employer Plans. The standards in this statement permits an agent employer that has an individual
employer OPEB plan with fewer than 100 members to use an alternative measurement method to
produce actuarially based information for purposes of financial reporting, regardless of the number of total
plan members in the agent multiple-employer OPEB plan in which it participates. This standard does not
apply to the Town and does not impact the basic financial statements.
• The GASB issued Statement #58, Accounting and Financial Reporting for Chapter 9 Bankruptcies. The
standards in this statement provide guidance for bankrupt state and local governments by establishing
requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities
and for classifying changes in those items and related costs. Management elected to implement this
standard early and this standard did not impact the basic financial statements.
Other Future GASB Pronouncements:
• The GASB issued Statement #54, Fund Balance Reporting and Governmental Fund Type Definitions,
which is required to be implemented in fiscal year 2011. Management believes this pronouncement will
require additional disclosure and impact the basic financial statements.
• The GASB issued Statement #59, Financial Instruments Omnibus. The objective of this Statement is to
update and improve existing standards regarding financial reporting and disclosure requirements of
certain financial instruments and external investment pools for which significant issues have been
identified in practice. The provisions of this Statement are effective for financial statements for periods
beginning after June 15, 2010.
Town of Canton, Massachusetts 61 Comprehensive Annual Financial ReportSource page 70
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Required Supplementary Information Required Supplementary Information Town of Canton, Massachusetts 63 Comprehensive Annual Financial Report
Source page 72
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30, 2010
Budgeted Amounts
Actual Amounts Variance
Original Final Budgetary Carried Forward to Final
Budget Budget Amounts To Next Year Budget
REVENUES:
Real estate and personal property taxes,
net of tax refunds…………………………………………… $ 52,680,226 $ 52,680,226 $ 52,168,187 $ - $ (512,039)
Tax liens……………………………………………………… - - 193,859 - 193,859
Motor vehicle and other excise taxes……………………… 3,000,000 3,000,000 3,080,023 - 80,023
Penalties and interest on taxes……………………………… 275,000 275,000 317,161 - 42,161
Payments in lieu of taxes…………………………………… 201,363 201,363 199,299 - (2,064)
Licenses and permits………………………………………… 610,000 610,000 658,905 - 48,905
Fines and forfeitures………………………………………… 125,000 125,000 123,576 - (1,424)
Intergovernmental…………………………………………… 6,780,621 6,780,621 6,702,517 - (78,104)
Departmental and other……………………………………… 947,015 947,015 1,067,808 - 120,793
Investment income…………………………………………… 125,000 125,000 125,703 - 703
TOTAL REVENUES…………………………………… 64,744,225 64,744,225 64,637,038 - (107,187)
EXPENDITURES:
Current:
General Government
Executive Branch………………………………………… 878,582 978,582 977,596 - 986
Executive Branch articles……………………………… 63,643 63,643 3,843 59,800 -
Finance Committee……………………………………… 12,703 12,703 7,360 - 5,343
Reserve Fund…………………………………………… 300,000 92,250 - - 92,250
Finance Department…………………………………… 923,147 923,147 832,034 80,350 10,763
Finance Department articles…………………………… 58,652 58,652 38,469 20,140 43
Assessors………………………………………………… 241,390 241,390 234,705 5,000 1,685
Assessors articles……………………………………… 300,000 300,000 290,000 - 10,000
Water/Sewer Rate Committee………………………… 1,000 1,000 261 - 739
Town Clerk & Elections………………………………… 198,270 189,270 187,634 552 1,084
Town Clerk & Elections articles………………………… 51,593 51,593 8,850 42,500 243
Conservation Commission……………………………… 62,684 66,684 64,688 1,853 143
Planning Board…………………………………………… 57,511 57,511 52,467 1,250 3,794
Building Renovation Committee……………………… 3,381 3,381 230 - 3,151
Capital Outlay Committee……………………………… 2,556 2,556 7 - 2,549
Municipal Buildings……………………………………… 427,192 427,192 419,035 6,147 2,010
