Canton, Massachusetts · Saved source text
FY16 Comprehensive Annual Financial Report
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Basic Financial Statements Town of Canton, Massachusetts Page 33 of 123 Comprehensive Annual Financial Report
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TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2016
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 29,017,957 $ 9,624,043 $ 38,642,000
Investments 8,800,037 - 8,800,037
Receivables, net:
Property taxes 551,133 - 551,133
Tax liens and foreclosures 1,262,801 30,150 1,292,951
User fees - 4,049,706 4,049,706
Departmental and other 1,034,290 - 1,034,290
Intergovernmental 3,148,597 - 3,148,597
Prepaid items 1,715,366 - 1,715,366
Deposit held by third party 122,921 - 122,921
Capital assets not being depreciated 13,738,642 624,852 14,363,494
Capital assets, net of accumulated depreciation 92,779,538 45,960,642 138,740,180
Total Assets 152,171,282 60,289,393 212,460,675
Deferred Outflows of Resources
Deferred pensions 6,285,161 425,452 6,710,613
Total Deferred Outflows of Resources 6,285,161 425,452 6,710,613
Liabilities
Warrants and accounts payable 2,331,135 505,795 2,836,930
Accrued payroll and withholdings 3,666,480 23,979 3,690,459
Retainage payable 115,341 - 115,341
Tax refunds payable 2,550,000 - 2,550,000
Health claims incurred but not reported 740,988 - 740,988
Accrued interest 250,715 196,052 446,767
Other liabilities 39,489 10,000 49,489
Bond anticipation notes payable 2,385,000 1,300,000 3,685,000
Noncurrent liabilities:
Due within one year 4,550,864 2,746,173 7,297,037
Due in more than one year 106,918,110 29,212,130 136,130,240
Total Liabilities 123,548,122 33,994,129 157,542,251
Deferred Inflows of Resources
Deferred pensions 3,280,618 222,070 3,502,688
Total Deferred Inflows of Resources 3,280,618 222,070 3,502,688
Net Position
Net investment in capital assets 78,591,436 17,457,708 96,049,144
Restricted for:
Nonexpendable permanent funds 471,585 - 471,585
Expendable permanent funds 341,753 - 341,753
Debt service 2,125,785 - 2,125,785
Federal and State grants 1,347,318 - 1,347,318
Community preservation 1,395,425 - 1,395,425
Gift funds 2,031,263 - 2,031,263
Other specific purposes 1,293,419 - 1,293,419
Unrestricted (55,970,281) 9,040,938 (46,929,343)
Total Net Position $ 31,627,703 $ 26,498,646 $ 58,126,349
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 35 of 123 Comprehensive Annual Financial ReportSource page 46
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2016
Program Revenues Net (Expenses) Revenues and Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary government:
Governmental activities:
General government $ 5,764,062 $ 776,450 $ 127,304 $ - $ (4,860,308) $ (4,860,308)
Public safety 16,584,359 3,123,869 399,605 - (13,060,885) (13,060,885)
Education 60,963,021 2,788,752 14,573,089 - (43,601,180) (43,601,180)
Public works 7,581,355 316,164 237,324 1,417,491 (5,610,376) (5,610,376)
Health and human services 1,536,513 97,633 383,435 - (1,055,445) (1,055,445)
Culture and recreation 3,698,331 468,374 38,167 145,336 (3,046,454) (3,046,454)
Interest expense 672,768 - 83,026 - (589,742) (589,742)
Total governmental activities 96,800,409 7,571,242 15,841,950 1,562,827 (71,824,390) (71,824,390)
Business-type activities:
Water 5,692,320 7,084,917 - - $ 1,392,597 1,392,597
Sewer 5,925,780 6,517,066 2,093 - 593,379 593,379
Rink 79,670 - - - (79,670) (79,670)
Total business-type activities 11,697,770 13,601,983 2,093 - 1,906,306 1,906,306
Total Primary Government $ 108,498,179 $ 21,173,225 $ 15,844,043 $ 1,562,827 (71,824,390) 1,906,306 (69,918,084)
General Revenues:
Property taxes 67,168,983 - 67,168,983
Tax liens 204,512 - 204,512
Motor vehicle and other excise 4,376,168 - 4,376,168
Hotel and meals taxes 601,227 - 601,227
Payments in lieu of taxes 225,405 - 225,405
Grants and contributions not restricted
to specific programs 2,013,767 - 2,013,767
Penalties and interest on taxes 254,164 - 254,164
Unrestricted investment income 246,862 38,296 285,158
Insurance recoveries 2,190,705 - 2,190,705
Transfers (net) (1,824,747) 1,824,747 -
Total general revenues and transfers 75,457,046 1,863,043 77,320,089
Change in Net Position 3,632,656 3,769,349 7,402,005
Net Position:
Beginning of year 27,995,047 22,729,297 50,724,344
End of year $ 31,627,703 $ 26,498,646 $ 58,126,349
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 36 of 123 Comprehensive Annual Financial ReportSource page 47
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2016
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Assets
Cash and cash equivalents $ 16,304,708 $ 722,746 $ 9,540,529 $ 26,567,983
Investments 3,982,225 - 1,271,042 5,253,267
Receivables, net of allowance for uncollectibles:
Property taxes 546,198 - 4,935 551,133
Tax liens and foreclosures 1,260,489 - 2,312 1,262,801
Motor vehicle excise 299,187 - - 299,187
Intergovernmental 2,125,785 92,532 930,280 3,148,597
Departmental and other 11,239 - 532,489 543,728
Prepaid items 1,715,366 - - 1,715,366
Due from other funds 699,024 - - 699,024
Total Assets 26,944,221 815,278 12,281,587 40,041,086
Deferred Outflows of Resources - - - -
Total Assets and Deferred Outflows of Resources $ 26,944,221 $ 815,278 $ 12,281,587 $ 40,041,086
Liabilities
Warrants and accounts payable $ 1,322,313 $ 591,890 $ 249,365 $ 2,163,568
Accrued payroll and withholdings 3,531,574 600 134,306 3,666,480
Retainage payable - 115,341 - 115,341
Tax refunds payable 2,550,000 - - 2,550,000
Other liabilities 39,489 - - 39,489
Due to other funds - - 699,024 699,024
Bond anticipation notes payable - 2,385,000 - 2,385,000
Total Liabilities 7,443,376 3,092,831 1,082,695 11,618,902
Deferred Inflows of Resources
Unavailable revenues - property taxes 1,369,195 - 7,247 1,376,442
Unavailable revenues - motor vehicle excise 299,187 - - 299,187
Unavailable revenues - intergovernmental 2,125,785 - - 2,125,785
Unavailable revenues - other 11,239 - 532,489 543,728
Total Deferred Inflows of Resources 3,805,406 - 539,736 4,345,142
Fund Balances
Nonspendable - - 471,585 471,585
Restricted - 163,154 10,421,619 10,584,773
Committed 886,722 - - 886,722
Assigned 1,846,942 - - 1,846,942
Unassigned 12,961,775 (2,440,707) (234,048) 10,287,020
Total Fund Balances 15,695,439 (2,277,553) 10,659,156 24,077,042
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $ 26,944,221 $ 815,278 $ 12,281,587 $ 40,041,086
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 123 Comprehensive Annual Financial ReportSource page 48
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2016
Total Governmental Fund Balances $ 24,077,042
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 106,518,180
Other long-term assets are unavailable to pay current-period expenditures 4,345,142
Deferred outflows and inflows of resources to be recognized in future pension expense
are not available resources and, therefore, are not reported in the funds:
Net difference between projected and actual earnings on pension plan investments 5,220,609
Differences between expected and actual experience 788,735
Changes in assumptions (3,280,618)
Changes in proportion and differences between Town contributions and
proportionate share of contributions 275,817
Net effect of reporting deferred outflows and inflows of resources from pensions 3,004,543
Assets, deferred outflows of resources and liabilities and deferred inflows of resources of the
Town's internal service funds are included in the Statement of Net Position, but are not
reported in the governmental funds. 5,402,485
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in the governmental funds interest is not reported until due. (250,715)
Long-term liabilities are not due and payable in the current period and therefore are not
reported in the government funds:
Bonds and notes payable (25,616,026)
Unamortized premiums on bonds (1,131,980)
Capital leases payable (84,246)
Landfill closure (52,000)
Compensated absences (1,533,841)
Net pension liability (38,926,647)
Other postemployment benefits (44,124,234)
Net effect of reporting long-term liabilities (111,468,974)
Net Position of Governmental Activities $ 31,627,703
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 123 Comprehensive Annual Financial ReportSource page 49
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Revenues:
Property taxes $ 66,702,218 $ - $ 521,506 $ 67,223,724
Tax liens 147,456 - - 147,456
Intergovernmental 14,191,580 - 4,910,428 19,102,008
Motor vehicle and other excises 4,555,904 - - 4,555,904
Hotel and meals taxes 601,227 - - 601,227
Licenses and permits 1,035,070 - - 1,035,070
Penalties and interest on taxes 254,164 - - 254,164
Payments in lieu of taxes 225,405 - - 225,405
Fines and forfeitures 119,540 - - 119,540
Charges for services - - 1,747,854 1,747,854
Departmental and other revenue 1,239,870 37,253 3,229,142 4,506,265
Investment income 168,008 - 30,218 198,226
Contributions and donations - - 488,456 488,456
Total Revenues 89,240,442 37,253 10,927,604 100,205,299
Expenditures:
Current:
General government 3,978,642 16,925 96,834 4,092,401
Public safety 10,352,360 308,237 1,141,012 11,801,609
Education 37,781,322 2,924,035 5,763,196 46,468,553
Public works 4,809,315 1,108,591 2,015,655 7,933,561
Health and human services 1,003,187 - 161,239 1,164,426
Culture and recreation 1,917,534 - 784,075 2,701,609
Pension benefits 9,802,225 - - 9,802,225
Employee benefits 11,384,011 - 98,441 11,482,452
State and county assessments 927,338 - - 927,338
Debt service:
Principal 3,931,624 - - 3,931,624
Interest 1,061,042 - - 1,061,042
Total Expenditures 86,948,600 4,357,788 10,060,452 101,366,840
Excess (Deficiency) of Revenues Over (Under) Expenditures 2,291,842 (4,320,535) 867,152 (1,161,541)
Other Financing Sources (Uses):
Issuance of bonds and notes - 1,367,000 - 1,367,000
Premiums from bonds and notes 11,148 - - 11,148
Issuance of refunding bonds 515,000 - - 515,000
Payments on refunding bonds (526,148) - - (526,148)
Insurance recoveries - - 2,354,811 2,354,811
Transfers in 1,647,854 566,892 80,000 2,294,746
Transfers out (832,786) - (3,286,707) (4,119,493)
Total Other Financing Sources (Uses) 815,068 1,933,892 (851,896) 1,897,064
