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2009 Comprehensive Annual Financial Report (PDF)
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TOWN OF CANTON ,MASSACHUSETTS
COMPREHENSIWE ANNUAL FNANCAL REPORT
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BRA OP ES NAY WE NEVER FORGET Bet ey
THOSE WHO SERVED [nies
OUR COMMUNITY ily
For the fiscalyear ended
June 30,2009
[Original embedded text, retained for comparison]
TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the fiscal year ended
June 30, 2009Source page 2
On the cover:
September 11th memorial dedicated to all those who served their community.
The Town recently purchased two new ambulances for the Fire Department.Source page 3
Town of Canton, Massachusetts
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2008 through June 30, 2009
Prepared by the Finance DepartmentSource page 4
TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2009
TABLE OF CONTENTS
Introductory Section.................................................................................................................................................1
Letter of Transmittal ................................................................................................................................................1
Organizational Chart ...............................................................................................................................................6
Principal Officials.....................................................................................................................................................7
Certificate of Achievement for Excellence in Financial Reporting ..........................................................................8
Financial Section ......................................................................................................................................................9
Independent Auditors’ Report .................................................................................................................................9
Management’s Discussion and Analysis ..............................................................................................................11
Basic Financial Statements...................................................................................................................................21
Statement of Net Assets....................................................................................................................................23
Statement of Activities.......................................................................................................................................24
Governmental Funds – Balance Sheet .............................................................................................................26
Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the
Statement of Net Assets .................................................................................................................................27
Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances ....................28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities .......................................................................................29
Proprietary Funds – Statement of Net Assets...................................................................................................30
Proprietary Funds – Statement of Revenues, Expenses and Changes in Fund Net Assets............................31
Proprietary Funds – Statement of Cash Flows .................................................................................................32
Fiduciary Funds – Statement of Fiduciary Net Assets ......................................................................................33
Fiduciary Funds – Statement of Changes in Fiduciary Net Assets...................................................................34
Notes to Basic Financial Statements ....................................................................................................................35
Required Supplementary Information ...................................................................................................................65
Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual .66
Retirement System Schedules ..........................................................................................................................68
Retirement system schedule of funding progress ........................................................................................ 69
Retirement system schedule of employer contributions............................................................................... 70
Other Post-Employment Benefits Plan Schedules............................................................................................71
Other post-employment benefit plan funding progress................................................................................. 72
Other post-employment benefit plan actuarial methods and assumptions .................................................. 73Source page 5
Notes to Required Supplementary Information.....................................................................................................74
Combining Statements..........................................................................................................................................77
Nonmajor Governmental Funds ........................................................................................................................78
Nonmajor Governmental Funds - Combining Balance Sheet ...................................................................... 80
Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances........................................................................................................................... 84
Internal Service Funds ......................................................................................................................................88
Internal Service Funds – Combining Statement of Net Assets .................................................................... 89
Internal Service Funds – Combining Statement of Revenues, Expenses, and
Changes in Fund Net Assets ........................................................................................................................ 90
Internal Service Funds – Combining Statement of Cash Flows ................................................................... 91
Fiduciary Funds.................................................................................................................................................92
Agency Fund – Statement of Changes in Assets and Liabilities .................................................................. 93
Statistical Section...................................................................................................................................................95
Net Assets by Component – Last Seven Fiscal Years .........................................................................................96
Changes in Net Assets – Last Seven Fiscal Years ..............................................................................................97
Fund Balances, Governmental Funds – Last Ten Fiscal Years ...........................................................................98
Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years........................................................99
Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates –
Last Ten Fiscal Years.......................................................................................................................................100
Principal Taxpayers – Current Year and Nine Years Ago ..................................................................................101
Property Tax Levies and Collections – Last Ten Fiscal Years ...........................................................................102
Ratios of Outstanding Debt and General Bonded Debt – Last Ten Fiscal Years...............................................103
Direct and Overlapping Governmental Activities Debt........................................................................................104
Computation of Legal Debt Margin – Last Ten Fiscal Years ..............................................................................105
Demographic and Economic Statistics – Last Ten Fiscal Years ........................................................................106
Principal Employers (Excluding Town) – Current Year and Nine Years Ago .....................................................107
Full-time Equivalent Town Employees by Function - Last Ten Fiscal Years......................................................108
Operating Indicators by Function/Program – Last Ten Fiscal Years ..................................................................109
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years..............................................................110Source page 6
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Introductory Section
The Canton Viaduct, built in 1835, was the final link on the 41 mile railroad between Boston, Massachusetts and
Providence, Rhode Island. It is one of the two oldest surviving multiple arch stone railroad bridges still in active
mainline use in the United States.Source page 8