Municipal Buildings articles…………………………… 55,549 55,549 26,185 26,758 2,606
Town Insurance………………………………………… 765,000 765,000 675,429 - 89,571
Total……………………………………………………… 4,402,853 4,290,103 3,818,793 244,350 226,960
Public Safety
Fire Department………………………………………… 4,301,443 4,353,443 4,345,064 5,597 2,782
Fire Department articles………………………………… 12,000 12,000 10,747 - 1,253
Police……………………………………………………… 3,700,156 3,700,156 3,700,010 - 146
Police articles…………………………………………… 189,598 189,598 135,488 54,110 -
Building & Zoning………………………………………… 312,494 312,494 295,903 10,290 6,301
Sealer of Weights & Measures………………………… 7,500 7,500 6,750 - 750
Emergency Management……………………………… 8,335 8,335 7,604 - 731
Emergency Management Articles……………………… 15,000 15,000 13,678 - 1,322
Animal Control…………………………………………… 139,713 139,713 100,428 - 39,285
Town Emergency………………………………………… 8,875 8,875 - - 8,875
Total……………………………………………………… 8,695,114 8,747,114 8,615,672 69,997 61,445
Education
School…………………………………………………… 28,717,164 29,080,556 28,838,387 36,657 205,512
School articles…………………………………………… 176,325 176,325 173,452 2,873 -
Blue Hills Regional……………………………………… 1,321,631 1,321,631 1,321,631 - -
Total……………………………………………………… 30,215,120 30,578,512 30,333,470 39,530 205,512
(Continued)
Town of Canton, Massachusetts 64 Comprehensive Annual Financial ReportSource page 73
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30, 2010
Budgeted Amounts
Actual Amounts Variance
Original Final Budgetary Carried Forward to Final
Budget Budget Amounts To Next Year Budget
Public Works
Public Works……………………………………………… 1,928,098 1,978,098 1,954,850 21,744 1,504
Public Works articles…………………………………… 30,282 30,282 8,544 21,738 -
Street Lighting…………………………………………… 239,000 239,000 172,219 9,317 57,464
Snow & Ice……………………………………………… 184,721 597,771 597,771 - -
Trash Collection………………………………………… 1,408,692 1,408,692 1,330,272 46,703 31,717
Total……………………………………………………… 3,790,793 4,253,843 4,063,656 99,502 90,685
Health and Human Services
Health Department……………………………………… 304,974 304,974 298,695 - 6,279
Council on Aging………………………………………… 201,606 201,606 201,562 42 2
Commission on Disability……………………………… 2,565 2,565 329 - 2,236
Veteran's Services……………………………………… 98,997 154,747 154,513 - 234
Total……………………………………………………… 608,142 663,892 655,099 42 8,751
Culture and Recreation
Recreation & Playground……………………………… 379,158 387,158 387,144 - 14
Recreation & Playground articles……………………… 17,339 17,339 13,410 3,929 -
Public Library…………………………………………… 968,545 968,545 968,261 - 284
Public Library articles…………………………………… 11,923 11,923 5,664 6,259 -
Historical Commission…………………………………… 3,669 3,669 3,616 - 53
Beautification Commission……………………………… 4,120 4,120 4,118 - 2
Total……………………………………………………… 1,384,754 1,392,754 1,382,213 10,188 353
Pension Benefits…………………………………………… 2,875,438 2,875,438 2,870,147 - 5,291
Employee Benefits
Unemployment Compensation………………………… 100,000 100,000 100,000 - -
Employer Share - Health……………………………… 9,007,669 8,957,669 8,952,223 - 5,446
Employer Share - Life…………………………………… 58,680 58,680 55,575 - 3,105
Total……………………………………………………… 9,166,349 9,116,349 9,107,798 - 8,551
State and county charges…………………………………… 950,255 960,255 932,878 - 27,377
Debt service…………………………………………………… 5,946,166 5,911,116 5,903,695 - 7,421
TOTAL EXPENDITURES……………………………… 68,034,984 68,789,376 67,683,421 463,609 642,346
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES……………………………………… (3,290,759) (4,045,151) (3,046,383) (463,609) 535,159
OTHER FINANCING SOURCES (USES):
Premium from issuance of bonds…………………………… - - 8,793 - 8,793
Transfers in…………………………………………………… 2,142,540 2,142,540 2,158,470 - 15,930
Transfers out………………………………………………… (250,800) (260,800) (260,800) - -
TOTAL OTHER FINANCING SOURCES (USES)…… 1,891,740 1,881,740 1,906,463 - 24,723
NET CHANGE IN FUND BALANCE…………………………… (1,399,019) (2,163,411) (1,139,920) (463,609) 559,882
BUDGETARY FUND BALANCE, Beginning of year………… 5,700,074 11,779,113 11,779,113 - -
BUDGETARY FUND BALANCE, End of year…………………$ 4,301,055 $ 9,615,702 $ 10,639,193 $ (463,609) $ 559,882
(Concluded)
See notes to required supplementary information.