Net Change in Fund Balances 3,106,910 (2,386,643) 15,256 735,523
FUND BALANCES - Beginning of year 12,588,529 109,090 10,643,900 23,341,519
FUND BALANCES - End of year $ 15,695,439 $ (2,277,553) $ 10,659,156 $ 24,077,042
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 123 Comprehensive Annual Financial ReportSource page 50
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2016
Net Change in Fund Balances - Total Governmental Fund Balances $ 735,523
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense. The net amounts are reflected here as reconciling items:
Capital outlays 6,844,641
Disposal of assets (64,315)
Depreciation expense (4,714,041)
Net effect of reporting capital assets 2,066,285
In the Statement of Activities, Internal Service Funds established to administer the Town's
health insurance and worker's compensation activities are included within the Statement of
activities whereas these activities are not presented in the Statement of Revenues,
Expenditures and Changes in Fund Balances. 66,082
The issuance of long-term debt provides current financial resources to governmental funds,
while the repayment of the principal of long-term debt consumes the financial resources of
governmental funds. Neither has any effect on net position. Also governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when debt is first issued,
whereas these amounts are amortized in the Statement of Activities. The net amounts are
reflected here as reconciling items:
Issuance of general obligation bonds and notes (1,367,000)
Premiums from bonds and notes (11,148)
Issuance of refunding bonds (515,000)
Payments on refunding bonds 526,148
Amortization of premiums on bonds and notes payable 353,697
Payments on capital leases 20,004
Repayments of debt 3,931,624
Net effect of reporting long-term debt 2,938,325
Revenues in the Statement of Activities that do not provide current financial resources are
unavailable in the Statement of Revenues, Expenditures and Changes in Fund Balances.
Therefore, the recognition of revenue for various types of accounts receivable differ between
the two statements. The amount presented represents the difference in unavailable revenue. (350,934)
In the Statement of Activities, interest is accrued on outstanding long-term debt;
whereas in governmental funds interest is not reported until due. The net
amount presented here as a reconciling item represents the difference in
accruals between this year and the prior year. 34,577
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and therefore are not reported as expenditures in the governmental funds:
Landfill closure 26,000
Compensated absences 50,628
Pension benefits (699,361)
Other postemployment benefits (1,234,469)
Net effect of reporting long-term liabilities (1,857,202)
Change in Net Position of Governmental Activities $ 3,632,656
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 123 Comprehensive Annual Financial ReportSource page 51
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 4,632,662 $ 3,179,969 $ 1,811,412 $ 9,624,043 $ 2,449,974
Investments - - - - 3,546,770
Receivables (net):
User charges 2,207,256 1,842,450 - 4,049,706 -
Tax liens 13,820 16,330 - 30,150 -
Departmental and other - - - - 191,375
Deposit held by third party - - - - 122,921
Total current assets 6,853,738 5,038,749 1,811,412 13,703,899 6,311,040
Noncurrent assets:
Nondepreciable capital assets 624,852 - - 624,852 -
Capital assets (net of depreciation) 31,025,964 14,834,826 99,852 45,960,642 -
Total noncurrent assets 31,650,816 14,834,826 99,852 46,585,494 -
Total Assets 38,504,554 19,873,575 1,911,264 60,289,393 6,311,040
Deferred Outflows of Resources
Deferred pensions 215,411 171,791 38,250 425,452 -
Total Deferred Outflows of Resources 215,411 171,791 38,250 425,452 -
Liabilities
Current liabilities:
Warrants and accounts payable 504,804 614 377 505,795 167,567
Accrued payroll and withholdings 19,028 4,823 128 23,979 -
Health claims incurred but not reported - - - - 740,988
Accrued interest 135,074 60,978 - 196,052 -
Other liabilities 10,000 - - 10,000 -
Bond anticipation notes payable 1,300,000 - - 1,300,000 -
Compensated absences 22,278 3,734 3,914 29,926 -
Bonds and notes payable 1,718,992 991,255 6,000 2,716,247 -
Total current liabilities 3,710,176 1,061,404 10,419 4,781,999 908,555
Noncurrent liabilities:
Compensated absences 66,833 11,201 11,743 89,777 -
Other postemployment benefits 915,767 411,788 244,302 1,571,857 -
Net pension liability 1,334,130 1,063,978 236,901 2,635,009 -
Bonds and notes payable 17,771,449 7,132,038 12,000 24,915,487 -
Total noncurrent liabilities 20,088,179 8,619,005 504,946 29,212,130 -
Total Liabilities 23,798,355 9,680,409 515,365 33,994,129 908,555
Deferred Inflows of Resources
Deferred pensions 112,436 89,669 19,965 222,070 -
Total Deferred Outflows of Resources 112,436 89,669 19,965 222,070 -
Net Position
Net investment in capital assets 10,725,301 6,650,555 81,852 17,457,708 -
Unrestricted 4,083,873 3,624,733 1,332,332 9,040,938 5,402,485
Total Net Position $ 14,809,174 $ 10,275,288 $ 1,414,184 $ 26,498,646 $ 5,402,485
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 123 Comprehensive Annual Financial ReportSource page 52
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 7,084,917 $ 6,517,066 $ - $ 13,601,983 $ -
Employee contributions - - - - 3,424,160
Employer contributions - - - - 10,209,630
Stop loss reimbursements - - - - 497,643
Total Operating Revenues 7,084,917 6,517,066 - 13,601,983 14,131,433
Operating Expenses:
Operating costs 2,631,710 1,103,313 53,478 3,788,501 -
Massachusetts Water Resources Authority assessment 1,299,628 3,979,956 - 5,279,584 -
Depreciation 1,161,401 660,028 25,412 1,846,841 -
Employee benefits - - - - 14,113,987
Total Operating Expenses 5,092,739 5,743,297 78,890 10,914,926 14,113,987
Operating Income (Loss) 1,992,178 773,769 (78,890) 2,687,057 17,446
Nonoperating Revenues (Expenses):
Intergovernmental - 2,093 - 2,093 -
Investment income 22,988 13,481 1,827 38,296 48,636
Interest expense (599,581) (182,483) (780) (782,844) -
Total Nonoperating Revenues (Expenses) (576,593) (166,909) 1,047 (742,455) 48,636
Income (Loss) Before Transfers 1,415,585 606,860 (77,843) 1,944,602 66,082
Transfers in 387,695 - 1,787,052 2,174,747 -
Transfers out (350,000) - - (350,000) -
Total Transfers 37,695 - 1,787,052 1,824,747 -
Change in Net Position 1,453,280 606,860 1,709,209 3,769,349 66,082
Total Net Position - Beginning of the Year 13,355,894 9,668,428 (295,025) 22,729,297 5,336,403
Total Net Position - End of the Year $ 14,809,174 $ 10,275,288 $ 1,414,184 $ 26,498,646 $ 5,402,485
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 123 Comprehensive Annual Financial ReportSource page 53
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,962,201 $ 6,468,014 $ 20,000 $ 13,450,215 $ -
Receipts from interfund services provided - - - - 14,259,936
Payments to employees (804,344) (320,836) (9,641) (1,134,821) -
Payments to vendors (2,651,766) (4,728,408) (15,430) (7,395,604) -
Payments for interfund services used - - - - (14,185,159)
Net Cash Provided by (Used in) Operating
Activities 3,506,091 1,418,770 (5,071) 4,919,790 74,777
Cash Flows from Noncapital Financing Activities:
Intergovernmental operating grants - 2,093 - 2,093 -
Net Cash Provided by (Used in) Noncapital
Financing Activities 37,695 2,093 1,787,052 1,826,840 -
Cash Flows from Capital and Related Financing Activities:
Proceeds from the issuance of bonds and notes 1,300,000 561,000 - 1,861,000 -
Proceeds from the issuance of refunding bonds 585,000 50,000 - 635,000 -
Payments of refunded bonds (585,000) (50,000) - (635,000) -
Acquisition and construction of capital assets (1,646,420) (403,113) - (2,049,533) -
Principal payments on bonds and notes (1,708,750) (899,515) (8,000) (2,616,265) -
Interest payments on bonds and notes (671,804) (223,393) (780) (895,977) -
Net Cash Used in Capital and Related
Financing Activities (2,726,974) (965,021) (8,780) (3,700,775) -
Cash Flows from Investing Activities:
Investment income 22,988 13,481 1,827 38,296 48,636
Investment of operating cash - - - - (841,476)
Net Cash Provided by (Used in) Investing Activities 22,988 13,481 1,827 38,296 (792,840)
Net Change in Cash and Cash Equivalents 839,800 469,323 1,775,028 3,084,151 (718,063)
Cash and Cash Equivalents:
Beginning of the year 3,792,862 2,710,646 36,384 6,539,892 3,168,037
End of the year $ 4,632,662 $ 3,179,969 $ 1,811,412 $ 9,624,043 $ 2,449,974
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 1,992,178 $ 773,769 $ (78,890) $ 2,687,057 $ 17,446
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,161,401 660,028 25,412 1,846,841 -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
Receivables (122,716) (49,052) 39,710 (132,058) 128,503
Amounts held by insurance carrier - - - - (64,521)
Deferred outflows of resources (163,413) (130,322) (29,017) (322,752) -
Accounts payable and accrued expenses 397,868 (6,013) (5,561) 386,294 (251,616)
Health claims incurred but not reported - - - - 244,965
Other postemployment benefits 53,391 20,922 10,002 84,315 -
Net pension liability 74,946 59,769 13,308 148,023 -
Deferred inflows of resources 112,436 89,669 19,965 222,070 -
Net Cash Provided by (Used in) Operating
Activities $ 3,506,091 $ 1,418,770 $ (5,071) $ 4,919,790 $ 74,777
Noncash capital and related financing activities:
Amortization of bond premium $ 53,310 $ 35,123 $ - $ 88,433 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 123 Comprehensive Annual Financial ReportSource page 54
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2016
Other Private
Postemployment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 7,738 $ 100,410 $ 1,373,818
Investments 1,980,803 - -
Total Assets 1,988,541 100,410 1,373,818
Liabilities
Warrants payable - - 13,269
Agency liabilities - - 1,360,549
Total Liabilities - - 1,373,818
Net Position
Held in trust for other postemployment benefits 1,988,541 - -
Held in trust for private purposes - 100,410 -
Total Net Position $ 1,988,541 $ 100,410 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 123 Comprehensive Annual Financial ReportSource page 55