Introductory Section Letter of Transmittal October 16, 2009 To the Honorable Selectmen and Citizens of the Town of Canton: At the close of each fiscal year, state law requires the Town of Canton to publish a complete set of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the Town of Canton, Massachusetts, for the fiscal year ending June 30, 2009 for your review. The report is designed to be used by the elected and appointed officials of the Town and others who are concerned with its management and progress such as bond analysts, banking institutions and rating agencies as well as the residents and taxpayers of Canton. This report consists of management’s representations concerning the finances of the Town of Canton. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh their benefits, the Town of Canton’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The Town of Canton’s financial statements have been audited by Powers & Sullivan, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Canton for the fiscal year ended June 30, 2009, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town of Canton’s financial statements for the fiscal year ended June 30, 2009 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town of Canton was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal Town of Canton, Massachusetts 1 Comprehensive Annual Financial Report
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requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Canton’s separately issued Reports on Federal Award Programs. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Canton’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town Canton was incorporated as a Town in 1797. The Town is located in eastern Massachusetts, approximately 18 miles southwest of Boston, has a population of approximately 21,000 and a land area of approximately 19 square miles. It is situated at the junction of Interstates 95 and 93, with access to Route 24, providing an excellent location for residents, businesses and commuters. The Town has a rich and varied industrial heritage, serving as the location of Paul Revere’s copper rolling mills in post-Colonial times, and as the site of rubber, chemical and woolen manufacturing in more recent times. Present commercial enterprises play a key role in the Town’s fiscal stability and are considered a major asset to the community. The prime commercial areas are well located so as to allow direct highway access without affecting the community’s small town charm. Many of the Town’s lakes, ponds and wetlands have been protected and preserved for present enjoyment and future generations. Among the protected areas are the Eleanor Cabot Bradley Reservation, an 82 acre estate that blends open fields, woodlands and gardens in the shadow of Great Blue Hill and Pequitside Farm, a Town- owned 38 acre conservation and recreation area which offers playing fields, picnicking, hiking and cross country skiing. The Town offers a full range of traditional municipal services including police and fire protection, ambulance and rescue services, education, maintenance of streets and infrastructure, solid waste collection and disposal, health and human services, cultural and recreational, administrative and financial services. The Town is a member community of the Massachusetts Water Resources Authority (MWRA) for its water and sewer services. Canton prides itself on its quality school system. Canton students consistently perform well on national and state tests and over 97% of students graduating from the high school go on to higher education. The Town is the location of the Blue Hills Regional Technical School which provides expanded vocational education opportunities for high school students of Canton and eight other area communities. Canton is also home to one of the two campuses of Massasoit Community College. The campus is a multi-level facility with specialized labs and art studios that support the technical and visual arts programs of the College. The campus also includes the Milton Art Museum, Akillian Gallery and the College’s Professional Development Center. The Town has reached its 10% affordable housing requirement mandated by the Commonwealth of Massachusetts (Commonwealth), which is an important milestone as communities under the 10% threshold are subject to an appeals process that can overturn local zoning board decisions. This will allow the Town to maintain its commitment to developing much needed affordable housing units in areas of the Town that can accommodate the growth. The Town operates under the Selectmen, Town Administrator and Open Town Meeting form of government. The five elected Selectmen make policy decisions, and the Town Administrator is responsible for carrying out the policies of the Selectmen and for managing the day-to-day operations of the Town. The policies and procedures Town of Canton, Massachusetts 2 Comprehensive Annual Financial Report
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of the Board of Selectmen are detailed in the Administrative Code that will continue to evolve and be created over time to best serve the community. An elected, five-member School Committee appoints a School Superintendent who administers the public school system of the Town. School Committee members, like the Selectmen, are elected at-large to three-year staggered terms. An annual operating budget is approved by Town Meeting two months prior to the start of the fiscal year. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government) and department (e.g. finance) allowing the department heads to allocate resources within the department as they see fit. Transfers between departments, however, need special approval by Town Meeting unless specifically exempted by state statute. Factors Affecting Economic Condition The Town maintains a strong commercial tax base which represented 22.5% of the total assessed property value in 2009. Market value per capita is approximately $200,000 and the Town’s per capita income is significantly higher than the state average, which adds to the fiscal strength of the community. Through proactive measures by Town management the Town has been able to attract and retain several large international companies such as Reebok International, LTD and Dunkin’ Brands, Inc. Recently, Organogenesis, Inc. announced that it was remaining in Canton by expanding its global headquarters, research and development labs and manufacturing facilities in a campus that will occupy over 250,000 square feet. Organogenesis, Inc., the world leader in regenerative medicine, was enticed to remain in Canton with $12.9 million in incentives as part of the Commonwealth’s $1.0 billion Life Sciences Initiative. The Board of Selectmen and the local Economic Development Committee (EDC) are committed to negotiating Tax Incremental Financing (TIF) agreements that enhance the Town’s tax base. A formal TIF policy has been published to provide consistent and rational evaluation criteria to better support the investment in terms of reduced taxes to the Town in exchange for promoting commercial development. Both the Selectmen and the EDC were also instrumental in developing a series of internet based presentations to encourage Canton as an attractive business destination and also a comprehensive guide to assist business with local permitting processes. The Commonwealth has pledged approximately $3.0 million in roadway and sidewalk improvements along Route 138 and Dan Road for efficiency and safety reasons, in an area of importance for economic development. The majority of funds from a $3.4 million grant from NSTAR have also been earmarked for further roadway and infrastructure improvements along Route 138. The Town was recently ranked 5th out of 351 municipalities by the Massachusetts High Technology Council’s MassTrack program. MassTrack was created to measure the support of state and local officials for the priorities of the technology economy, including supporting technology development and growth. One of the main factors in attaining this ranking was the Town’s adoption of the Massachusetts General Law (MGL) chapter 43D expedited permitting law that allows Town Meeting to designate targeted developments for a streamlined permit review process. As part of adopting this legislation, a Permit Advisory Committee was also formed to bring together the key permit granting departments to assist the proponent of the commercial development through the permitting process. The Town also utilized a $150,000 state grant to purchase permitting software and to contract with a permit specialist to assist with implementing streamlined permitting procedures. During fiscal year 2009, the Town was lauded as a prime destination for the biotechnology industry by the Massachusetts Biotechnology Council (MBC). Through its BioReady Communities Campaign, the MBC rates a community’s readiness to host and attract biotechnology research and manufacturing facilities. The Town was one of only 19 Massachusetts communities to receive a Platinum ranking from the MBC, which is the highest attainable. To achieve this ranking a community must have a building that is already permitted for biotechnology Town of Canton, Massachusetts 3 Comprehensive Annual Financial Report