Town of Canton, Massachusetts 65 Comprehensive Annual Financial ReportSource page 74
Retirement System Schedules of Funding
Progress and Employer Contributions
The Retirement System Schedule of Funding Progress presents multiyear trend information about whether the
actuarial value of planned assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
The Retirement System Schedule of Employer Contributions presents multiyear trend information for required and
actual contributions relating to the cost-sharing plan as a whole, of which the Town is one participating employer,
was well as the Town’s proportionate share of the plan’s annual contributions.
Retirement System Schedules
Town of Canton, Massachusetts 66 Comprehensive Annual Financial ReportSource page 75
Norfolk County Contributory Retirement System
Schedule of Funding Progress
FISCAL YEAR ENDED JUNE 30, 2010
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
01/01/08 $ 596,157,147 $ 907,719,124 $ 311,561,977 65.7% $ 223,814,977 139.2%
01/01/07 533,077,948 855,677,413 322,599,465 62.3% 219,620,865 146.9%
01/01/05 467,186,566 762,900,650 295,714,084 61.2% 196,639,163 150.4%
01/01/03 415,150,776 675,275,257 260,124,481 61.5% 185,281,985 140.4%
01/01/00 371,646,793 533,959,970 162,313,177 69.6% 163,542,978 99.2%
01/01/97 258,771,070 392,463,080 133,692,010 65.9% 126,219,194 105.9%
01/01/93 151,546,609 291,472,940 139,926,331 52.0% 107,482,975 130.2%
The Town's share of the UAAL, as of January 1, 2008, is approximately 6.9%.
See notes to required supplementary information.
Town of Canton, Massachusetts 67 Comprehensive Annual Financial ReportSource page 76
Norfolk County Contributory Retirement System
Schedule of Employer Contributions
FISCAL YEAR ENDED 30, 2010
System Wide Town of Canton
(B/A)
Fiscal Year Annual (A) (B) Town's Percentage
Ended Required Actual Percentage Actual of System Wide
June 30 Contributions Contributions Contributed Contributions Actual Contributions
2010 $ 41,242,373 $ 41,242,373 100% $ 2,826,638 6.85%
2009 38,920,499 38,920,499 100% 2,672,418 6.87%
2008 33,104,903 33,104,903 100% 2,297,249 6.94%
2007 32,877,890 32,877,890 100% 2,201,571 6.70%
2006 31,755,708 31,755,708 100% 2,017,098 6.35%
2005 28,238,996 28,238,996 100% 1,747,497 6.19%
The Town's Actual Contributions equaled 100% of its Required Contribution for each year presented.
See notes to required supplementary information.
Town of Canton, Massachusetts 68 Comprehensive Annual Financial ReportSource page 77
Other Postemployment Benefits Plan
Schedules
The Schedule of Funding progress compares, over time, the actuarial accrued liability for benefits with the
actuarial value of accumulated plan assets.
The Schedule of Employer Contributions compares, over time, the Annual Required Contributions to the Actual
Contributions made.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.