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FISCAL YEAR ENDED JUNE 30, 2016
Other Private
Postemployment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employee $ 417,525 $ -
Employer 1,940,567 -
Other - 3,725
Total contributions 2,358,092 3,725
Investment income:
Interest and dividends 47,748 1,043
Total Additions 2,405,840 4,768
Deductions
Education - scholarships - 16,450
Retiree benefits 1,608,092 -
Total Deductions 1,608,092 16,450
CHANGE IN NET POSITION 797,748 (11,682)
NET POSITION AT BEGINNING OF YEAR 1,190,793 112,092
NET POSITION AT END OF YEAR $ 1,988,541 $ 100,410
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 45 of 123 Comprehensive Annual Financial ReportSource page 56
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2016
I. Summary of Significant Accounting Policies
The accompanying basic financial statements of the Town have been prepared in conformity with
generally accepted accounting principles (GAAP) as applied to state and local governments. GAAP
is prescribed by the Governmental Accounting Standards Board (GASB), which is the primary
standard-setting body for state and local government entities. The following is a summary of the more
significant policies and practices used by the Town:
A. Reporting Entity
The Town is located in Norfolk County, fifteen miles southwest of Boston and was incorporated
as a Town in 1797. An elected five member Board of Selectmen (“Selectmen”) governs the
Town and an appointed Town Administrator oversees the Town’s daily executive and
administrative duties. The Town follows the open town meeting form of government. The Town
provides governmental services for the territory within its boundaries, including police and fire
protection, disposal of garbage and rubbish, public education in grades K-12, water and sewer
services, street maintenance, parks and recreational facilities.
Component units, while separate entities, are in substance part of the governmental operations if
the significance of their operations and/or financial relationship with the Town meet certain
criteria. Pursuant to these criteria there are no component units required to be included in the
financial statements.
The Town is a member community of the Blue Hills Regional Technical School that provides
educational services to nine area communities. This joint venture assesses each community its
share of operational and debt service costs based on student population and other factors. In
fiscal year 2016, the Town’s share of the operating and debt service expenses was $1,117,954.
There is no equity interest reported in these financial statements. Complete audited financial
statements can be obtained directly from the District’s administrative office located at 800
Randolph Street, Canton, Massachusetts 02021.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the non-fiduciary activities of the primary government and
its component units. For the most part, the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which rely
primarily on fees and charges for support.
Separate financial statements are provided for governmental funds, proprietary funds and
fiduciary funds, even though the fiduciary funds are excluded from the government-wide
financial statements. Major individual government funds and major individual enterprise funds
are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated
and presented in a single column.
Town of Canton, Massachusetts Page 46 of 123 Comprehensive Annual Financial ReportSource page 57
Major Fund Criteria – Major funds must be reported if both of the following criteria are met:
1) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of an individual governmental or enterprise fund are at least ten
percent of the corresponding element (assets and deferred outflows, liabilities and
deferred inflows, etc.) for all funds of that category or type (total governmental or total
enterprise funds), and
2) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of the individual governmental fund or enterprise fund are at least
five percent of the corresponding element for all governmental and enterprise funds
combined.
Additionally, any other governmental or enterprise fund that management believes is particularly
significant to the basic financial statements may be reported as a major fund.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when a liability is incurred. Property taxes are
recognized as revenues in the fiscal year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider are met.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
The governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized when
susceptible to accrual (i.e. measurable and available). Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities of
the current period. Expenditures are recorded when the related fund liability is incurred, except
for unmatured interest on general long-term debt which is recognized when due, certain
compensated absences, claims and judgments which are recognized when the obligations are
expected to be liquidated with current expendable available resources.
The Town considers property tax revenues to be available if they are material and collected
within 60 days after the end of the fiscal year. Investment income associated with the current
fiscal period is susceptible to accrual and has been recognized as revenue of the current fiscal
period. All other revenue items are considered to be measurable and available only when the
cash is received and are recognized as revenue at that time.
Town of Canton, Massachusetts Page 47 of 123 Comprehensive Annual Financial ReportSource page 58
The government reports the following major Governmental Funds:
General Fund – is the government’s primary operating fund. It accounts for all financial
resources of the general government except those required to be accounted for in another
fund.
Capital Projects Fund – is used to account for financial resources that are restricted,
committed or assigned to expenditures for capital outlays.
Nonmajor Governmental Funds – consist of special revenue, 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
that are restricted or committed to expenditures for specified purposes other than debt service
or capital projects.
The Permanent Funds are used to account for financial resources that are restricted to the
extent that only earnings, not principal, may be used for purposes that support the
governmental programs.
The proprietary fund financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are
recognized when earned and expenses are recorded when the liabilities are incurred.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues are user charges and fees, while operating expenses consist of
salaries, ordinary maintenance, assessments, indirect costs and depreciation. All revenues and
expenses not meeting this definition are reported as non-operating revenues and expenses.
The government reports the following major proprietary funds:
Water Enterprise Fund – is used to account for the operation of the Town’s water activities.
Costs associated with maintaining the related infrastructure and providing services to the
general public on a continuing basis, including depreciation, are financed or recovered
primarily through user charges.
Sewer Enterprise Fund – is used to account for the operation of the Town’s sewer activities.
Costs associated with maintaining the related infrastructure and providing services to the
general public on a continuing basis, including depreciation, are financed or recovered
primarily through user charges.
Rink Enterprise Fund – is used to account for the operation of the Town’s ice skating rink
activities.
Town of Canton, Massachusetts Page 48 of 123 Comprehensive Annual Financial ReportSource page 59
Additionally, the following proprietary fund type is reported:
Internal Service Fund – is used to account for the Town’s self-insured health insurance,
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 economic resources measurement focus
and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a
trustee capacity and cannot be used to support the governmental programs.
The government reports the following fiduciary funds:
Other Postemployment Benefits Trust Fund – is used to accumulate funds for future payments
of other post-employment benefits for retirees such as health and life insurance.
Private-Purpose Trust Fund – is used to account for trust arrangements under which principal
and income benefit individuals, private organizations or other governments. This fund is
used for educational scholarships.
Agency Fund – is used to account for assets held in a purely custodial capacity. The Town’s
agency funds consist primarily of student activities and escrow and other deposits. Agency
funds apply the accrual basis of accounting but do not have a measurement focus.
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Equity
Deposits and Investments – The Town’s cash and cash equivalents are considered to be cash on
hand, demand deposits, and short-term investments with original maturities of three months or
less from the date of acquisition.
Investments of the Town are recorded at fair value in accordance with GASB Statement No. 72,
Fair Value Measurement and Application. Accordingly, the change in fair value of investments
is recognized as an increase or decrease to investment assets and investment income.
Receivables – Real estate and personal property taxes are assessed on January 1 every year. Bills
are sent quarterly and are due on August 1, November 1, February 1, and May 1, or thirty days
subsequent to the mailing date. Interest accrues on delinquent taxes at the rate of 14% per
annum. Motor vehicle excise are billed annually for each vehicle registered in the Town based on
vehicles reported to the Town by the Commonwealth of Massachusetts. Water and sewer user
fees are billed quarterly based on individual meter readings and are subject to interest and
penalties if not paid by the respective due dates. Property taxes, motor vehicle excise taxes and
water and sewer user fees are recorded as receivables in the fiscal year of the levy.