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uses and has at least 20,000 square feet available for biotechnology uses or has a shovel ready, pre-permitted land site that has already completed a state environmental review. The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden by a majority vote at a Town election. While revenue increases have been limited in recent years fixed costs, including health insurance and pension costs, have increased substantially. During fiscal year 2008, the Town’s management made the difficult choice to cut services and raise fees in order to balance the budget. With more cuts looming in future years, the Town’s voters approved a $4.5 million Proposition 2 ½ tax override that allowed for the restoration of most of the budget cuts from the prior years. The tax override was planned to be phased in over a three year period with an annual cost to the average residential homeowner of $450. As a result of the Proposition 2 ½ tax override, Standard and Poor’s upgraded the Town’s bond rating from ‘AA+’ to ‘AAA’, their highest rating given. The override and the resulting revenue flexibility to restore lost services and stabilize budgets through fiscal year 2012 were cited as prominent factors in the upgrade. Standard and Poor’s also cited the Town’s strong wealth and income levels in addition to strong reserve levels and financial management policies. Unfortunately for the Town, due to the national recession, the Commonwealth reduced the Town’s fiscal year 2009 state aid by $260,000 in mid-year. The state aid cut combined with the unexpected costs of snow and ice removal from the winter months caused the Town to use approximately $700,000 of its cash reserves. This leaves a balance in the Town’s reserves of approximately $6.4 million, which is 9.5% of fiscal year 2010 general fund operating budget. The Town is committed to building up its reserves once the fiscal crisis is over and the fiscal year 2010 budget set by Town Meeting includes a $100,000 transfer to the Town’s stabilization fund. Fiscal year 2010 stands to be an even tougher year to manage as the Commonwealth further cut state aid to local cities and towns. The fiscal year 2010 state aid figure of $6.025 million represents a 14.4% reduction from the original fiscal year 2009 aid amount, with the likely prospect of further mid-year cuts as the Commonwealth deals with lagging tax revenues. The Town was also forced to reduce its local revenue estimates as the recession has impacted motor vehicle excise, building permit and investment interest revenue. However, due to the passage of the Proposition 2 ½ tax override the Town has the option of utilizing its excess property tax revenue capacity to avoid the severe service cuts that other municipalities are facing, although expense budgets may have to be trimmed during the year in response to declining revenues. Capital Financing As part of the annual budget process, the Capital Planning Committee (CPC) recommends the capital budget for the upcoming year and prepares a five-year plan to address the long-term capital needs of the Town. The capital spending plan for the five year period from fiscal year 2010 through fiscal year 2014 has an estimated cost of $56,121,000, with $4,300,000 to be funded from estimated revenues and reserves and the remainder to be funded from grants and the issuance of bonds. The CPC’s capital plan has allocated $3,814,000 for municipal departments, $4,476,000 for the school department, $11,181,000 for the water enterprise fund, $36,475,000 for the sewer enterprise fund, and $175,000 for the rink enterprise fund. The Town funds a portion of its annual capital plan on a pay-as-you-go basis through recurring revenues. The target set aside is 6% of recurring revenues; however, largely due to recent decreases in state aid, the Town has lowered the set aside for the past six fiscal years. Major Initiatives Town Meeting has approved the construction of two water treatment facilities at a cost of approximately $13,500,000 to improve water quality and utilize more local sources of water. The first of these facilities is expected to begin operation during fiscal year 2010. Also, $7,000,000 in sewer improvements were approved to Town of Canton, Massachusetts 4 Comprehensive Annual Financial Report
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reduce MWRA assessments for sewer treatment and to reduce outflows. The cost of these projects is being funded entirely from utility rates and fees. The Town has received $1,034,000 through the Commonwealth’s Massachusetts Opportunity Relocation and Expansion (MORE) Jobs Program, which provides local municipalities with infrastructure funds that promote private business expansion and job creation. The grant will allow the Town to upgrade the roadway base, curbing, surface and landscaping on Dan Road, which is home to Organogenesis, Inc. To qualify for the grant, Organogenesis, Inc. committed to creating 149 permanent full-time jobs over the next five years and will generate over $62,000,000 in sales from outside the Commonwealth in 2009. Work has completed on a comprehensive reconstruction of its Town center. The project was funded from approximately $2,700,000 in Public Works Economic Development (PWED) grant funds and $1,900,000 in Chapter 90 and other highway appropriations from the Commonwealth. State funds will be used to make infrastructure improvements including relocating overhead wiring underground, adding new concrete and brick sidewalks, trees, historic lighting and signage. This project will aid in the economic revitalization of Canton center as well as provide for more open space and the general beautification of the area. Town management is continuing its efforts to assist in the redevelopment of the 42-acre Plymouth Rubber Company property. This is an important property to the Town as it occupies a location near Canton center and is adjacent to approximately 300 acres of land that includes three local ponds. The Board of Selectmen has made site cleanup and managing the water rights surrounding the property top priorities. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Canton for its comprehensive annual financial report for the fiscal year ended June 30, 2008. This was the third year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The publication of this CAFR represents an important achievement in the ability of the Town of Canton to provide enhanced financial information and accountability to its citizens, elected and appointed officials and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department, and in particular, Town Accountant Paul Gargano. Special thanks also go to the public accounting firm of Powers & Sullivan for their advice and assistance in the preparation of this report. Respectfully submitted, William T. Friel James R. Murgia Town Administrator Finance Director Town of Canton, Massachusetts 5 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts Comprehensive Annual Financial Report TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Blue Hills Board of Regional Library of Assessors School Trustees District Board of Selectmen. Appointed Multiple Member Bodies Town Clerks Board Board Town School Board Planning Meeting Committee of Health Board of Selectmen Office -Register of Voters -Comm. on Disability -Zoning Board.of Appeals -Water/Sewer Rate Policy Commission -Youth Commission -Historical Commission -Fair Housing Committee -Cable Advisory Committee -Beautification Committee -Conservation Commission -Council on Aging -Industrial Develop. Financing Authority -Local Emergency Planning Committee -Traffic Study Committee -Industrial Development Commission Town School Director Town Town Town Director of Canton Library Moderator | | Superintendent || Public Health Planner Clerk Administrator Assessing Representative Director Finance a a Committee Executive TownCounsel -— Assistant Personnel I Town Planner Administrative Secretary Sealer of Weights| $$ and Measures Secretary Committee Veteran’s Building Police Fire Dept. of Human Zoning Maintenance Becenenl . Resource 5 tx Departament one ‘Deparimant P — — Works Department on Aging Department ——— at I Building Veteran’s Building Police Fire Buperintendent] Human Finance COA Animal Recreation | | Conservation poe . 3 A of Resource 3 7 Control “ Commission Commissioner] | Director | Superintendent Chief Chief Public Works | |Administrator| | Ditector Director Officer Director a a a Department | | Council Animal Recreation | | Conservation of Finance Control Agent 0 rganiza ionalC hart [Original embedded text, retained for comparison] Organizational Chart Town of Canton, Massachusetts 6 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts
Principal Officials
Board of Selectmen
Gerald A. Salvatori Jr., Chair
Victor D. Del Vecchio, Vice Chair
John J. Connolly, Clerk
Avril T. Elkort
Robert E. Burr Jr.
Town Administrator – William T. Friel
Finance Director – James R. Murgia
Town Accountant – Paul W. Gargano
School Superintendent – Dr. John D’Auria
School Business Administrator – Kenneth Leon
Police Chief – Kenneth N. Berkowitz
Fire Chief – Thomas J. Ronayne III
DPW Superintendent – Michael T. Trotta
Town of Canton, Massachusetts 7 Comprehensive Annual Financial ReportSource page 15
Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Canton Massachusetts For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. fad M President Wy € Go Executive Director Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report [Original embedded text, retained for comparison] Certificate of Achievement for Excellence in Financial Reporting Town of Canton, Massachusetts 8 Comprehensive Annual Financial Report
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Financial Section
The first of two water treatment plants to be constructed by the Town is expected to be operational during fiscal
year 2010.Source page 17
Financial Section Independent Auditors’ Report To the Honorable Board of Selectmen Town of Canton, Massachusetts We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of and for the fiscal year ended June 30, 2009, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Canton, Massachusetts' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 16, 2009, on our consideration of the Town of Canton, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The combining fund statements, as listed in the table of contents, are presented for the purpose of supplementary analysis and are not a required part of the financial statements of the Town of Canton, Massachusetts. Such supplementary information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. Town of Canton, Massachusetts 9 Comprehensive Annual Financial Report
