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Source page 81
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Canton
Massachusetts
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2013
Executive Director/CEO
Town of Canton, Massachusetts Page 13 of 119 Comprehensive Annual Financial ReportSource page 82
TOWN OF CANTON, MASSACHUSETTS
ORGANIZATIONAL CHART
Blue HJDs To'\\n Board ofSelectmen
Tov.n Board Planning Board Board Housing Board of Library
~egional School a.ru Appointed Multiple
Trustees
M eeting of Health Board of Selectmen of Assessot5 Authority
District Office Member Bodies
I I I I I I I I _l
Canton Director Tov.'ll To·wn -Register of\-oters
Tov.'ll To"n Director of Executive [.jbrary -ComtJL on Disability
Moderator Represe:ntative Public Health Planner Oetk Administrator .~ssessing Director Director -Zoning Boarclof Appeals
. Watet<'Sewer Rate Policy
Finance Commission
Committee -Youth Commission
EJtecutive
Tov.n Counsel r-- -Historical Commission
As sis tam -Fair Housing Committee
Personnel -Cable A dvisoryComminee
Adv. Board To-wn Planner r-- Administrative -Beautification Committee
Secretat)r -Conservation Commission
Building Sealer of Weights -Council on A ging
!Renovations -Industrial Develop.
a:ndtv!easme.s r-- Secretary Financing Authority
Committee
-Local Emergency Planning
Capital Gonunittee
Ouday -Traffic StudyCommittee
-Indus trial Development
Committee
Commission
I I I I I I I I I I
Building & Veteran's Building Fire Dept. of Human Department Council Recreation Consetvation
Police
Z-oning Maint enance Resource of Finance
Office Department Department Public Wod:s on Aging Commission Commission
Deoartment Deoartment Department
Veteran's Police Fire rsuperintenden Human F'tnance COA Recreation Conservation
Building
of ResoW'Ce Commission
Commissioner Director Chief Chief Director Director Director
Public Wod:s A.dministtator Agent
Town of Canton, Massachusetts Page 14 of 119 Comprehensive Annual Financial ReportSource page 83
CANTON PUBLIC SCHOOLS
CANTON SCHOOL COMMITTEE
ADMINISTRATIVE ASSISTANT TO THE
SUPERINTENDENT/SCHOOL COMMITTEE
SUPERINTENDENT OF SCHOOLS
DIRECTOR .OF CURRICULUM SCHOOL BUSINESS
BUILDING PRINCIPALS DIRECTOR OF
and INSTRUCTION ADMINISTRATOR
STUDENT SERVICES
WIDE AREA EDUCATIONAL SCHOOL
NETWORK TECHNOLOGY SECRETARIES ASSISTANT
SCHOOL COUNCIL SECRETARIES
ADM. ADM.. PRINCIPALS ADMINISTRATIVE ASST.
CAPT.
SPED
K-5 READING PARENT GROUPS
PARENT
BUILDING SPECIALISTS SPECIAL EDUCATION, ADVISORY
TECHNOLOGY DISTRICT ACCOUNTS
FACULTY BUILDING 504, ALT. ED. COUNCIL PAYROLL
SPECIALISTS DEPARTMENT PAYABLE
AND STAFF DEPARTMENT STUDENT SERVICES
COORDINATORS
COORDINATORS FACULTY AND STAFF
COMPUTER PROFESSIONAL
DIRECTOR OF
TEACHERS DEVELOPMENT
CHARMSS FOOD SERVICES
COMMITTEE
CUSTODIANS COLLABORATIVE
FACILITIES
PRIVATE SCHOOLS
DIRECTOR
CAFETERIA
MANAGERS/
CUSTODIANS/ WORKERS
MAINTENANCE
TRANSPORTATION
COORDINATOR
HEALTH
SERVICES
Town of Canton, Massachusetts Page 15 of 119 Comprehensive Annual Financial ReportSource page 84
PRINCIPAL TOWN OFFICIALS
Elected Officials
Board of Selectmen Victor D. Del Vecchio, Chairman
Avril T. Elkort, Vice Chairman
John J. Connolly, Clerk
Robert E. Burr Jr., Member
Gerald A. Salvatori Jr., Member
School Committee Cynthia Thomas, Chairman
Robert Golledge, Vice Chairman
Reuki B. Schutt, Secretary
John Bonnanzio, Member
Michael Loughran, Member
Principal Executive Officers
Town Administrator William T. Friel
Finance Director James R. Murgia
Town Accountant Kathy Dooley Butters
Superintendent of Schools Jeffrey W. Granatino
School Business Administrator Barry Nectow
Police Chief Kenneth N. Berkowitz
Fire Chief Charles E. Doody
DPW Superintendent Michael T. Trotta
Town of Canton, Massachusetts Page 16 of 119 Comprehensive Annual Financial ReportSource page 85
Financial Section The Fire Department acquired a new ladder truck for its Ponkapoag Station 2 to utilize in the area of the Town with the highest life safety hazards.
Source page 87
INDEPENDENT AUDITOR’S REPORT
Honorable Board of Selectmen
Town of Canton, Massachusetts
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the Town of Canton,
Massachusetts, (the “Town”) as of and for the year ended June 30, 2014 which collectively comprise the
Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
out audit opinions.