Real estate taxes and water and sewer user fees are secured through a lien process within 60 days
after the due date and are considered 100% collectible. Accordingly, an allowance for
uncollectible balances for these receivables is not reported. All personal property tax and excise
tax receivables are shown net of an allowance for uncollectible balances comprised of those
outstanding amounts greater than five years old. Other departmental receivables are shown net of
an allowance for uncollectible balances based on historical trends and specific account analysis.
Town of Canton, Massachusetts Page 49 of 123 Comprehensive Annual Financial ReportSource page 60
Inventories – Inventories, which are not material to the basic financial statements, are considered
to be expenditures at the time of purchase.
Capital Assets – Capital assets, which include land, land improvements, buildings and
improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer
mains, and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded
at the estimated fair market value at the date of donation. Interest incurred during the
construction phase of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
All purchases and construction costs in excess of $25,000 are capitalized at the date of acquisition
or construction, respectively, with expected lives of greater than one year. The costs of normal
maintenance and repairs that do not add to the value of the asset or materially extend assets lives
are not capitalized.
Capital assets (excluding land and construction-in-process) are depreciated by the Town on a
straight-line-basis over the following estimated useful lives:
Land improvements 20-50 years
Buildings and improvements 20-50 years
Machinery and equipment 3-20 years
Vehicles 5 years
Infrastructure 40-50 years
Interfund Balances – Activity between funds that are representative of lending arrangements
outstanding at the end of the fiscal year are referred to as either due to/from other funds or
advances to/from other funds. All other outstanding balances between funds are reported as due
to/from other funds.
Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as internal balances.
Interfund Transfers – During the course of its operations, resources are permanently reallocated
between and within funds. These transactions are reported as transfers in and transfers out in the
individual fund statements. Transfers between and within governmental and fiduciary funds are
eliminated from the governmental activities in the statement of activities. Any residual balances
outstanding between the governmental activities and the business–type activities are reported in
the statement of activities as transfers, net.
Investment Income – Excluding the permanent funds, investment income derived from major and
nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by
state law. Investment income of the proprietary funds is voluntarily assigned to the general fund.
Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but
unused vacation and sick-pay benefits. Compensated absence liabilities related to both
governmental and business-type activities are normally paid from the funds reporting payroll and
related expenditures. Amounts related to these benefits are accrued when incurred in the
government-wide and proprietary fund financial statements. A liability for these amounts is
reported in Governmental Funds only if they have matured.
Town of Canton, Massachusetts Page 50 of 123 Comprehensive Annual Financial ReportSource page 61
Long-term Obligations – Long-term debt is reported as liabilities in the government-wide and
proprietary fund statement of net position. Bond premiums and discounts are amortized over the
life of the bonds using the effective interest method. Bond anticipation notes payable are reported
net of the applicable bond premium or discount.
In the governmental fund financial statements, the face amount of long-term debt issued is
reported as other financing sources. Premiums received on a debt issuance are reported as other
financing sources while discounts are reported as other financing uses. Issuance costs are
exclusively reported as general government expenditures regardless of whether they are withheld
from the actual proceeds.
Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position
will sometimes report a separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The Town has one item that is reported on the government-
wide statement of net position which relates to outflows from changes in the net pension liability.
This will be recognized in pension expense in future years as more fully described in Note III,
subsection A.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. The Town has two
items that are reported as deferred inflows of resources. The first arises only under a modified
accrual basis of accounting and, accordingly, the item unavailable revenue is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from
four sources: property taxes, excise taxes, intergovernmental and other. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts become
available. The second item is reported on the government-wide statement of net position which
relates to outflows from changes in the net pension liability. This will be recognized in pension
expense in future years as more fully described in Note III, subsection A.
Net Position – In the government-wide financial statements, net position reported as “net
investment in capital assets” includes capital assets, net of accumulated depreciation, less the
principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital
related debt are not considered to be capital related debt.
Net position is reported as restricted when amounts are not available for appropriation or are
legally restricted by outside parties for a specific use. Net position has been restricted for the
following:
Nonexpendable permanent funds represent the endowment portion of donor restricted trusts
that support governmental programs.
Expendable permanent funds represent the spendable portion of donor restricted trusts that
support governmental programs.
Debt service represents a grant to fund a portion of the debt service on outstanding school
construction debt that will be amortized over the life of the bonds in accordance with state
law.
Town of Canton, Massachusetts Page 51 of 123 Comprehensive Annual Financial ReportSource page 62
Federal and State grants represent assets that have restrictions placed on them from federal
and state granting agencies.
Community preservation represents assets that are restricted by state law for the purposes of
acquiring or developing open space and recreational facilities, historic resources and
affordable housing.
Gift funds represent assets that are restricted by donors for specific governmental programs
and uses.
Other specific purposes represent assets that are restricted by third parties for specific
governmental programs and uses.
Fund Equity – In the fund financial statements, fund balance for governmental funds is reported
in classifications that comprise a hierarchy based primarily to the extent in which the Town is
required to honor constraints on the specific purpose for which amounts in the funds can be spent.
Fund balance is reported in five components – nonspendable, restricted, committed, assigned, and
unassigned as described below:
Nonspendable represents amounts that cannot be spent because they are either (a) not in
spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be
maintained intact such as the corpus of an endowment.
Restricted represents amounts that have constraints placed either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law
through constitutional provisions or enabling legislation. Enabling legislation authorizes the
Town to assess, levy, charge or otherwise mandate payment of resources (from external
resource providers) and includes a legally enforceable requirement (compelled by external
parties) that those resources be used only for the specific purposes stipulated in the
legislation.
Committed represents amounts that can only be used for specific purposes pursuant to
formal action of the Town Meeting through Town Meeting Articles, which represent the
most binding constraint that give rise to committed fund balance. Those committed amounts
cannot be used for any other purpose unless the Town Meeting removes or changes the
specified use by taking the same type of action (through Town Meeting Articles) it
employed previously to commit those amounts.
Assigned represents amounts that are constrained by the Town’s intent to be used for
specific purposes, but are neither restricted nor committed. The Board of Selectmen has by
ordinance authorized the Finance Director to assign fund balance. The Town Meeting may
also assign fund balance as it does when appropriating fund balance to cover a gap between
estimated revenue and appropriations in the subsequent year’s appropriated budget.
Unassigned represents amounts that have not been restricted, committed or assigned to
specific purposes within the general fund. The general fund is the only fund that reports a
positive unassigned fund balance amount. Other governmental funds besides the general
fund can only report a negative unassigned fund balance amount.
Town of Canton, Massachusetts Page 52 of 123 Comprehensive Annual Financial ReportSource page 63
When both restricted and unrestricted resources are available for use, it is the Town’s policy to
use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as
they are needed. When unrestricted resources (committed, assigned and unassigned) are available
for use it is the Town’s policy to use committed resources first, then assigned, and then
unassigned as they are needed.
The Town has not established financial policies with respect to maintaining minimum fund
balance amounts.
Stabilization Funds – The Town maintains a general stabilization fund which may be used for any
municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals
$6,426,119 at June 30, 2016 and is reported as unassigned fund balance in the General Fund.
Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify
encumbrances that arise from the issuance of purchase orders resulting from normal purchasing
activity approved by the Finance Department as assigned, and (2) classify encumbrances that
result from an action of the Town Meeting as committed. Encumbrances of funds already
restricted, or committed are included within the classification of those fund balances and not
reported separately. The Town reports $514,942 of encumbrances from normal purchasing
activity in the general fund as assigned and $886,722 of encumbrances from Town Meeting
Articles in the general fund as committed. There are no encumbrances reported in any other fund.
Town of Canton, Massachusetts Page 53 of 123 Comprehensive Annual Financial ReportSource page 64
The following table reflects the Town’s fund equity categorizations:
Capital Nonmajor
General Projects Governmental Total
Nonspendable:
Nonexpendable trust funds $ - $ - $ 471,585 $ 471,585
Restricted:
Recreation revolving - - 200,444 200,444
Parking revolving - - 126,602 126,602
Animal control revolving - - 86,912 86,912
Other Town revolving - - 317,501 317,501
School revolving - - 1,876,446 1,876,446
General municipal private grants - - 760,048 760,048
Ambulance receipts reserved - - 1,134,112 1,134,112
Community preservation - - 1,388,178 1,388,178
Police grants - - 756,692 756,692
Other Town grants - - 88,732 88,732
School grants - - 501,894 501,894
General municipal donations - - 1,704,438 1,704,438
School donations - - 179,087 179,087
Police donations - - 78,210 78,210
Insurance recoveries - - 502,573 502,573
Roadway improvements - 118,454 - 118,454
Other capital outlay - 44,700 - 44,700
Library trust funds - - 161,476 161,476
Conservation trust funds - - 149,049 149,049
Other trust funds - - 31,228 31,228
Other purposes - - 377,997 377,997
Committed:
Police 105,475 - - 105,475
Education 107,648 - - 107,648
Streetlights 356,000 - - 356,000
Public buildings 154,955 - - 154,955
Other purposes 162,644 - - 162,644
Assigned:
Purchase orders 514,942 - - 514,942
Subsequent years' budget 1,332,000 - - 1,332,000
Unassigned 12,961,775 (2,440,707) (234,048) 10,287,020
$ 15,695,439 $ (2,277,553) $ 10,659,156 $ 24,077,042
Town of Canton, Massachusetts Page 54 of 123 Comprehensive Annual Financial ReportSource page 65
E. Excess of Expenditures Over Appropriations and Deficits
During fiscal year 2016, no expenditures exceeded appropriations in the General Fund.