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Management’s discussion and analysis, located on the following pages, and the schedule of revenues, expenditures and changes in fund balance – general fund – budgetary basis, the retirement system’s schedule of funding progress and schedule of employer contributions, other post employment benefit plan schedule of funding progress and other post employment benefit plan actuarial methods and assumptions, located after the notes to the financial statements, are not a required part of the basic financial statements but are supplementary information required by accounting principals generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. October 16, 2009 Town of Canton, Massachusetts 10 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis Town of Canton, Massachusetts 11 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis As management of the Town of Canton, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2009. This is the sixth year our financial statements have been prepared under the Governmental Accounting Standards Board Statement Number 34 – Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. We encourage readers to consider the information presented in this report. The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides guidance on how to prepare financial statements in conformity with generally accepted accounting principals (GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to establish consistent reporting standards for all governments in the United States. This consistent application is the only way users (including citizens, the media, legislators and others) can assess the financial condition of one government compared to others. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Canton’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to private-sector business. The statement of net assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, education, public works, human services, culture and recreation, and interest expenditures. The business-type activities include the water, sewer and skating rink activities. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Town of Canton, Massachusetts 12 Comprehensive Annual Financial Report
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Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Canton adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town maintains two types of propriety funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water, sewer and skating rink activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among various functions. The Town uses internal service funds to account for health claims, workers’ compensation, unemployment claims and building insurance activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government- wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Town of Canton, Massachusetts 13 Comprehensive Annual Financial Report
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Government-wide Financial Analysis Governmental Activities As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For governmental activities, assets exceeded liabilities by $80.9 million at the close of fiscal year 2009. The overall financial condition of the Town’s governmental activities remained the same during fiscal year 2009. Governmental net assets of $54.9 million (68%), reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in its capital assets is reported net of its related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the net assets $8.8 million (11%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets $17.2 million, (21%) may be used to meet the government’s ongoing obligations to citizens and creditors. The governmental net assets decreased by $36,000 during the current fiscal year which is primarily due to a combination of factors. Net assets increased due to $3.3 million in capital grants mainly received from the Massachusetts School Building Authority (MSBA) for its share of the new high school. Net assets decreased due to the implementation of GASB Statement #45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Town currently funds the postemployment benefits on a pay-as-you-go basis which is lower than the annual required contribution. A liability and additional expense of $3.0 million has been recorded during fiscal year 2009. The governmental expenses totaled $80.4 million of which $22.4 million (28%) was directly supported by program revenues. General revenues and transfers totaled $57.9 million, primarily coming from property taxes, motor vehicle excise, non-restricted state aid and other miscellaneous charges. Condensed financial data for fiscal years 2009 and 2008 is presented below. Town of Canton, Massachusetts 14 Comprehensive Annual Financial Report
Source page 23
Balance at Balance at
June 30, June 30,
2009 2008
Assets:
Current assets……………………………………… $ 39,573,940 $ 35,034,017
Noncurrent assets (excluding capital)…………… 4,676,268 9,610,280
Capital assets………………………………………… 102,295,481 98,668,035
Total assets……………………………………… 146,545,689 143,312,332
Liabilities:
Current liabilities (excluding debt)………………… 8,480,938 8,035,765
Noncurrent liabilities (excluding debt)……………… 4,165,321 1,228,354
Current debt………………………………………… 8,898,750 8,605,020
Noncurrent debt……………………………………… 44,058,295 44,465,045
Total liabilities…………………………………… 65,603,304 62,334,184
Net Assets:
Capital assets net of related debt………………… 54,948,512 51,291,396
Restricted…………………………………………… 8,844,047 4,432,975
Unrestricted…………………………………………… 17,149,826 25,253,777
Total net assets………………………………… $ 80,942,385 $ 80,978,148
Town of Canton, Massachusetts 15 Comprehensive Annual Financial ReportSource page 24
Year Ended Year Ended
June 30, June 30,
2009 2008
Program revenues:
Charges for services………………………………… $ 4,732,432 $ 5,322,763
Operating grants and contributions………………… 14,389,625 13,251,876
Capital grants and contributions…………………… 3,291,089 2,251,419
Total program revenues……………………… 22,413,146 20,826,058
General Revenues:
Real estate and personal property taxes………… 49,643,467 46,074,751
Tax liens……………………………………………… 186,291 204,174
Motor vehicle excise taxes………………………… 3,170,275 3,622,335
Penalties and interest on taxes…………………… 246,950 188,163
Payments in lieu of taxes…………………………… 194,559 191,827
Nonrestricted grants and contributions…………… 2,727,082 2,974,443
Unrestricted investment income…………………… 488,112 909,900
Miscellaneous revenues…………………………… 245,317 189,784
Total general revenues………………………… 56,902,053 54,355,377
Total revenues………………………………… 79,315,199 75,181,435
Expenses:
General government………………………………… 6,292,728 5,142,280
Public safety………………………………………… 13,435,861 12,501,298
Education…………………………………………… 50,203,533 45,669,483
Public works………………………………………… 4,868,008 5,002,096
Human services……………………………………… 941,217 810,319
Culture and recreation……………………………… 2,623,016 2,498,364
Interest………………………………………………… 1,996,528 2,105,670
Total expenses………………………………… 80,360,891 73,729,510
Excess before transfers……………………………… (1,045,692) 1,451,925
Transfers………………………………………………… 1,009,929 969,101
Change in net assets………………………………… $ (35,763) $ 2,421,026
Town of Canton, Massachusetts 16 Comprehensive Annual Financial ReportSource page 25
Business-type Activities
The Town’s business-type activities include water, sewer and skating rink services. They are self-supporting and
each fund maintained their financial condition in fiscal year 2009.
Business-type water net assets of $7.9 million (85%) represent the investment in capital assets while $1.4 million
(15%) is unrestricted. Net assets decreased by $407 thousand which is the result of a $74 thousand
postemployment liability being recorded along with an increase in MWRA assessments not fully offset by higher
rates.
Business-type sewer net assets of $6.4 million (71%) represent the investment in capital assets while $2.6 million
(29%) is unrestricted. Net assets decreased by $24 thousand which is the result of a $31 thousand
postemployment liability being recorded.
Business-type rink net assets of $191 thousand (79%) represent the investment in capital assets while $50
thousand (21%) is unrestricted. Net assets decreased by $52 thousand on revenues of $391 thousand. The
decrease is substantially equal to the indirect costs charged to by the general fund.
At the end of the current fiscal year, the business-type activities were able to report positive balances in all
categories of net assets. The same situation held true for the prior fiscal year.
Condensed financial data for fiscal years 2009 and 2008 is presented below.
Balance at Balance at
June 30, June 30,
2009 2008
Assets:
Current assets……………………………………… $ 5,710,567 $ 8,595,910
Noncurrent assets (excluding capital)…………… 45,414 38,895
Capital assets………………………………………… 28,693,221 24,553,886
Total assets……………………………………… 34,449,202 33,188,691
Liabilities:
Current liabilities (excluding debt)………………… 410,734 411,260
Noncurrent liabilities (excluding debt)……………… 205,000 80,000
Current debt………………………………………… 4,782,223 4,890,420
Noncurrent debt……………………………………… 10,491,745 8,765,035
Total liabilities…………………………………… 15,889,702 14,146,715
Net Assets:
Capital assets net of related debt………………… 14,483,253 13,948,369
Unrestricted…………………………………………… 4,076,247 5,093,607
Total net assets………………………………… $ 18,559,500 $ 19,041,976
Town of Canton, Massachusetts 17 Comprehensive Annual Financial ReportSource page 26
Year Ended Year Ended
June 30, June 30,
2009 2008
Program revenues:
Charges for services - Water……………………… $ 4,727,025 $ 5,148,323
Charges for services - Sewer……………………… 4,747,421 5,159,490
Charges for services - Rink………………………… 391,991 356,953
Capital grants and contributions…………………… 2,362 39,941
Total revenues………………………………… 9,868,799 10,704,707
Expenses:
Water………………………………………………… 4,521,904 3,769,301
Sewer………………………………………………… 4,442,173 4,643,878
Rink…………………………………………………… 377,269 357,203
Total expenses………………………………… 9,341,346 8,770,382
Excess before transfers……………………………… 527,453 1,934,325
Transfers………………………………………………… (1,009,929) (969,101)
Change in net assets………………………………… $ (482,476) $ 965,224
Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows
and balances of spendable resources. Such information is useful in assessing financing requirements. In
particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year.