Town of Canton, Massachusetts Page 17 of 119 Comprehensive Annual Financial ReportSource page 88
Town of Canton
Page Two
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the Town, as of June 30, 2014, and the respective
changes in financial position and, where applicable, cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As described in Note III. Subsection H, the Town implemented Governmental Accounting Standards
Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion was
not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management’s
discussion and analysis, the funding and contribution progress for pension benefits and other post-
employment benefits information and budgetary comparison information as listed in the table of contents,
be presented to supplement the basic financial statements. Such information, although not part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers
it to be an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The introductory section, combining and individual
nonmajor fund financial statements, and statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual
nonmajor fund financial statements are the responsibility of management and were derived from and
relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in
Town of Canton, Massachusetts Page 18 of 119 Comprehensive Annual Financial ReportSource page 89
Town of Canton
Page Three
relation to the basic financial statements as a whole. The introductory and statistical sections have not
been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report dated November 26,
2014, on our consideration of the Town of Canton, Massachusetts’ internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
Roselli, Clark and Associates
Certified Public Accountants
Woburn, Massachusetts 01801
November 26, 2014
Town of Canton, Massachusetts Page 19 of 119 Comprehensive Annual Financial ReportSource page 90
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Management’s Discussion and Analysis Town of Canton, Massachusetts Page 21 of 119 Comprehensive Annual Financial Report
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As the management of the Town, we offer readers of the accompanying financial statements this narrative
overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2014.
Financial Highlights
The assets and deferred outflows of the Town exceeded its liabilities and deferred inflows at the close
of the most recent fiscal year by approximately $77.5 million (total net position).
The government’s total net position decreased by approximately $0.7 million (less than 1%). This
consisted primarily of a decrease in governmental activities’ net position by approximately $ 2.4
million (4.3% of total governmental activities’ net position), which was offset by an increase in
Business - type activities’ net position of approximately $1.7 million (8.5% of Business-type
activities).
The Town’s Unassigned Fund Balance reported in the General Fund was approximately $9.8 million
(11.4% of General Fund expenditures). Total Fund Balance in the General Fund was approximately
$11.1 million (12.8% of General Fund expenditures). The Town reported total fund balances of
almost $10.8 million in the Combined Nonmajor Governmental Funds. Over $11.5 million in
Restricted Fund Balances, combined with over $0.4 million in Nonspendable Fund Balances was
offset by Unassigned Fund Deficits of almost $1.2 million.
The Town’s total debt decreased by approximately $6.8 million during the fiscal year. Detail of this
net decrease is illustrated as follows:
Issuances of debt
Governmental Activities $ 15,360,400
Business-Type Activities 7,066,100
Debt payments:
Governmental Activities (26,005,084)
Business-Type Activities (5,578,005)
Premium from issuance debt:
Governmental Activities 1,927,123
Business-Type Activities 550,966
Amortization of premium:
Governmental Activities (253,399)
Business-Type Activities (19,127)
Amortization of deferred refunding charges:
Governmental Activities 67,627
Business-Type Activities 67,373
$ (6,816,026)
Town of Canton, Massachusetts Page 23 of 119 Comprehensive Annual Financial ReportSource page 94
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also
contains other supplementary information in addition to the basic financial statements themselves.
The layout and relationship of the financial statements and supplementary information is visually
illustrated as follows:
Government-wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. The statement of position presents information on all of the Town’s assets, deferred outflows,
liabilities and deferred inflows, with the net result reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the Town is
improving or deteriorating. The statement of activities presents information showing how the
government’s net position changed during the most recent fiscal year. All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave.)
The government-wide financial statements consist of two classifications; (1) those whose activities are
principally supported by taxes and intergovernmental revenue (governmental activities), and (2) those
Town of Canton, Massachusetts Page 24 of 119 Comprehensive Annual Financial ReportSource page 95
whose activities are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities).
The governmental activities of the Town include general government, public safety, highways and streets,
sanitation, education, economic development, debt service, fringe benefits and culture and recreation.
The business-type activities of the Town are comprised of water, sewer and rink enterprise funds.
Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The Town, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the Town can be divided into three categories: governmental
funds, proprietary funds, and fiduciary funds.
Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such
as fund balance associated with inventories, and other amounts that are classified based on the relative
strength of the constraints that control the purposes for which specific amounts can be spent. Beginning
with the most binding constraints, fund balance amounts will be reported in the following classifications:
• Restricted—amounts constrained by external parties, constitutional provision, or enabling
legislation
• Committed—amounts constrained by a government using its highest level of decision-making
authority
• Assigned—amounts a government intends to use for a particular purpose
• Unassigned—amounts that are not constrained at all will be reported in the general fund or in
other major funds if negative
Governmental funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a government’s near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions.
The Town maintains 18 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the General Fund, which is considered to be a major fund. Data from the
other 17 governmental funds are combined into a single, aggregated presentation. Individual fund data
for each of these Nonmajor governmental funds is provided in the form of combining statements.
The Town adopts an annual appropriated budget for its general fund and its enterprise fund. A budgetary
comparison schedule has been provided for the general fund to demonstrate compliance with this budget.
Town of Canton, Massachusetts Page 25 of 119 Comprehensive Annual Financial ReportSource page 96
Proprietary funds – The Town maintains two types of proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The Town uses an enterprise fund to account for its water, sewer and rink enterprise funds.
Internal service funds are used to report activities that service all other Town Departments. The Town
uses internal service funds to account for self-insured health insurance claims.
Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statement because
the resources of those funds are not available to support the Town’s own programs. The accounting used
for fiduciary funds is much like that used for proprietary funds.
Notes to the Financial Statements - The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Information - In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the Town’s progress in funding its
obligation to provide pension benefits and other postemployment benefits to its employees as well as the
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the Town, assets exceeded liabilities by approximately $77.5 million at the close
of the most recent fiscal year.