The Town incurred individual fund deficits totaling $2,440,707 in the Capital Projects major
fund. The Town also incurred individual fund deficits totaling $234,048 in three special revenue
funds that are reported in the non-major governmental funds. These deficits will be funded
through grant revenues, departmental revenues and bond proceeds during fiscal year 2017.
F. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure for contingent assets and liabilities at the date of the basic financial statements and the
reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results
could vary from estimates that were used.
II. Detailed Notes to All Funds
A. Deposits and Investments
A cash and investment pool is maintained that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The
deposits and investments of trust funds are held separately from those of other funds.
State laws and regulations require the Town to invest funds only in pre-approved investment
instruments which include but are not necessarily limited to bank deposits, money markets,
certificates of deposit, U.S. obligations, repurchase agreements, and the State Treasurer’s
investment pool (the Pool). In addition, the statutes impose various limitations on the amount and
length of investments and deposits. Repurchase agreements cannot be for a period of over ninety
days, and the underlying security must be a United States obligation.
The Pool meets the criteria of an external investment pool. The Pool is administered by the
Massachusetts Municipal Depository Trust (the MMDT), which was established by the Treasurer
of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the
same as the value of the Pool shares.
Custodial Credit Risk: Deposits - In the case of deposits, this is the risk that in the event of a bank
failure, the government’s deposits may not be returned to it. The Town has adopted a policy that
no more than 25% of the Town’s cash may be comprised of unsecured bank deposits, except for a
30 day reprieve during times of heavy collections. The credit worthiness of banks will be tracked
by Veribanc, or other bank credit worthiness reporting systems, and the Treasurer will move or
collateralize deposits as a result of negative reports. At year-end, the carrying amount of the
Town's deposits was $38,568,972 and the bank balance was $40,271,189. Of the Town's bank
balance, $38,449,647 was covered by federal depository insurance or the Depositor’s Insurance
Fund; $1,605,342 was collateralized and the remainder was exposed to custodial credit risk
because it was uninsured and uncollateralized. The carrying amount of cash includes $4,659,138
of non-negotiable certificates of deposit with maturities of less than one year that are considered
cash and cash equivalents.
Town of Canton, Massachusetts Page 55 of 123 Comprehensive Annual Financial ReportSource page 66
Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of
the invested party not being able to provide required payments to investors, ceasing to exist, or
filing of bankruptcy, the Town may not be able to recover the full amount of its principal
investment and/or investment earnings. The Town has adopted a policy to review the financial
institutions financial statements and the background of each advisor. All securities not held
directly by the Town will be held in the Town’s name and tax identification number by a third
party custodian and evidenced by safekeeping receipts showing individual CUSIP numbers for
each security. The investments in the MMDT are not exposed to custodial credit risk as their
existence is not evidenced by securities that exist in physical or book form. The Town’s
investment in a repurchase agreement is held by a counterparty, but not in the Town’s name. The
repurchase agreement is fully collateralized with U.S. government securities. The Town’s
investments in negotiable certificates of deposit are fully covered by federal depository insurance.
Fair Value of Investments – The Town reports its investments at fair value. The Town
categorizes its fair value measurements within the fair value hierarchy established by GAAP.
This hierarchy is based on valuation inputs used to measure the fair value of the asset or liability.
The three levels of the hierarchy are as follows:
Level 1 – Inputs are quoted prices in active markets for identical investments at the
measurement date.
Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or
indirectly observable for the investment through correlation with market data at the
measurement date and for the duration of the instrument’s anticipated life.
Level 3 – Inputs reflect the Town’s best estimate of what market participants would use
in pricing the investment at the measurement date.
The following table presents the Town’s investments carried at fair value on a recurring basis in
the statement of net position at June 30, 2016:
Fair Value Measurements Using
6/30/16 Level 1 Level 2 Level 3
Investments by fair value level
Debt securities:
Corporate fixed income securities $ 1,116,209 1,116,209 - -
U.S. government obligations 4,297,567 4,297,567 - -
Negotiable certificates of deposit 1,623,163 - 1,623,163 -
Bond mutual funds 1,047,335 - 1,047,335 -
Repurchase agreements 1,200,000 - 1,200,000 -
State investment pool 354,994 - 354,994 -
Total debt securities 9,639,268 5,413,776 4,225,492 -
Equity securities:
Common stock 1,473,730 1,473,730 - -
Equity mutual funds 1,222,836 - 1,222,836 -
Total equity securities 2,696,566 1,473,730 1,222,836 -
Total investments by fair value level $ 12,335,834 $ 6,887,506 $ 5,448,328 $ -
Town of Canton, Massachusetts Page 56 of 123 Comprehensive Annual Financial ReportSource page 67
Debt and equity securities classified in Level 1 are valued using prices quoted in active markets
for those securities. Negotiable certificates of deposit and repurchase agreements are valued
using matrix pricing based on the securities’ relationship to benchmark quoted prices. Bond and
equity mutual funds are valued based on the published fair value per share (unit) for each fund.
The State Treasurer’s investment pool (MMDT) is valued based on the composition and fair
value of the underlying investments contained within this pool, which can be determined using
inputs other than quoted prices that are observable either directly or indirectly.
Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates. The Town’s policy limits investments
of operating funds to one year or less.
At June 30, 2016, the Town had the following investments with maturities:
Maturities in Years
Investments 6/30/16 Less than 1 1-5 6 - 10
Corporate fixed income securities $ 1,116,209 $ - $ 1,065,741 $ 50,468
U.S. government obligations 4,297,567 - 2,355,482 1,942,085
Negotiable certificates of deposit 1,623,163 - 1,623,163 -
Repurchase agreements 1,200,000 1,200,000 - -
State investment pool 354,994 354,994 - -
Total investments with maturities $ 8,591,933 $ 1,554,994 $ 5,044,386 $ 1,992,553
Concentration of Credit Risk – The Town has adopted a policy to limit the amount of investments
that may be invested in a single issuer to 10% of the Town’s investments, except for U.S
government obligations, investments fully collateralized with U.S. government obligations and
the Pool (MMDT). At June 30, 2016, Town has 35% of its investments in U.S. government
obligations and 10% of its investments in repurchase agreements collateralized with United States
government backed securities.
Credit Risk – The Town has adopted a policy to only purchase investment grade securities with a
high concentration in securities rated ‘A’ or better.
Town of Canton, Massachusetts Page 57 of 123 Comprehensive Annual Financial ReportSource page 68
At June 30, 2016 the credit quality ratings of investments were as follows:
Corporate U.S. Government Negotiable State
Quality Ratings Fixed Agencies & Certificates Repurchase Investment
(Moody's) Income Treasuries of Deposit Agreements Pool Totals
AAA $ - $ 4,297,567 $ - $ - $ - $ 4,297,567
AA 50,238 - - - - 50,238
A 104,887 - - - - 104,887
A1 160,000 - - - - 160,000
A2 89,775 - - - - 89,775
BAA 102,610 - - - - 102,610
BAA1 425,271 - - - - 425,271
BAA2 183,428 - - - - 183,428
Not rated - - 1,623,163 1,200,000 354,994 3,178,157
Totals - All $ 1,116,209 $ 4,297,567 $ 1,623,163 $ 1,200,000 $ 354,994 $ 8,591,933
B. Receivables
Receivables as of year-end for the Town’s individual and non-major governmental funds in the
aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes $ 598,178 $ (51,980) $ 546,198
Tax liens and foreclosures 1,262,801 - 1,262,801
Community preservation surcharges 4,935 - 4,935
Motor vehicle and other excise taxes 561,285 (262,098) 299,187
Ambulance fees 670,712 (237,256) 433,456
Public safety details 99,033 - 99,033
Other 11,239 - 11,239
Intergovernmental 3,148,597 - 3,148,597
Total $ 6,356,780 $ (551,334) $ 5,805,446
Town of Canton, Massachusetts Page 58 of 123 Comprehensive Annual Financial ReportSource page 69
Receivables as of year-end for the Town’s proprietary funds are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Water user charges $ 2,207,256 $ - $ 2,207,256
Water liens 13,820 - 13,820
Sewer user charges 1,842,450 - 1,842,450
Sewer liens 16,330 - 16,330
Rink user charges 19,710 (19,710) -
Stop loss receivables 191,375 - 191,375
Total $ 4,290,941 $ (19,710) $ 4,271,231
Governmental funds report deferred inflows of resources in connection with receivables for
revenues that are not considered to be available to liquidate liabilities of the current period. The
following identifies the components of deferred inflows of resources in the governmental funds:
Other
General Governmental
Fund Funds Total
Receivable type:
Real estate and personal property taxes $ 108,706 $ - $ 108,706
Tax liens and foreclosures 1,260,489 2,312 1,262,801
Motor vehicle and other excise taxes 299,187 - 299,187
Community preservation surcharges - 4,935 4,935
Ambulance fees - 433,456 433,456
Public safety details - 99,033 99,033
Other 11,239 - 11,239
Intergovernmental 2,125,785 - 2,125,785
Total $ 3,805,406 $ 539,736 $ 4,345,142
School Building Assistance Reimbursement – As of June 30, 2016, the Town expects to receive
the balance of grants from the Commonwealth of Massachusetts under various construction
reimbursement regulations totaling approximately $2.4 million applicable to approved school
construction costs which includes both principal and interest. Approximately $2.3 million of
such costs are reimbursed to the Town in equal installments over the life of the related bond
issues and are subject to appropriation only by the State Legislature. Approximately $0.1 million
is due in a lump sum during fiscal year 2017. In the Governmental funds, a receivable of
approximately $2.2 million under the caption Intergovernmental has been recorded. This includes
the reimbursable portion of the principal balance and the lump sum payout as of June 30, 2016.