The General Fund is the chief operating fund. At the end of the current fiscal year, unreserved fund balance of
the general fund was $3.3 million, while total fund balance was $11.2 million. Reservation of Fund Balance for
Encumbrances and Continuing Appropriations totaled $800 thousand, reserved for MSBA grant funds of $7.2
million and $600 thousand was designated for amounts voted to be used in fiscal year 2010. Unreserved fund
balance represents 5% of total general fund expenditures, while total fund balance represents 17% of that same
amount. The General Fund’s fund balance increased by $5.7 million which was the result of balancing the budget
by using ($2.5) million of prior year reserves, an appropriation budget to actual surplus of $769 thousand along
with receiving $7.2 million in a MSBA capital grant for the new high school. The MSBA grant is required to be
reserved and amortized over the life of the new high school’s debt service payments.
The Roadway Improvement Fund accounts for the Town’s activity related to State funded roadway construction
projects. Temporary notes are used for cash flow purposes to fund the expenditures until the State grants are
received.
Town of Canton, Massachusetts 18 Comprehensive Annual Financial ReportSource page 27
General Fund Budgetary Highlights
The Town has adopted a budget for the General Fund. Actual revenues exceeded the budget by $7.0 million due
to the receipt of the unbudgeted MSBA grant of $7.2 million. Unexpended appropriations totaled $1.6 million of
which $800 thousand was carried forward to fiscal year 2010. The Town received $395 thousand of grant funds
from the State Fiscal Stabilization Fund which is a component of the Federal American Reinvestment and
Recovery Act (ARRA). This grant is presented as a special revenue fund which had the effect of reducing general
fund intergovernmental revenues and education expenditures by the same amount. Therefore the budget to
actual results present a revenue deficit and an equal and offsetting appropriation surplus of $395 thousand.
There were no significant changes between the original and final budget.
Capital Asset and Debt Administration
In prior fiscal years, the Town had refunded general obligation bonds by placing the proceeds in an irrevocable
trust to provide for future debt service payments. Accordingly, neither the asset nor the liability for the defeased
bonds is included in the Town’s financial statements. At June 30, 2009 a total of $5,340,000 of outstanding bonds
are considered defeased.
During fiscal year 2009, the Town issued $6,399,333 of general obligation bonds to retire maturing bond
anticipation notes and to provide permanent financing for several capital projects.
Outstanding long-term debt of governmental activities, as of June 30, 2009, totaled $48,006,045. Total debt
service expenditures on long-term governmental debt for the next five years average $5.6 million annually. The
Town had $1,751,000 in governmental bond anticipation notes (BANs) and $3,200,000 of grant anticipation notes
(GANS) outstanding at fiscal year-end.
The Water Enterprise Fund had $6,616,543 of long-term debt and $3,435,600 of BANs outstanding at year end.
The Sewer Enterprise Fund had $4,921,825 of long-term debt and $215,000 of BANs outstanding at year end.
The Ice Rink Enterprise Fund had $85,000 of long-term debt outstanding at year end.
Major capital additions and projects include the following:
• The governmental activities acquired over $7.3 million of various capital assets in FY2009.
• Business type activities include water additions of $4.5 million, sewer additions of $452 thousand and rink
additions of $85 thousand.
• Depreciation expense was $3.7 million for governmental activities and $950 for business-type activities.
Please refer to the Notes 4, 6 and 8 for further discussion of the capital asset and debt activity.
Town of Canton, Massachusetts 19 Comprehensive Annual Financial ReportSource page 28
Economic Factors and Next Year’s Budget and Rates The fiscal year 2010 general fund operating budget of $68.3 million represents a $900,000, or 1.3%, increase from the fiscal year 2009 budget. This is primarily due to a $1.0 million increase 3.4% in education expenditures. The fiscal year 2010 operating budget includes $800,000 of appropriations carried forward from fiscal year 2009. Property taxes in Massachusetts municipalities are limited to a levy growth of 2 ½% plus a factor for new construction, unless voters at an election approve an increase for operating expenses or debt service for a specific project (Proposition 2 ½). Due to the recent passage of a $4.5 million Proposition 2 ½ tax levy override, the Town calculated that the tax levy growth from fiscal year 2009 to fiscal year 2010, exclusive of debt service excluded from Proposition 2 ½, will be approximately $3.7 million or 7.8%. The Town is scheduled to receive $6.0 million in state aid in fiscal year 2010, net of school construction grants. This amount is $350,000, or 5.5%, less than received in fiscal year 2009. The Water Enterprise Fund’s rates were increased by 10% for fiscal year 2010, while the Sewer and Rink Enterprise Fund’s rates were unchanged. Requests for Information This financial report is designed to provide a general overview of the Town of Canton’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 801 Washington Street, Canton, Massachusetts 02021. Town of Canton, Massachusetts 20 Comprehensive Annual Financial Report
Source page 29
Basic Financial Statements Town of Canton, Massachusetts 21 Comprehensive Annual Financial Report
Source page 30
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Source page 31
STATEMENT OF NET ASSETS
JUNE 30, 2009
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
CURRENT:
Cash and cash equivalents……………………………… $ 30,109,174 $ 3,351,789 $ 33,460,963
Investments………………………………………………… 2,115,869 - 2,115,869
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes…………… 588,153 - 588,153
Tax liens………………………………………………… 774,417 31,653 806,070
Motor vehicle excise taxes…………………………… 171,484 - 171,484
User fees………………………………………………… - 2,322,339 2,322,339
Departmental and other………………………………… 214,255 - 214,255
Special assessments…………………………………… - 12,193 12,193
Intergovernmental……………………………………… 3,852,742 - 3,852,742
Tax foreclosures…………………………………………… 187,709 - 187,709
Internal balances…………………………………………… 36,200 (36,200) -
Working capital deposit…………………………………… 1,465,400 - 1,465,400
Other assets………………………………………………… 15,231 - 15,231
Deferred loss on refunding………………………………… 43,306 28,793 72,099
Total current assets………………………………………… 39,573,940 5,710,567 45,284,507
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Intergovernmental……………………………………… 4,396,135 - 4,396,135
Special assessments…………………………………… - 5,986 5,986
Internal balances…………………………………………… 108,600 (108,600) -