Condensed net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2014 2013 2014 2013 2014 2013
Assets
Currrent and other assets $ 39,902,504 $ 40,350,898 $ 9,002,755 $ 7,000,676 $ 48,905,259 $ 47,351,574
Capital assets, net 100,407,535 101,894,990 47,322,552 45,989,428 147,730,087 147,884,418
Total assets 140,310,039 142,245,888 56,325,307 52,990,104 196,635,346 195,235,992
Deferred outflows of resources 651,390 - - - 651,390 -
Liabilities
Long-term liabilities 70,408,131 71,525,895 30,180,820 28,266,054 100,588,951 99,791,949
Other liabilities 15,206,827 12,914,629 4,001,148 4,311,860 19,207,975 17,226,489
Total liabilities 85,614,958 84,440,524 34,181,968 32,577,914 119,796,926 117,018,438
Deferred inflows of resources - - - - - -
Net Position
Net investment in capital assets 70,116,230 61,957,511 15,743,697 16,381,614 85,859,927 78,339,125
Restricted 8,912,488 10,768,853 - - 8,912,488 10,768,853
Unrestricted (23,682,247) (14,921,000) 6,399,642 4,030,576 (17,282,605) (10,890,424)
Total Net Position $ 55,346,471 $ 57,805,364 $ 22,143,339 $ 20,412,190 $ 77,489,810 $ 78,217,554
Town of Canton, Massachusetts Page 26 of 119 Comprehensive Annual Financial ReportSource page 97
By far, the largest portion (approximately $85.9 million) of the Town’s net position reflects its investment
in capital assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used
to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town’s
investment in its capital assets is reported net of related debt, it should be noted that the resources needed
to repay this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities.
An additional portion, approximately $8.9 million, of the Town’s net position represents resources that
are subject to external restrictions on how they may be used. Unrestricted net position is reported as a
deficit, of approximately $17.3 million due to the recognition of other post-employment benefits of
approximately $43.7 million since the implementation of GASB 45 in 2009.
Condensed changes in net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2014 2013 2014 2013 2014 2013
Revenues
Program revenues:
Charges for services $ 6,884,720 $ 6,292,650 $ 13,419,115 $ 12,479,038 $ 20,303,835 $ 18,771,688
Operating grants and contributions 18,811,622 16,961,153 6,250 - 18,817,872 16,961,153
Capital grants and contributions 611,930 550,999 463,500 - 1,075,430 550,999
General revenues:
Property taxes and tax liens 61,423,003 58,966,309 - - 61,423,003 58,966,309
Unrestricted grants and contributions 2,776,692 2,202,728 - - 2,776,692 2,202,728
Other 5,259,025 5,734,700 20,083 16,768 5,279,108 5,751,468
Total Revenues 95,766,992 90,708,539 13,908,948 12,495,806 109,675,940 103,204,345
Expenses
General government 6,231,894 5,809,111 - - 6,231,894 5,809,111
Public safety 16,625,726 16,060,024 - - 16,625,726 16,060,024
Education 64,153,101 61,782,205 - - 64,153,101 61,782,205
Public works 6,419,350 6,286,770 - - 6,419,350 6,286,770
Health and human services 1,346,871 1,314,086 - - 1,346,871 1,314,086
Culture and recreation 3,123,867 2,985,722 - - 3,123,867 2,985,722
Debt service 1,557,660 1,668,538 - - 1,557,660 1,668,538
Water - - 5,225,383 5,853,408 5,225,383 5,853,408
Sewer - - 5,366,166 5,173,053 5,366,166 5,173,053
Rink - - 353,666 390,072 353,666 390,072
Total Expenses 99,458,469 95,906,456 10,945,215 11,416,533 110,403,684 107,322,989
Change in net position before transfers (3,691,477) (5,197,917) 2,963,733 1,079,273 (727,744) (4,118,644)
Transfers 1,232,584 1,063,245 (1,232,584) (1,063,245) - -
Change in net position (2,458,893) (4,134,672) 1,731,149 16,028 (727,744) (4,118,644)
Net position, beginning of year 57,805,364 61,940,036 20,412,190 20,396,162 78,217,554 82,336,198
Net position, end of year $ 55,346,471 $ 57,805,364 $ 22,143,339 $ 20,412,190 $ 77,489,810 $ 78,217,554
Town of Canton, Massachusetts Page 27 of 119 Comprehensive Annual Financial ReportSource page 98
Governmental Activities – The governmental activities decreased net position by approximately $ 2.5
million (4.3% of governmental activities’ net position).
The following are the primary causes for the net decrease in governmental activities:
Expenses:
Provision for other postemployment benefits $ (7,461,531)
Positive expense to budget results 938,753
Provision for compensated absences (85,731)
Depreciation (4,092,676)
$ (10,701,185)
Revenues:
Local receipts exceeding forecast 3,403,004
$ 3,403,004
Other Items:
Forecasted revenue surplus $ 4,839,288
Total Change $ (2,458,893)
Net position of the business-type activities increased $1.7 million over the prior year. This was
due to an increase in the sewer usage rate, an increase in water and sewer consumption, and a
reduction in the reliance on water from outside sources.
Fiscal Year 2014 Expenses and Program Revenues – governmental activities are graphically presented as
follows:
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
Functional expenses
$20,000,000
Program Revenues
$10,000,000
$0
Town of Canton, Massachusetts Page 28 of 119 Comprehensive Annual Financial ReportSource page 99
Major revenue sources of governmental activities consist of revenue from; (1) Operating grants and
contributions which comprised approximately 19.6% of the total governmental activity revenues; up from
18.7% in the prior year due to developer contributions of approximately $1.7 million; and (2) Property
taxes which represented 64.1% of total revenues, down slightly from 65.0% in the prior year. No other
revenue sources exceeded 10% of total revenues in either fiscal 2014 or 2013.