Town of Canton, Massachusetts Page 59 of 123 Comprehensive Annual Financial ReportSource page 70
C. Interfund Receivables, Payables and Transfers
The composition of interfund balances at June 30, 2016 is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds - $ 598,667
Roadway Improvements
General Fund Nonmajor Governmental Funds -
Town Grants 100,357
$ 699,024
The outstanding balances between funds result mainly from the timing difference between the
dates that reimbursable expenditures occur, the intergovernmental reimbursements are received
and the payments to the general fund are made.
The composition of interfund transfers for the fiscal year ended June 30, 2016 is as follows:
Transfers In
Capital Nonmajor Water Rink
General Projects Governmental Enterprise Enterprise
Transfers Out Fund Fund Funds Fund Fund Total
General Fund $ - $ 402,786 $ 80,000 $ 350,000 $ - $ 832,786 (1)
Nonmajor Governmental Funds 1,297,854 164,106 - 37,695 1,787,052 3,286,707 (2)
Water Enterprise Fund 350,000 - - - - 350,000 (3)
Total $ 1,647,854 $ 566,892 $ 80,000 $ 387,695 $ 1,787,052 $ 4,469,493
(1) Transfers to capital projects fund for various capital purposes, transfer to nonmajor governmental funds for
retirement buyback reserves and transfer to water enterprise fund for capital purposes.
(2) Transfers to general fund to supplement operating budgets, transfer to capital projects fund for roadway
improvements, transfers to water and rink enterprise funds for insurance recoveries.
(3) Transfer to general fund to reimburse for capital funding transfer earlier in year.
Town of Canton, Massachusetts Page 60 of 123 Comprehensive Annual Financial ReportSource page 71
D. Capital Assets
Capital asset activity for governmental activities for the year ended June 30, 2016, 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 process - 2,579,774 - 2,579,774
Total capital assets not being depreciated 11,158,868 2,579,774 - 13,738,642
Capital assets being depreciated:
Land improvements 2,765,111 - - 2,765,111
Buildings 79,576,179 420,003 - 79,996,182
Building improvements 26,305,147 622,100 - 26,927,247
Machinery and equipment 7,697,905 869,751 (258,140) 8,309,516
Vehicles 5,639,427 783,379 (784,358) 5,638,448
Infrastructure 23,210,853 1,569,634 - 24,780,487
Total capital assets being depreciated 145,194,622 4,264,867 (1,042,498) 148,416,991
Less accumulated depreciation for:
Land improvements (1,487,750) (166,039) - (1,653,789)
Buildings (24,792,517) (1,801,698) - (26,594,215)
Building improvements (11,810,557) (1,049,635) - (12,860,192)
Machinery and equipment (4,463,589) (566,247) 216,140 (4,813,696)
Vehicles (4,085,227) (530,531) 762,043 (3,853,715)
Infrastructure (5,261,955) (599,891) - (5,861,846)
Total accumulated depreciation (51,901,595) (4,714,041) 978,183 (55,637,453)
Total capital assets being depreciated, net 93,293,027 (449,174) (64,315) 92,779,538
Total governmental activities capital assets, net $ 104,451,895 $ 2,130,600 $ (64,315) $ 106,518,180
Capital asset activity for business-type activities for the year ended June 30, 2016, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Capital assets being depreciated:
Buildings 18,758,743 - - 18,758,743
Building improvements 167,425 178,485 - 345,910
Machinery and equipment 2,877,839 109,231 - 2,987,070
Vehicles 927,140 - - 927,140
Infrastructure 55,477,473 1,761,817 - 57,239,290
Total capital assets being depreciated 78,208,620 2,049,533 - 80,258,153
Less accumulated depreciation for:
Buildings (3,902,717) (438,652) - (4,341,369)
Building improvements (79,535) (13,084) - (92,619)
Machinery and equipment (1,163,738) (285,630) - (1,449,368)
Vehicles (813,742) (44,912) - (858,654)
Infrastructure (26,490,938) (1,064,563) - (27,555,501)
Total accumulated depreciation (32,450,670) (1,846,841) - (34,297,511)
Total capital assets being depreciated, net 45,757,950 202,692 - 45,960,642
Total business-type activities capital assets, net $ 46,382,802 $ 202,692 $ - $ 46,585,494
Town of Canton, Massachusetts Page 61 of 123 Comprehensive Annual Financial ReportSource page 72
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Water
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Capital assets being depreciated:
Buildings 17,495,139 - - 17,495,139
Building improvements 27,465 178,485 - 205,950
Machinery and equipment 1,977,051 109,231 - 2,086,282
Vehicles 541,364 - - 541,364
Infrastructure 25,590,270 1,358,704 - 26,948,974
Total capital assets being depreciated 45,631,289 1,646,420 - 47,277,709
Less accumulated depreciation for:
Buildings (3,526,487) (408,530) - (3,935,017)
Building improvements (4,806) (5,836) - (10,642)
Machinery and equipment (737,177) (203,167) - (940,344)
Vehicles (473,802) (31,206) - (505,008)
Infrastructure (10,348,072) (512,662) - (10,860,734)
Total accumulated depreciation (15,090,344) (1,161,401) - (16,251,745)
Total capital assets being depreciated, net 30,540,945 485,019 - 31,025,964
Total Water capital assets, net $ 31,165,797 $ 485,019 $ - $ 31,650,816
Business-type Activities: Sewer
Capital assets being depreciated:
Buildings $ 1,263,604 $ - $ - $ 1,263,604
Machinery and equipment 642,991 - - 642,991
Vehicles 356,616 - - 356,616
Infrastructure 29,887,203 403,113 - 30,290,316
Total capital assets being depreciated 32,150,414 403,113 - 32,553,527
Less accumulated depreciation for:
Buildings (376,230) (30,122) - (406,352)
Machinery and equipment (228,797) (64,299) - (293,096)
Vehicles (310,780) (13,706) - (324,486)
Infrastructure (16,142,866) (551,901) - (16,694,767)
Total accumulated depreciation (17,058,673) (660,028) - (17,718,701)
Total capital assets being depreciated, net 15,091,741 (256,915) - 14,834,826
Total Sewer capital assets, net $ 15,091,741 $ (256,915) $ - $ 14,834,826
Town of Canton, Massachusetts Page 62 of 123 Comprehensive Annual Financial ReportSource page 73
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Rink
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 (74,729) (7,248) - (81,977)
Machinery and equipment (197,764) (18,164) - (215,928)
Vehicles (29,160) - - (29,160)
Total accumulated depreciation (301,653) (25,412) - (327,065)
Total capital assets being depreciated, net 125,264 (25,412) - 99,852
Total Rink capital assets, net $ 125,264 $ (25,412) $ - $ 99,852
Depreciation expense was charged to functions/programs as follows:
Governmental Activities: Business-Type Activities:
General government $ 172,511 Water $ 1,161,401
Public safety 705,770 Sewer 660,028
Education 2,466,538 Rink 25,412
Public works 945,183 $ 1,846,841
Health and human services 71,279
Culture and recreation 352,760
$ 4,714,041
Capital Asset Impairment – During the prior fiscal year, a portion of the roof of the ice rink used
in the Rink Enterprise Fund operations collapsed due to the significant snowfall in the area. The
ice rink is leased from the Commonwealth and, therefore, the building is not a capital asset of the
Rink Enterprise Fund. Capital assets of the Rink Enterprise Fund with a carrying value of
$99,852 were idle at year-end and are considered temporarily impaired due to the ice rink being
closed until repairs can be completed. The Rink Enterprise Fund has not recorded a provision for
this damage as all repairs from this event are expected to be funded by the Commonwealth and
insurance recoveries. The rink is expected to be operational during fiscal year 2018.
E. Leases
The Town entered into a non-cancelable lease for the purchase of a school bus. This lease
qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the
present value of the future minimum lease payments as of the inception date.
Assets acquired through capital leases are as follows:
Amount
Asset:
School bus $ 104,250
Less: accumulated depreciation (20,850)
Total $ 83,400
Town of Canton, Massachusetts Page 63 of 123 Comprehensive Annual Financial ReportSource page 74
The future minimum lease payments and the present value of the minimum lease payments at
June 30, 2016, are as follows:
Fiscal Year Ended June 30, Amount
2017 $ 21,713
2018 21,713
2019 21,713
2020 21,713
Total minimum lease payments 86,852
Less: amounts representing interest (2,606)
Present value of minimum lease payments $ 84,246
`F. Temporary Debt
The Town is authorized to borrow on a temporary basis to fund the following:
Current Operating Costs – Prior to collection of revenues, expenditures may be financed through
the issuance of revenue or tax anticipation notes (RANS or TANS).
Capital Projects and Other Approved Costs – Projects may be temporarily funded through the
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases,
prior to the issuance of these temporary notes, the governing body must take the necessary legal
steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed
the aggregate amount of bonds authorized or the grant award amount.
Temporary notes are general obligations of the Town and carry maturity dates that are limited by
state law. Interest expenditures and expenses for temporary borrowings are accounted for in the
general fund and enterprise funds, respectively.