Deferred loss on refunding………………………………… 171,533 148,028 319,561
Capital assets:
Nondepreciable………………………………………… 12,959,129 8,209,849 21,168,978
Depreciable……………………………………………… 89,336,352 20,483,372 109,819,724
Total noncurrent assets…………………………………… 106,971,749 28,738,635 135,710,384
TOTAL ASSETS……………………………………………… 146,545,689 34,449,202 180,994,891
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 2,058,961 178,532 2,237,493
Accrued payroll…………………………………………… 2,574,410 35,557 2,609,967
Health claims payable……………………………………… 1,220,000 - 1,220,000
Tax refunds payable……………………………………… 823,000 - 823,000
Accrued interest…………………………………………… 491,685 94,645 586,330
Other liabilities……………………………………………… 285,134 - 285,134
Capital lease obligations…………………………………… 18,667 - 18,667
Landfill closure……………………………………………… 78,000 - 78,000
Compensated absences…………………………………… 786,000 102,000 888,000
Workers' compensation…………………………………… 95,000 - 95,000
Unamortized premium on bonds payable……………… 50,081 - 50,081
Bonds and notes payable………………………………… 8,898,750 4,782,223 13,680,973
Total current liabilities……………………………………… 17,379,688 5,192,957 22,572,645
NONCURRENT:
Capital lease obligations…………………………………… 41,097 - 41,097
Landfill closure……………………………………………… 283,000 - 283,000
Compensated absences…………………………………… 443,000 84,000 527,000
Workers' compensation…………………………………… 20,000 - 20,000
Unamortized premium on bonds payable……………… 361,224 - 361,224
Other post employment benefits………………………… 3,017,000 121,000 3,138,000
Bonds and notes payable………………………………… 44,058,295 10,491,745 54,550,040
Total noncurrent liabilities………………………………… 48,223,616 10,696,745 58,920,361
TOTAL LIABILITIES…………………………………………… 65,603,304 15,889,702 81,493,006
NET ASSETS
Invested in capital assets, net of related debt……………… 54,948,512 14,483,253 69,431,765
Restricted for:
Permanent funds:
Expendable……….…………………………………… 458,558 - 458,558
Nonexpendable………………………………………… 338,785 - 338,785
Grants and gifts…………………………………………… 879,375 - 879,375
MSBA Grant………………………………………………… 7,167,329 - 7,167,329
Unrestricted…………………………………………………… 17,149,826 4,076,247 21,226,073
TOTAL NET ASSETS………………………………………… $ 80,942,385 $ 18,559,500 $ 99,501,885
See notes to basic financial statements.
Town of Canton, Massachusetts 23 Comprehensive Annual Financial ReportSource page 32
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2009
Program Revenues
Operating Capital
Charges for Grants and Grants and Net (Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental Activities:
General government…………………… $ 6,292,728 $ 400,721 $ 74,165 $ - $ (5,817,842)
Public safety……………………………… 13,435,861 1,867,319 363,060 - (11,205,482)
Education………………………………… 50,203,533 1,975,650 13,727,753 2,716,632 (31,783,498)
Public works……………………………… 4,868,008 69,082 17,600 574,457 (4,206,869)
Human services………………………… 941,217 42,354 90,315 - (808,548)
Culture and recreation…………………… 2,623,016 377,306 27,923 - (2,217,787)
Interest…………………………………… 1,996,528 - 88,809 - (1,907,719)
Total Governmental Activities………… 80,360,891 4,732,432 14,389,625 3,291,089 (57,947,745)
Business-Type Activities:
Water……………………………………… 4,521,904 4,727,025 - - 205,121
Sewer……………………………………… 4,442,173 4,747,421 - 2,362 307,610
Rink……………………………………….… 377,269 391,991 - - 14,722
Total Business-Type Activities………… 9,341,346 9,866,437 - 2,362 527,453
Total Primary Government…………… $ 89,702,237 $ 14,598,869 $ 14,389,625 $ 3,293,451 $ (57,420,292)
See notes to basic financial statements. (Continued)
Town of Canton, Massachusetts 24 Comprehensive Annual Financial ReportSource page 33
STATEMENT OF ACTIVITIES (Continued)
FISCAL YEAR ENDED JUNE 30, 2009
Primary Government
Governmental Business-Type
Activities Activities Total
Changes in net assets:
Net (expense) revenue from previous page…………… $ (57,947,745) $ 527,453 $ (57,420,292)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable………………………… 49,643,467 - 49,643,467
Tax liens……………………………………………… 186,291 - 186,291
Motor vehicle excise taxes…………………………… 3,170,275 - 3,170,275
Penalties and interest on taxes……………………… 246,950 - 246,950
Payments in lieu of taxes…………………………… 194,559 - 194,559
Grants and contributions not restricted to
specific programs…………………………………… 2,727,082 - 2,727,082
Unrestricted investment income…………………… 488,112 - 488,112
Miscellaneous………………………………………… 245,317 - 245,317
Transfers, net …………………………………………… 1,009,929 (1,009,929) -
Total general revenues and transfers………………… 57,911,982 (1,009,929) 56,902,053
Change in net assets……………………………… (35,763) (482,476) (518,239)
Net Assets:
Beginning of year……………………………………… 80,978,148 19,041,976 100,020,124
End of year…………………………………………… $ 80,942,385 $ 18,559,500 $ 99,501,885
(Concluded)
Town of Canton, Massachusetts 25 Comprehensive Annual Financial ReportSource page 34
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2009
Nonmajor Total
Roadway Governmental Governmental
ASSETS General Improvements Funds Funds
Cash and cash equivalents…………………………………$ 15,241,402 $ 153,122 $ 10,374,605 $ 25,769,129
Investments………………………………………………… - - 1,768,002 1,768,002
Receivables, net of uncollectibles:
Real estate and personal property taxes……………… 588,153 - - 588,153
Tax liens………………………………………………… 774,417 - - 774,417
Motor vehicle excise taxes……………………………… 171,484 - - 171,484
Departmental and other………………………………… - - 214,255 214,255
Intergovernmental……………………………………… 4,791,241 3,457,636 - 8,248,877
Tax foreclosures…………………………………………… 187,709 - - 187,709
Due from other funds……………………………………… - - 144,800 144,800
Other assets………………………………………………… 15,231 - - 15,231
TOTAL ASSETS…………………………………………… $ 21,769,637 $ 3,610,758 $ 12,501,662 $ 37,882,057
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable…………………………………………$ 817,488 $ 70,617 $ 345,031 $ 1,233,136
Accrued payroll…………………………………………… 2,386,644 143 187,623 2,574,410
Tax refunds payable…………………………………… 823,000 - - 823,000
Other liabilities…………………………………………… 273,387 - 11,747 285,134
Deferred revenues……………………………………… 6,219,633 339,998 214,255 6,773,886
Notes payable…………………………………………… - 3,200,000 1,751,000 4,951,000
TOTAL LIABILITIES………………………………………… 10,520,152 3,610,758 2,509,656 16,640,566
FUND BALANCES:
Reserved for:
Encumbrances and continuing appropriations…… 800,001 - - 800,001
Perpetual permanent funds………………………… - - 338,785 338,785
MSBA Grant………………………………………… 7,167,329 - - 7,167,329
Unreserved:
Designated for subsequent year's expenditures… 600,000 - - 600,000
Undesignated, reported in:
General fund……………………………………… 2,682,155 - - 2,682,155
Special revenue funds…………………………… - - 9,870,598 9,870,598
Capital projects funds…………………………… - - (675,935) (675,935)
Permanent funds………………………………… - - 458,558 458,558
TOTAL FUND BALANCES………………………………… 11,249,485 - 9,992,006 21,241,491
TOTAL LIABILITIES AND FUND BALANCES……………$ 21,769,637 $ 3,610,758 $ 12,501,662 $ 37,882,057
See notes to basic financial statements.