Revenues
3%
1% 5%
7%
Property taxes
20% Operating grants and contributions
Capital grants and contributions
64% Charges for services
Other
Intergovernmental (unrestricted)
Major operating expenses were consistent with the prior year as the Town devoted over 80% of its efforts
to education and public safety. More specifically, educational expenses, whose level is driven by
minimum per pupil spending requirements under State law was up slightly to 64.5% as compared to
64.4% in the prior year, and public safety expenses were consistent with the prior year at 16.7%. No
other expenses represented greater than 10.0% of total expenses in either fiscal 2014 or 2013.
Expenses
1% 3% 2%
6%
7%
17% General government
Public safety
Education
Public works
Health and human services
64% Culture and recreation
Interest expense
Town of Canton, Massachusetts Page 29 of 119 Comprehensive Annual Financial ReportSource page 100
Business-type Activities – As previously discussed, revenues of business-type activities were higher as
compared to the prior year due to an increase in sewer rates and increases in user consumption. Expenses
were lower than prior year due to the Town reducing its reliance on outside water sources. Predominantly
all business-type activities revenues were from user charges.
Business – type activities
13
12
11
User charges Expenses and indirect
charges
Fund-wide Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental funds – The focus of the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a
combined ending fund balance of approximately $21.9 million, a decrease of approximately $1.1 million
over the prior year.
Combined Nonmajor Funds increased by approximately $2.1 million due primarily to developer
contributions in the amount of $1.7 million. This was offset by a reduction in the General Fund of
approximately $3.2 million which can be analyzed as follows:
Unassigned fund balance used for budget $ (2,085,978)
Restricted fund balance used for budget (550,537)
Expenditures charged to prior year encumbrances (796,643)
Other revenues exceeding forecast 3,403,004
Favorable actual expenditures as compared to budget 938,753
Premium on issuance of bonds payable 2,258,843
Paydown of old debt on refunding (6,531,402)
Other net minor items 162,955
$ (3,201,005)
Town of Canton, Massachusetts Page 30 of 119 Comprehensive Annual Financial ReportSource page 101
Unassigned fund balance in the general fund was approximately $9.8 million or 11.4% of general fund
expenditures. This is available for spending at the government’s discretion. Assigned fund balance, as a
result of encumbrances of approximately $0.9 million, and committed fund balance for carryover articles
of approximately $0.4 million bring total fund balance in the general fund to approximately $11.0 million
or 12.8% of general fund expenditures.
The remainder of governmental fund balances are included as Combined Nonmajor Fund Balances and
are classified as either (1) non-spendable, due to being the corpus of an endowment in the amount of
approximately $0.4 million; (2) restricted due to constraints placed externally by third-parties in the
amount of approximately $11.5 million, or (3) unassigned as they reflect negative balances due to the use
of short-term notes as funding sources for construction of approximately $1.2 million. These are
expected to be funded in future years through permanent financing.
Proprietary funds – The Town’s proprietary funds are made up of (1) the Water, Sewer and Rink
Enterprise Funds which provides the same type of information found in the government-wide financial
statements under business-type activities, but in more detail; and (2) the Town’s Internal Service Fund
which accounts for the Town’s Health Claims Fund.
The Health Claims Fund has a Net Position balance of approximately $3.5 million. This represents a
decrease of approximately $0.4 million over the prior year as claims exceeded contributions by the
employee and employer. The Net Position balance represented approximately 23% of claims for the year,
which is still above the industry standard of 20%.
Health Claims Fund
15
14
13
12
11
10
Revenues Expenses
Town of Canton, Massachusetts Page 31 of 119 Comprehensive Annual Financial ReportSource page 102
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget included revisions to the following
line items:
Approximately $0.2 million in increases allocated to public safety.
Approximately $0.2 million in decreases allocated to general government.
Approximately $0.5 million in increases allocated to public works.
Approximately $0.1 million in increases to education.
Approximately $0.3 million in increases to other areas combined.
All of the amendments were between operating line items in the original budget and were for operating
purposes. The overall bottom line final budget did not vary significantly from the original budget.
Major budget to actual differences on the revenue side included property tax and excise, which exceeded
budget by approximately $2.3 million, local receipts which exceeded budget by $0.7 million and state aid
which exceeded budget by $0.4 million.
On the expenditure side, numerous minor favorable results which in total approximated $0.9 million were
experienced.
Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary
Information following the footnotes to the report.
Capital Asset and Debt Administration
Capital Assets – The Town’s investment in capital assets for its governmental and business type
activities as of June 30, 2014 amounts to approximately $147.7 million (net of accumulated
depreciation) a decrease from the previous year’s balance of approximately $0.2 million.
This investment in capital assets includes land, buildings and improvements, infrastructure, machinery,
equipment, and software. The total decrease is due to depreciation exceeding capital investments.
Additional information on the Town’s capital assets can be found in Note II subsection D.
Long-term Debt – State statutes limit the amount of general obligation debt a governmental entity may
issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately
$206.6 million, which is significantly in excess of the Town’s outstanding general obligation debt
classified as inside the debt limit.
At the end of the current fiscal year, the Town had total debt outstanding of approximately $62.2 million.
The entire amount comprises debt backed by the full faith and credit of the government.
The Town’s most recent credit evaluation resulted in an “AAA” rating from Standard and Poor‘s
Investment Services for general obligation debt. This is the highest investment grade possible.