Temporary notes outstanding at June 30, 2016, are payable as follows:
Interest Maturity July 1, June 30,
Type Rate Date 2015 Additions Retirements 2016
BAN 0.50% Matured $ 797,786 $ - $ (797,786) $ -
BAN 2.00% 03/24/17 - 2,385,000 - 2,385,000
Total Governmental Notes 797,786 2,385,000 (797,786) 2,385,000
BAN 2.00% 03/24/17 - 1,300,000 - 1,300,000
Total Business-Type Notes - 1,300,000 - 1,300,000
Total Notes Payable $ 797,786 $ 3,685,000 $ (797,786) $ 3,685,000
Short-term (BANs) were issued for Town building improvements ($110,000), dam repairs
($75,000), school building improvements ($2,200,000) and water mains ($1,300,000).
Town of Canton, Massachusetts Page 64 of 123 Comprehensive Annual Financial ReportSource page 75
G. Long–Term Obligations
The Town issues general obligation bonds and notes to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds and notes have been issued for
both governmental and business-type activities. Additionally, the Town incurs various other
long-term obligations relative to associated personnel costs.
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize
indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance
with this section of the law is designated as being “inside the debt limit.” In addition, the Town
may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is
designated as being “outside the debt limit”.
The following reflects the current year activity in the long-term liability accounts:
Beginning Ending Due within
Balance Additions Deletions Balance one year
Governmental Activities:
Bond and note indebtedness $ 28,180,650 $ 1,882,000 $ (4,446,624) $ 25,616,026 $ 3,821,850
Unamortized bond premium 1,485,677 - (353,697) 1,131,980 299,135
Capital leases 104,250 - (20,004) 84,246 20,419
Landfill closure 78,000 - (26,000) 52,000 26,000
Compensated absences 1,584,469 345,489 (396,117) 1,533,841 383,460
Net pension liability 36,739,917 9,398,277 (7,211,547) 38,926,647 -
Other postemployment benefits 42,889,765 5,059,321 (3,824,852) 44,124,234 -
Total Governmental Activities $ 111,062,728 $ 16,685,087 $ (16,278,841) $ 111,468,974 $ 4,550,864
Business-Type Activities - Water:
Bond and note debt $ 20,960,050 $ 585,000 $ (2,293,750) $ 19,251,300 $ 1,671,400
Unamortized bond premium 292,451 - (53,310) 239,141 47,592
Compensated absences 110,344 6,353 (27,586) 89,111 22,278
Net pension liability 1,259,184 322,106 (247,160) 1,334,130 -
Other postemployment benefits 862,376 62,843 (9,452) 915,767 -
Total Water 23,484,405 976,302 (2,631,258) 21,829,449 1,741,270
Business-Type Activities - Sewer:
Bond and note debt 8,359,040 611,000 (949,515) 8,020,525 956,132
Unamortized bond premium 137,891 - (35,123) 102,768 35,123
Compensated absences 13,404 4,882 (3,351) 14,935 3,734
Net pension liability 1,004,209 256,882 (197,113) 1,063,978 -
Other postemployment benefits 390,865 28,571 (7,648) 411,788 -
Total Sewer 9,905,409 901,335 (1,192,750) 9,613,994 994,989
Business-Type Activities - Rink:
Bond and note debt 26,000 - (8,000) 18,000 6,000
Compensated absences 17,586 2,467 (4,396) 15,657 3,914
Net pension liability 223,593 57,196 (43,888) 236,901 -
Other postemployment benefits 234,300 11,090 (1,088) 244,302 -
Total Rink 501,479 70,753 (57,372) 514,860 9,914
Total Business-Type Activities $ 33,891,293 $ 1,948,390 $ (3,881,380) $ 31,958,303 $ 2,746,173
The governmental activities liabilities will be liquidated by the general fund. The business-type
liabilities will be liquidated by the enterprise fund reporting the liabilities.
Town of Canton, Massachusetts Page 65 of 123 Comprehensive Annual Financial ReportSource page 76
The following is a summary of outstanding long-term debt obligations as of June 30, 2016:
Interest Beginning Ending
Description of Issue Rate Balance Additions Maturities Balance
Governmental Activities:
General Obligation Bonds 2.00 - 5.00% $11,906,150 $ 1,367,000 $ (1,765,924) $11,507,226
Refunding Bonds 2.00 - 4.00% 16,274,500 515,000 (2,680,700) 14,108,800
Total Governmental Activities 28,180,650 1,882,000 (4,446,624) 25,616,026
Add: Unamortized bond premium 1,485,677 - (353,697) 1,131,980
Total Governmental Activities, net $ 29,666,327 $ 1,882,000 $ (4,800,321) $ 26,748,006
Business-Type Activities - Water:
General Obligation Bonds 2.00 - 5.00% $18,093,250 $ - $ (1,901,250) $16,192,000
Refunding Bonds 3.25 - 4.00% 1,289,800 585,000 (192,500) 1,682,300
Massachusetts Water Resource Authority 0.00% 1,577,000 - (200,000) 1,377,000
Total Water 20,960,050 585,000 (2,293,750) 19,251,300
Add: Unamortized bond premium 292,451 - (53,310) 239,141
Total Water, net 21,252,501 585,000 (2,347,060) 19,490,441
Business-Type Activities - Sewer:
General Obligation Bonds 2.00 - 5.00% 2,770,750 561,000 (310,750) 3,021,000
Refunding Bonds 3.25 - 4.00% 2,023,700 50,000 (358,800) 1,714,900
Massachusetts Water Resource Authority 0.00% 453,200 - (113,300) 339,900
Massachusetts Clean Water Trust 2.00% 3,111,390 - (166,665) 2,944,725
Total Sewer 8,359,040 611,000 (949,515) 8,020,525
Add: Unamortized bond premium 137,891 - (35,123) 102,768
Total Sewer, net 8,496,931 611,000 (984,638) 8,123,293
Business-Type Activities - Rink:
General Obligation Bonds 2.00 - 4.25% 26,000 - (8,000) 18,000
Total Rink 26,000 - (8,000) 18,000
Total Business-Type Activities, net $ 29,775,432 $ 1,196,000 $ (3,339,698) $ 27,631,734
The following represents authorized and unissued debt as of June 30, 2016:
Project Amount
Governmental:
Infrastructure $ 8,847,000
School building improvements 1,900,000
Land purchase 1,740,000
Fire equipment and vehicles 984,000
Other capital projects 2,299,005
Business-type:
Water projects 1,330,000
Sewer projects 864,790
Rink compressor 245,000
Total Authorized and Unissued $ 18,209,795
Town of Canton, Massachusetts Page 66 of 123 Comprehensive Annual Financial ReportSource page 77
Payments on outstanding bond balances due in future years consist of the following:
Governmental Activities
Year Ending Principal Interest
June 30, Balance Balance Total
2017 $ 3,821,850 $ 914,012 $ 4,735,862
2018 3,443,933 787,676 4,231,609
2019 3,183,421 659,171 3,842,592
2020 2,985,516 536,696 3,522,212
2021 2,923,415 426,954 3,350,369
2022 - 2026 7,374,588 859,812 8,234,400
2027 - 2031 1,666,237 160,138 1,826,375
2032 - 2036 217,066 8,004 225,070
Total $ 25,616,026 $ 4,352,463 $ 29,968,489
Business-Type Activities: Water
Year Ending Principal Interest
June 30, Balance Balance Total
2017 $ 1,671,400 $ 603,857 $ 2,275,257
2018 1,574,800 559,878 2,134,678
2019 1,569,700 512,368 2,082,068
2020 1,558,200 463,740 2,021,940
2021 1,506,400 419,798 1,926,198
2022 - 2026 6,436,800 1,444,367 7,881,167
2027 - 2031 4,443,000 523,126 4,966,126
2032 - 2036 491,000 19,942 510,942
Total $ 19,251,300 $ 4,547,076 $ 23,798,376
Business-Type Activities: Sewer
Year Ending Principal Interest
June 30, Balance Balance Total
2017 $ 956,132 $ 203,311 $ 1,159,443
2018 941,367 180,633 1,122,000
2019 925,771 154,666 1,080,437
2020 731,746 128,319 860,065
2021 549,594 110,493 660,087
2022 - 2026 2,234,711 347,212 2,581,923
2027 - 2031 1,581,204 119,425 1,700,629
2032 - 2036 100,000 3,375 103,375
Total $ 8,020,525 $ 1,247,434 $ 9,267,959
Business-Type Activities: Rink
Year Ending Principal Interest
June 30, Balance Balance Total
2017 $ 6,000 $ 540 $ 6,540
2018 6,000 360 6,360
2019 6,000 180 6,180
Total $ 18,000 $ 1,080 $ 19,080
Town of Canton, Massachusetts Page 67 of 123 Comprehensive Annual Financial ReportSource page 78
Current Refunding – On March 17, 2016, the Town issued general obligation refunding bonds of
$1,150,000, paying interest at 2.0% per annum, that were used to retire $1,150,000 of general
obligation bonds. As a result of the current refunding, the Town reduced its total debt service
requirements by $111,041, which resulted in an economic gain (difference between the present
value of the debt service payments on the old and new debt) of $102,524.
III. Other Information
A. Retirement System
Retirement System Description – The Town contributes to the Norfolk County Retirement System
(the “System”), a cost-sharing multiple-employer defined benefit pension plan. The System was
established under Chapter 32 of the Commonwealth of Massachusetts General Laws (MGL) and
is administered by Norfolk County Retirement Board (the “Board”). Standalone financial
statements for the year ended December 31, 2015 were issued and are available at the Norfolk
County Retirement System, 480 Neponset Street, Canton, MA 02021.
The System provides retirement, disability and death benefits to plan members and beneficiaries.
Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan.
Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits
imposed by the Commonwealth’s state law during those years are borne by the Commonwealth
and are deposited into the pension fund directly. Cost-of-living adjustments granted after 1997
must be approved by the Board and are borne by the System.