Town of Canton, Massachusetts 69 Comprehensive Annual Financial ReportSource page 78
OTHER POSTEMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS
JUNE 30, 2010
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets Projected Unit Credit (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
1/1/2009 $ - $ 80,263,018 $ 80,263,018 0% $ 32,236,036 249.0%
Schedule of Employer Contributions
Fiscal Annual Actual
Year Required Contributions Percentage
Ended Contribution Made Contributed
2010 $ 5,684,000 $ 2,719,000 48%
2009 5,490,000 2,352,000 43%
See notes to required supplementary information.
Town of Canton, Massachusetts 70 Comprehensive Annual Financial ReportSource page 79
OTHER POSTEMPLOYMENT BENEFIT PLAN
ACTUARIAL METHODS AND ASSUMPTIONS
FISCAL YEAR ENDED JUNE 30, 2010
Actuarial Methods:
Valuation date January 1, 2009
Actuarial cost method Projected Unit Credit
Amortization method Level dollar amount over a 30 year period at transition
Remaining amortization period 28 years as of June 30, 2010, closed basis
Actuarial Assumptions:
Investment rate of return 4.25% for an unfunded plan
Medical/drug cost trend rate 10% graded to 5% over 10 years
Plan Membership:
Current retirees, beneficiaries, and dependents 545
Current active members 604
Total 1,149
See notes to required supplementary information.
Town of Canton, Massachusetts 71 Comprehensive Annual Financial ReportSource page 80
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010
NOTE A – BUDGETARY BASIS OF ACCOUNTING
Notes to Required Supplementary Information
A. Budgetary Information
Municipal Law requires the adoption of a balanced budget that is approved by the Finance Committee
(Committee). The Committee presents an annual budget to the Open Town Meeting, which includes estimates of
revenues and other financing sources and recommendations of expenditures and other financing uses. The
Town, which has full authority to amend and/or reject the budget or any line item, adopts the expenditure budget
by majority vote at the Annual Town Meeting. Changes subsequent to the approved annual budget require
majority vote at a Special Town Meeting.
The majority of the Town’s appropriations are non-continuing, which lapse at the end of each fiscal year. Others
are continuing appropriations for which the governing body has authorized that an unspent balance from a prior
fiscal year be carried forward and made available for spending in the current fiscal year. These carry forwards
are included as part of the subsequent fiscal year’s original budget.
Generally, expenditures may not exceed the legal level of spending authorized for an appropriation account.
However, the payment of debt service is statutorily required, regardless of whether such amounts are
appropriated. Additionally, expenditures for disasters, natural or otherwise, and final claims and judgments may
exceed the level of spending authorized by two-thirds majority vote at a special town meeting.
The Town adopts an annual budget for the general fund in conformity with the guidelines described above. The
fiscal year 2010 final budget includes approximately $69,050,000 in current year authorized appropriations and
other amounts to be raised.
The Town Accountant has the responsibility to ensure that budgetary control is maintained in the manner in which
the appropriations were voted at Town Meeting. Budgetary control is exercised through the Town’s accounting
system.
B. Budgetary – GAAP Reconciliation
For budgetary financial reporting purposes, the Uniform Municipal Accounting System basis of accounting
(established by the Commonwealth) is followed, which differs from the GAAP basis of accounting. A
reconciliation of budgetary-basis to GAAP-basis results for the general fund for the fiscal year ended June 30,
2010, is presented as follows:
Net change in fund balance, budgetary basis…………………… $ (1,139,920)
Basis of accounting differences:
Net change in recording 60-day receipts……………………… (190,094)
Net change in recording tax refunds payable…………………… 239,000
Recognition of revenue for on-behalf payment………………… 7,612,661
Recognition of expenditure for on-behalf payment…………… (7,612,661)
Net change in fund balance, GAAP basis…………………………$ (1,091,014)
C. Appropriation Deficits
At June 30, 2010 there were no expenditures that exceeded budgeted appropriations.
Town of Canton, Massachusetts 72 Comprehensive Annual Financial Report