Town of Canton, Massachusetts Page 32 of 119 Comprehensive Annual Financial ReportSource page 103
The Town’s total debt decreased by approximately $6.8 million during the fiscal year; detail of this net
decrease is illustrated as follows:
Issuances of debt
Governmental Activities $ 15,360,400
Business-Type Activities 7,066,100
Debt payments:
Governmental Activities (26,005,084)
Business-Type Activities (5,578,005)
Premium from issuance debt:
Governmental Activities 1,927,123
Business-Type Activities 550,966
Amortization of premium:
Governmental Activities (253,399)
Business-Type Activities (19,127)
Amortization of deferred refunding charges:
Governmental Activities 67,627
Business-Type Activities 67,373
$ (6,816,026)
The Town also holds a proportionate share of debt of other governmental units that provide services
within the Town’s boundaries. The debt service from such arrangements is assessed annually to the
Town.
Bond anticipation note payable balances outstanding at year-end amount to approximately $2.9 million
and relate to departmental equipment, school improvements, and water and sewer infrastructure.
Additional information on the Town’s short-term and long-term debt can be found in Note II under
subsections F and G.
Economic Factors and Next Year’s Budgets and Rates
Consistent with both State and National work force trends, the Town’s unemployment rates improved
dramatically and are now approaching rates in place in 2008 before the latest recession
The Town’s property tax base is made up predominantly of residential real estate taxes, which
comprise nearly 61.2% of the Town’s property tax base. The Town also relies heavily on its
commercial and industrial property tax base, which in aggregate comprise 38.8% of the Town’s
property tax base. The Town uses a split rate in assessing taxes, thus commercial, industrial and
personal property tax rates are just over double the residential rate. In addition, Chapter 580 of the
Town of Canton, Massachusetts Page 33 of 119 Comprehensive Annual Financial ReportSource page 104
Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase
taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy.
Consistent with both State and National indices, the Town’s housing market experienced a downward
trend from 2005 – 2010. Housing prices began to stabilize during fiscal year 2011 and recently are
beginning to see an upward trend. During 2014, houses in the Town began selling at greater than their
assessed values, as a result, the Town expects its housing market to continue to maintain or slightly
outpace National indices. In addition, The Town has residential developments in various stages of
completion. These are expected to be completed in the near future.
The Town has responded well to the recent economic challenges. Reductions in local revenue,
primarily interest income and other reductions in revenue have caused the Town to aggressively seek
other revenue producing initiatives in order to maintain appropriations in ways that preserved local
service levels. The Town has been very successful in that regard.
All of the above items were considered when the Town developed its budget for fiscal year 2015. The
budget was adopted in May 2014 and the Town expects its tax rate to be certified in December 2014.
Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for all those with
an interest in the government’s finances. Questions concerning any of the information provided in this
report or request for additional financial information should be addressed to the Office of the Finance
Director, 801 Washington Street, Canton, Massachusetts 02021.
Town of Canton, Massachusetts Page 34 of 119 Comprehensive Annual Financial ReportSource page 105
Basic Financial Statements Town of Canton, Massachusetts Page 35 of 119 Comprehensive Annual Financial Report
Source page 106
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TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2014
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 27,758,372 $ 5,475,649 $ 33,234,021
Investments 6,077,727 - 6,077,727
Receivables, net:
Property taxes 455,396 - 455,396
Tax liens and foreclosures 1,343,188 45,436 1,388,624
User fees - 3,481,670 3,481,670
Departmental and other 655,761 - 655,761
Intergovernmental 3,553,660 - 3,553,660
Deposit held by third party 58,400 - 58,400
Capital assets not being depreciated 12,164,599 624,852 12,789,451
Capital assets, net of accumulated depreciation 88,242,936 46,697,700 134,940,636
Total Assets 140,310,039 56,325,307 196,635,346
Deferred Outflows of Resources
Prepaid expenses 651,390 - 651,390
Total Deferred Outflows of Resources 651,390 - 651,390
Liabilities
Warrants and accounts payable 2,022,207 180,578 2,202,785
Accrued payroll and withholdings 3,742,821 26,491 3,769,312
Retainage payable 22,779 - 22,779
Tax refunds payable 1,475,000 - 1,475,000
Health claims incurred but not reported 938,586 - 938,586
Accrued interest 314,266 232,791 547,057
Other liabilities 34,916 10,000 44,916
Bond anticipation notes payable 1,985,950 930,000 2,915,950
Noncurrent liabilities:
Due within one year 4,670,302 2,621,288 7,291,590
Due in more than one year 70,408,131 30,180,820 100,588,951
Total Liabilities 85,614,958 34,181,968 119,796,926
Deferred Inflows of Resources - - -
Net Position
Net investment in capital assets 70,116,230 15,743,697 85,859,927
Restricted for:
Nonexpendable permanent funds 432,785 - 432,785
Federal and State grants 1,951,052 - 1,951,052
Massachusetts School Building Authority grant 2,860,353 - 2,860,353
Other purposes 3,668,298 - 3,668,298
Unrestricted (23,682,247) 6,399,642 (17,282,605)
Total Net Position $ 55,346,471 $ 22,143,339 $ 77,489,810
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 119 Comprehensive Annual Financial ReportSource page 108