Contributions Requirements – The System has elected provisions of Chapter 32, Section 22D (as
amended) of Massachusetts General Laws, which require that a funding schedule be established
to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating
employers are assessed their share of the total retirement cost based on the entry age, normal
actuarial cost method. The Town contributed $3,990,657 to the System in fiscal year 2016,
which equaled the actuarially-determined contribution requirement for the fiscal year.
Net Pension Liability – At June 30, 2016, the Town reported a liability of $41,561,656 for its
proportionate share of the net pension liability. The net pension liability was measured as of
December 31, 2015 and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation as of January 1, 2016. There were no material changes to
the System’s benefit terms since the previous actuarial valuation.
The Town’s proportion of the net pension liability is based on a projection of the Town’s long-
term share of contributions to the System relative to the projected contributions of all employers.
The Town’s proportion was approximately 7.65% at December 31, 2015, which was consistent
with the proportion measured at January 1, 2016.
Fiduciary Net Position –The System’s fiduciary net position was determined using the accrual
basis of accounting. The System’s accounting records are maintained on a calendar-year basis in
accordance with the standards and procedures established by PERAC. Contributions from
employers and employees are recognized in the period in which they become due pursuant to
formal commitments, statutory or contractual requirements. Benefit payments (including refunds
of employee contributions) are recorded when incurred, regardless of the timing of payment.
Investments are reported at fair value; fair value is determined as the price one would receive in
an orderly transaction between market participants at a measurement date.
Town of Canton, Massachusetts Page 68 of 123 Comprehensive Annual Financial ReportSource page 79
Pension Expense – The Town recognized $4,737,359 in pension expense in the statement of
activities in fiscal year 2016; which was allocated to all functional expenses that applied.
Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2016, the
Town reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources (dollar amounts are in thousands):
Deferred Outflows Deferred Inflows
of Resources of Resources
Net differences between projected and
actual earnings on pension plan investments $ 5,574 $ -
Differences between expected and
actual experience 842 -
Changes in assumptions - 3,503
Changes in proportion and differences
between Town contributions and
proportionate share of contributions 295 -
Total $ 6,711 $ 3,503
The deferred outflows of resources and deferred inflows of resources are expected to be
recognized in the Town’s pension expense as follows (dollar amounts are in thousands):
Year ended June 30,
2017 $ 868
2018 868
2019 868
2020 604
Total $ 3,208
Actuarial Valuation – The measurement of the System’s total pension liability is developed by an
independent actuary. The latest actuarial valuation was performed as of January 1, 2016. The
significant actuarial assumptions used in the January 1, 2016 actuarial valuation included:
Actuarial cost method: Individual entry age normal
Amortization method: 4.0% increasing payments
Remaining amortization period: 13 years
Investment rate of return: 8.0%
Projected salary increases: Year 1 - 5.5%, Year 2 - 5.0%, Years 3 & 4 - 4.5%,
Year 5 - 4.0%, Thereafter - 3.5%
Asset valuation method: Market value
Town of Canton, Massachusetts Page 69 of 123 Comprehensive Annual Financial ReportSource page 80
Cost of living adjustments: 3.0% on the first $15,000 of benefits
Inflation rate: 4.0%
Mortality rates: Pre-retirement and post-retirement rates reflect the
RP-2014 Blue Collar Mortality with Scale MP-2014,
fully generational
The investment rate of return assumption is a long-term assumption and is based on capital
market expectations by asset class, historical returns and professional judgment. The market
expectations analysis used a building-block approach, which included expected returns by asset
class and the target asset allocation. The target allocation and best estimates of arithmetic real
returns for each major asset class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Domestic Equity 32.0% 9.4%
International Equity 17.5% 9.7%
Fixed Income 19.0% 3.4%
Real Estate 9.0% 7.7%
Private Equity 8.5% 13.6%
Hedge Fund 9.0% 7.9%
Real Assets 5.0% 7.9%
Total 100.0%
The System’s investment policy’s total, blended expected rate of return seeks to meet or exceed
the assumed actuarial rate of return.
Discount Rate – The discount rate used to measure the total pension liability in the January 1,
2016 actuarial valuation report was 8.0%. The projection of cash flows used to determine the
discount rate assumed plan member contributions were made at the current contribution rate and
that employer contributions will be made at rates equal to the actuarially-determined contribution
rates and the member rate. Based on those assumptions, the System’s fiduciary net position was
projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Sensitivity Analysis – The following presents the Town’s proportionate share of the net pension
liability calculated using the discount rate of 8.0% as well as the Town’s proportionate share of
the net pension liability using a discount rate that is one percentage point lower (7.0%) or one
percentage point higher (9.0%) than the current rate (dollar amounts are in thousands):
Current
1% Decrease Discount 1% Increase
(7.0%) (8.0%) (9.0%)
Town’s proportionate share of
the net pension liability $ 52,124 $ 41,562 $ 32,547
Town of Canton, Massachusetts Page 70 of 123 Comprehensive Annual Financial ReportSource page 81
B. Massachusetts Teachers’ Retirement System
Teachers and certain administrative employees of the School Department participate in the
Massachusetts Teachers’ Retirement System (“MTRS”), a cost-sharing multiple employer
defined benefit pension plan. The MTRS is managed by the Commonwealth on behalf of
municipal teachers and municipal teacher retirees. Like the System, MTRS was established
under Chapter 32 of Massachusetts General Laws. The Commonwealth’s legislature has the
authority to amend or modify the MTRS’s funding policies.
The Commonwealth is a nonemployer contributor to the MTRS and is legally responsible by
statute for all actuarially determined employer contributions and future benefit requirements of
the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by
GASB Statement No. 68, Accounting and Financial Reporting for Pensions.
For the year ended June 30, 2016, the Commonwealth contributed $3,712,983 to the MTRS on
behalf of the Town. The Town’s proportionate share of the collective MTRS net pension liability
at this reporting date was 0.36333%, which was based on the actual, actuarially determined
contribution made by the Commonwealth on behalf of the Town as a percentage of the total
annual contribution made by the Commonwealth on behalf of all employers.
The table below presents the Town’s proportionate share of the following:
Paid (or assumed)
Commonwealth On Behalf Town
Portion of the Town Portion
Net pension liability $ 74,445,117 $ (74,445,117) $ —
Pension expense 6,038,162 (6,038,162) —
The Town has recognized intergovernmental revenue and pension expense of $6,038,162
associated with this arrangement.
C. Other Postemployment Benefits (OPEB)
Plan Description – The Town administers a single-employer defined benefit healthcare plan (the
“Plan”). The Plan provides health and life insurance benefits to current and future retirees, their
dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B.
Specific benefit provisions and contribution rates are established by collective bargaining
agreements, state law, and Town ordinance. All benefits are provided through the Town’s self-
funded insurance program described previously. The Plan does not issue a stand–alone financial
report. The number of participants in the Plan consists of 671 active employees and 453 retired
employees for a total of 1,124.
Funding Policy – The contribution requirements of Plan members and the Town are established
and may be amended by the Town, through negotiation with the Town employee unions.
Retirees contribute 25 percent of the calculated contribution through pension benefit deductions.
The remainder of the cost is funded by the Town. The Town currently contributes enough money
to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the
Plan are paid by the Town.
Town of Canton, Massachusetts Page 71 of 123 Comprehensive Annual Financial ReportSource page 82
Annual OPEB Cost and Net OPEB Obligation – The Town’s annual OPEB cost is calculated
based on the annual required contribution “ARC” of the employer, an actuarially determined
amount that is calculated in accordance with GASB Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded liabilities over a period not to exceed thirty years.
The following table reflects the activity regarding the Town’s OPEB obligation:
Annual required contribution (ARC) $ 8,349,722
Interest on net OPEB obligation 1,863,847
Adjustment to ARC (5,051,744)
Annual OPEB cost 5,161,825
Contributions made $ (3,843,040)
Increase in net OPEB obligation 1,318,785
Net OPEB obligation at beginning of year 44,377,306
Net OPEB obligation at end of year $ 45,696,091
Trend information regarding annual OPEB cost, the percentage of the annual OPEB cost
contributed and the net OPEB obligation is as follows:
Annual OPEB Percentage of
Fiscal Year Cost AOPEBC Net OPEB
Ending (AOPEBC) Contributed Obligation
June 30, 2016 $ 5,161,825* 74% $ 45,696,091
June 30, 2015 $ 4,975,024 87% $ 44,377,306
June 30, 2014 $ 12,935,961 40% $ 43,748,569
* Reflected in the Statement of Activities as follows:
The AOPEBC at June 30, 2016 was charged to the following functional programs: General
Government $211,754; Public Safety $1,035,509; Education $3,365,235; Public Works $226,256;
Health and Human Services $65,924; Culture and Recreation $154,643; Water $62,843; Sewer
$28,571; and Rink $11,090.
Funding Status and Funding Progress – The funded status of the Plan at June 30, 2016, based on
the most recent actuarial valuation performed as of July 1, 2014, was as follows (in millions):
Actuarial
Accrued
Liability UAAL as a
Actuarial (AAL) Entry Unfunded Percentage
Value of Age Normal AAL Funded Covered of Covered
Assets Cost (UAAL) Ratio Payroll Payroll
(A) (B) (B – A) (A/B) (C) ((B-A)/C)
$ 0.6 $ 90.2 $ 89.6 0.64% N/A N/A
Town of Canton, Massachusetts Page 72 of 123 Comprehensive Annual Financial Report