Town of Canton, Massachusetts 26 Comprehensive Annual Financial ReportSource page 35
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2009
Total governmental fund balances……………………………………………………………………… $ 21,241,491
Capital assets (net) used in governmental activities are not financial resources
and, therefore, are not reported in the funds…………………………………………………… 102,295,481
Accounts receivable are not available to pay for current-period
expenditures and, therefore, are deferred in the funds………………………………………… 6,773,886
Internal service funds are used by management to account for health insurance,
municipal insurance, workers' compensation, and unemployment activities.
The assets and liabilities of the internal service funds are included in
the governmental activities in the statement of net assets……………………………… 4,067,487
In the statement of net assets, interest is accrued on outstanding long-term debt,
whereas in governmental funds interest is not reported until due…………………………… (491,685)
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported in the governmental funds
Bonds and notes payable……………………………………………………………………… (48,006,045)
Landfill closure…………………………………………………………………………………… (361,000)
Capital leases…………………………………………………………………………………… (59,764)
Unamortized premium on bonds payable……………………………………………………… (411,305)
Workers compensation………………………………………………………………………… (75,000)
Other post employment benefits……………………………………………………………… (3,017,000)
Compensated absences………………………………………………………………………… (1,229,000)
Net effect of reporting long-term liabilities……………………………………………… (53,159,114)
In the statement of net assets, deferred losses are reported for refundings of
debt, which are amortized over the shorter of the remaining life of the
refunding bonds or refunded bonds. In governmental funds, defeasances
of debt are expensed when the refunding bonds are issued…………………………………… 214,839
Net assets of governmental activities………………………………………………………………… $ 80,942,385
See notes to basic financial statements.
Town of Canton, Massachusetts 27 Comprehensive Annual Financial ReportSource page 36
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2009
Nonmajor Total
Roadway Governmental Governmental
General Improvements Funds Funds
REVENUES:
Real estate and personal property taxes,
net of tax refunds……………………………………… $ 49,516,225 $ - $ - $ 49,516,225
Tax liens…………………………………………………… 187,083 - - 187,083
Motor vehicle excise taxes……………………………… 3,515,812 - - 3,515,812
Charges for services……………………………………… - - 1,552,111 1,552,111
Penalties and interest on taxes………………………… 246,950 - - 246,950
Payments in lieu of taxes………………………………… 194,559 - - 194,559
Licenses and permits……………………………………… 452,758 - - 452,758
Fines and forfeitures……………………………………… 149,867 - 16,124 165,991
Intergovernmental………………………………………… 14,428,342 3,302,779 2,854,884 20,586,005
MSBA Capital Grant……………………………………… 7,167,329 - - 7,167,329
Departmental and other…………………………………… 490,945 - 2,336,525 2,827,470
Contributions……………………………………………… - 1,000 255,730 256,730
Investment income………………………………………… 322,535 - 106,914 429,449
TOTAL REVENUES……………………………… 76,672,405 3,303,779 7,122,288 87,098,472
EXPENDITURES:
Current:
General government…………………………………… 3,408,657 - 1,362,460 4,771,117
Public safety…………………………………………… 8,447,207 - 1,324,576 9,771,783
Education……………………………………………… 29,148,044 - 6,170,774 35,318,818
Public works…………………………………………… 4,272,695 3,303,779 592,182 8,168,656
Human services………………………………………… 631,066 - 66,155 697,221
Culture and recreation………………………………… 1,402,038 - 504,076 1,906,114
Pension benefits……………………………………… 9,901,744 - - 9,901,744
Employee benefits……………………………………… 8,482,345 - - 8,482,345
State and county charges………………………………… 924,550 - - 924,550
Debt service:
Principal………………………………………………… 3,929,020 - - 3,929,020
Interest………………………………………………… 2,010,966 - - 2,010,966
TOTAL EXPENDITURES………………………… 72,558,332 3,303,779 10,020,223 85,882,334
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES……………………… 4,114,073 - (2,897,935) 1,216,138
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes…………………………… - - 3,541,000 3,541,000
Premium from issuance of debt………………………… 27,067 - 58,795 85,862
Capital lease financing…………………………………… - - 82,362 82,362
Transfers in………………………………………………… 2,111,433 - 617,000 2,728,433
Transfers out……………………………………………… (542,000) - (1,176,504) (1,718,504)
TOTAL OTHER FINANCING
SOURCES (USES)…………………………… 1,596,500 - 3,122,653 4,719,153
NET CHANGE IN FUND BALANCES……………………… 5,710,573 - 224,718 5,935,291
FUND BALANCES AT BEGINNING OF YEAR…………… 5,538,912 - 9,767,288 15,306,200
FUND BALANCES AT END OF YEAR…………………… $ 11,249,485 $ - $ 9,992,006 $ 21,241,491
See notes to basic financial statements.
Town of Canton, Massachusetts 28 Comprehensive Annual Financial ReportSource page 37
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, 2009
Net change in fund balances - total governmental funds…………………………………………………………. $ 5,935,291
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
Capital outlay…………………………………………………………………………………………………… 7,296,078
Depreciation expense………………………………………………………………………………………… (3,668,632)
Net effect of reporting capital assets………………………………………………………………… 3,627,446
Revenues in the Statement of Activities that do not provide current financial
resources are fully deferred in the Statement of Revenues, Expenditures and
Changes in Fund Balances. Therefore, the recognition of revenue for various
types of accounts receivable (i.e., real estate and personal property, motor
vehicle excise, etc.) differ between the two statements. This amount represents
the net change in deferred revenue…………………………………………………………………………… (7,927,798)
The issuance of long-term debt (e.g., bonds and leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-
term debt consumes the financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of premiums, discounts, and similar items when debt is
first issued, whereas these amounts are deferred and amortized in the
Statement of Activities.
Issuance of bonds and notes………………………………………………………………………………… (3,541,000)
Debt service principal payments……………………………………………………………………………… 3,929,020
Amortization of bond premiums……………………………………………………………………………… 52,095
Amortization of deferred charge on refunding……………………………………………………………… (43,849)
Net effect of reporting long-term debt………………………………………………………………… 336,502
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Net change in compensated absences accrual……………………………………………………………… (68,000)
Net change in accrued interest on long-term debt………………………………………………………… 6,192
Net change in worker's compensation accrual……………………………………………………………… 100,000
Other post employment benefits……………………………………………………………………………… (3,017,000)
Net change in landfill accrual………………………………………………………………………………… 32,000
Net effect of recording long-term liabilities and amortizing deferred losses………………….. (2,946,808)
Internal service funds are used by management to account for health
insurance and workers' compensation activities.