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2014
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 $ 6,231,894 $ 978,216 $ 1,833,276 $ - $ (3,420,402) $ (3,420,402)
Public safety 16,625,726 2,595,617 203,774 - (13,826,335) (13,826,335)
Education 64,153,101 2,632,798 16,203,963 - (45,316,340) (45,316,340)
Public works 6,419,350 227,108 13,200 586,930 (5,592,112) (5,592,112)
Health and human services 1,346,871 91,484 425,355 25,000 (805,032) (805,032)
Culture and recreation 3,123,867 359,497 25,431 - (2,738,939) (2,738,939)
Interest expense 1,557,660 - 106,623 - (1,451,037) (1,451,037)
Total governmental activities 99,458,469 6,884,720 18,811,622 611,930 (73,150,197) (73,150,197)
Business-type activities:
Water 5,225,383 6,943,731 4,206 - $ 1,722,554 1,722,554
Sewer 5,366,166 6,045,829 2,044 463,500 1,145,207 1,145,207
Rink 353,666 429,555 - - 75,889 75,889
Total business-type activities 10,945,215 13,419,115 6,250 463,500 2,943,650 2,943,650
Total Primary Government $ 110,403,684 $ 20,303,835 $ 18,817,872 $ 1,075,430 (73,150,197) 2,943,650 (70,206,547)
General Revenues:
Property taxes 61,423,003 - 61,423,003
Tax liens 591,950 - 591,950
Motor vehicle and other excise 3,380,408 - 3,380,408
Hotel and meals taxes 568,317 - 568,317
Payments in lieu of taxes 214,543 - 214,543
Grants and contributions not restricted
to specific programs 2,776,692 - 2,776,692
Penalties and interest on taxes 344,012 - 344,012
Unrestricted investment income 194,375 20,083 214,458
Loss on sale of capital assets (34,580) - (34,580)
Transfers (net) 1,232,584 (1,232,584) -
Total general revenues and transfers 70,691,304 (1,212,501) 69,478,803
Change in Net Position (2,458,893) 1,731,149 (727,744)
Net Position:
Beginning of year 57,805,364 20,412,190 78,217,554
End of year $ 55,346,471 $ 22,143,339 $ 77,489,810
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 119 Comprehensive Annual Financial ReportSource page 109
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2014
Nonmajor Total
General Governmental Governmental
Fund Funds Funds
Assets
Cash and cash equivalents $ 13,388,921 $ 12,344,474 $ 25,733,395
Investments 2,971,619 544,534 3,516,153
Receivables, net of allowance for uncollectibles:
Property taxes 451,911 3,485 455,396
Tax liens and foreclosures 1,341,202 1,986 1,343,188
Motor vehicle excise 212,688 - 212,688
Intergovernmental 2,860,353 693,307 3,553,660
Departmental and other - 378,188 378,188
Due from other funds 39,618 - 39,618
Total Assets 21,266,312 13,965,974 35,232,286
Deferred Outflows of Resources
Prepaid expenses 651,390 - 651,390
Total Deferred Outflows of Resources 651,390 - 651,390
Total Assets and Deferred Outflows of Resources $ 21,917,702 $ 13,965,974 $ 35,883,676
Liabilities
Warrants and accounts payable $ 1,152,448 $ 564,514 $ 1,716,962
Accrued payroll and withholdings 3,562,869 179,952 3,742,821
Retainage payable - 22,779 22,779
Tax refunds payable 1,475,000 - 1,475,000
Other liabilities 34,916 - 34,916
Due to other funds - 39,618 39,618
Bond anticipation notes payable - 1,985,950 1,985,950
Total Liabilities 6,225,233 2,792,813 9,018,046
Deferred Inflows of Resources
Unavailable revenues - property taxes 1,551,630 5,471 1,557,101
Unavailable revenues - motor vehicle excise 212,688 - 212,688
Unavailable revenues - intergovernmental 2,860,353 - 2,860,353
Unavailable revenues - other - 378,188 378,188
Total Deferred Inflows of Resources 4,624,671 383,659 5,008,330
Fund Balances
Nonspendable - 432,785 432,785
Restricted - 11,544,545 11,544,545
Committed 358,148 - 358,148
Assigned 893,993 - 893,993
Unassigned 9,815,657 (1,187,828) 8,627,829
Total Fund Balances 11,067,798 10,789,502 21,857,300
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $ 21,917,702 $ 13,965,974 $ 35,883,676
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 119 Comprehensive Annual Financial ReportSource page 110
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2014
Total Governmental Fund Balances $ 21,857,300
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 100,407,535
Other long-term assets are unavailable to pay current-period expenditures 5,008,330
Assets, deferred outflows of resources and liabilities and deferred inflows of resources of the
Town's internal service funds are inlcuded in the Statement of Net Position, but are not
reported in the governmental funds. 3,466,005
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in the governmental funds interest is not reported until due. (314,266)
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 (29,139,400)
Unamortized premiums on bonds (1,900,490)
Capital leases payable (13,022)
Landfill closure (104,000)
Compensated absences (1,582,268)
Other postemployment benefits (42,339,253)
Net effect of reporting long-term liabilities (75,078,433)
Net Position of Governmental Activities $ 55,346,471
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 119 Comprehensive Annual Financial ReportSource page 111
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2014
Nonmajor Total
General Governmental Governmental
Fund Funds Funds
Revenues:
Property taxes $ 61,063,407 $ 480,994 $ 61,544,401
Tax liens 782,539 - 782,539
Intergovernmental 16,881,939 3,521,976 20,403,915
Motor vehicle and other excises 3,714,753 - 3,714,753
Hotel and meals taxes 568,317 - 568,317
Licenses and permits 817,829 - 817,829
Penalties and interest on taxes 344,012 - 344,012
Payments in lieu of taxes 214,543 - 214,543
Fines and forfeitures 141,311 - 141,311
Charges for services - 1,580,929 1,580,929
Departmental and other revenue 950,867 3,122,603 4,073,470
Investment income 145,136 18,805 163,941
Contributions and donations - 2,146,011 2,146,011
Total Revenues 85,624,653 10,871,318 96,495,971
Expenditures:
Current:
General government 4,255,514 137,266 4,392,780
Public safety 9,744,751 1,030,095 10,774,846
Education 34,941,644 5,683,852 40,625,496
Public works 4,649,357 633,571 5,282,928
Health and human services 793,737 629,827 1,423,564
Culture and recreation 1,702,620 307,860 2,010,480
Pension benefits 11,915,349 - 11,915,349
Employee benefits 11,081,441 71,267 11,152,708
State and county assessments 959,868 - 959,868
Debt service:
Principal 4,520,404 - 4,520,404
Interest 1,619,994 - 1,619,994
Total Expenditures 86,184,679 8,493,738 94,678,417
Excess (Deficiency) of Revenues Over (Under) Expenditures (560,026) 2,377,580 1,817,554
Other Financing Sources (Uses):
Proceeds from bonds and notes - 175,000 175,000
Premiums from bonds and notes 2,258,843 - 2,258,843
Proceeds from refunding bonds 15,185,400 - 15,185,400
Payments of refunded bonds (21,739,649) - (21,739,649)
Transfers in 2,677,329 1,311,370 3,988,699
Transfers out (1,022,902) (1,733,213) (2,756,115)
Total Other Financing Sources (Uses) (2,640,979) (246,843) (2,887,822)
Net Change in Fund Balances (3,201,005) 2,130,737 (1,070,268)
FUND BALANCES - Beginning of year 14,268,803 8,658,765 22,927,568
FUND BALANCES - End of year $ 11,067,798 $ 10,789,502 $ 21,857,300
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 119 Comprehensive Annual Financial ReportSource page 112
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, 2014
Net Change in Fund Balances - Total Governmental Fund Balances $ (1,070,268)
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 2,507,989
Depreciation expense (3,995,444)
Net effect of reporting capital assets (1,487,455)
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. (371,831)
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:
Proceeds from general obligation bonds and notes (175,000)
Proceeds from refunding bonds (15,185,400)
Premiums from bonds and notes (1,927,123)
Amortization of deferred charges on refunding (67,627)
Amortization of premiums on bonds and notes payable (1,570)
Payments on capital leases 12,612
Payments on refunding bonds 21,739,649
Repayments of debt 4,520,404
Net effect of reporting long-term debt 8,915,945
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. (1,056,553)
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. 131,531
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 27,000
Compensated absences (85,731)
Other postemployment benefits (7,461,531)
Net effect of reporting long-term liabilities (7,520,262)
Change in Net Position of Governmental Activities $ (2,458,893)
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 119 Comprehensive Annual Financial ReportSource page 113
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2014
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 3,334,275 $ 2,064,096 $ 77,278 $ 5,475,649 $ 2,024,977
Investments - - - - 2,561,574
Receivables (net):
User charges 1,832,166 1,646,307 3,197 3,481,670 -
Tax liens 21,026 24,410 - 45,436 -
Departmental and other - - - - 64,885
Deposit held by third party - - - - 58,400
Total current assets 5,187,467 3,734,813 80,475 9,002,755 4,709,836
Noncurrent assets:
Nondepreciable capital assets 624,852 - - 624,852 -
Capital assets (net of depreciation) 30,995,251 15,551,773 150,676 46,697,700 -
Total noncurrent assets 31,620,103 15,551,773 150,676 47,322,552 -
Total Assets 36,807,570 19,286,586 231,151 56,325,307 4,709,836
Liabilities
Current liabilities:
Warrants and accounts payable 96,560 81,851 2,167 180,578 305,245
Accrued payroll and withholdings 18,173 8,126 192 26,491 -
Health claims incurred but not reported - - - - 938,586
Accrued interest 163,460 69,331 - 232,791 -
Other liabilities 10,000 - - 10,000 -
Bond anticipation notes payable 530,000 400,000 - 930,000 -
Compensated absences 31,073 17,952 4,001 53,026 -
Unamortized bond premiums 59,950 41,547 - 101,497 -
Bonds and notes payable 1,642,500 816,265 8,000 2,466,765 -
Total current liabilities 2,551,716 1,435,072 14,360 4,001,148 1,243,831
Noncurrent liabilities:
Compensated absences 93,217 53,854 12,001 159,072 -
Unamortized bond premiums 292,450 137,892 - 430,342 -
Other postemployment benefits 812,497 371,978 224,841 1,409,316 -
Bonds and notes payable 20,328,800 7,827,290 26,000 28,182,090 -
Total noncurrent liabilities 21,526,964 8,391,014 262,842 30,180,820 -
Total Liabilities 24,078,680 9,826,086 277,202 34,181,968 1,243,831
Net Position
Net investment in capital assets 9,118,803 6,508,218 116,676 15,743,697 -
Unrestricted 3,610,087 2,952,282 (162,727) 6,399,642 3,466,005
Total Net Position $ 12,728,890 $ 9,460,500 $ (46,051) $ 22,143,339 $ 3,466,005
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 119 Comprehensive Annual Financial ReportSource page 114
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2014
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 6,943,731 $ 6,045,829 $ 429,555 $ 13,419,115 $ -
Employee contributions - - - - 3,412,106
Employer contributions - - - - 9,942,023
Stop loss reimbursements - - - - 1,125,727
Total Operating Revenues 6,943,731 6,045,829 429,555 13,419,115 14,479,856
Operating Expenses:
Operating costs 2,038,833 953,902 327,094 3,319,829 -
Massachusetts Water Resources Authority assessment 1,426,900 3,485,020 - 4,911,920 -
Depreciation 1,058,193 651,735 25,412 1,735,340 -
Property insurance - - - - 29,859
Employee benefits - - - - 14,852,262
Total Operating Expenses 4,523,926 5,090,657 352,506 9,967,089 14,882,121
Operating Income (Loss) 2,419,805 955,172 77,049 3,452,026 (402,265)
Nonoperating Revenues (Expenses):
Intergovernmental 4,206 2,044 - 6,250 -
Investment income 12,214 7,860 9 20,083 30,434
Interest expense (701,457) (275,509) (1,160) (978,126) -
Total Nonoperating Revenues (Expenses) (685,037) (265,605) (1,151) (951,793) 30,434
Income (Loss) Before Capital Contributions and Transfers 1,734,768 689,567 75,898 2,500,233 (371,831)
Capital contributions - 463,500 - 463,500 -
Transfers out (756,170) (394,399) (82,015) (1,232,584) -
Change in Net Position 978,598 758,668 (6,117) 1,731,149 (371,831)
Total Net Position - Beginning of the Year 11,750,292 8,701,832 (39,934) 20,412,190 3,837,836
Total Net Position - End of the Year $ 12,728,890 $ 9,460,500 $ (46,051) $ 22,143,339 $ 3,466,005
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 119 Comprehensive Annual Financial ReportSource page 115
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2014
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,833,444 $ 5,736,464 $ 427,018 $ 12,996,926 $ -
Receipts from interfund services provided - - - - 14,679,254
Payments to employees (821,945) (389,682) (131,112) (1,342,739) -
Payments to vendors (2,398,433) (3,853,023) (171,054) (6,422,510) -
Payments for interfund services used - - - - (14,844,770)
Net Cash Provided by (Used in) Operating
Activities 3,613,066 1,493,759 124,852 5,231,677 (165,516)
Cash Flows from Noncapital Financing Activities:
Intergovernmental operating grants 4,206 2,044 - 6,250 -
Transfers out (756,170) (394,399) (82,015) (1,232,584) -
Net Cash Provided by (Used in) Noncapital
Financing Activities (751,964) (392,355) (82,015) (1,226,334) -
Cash Flows from Capital and Related Financing Activities:
Proceeds from capital grants - 463,500 - 463,500 -
Proceeds from the issuance of bonds and notes 3,495,000 1,266,500 - 4,761,500 -
Proceeds from the issuance of refunding bonds 1,342,300 1,892,300 - 3,234,600 -
Premiums from the issuance of bonds and notes 354,792 196,174 - 550,966 -
Acquisition and construction of capital assets (1,801,110) (1,267,354) - (3,068,464) -
Payments of refunded bonds (1,454,865) (2,020,455) - (3,475,320) -
Principal payments on bonds and notes (2,980,240) (989,445) (8,000) (3,977,685) -
Interest payments on bonds and notes (685,088) (248,385) (1,160) (934,633) -
Net Cash Used in Capital and Related
Financing Activities (1,729,211) (707,165) (9,160) (2,445,536) -
Cash Flows from Investing Activities:
Investment income 12,214 7,860 9 20,083 30,434
Investment of operating cash - - - - (2,561,574)
Net Cash Provided by (Used in) Investing Activities 12,214 7,860 9 20,083 (2,531,140)
Net Change in Cash and Cash Equivalents 1,144,105 402,099 33,686 1,579,890 (2,696,656)
Cash and Cash Equivalents:
Beginning of the year 2,190,170 1,661,997 43,592 3,895,759 4,721,633
End of the year $ 3,334,275 $ 2,064,096 $ 77,278 $ 5,475,649 $ 2,024,977
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 2,419,805 $ 955,172 $ 77,049 $ 3,452,026 $ (402,265)
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,058,193 651,735 25,412 1,735,340 -
Changes in assets and liabilities:
Receivables (110,287) (309,365) (2,537) (422,189) 199,398
Accounts payable and accrued expenses 245,355 196,217 24,928 466,500 11,681
Health claims incurred but not reported - - - - 25,670
Net Cash Provided by (Used in) Operating
Activities $ 3,613,066 $ 1,493,759 $ 124,852 $ 5,231,677 $ (165,516)
Noncash capital and related financing activities:
Amortization of deferred charges on refunding $ 8,151 $ 59,222 $ - $ 67,373 $ -
Amortization of bond premium 2,392 16,735 - 19,127 -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 45 of 119 Comprehensive Annual Financial ReportSource page 116
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2014
Other Private
Postemployment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 2,730 $ 115,906 $ 1,252,923
Investments 619,099 - -
Total Assets 621,829 115,906 1,252,923
Liabilities
Warrants payable - - 18,417
Agency liabilities - - 1,234,506
Total Liabilities - - 1,252,923
Net Position
Held in trust for other postemployment benefits 621,829 - -
Held in trust for private purposes - 115,906 -
Total Net Position $ 621,829 $ 115,906 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 46 of 119 Comprehensive Annual Financial ReportSource page 117
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2014
Other Private
Postemployment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employer $ 400,000 $ -
Other - 1,550
Total contributions 400,000 1,550
Investment income:
Interest and dividends 66,763 1,327
Total Additions 466,763 2,877
Deductions
Education - scholarships - 16,950
Total Deductions - 16,950
CHANGE IN NET POSITION 466,763 (14,073)
NET POSITION AT BEGINNING OF YEAR 155,066 129,979
NET POSITION AT END OF YEAR $ 621,829 $ 115,906
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 47 of 119 Comprehensive Annual Financial ReportSource page 118
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
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 2014, the Town’s share of the operating and debt service expenses was $1,059,042.
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 to a
significant extent 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 48 of 119 Comprehensive Annual Financial ReportSource page 119
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 49 of 119 Comprehensive Annual Financial ReportSource page 120
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.
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 Capital Projects Funds are used to account for financial resources that are restricted,
committed or assigned to expenditures for capital outlays.
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 50 of 119 Comprehensive Annual Financial ReportSource page 121
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 for the Town are reported at fair value.
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.
Inventories – Inventories, which are not material to the basic financial statements, are considered
to be expenditures at the time of purchase.
Town of Canton, Massachusetts Page 51 of 119 Comprehensive Annual Financial Report