The net activity of internal service funds is reported with Governmental Activities…………………… 939,604
Change in net assets of governmental activities……………………………………………………………………… $ (35,763)
See notes to basic financial statements.
Town of Canton, Massachusetts 29 Comprehensive Annual Financial ReportSource page 38
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2009
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
ASSETS
CURRENT:
Cash and cash equivalents……………………………$ 1,553,730 $ 1,714,769 $ 83,290 $ 3,351,789 $ 4,340,045
Investments…………………………………………… - - - - 347,867
Receivables, net of allowance for uncollectibles:
Tax liens……………………………………………… 15,057 16,596 - 31,653 -
User fees…………………………………………… 1,190,145 1,131,454 740 2,322,339 -
Special assessments……………………………… - 12,193 - 12,193 -
Working capital deposit……………………………… - - - - 1,465,400
Deferred loss on refunding…………………………… 3,581 25,212 - 28,793 -
Total current assets……………………………… 2,762,513 2,900,224 84,030 5,746,767 6,153,312
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Special assessments……………………………… - 5,986 - 5,986 -
Deferred loss on refunding…………………………… 18,028 130,000 - 148,028 -
Capital assets:
Nondepreciable……………………………………… 7,257,936 951,913 - 8,209,849 -
Depreciable………………………………………… 9,927,680 10,279,241 276,451 20,483,372 -
Total noncurrent assets………………………… 17,203,644 11,367,140 276,451 28,847,235 -
TOTAL ASSETS………………………………………… 19,966,157 14,267,364 360,481 34,594,002 6,153,312
LIABILITIES
CURRENT:
Warrants payable……………………………………… 161,514 10,353 6,665 178,532 825,825
Accrued payroll………………………………………… 24,411 8,809 2,337 35,557 -
Due to other funds…………………………………… 36,200 - - 36,200 -
Health claims payable………………………………… - - - - 1,220,000
Accrued interest……………………………………… 67,640 26,721 284 94,645 -
Compensated absences……………………………… 73,000 21,000 8,000 102,000 -
Workers' compensation……………………………… - - - - 20,000
Bonds and notes payable…………………………… 4,078,428 690,795 13,000 4,782,223 -
Total current liabilities…………………………… 4,441,193 757,678 30,286 5,229,157 2,065,825
NONCURRENT:
Due to other funds…………………………………… 108,600 - - 108,600 -
Compensated absences……………………………… 67,000 16,000 1,000 84,000 -
Workers' compensation……………………………… - - - - 20,000
Other post employment benefits…………………… 74,000 31,000 16,000 121,000 -
Bonds and notes payable…………………………… 5,973,715 4,446,030 72,000 10,491,745 -
Total noncurrent liabilities……………………… 6,223,315 4,493,030 89,000 10,805,345 20,000
TOTAL LIABILITIES……………………………………… 10,664,508 5,250,708 119,286 16,034,502 2,085,825
NET ASSETS
Invested in capital assets, net of related debt………… 7,869,473 6,422,329 191,451 14,483,253 -
Unrestricted……………………………………………… 1,432,176 2,594,327 49,744 4,076,247 4,067,487
TOTAL NET ASSETS……………………………………$ 9,301,649 $ 9,016,656 $ 241,195 $ 18,559,500 $ 4,067,487
See notes to basic financial statements.
Town of Canton, Massachusetts 30 Comprehensive Annual Financial ReportSource page 39
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2009
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
OPERATING REVENUES:
Employee contributions ……………………………………$ - $ - $ - $ - $ 2,664,332
Contributions……………………………………………… - - - - 7,996,943
Charges for services ……………………………………… 4,640,729 4,699,138 391,202 9,731,069 -
Other………………………………………………………… - - - - 305,335
TOTAL OPERATING REVENUES …………………… 4,640,729 4,699,138 391,202 9,731,069 10,966,610
OPERATING EXPENSES:
Cost of services and administration ……………………… 1,518,125 498,607 357,097 2,373,829 -
MWRA Assessment……………………………………… 2,274,995 3,242,180 - 5,517,175 -
Depreciation………………………………………………… 453,428 475,908 19,888 949,224 -
Employee benefits ………………………………………… - - - - 10,082,048
TOTAL OPERATING EXPENSES …………………… 4,246,548 4,216,695 376,985 8,840,228 10,085,669
OPERATING INCOME (LOSS)………………………… 394,181 482,443 14,217 890,841 880,941
NONOPERATING REVENUES (EXPENSES):
Investment income………………………………………… 41,249 31,841 308 73,398 58,663
Interest expense…………………………………………… (275,356) (225,478) (284) (501,118) -
Premium from issuance of bonds and notes…………… - 2,362 481 2,843 -
Other revenues…………………………………………… 45,047 16,442 - 61,489 -
TOTAL NONOPERATING REVENUES,
(EXPENSES), NET………………………………… (189,060) (174,833) 505 (363,388) 58,663
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS……………… 205,121 307,610 14,722 527,453 939,604
TRANSFERS:
Transfers out……………………………………………… (611,648) (331,825) (66,456) (1,009,929) -
CHANGE IN NET ASSETS…………………………… (406,527) (24,215) (51,734) (482,476) 939,604
NET ASSETS AT BEGINNING OF YEAR………………… 9,708,176 9,040,871 292,929 19,041,976 3,127,883
NET ASSETS AT END OF YEAR………………………… $ 9,301,649 $ 9,016,656 $ 241,195 $ 18,559,500 $ 4,067,487
See notes to basic financial statements.
Town of Canton, Massachusetts 31 Comprehensive Annual Financial ReportSource page 40
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30, 2009
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users…………………………………………… $ 4,764,829 $ 4,737,070 $ 391,202 $ 9,893,101 $ -
Receipts from interfund services provided……………………………………… - - - - 10,966,610
Receipts from other revenues…………………………………………………… 45,047 16,442 - 61,489 -
Payments to vendors……………………………………………………………… (2,837,235) (3,413,955) (161,471) (6,412,661) (3,621)
Payments to employees………………………………………………………… (830,138) (350,034) (178,199) (1,358,371) -
Payments for interfund services used…………………………………………… - - - - (10,031,964)
NET CASH FROM OPERATING ACTIVITIES…………………………………… 1,142,503 989,523 51,532 2,183,558 931,025
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out……………………………………………………………………… (611,648) (331,825) (66,456) (1,009,929) -
Advances to other funds………………………………………………………… (36,200) - - (36,200) -
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………… (647,848) (331,825) (66,456) (1,046,129) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes……………………………… 5,943,933 480,000 85,000 6,508,933 -
Premium from the issuance of bonds and notes……………………………… - 2,362 481 2,843 -
Acquisition and construction of capital assets………………………………… (4,552,760) (451,003) (84,796) (5,088,559) -
Principal payments on bonds and notes………………………………………… (4,138,605) (751,815) - (4,890,420) -
Interest expense…………………………………………………………………… (266,546) (200,921) - (467,467) -
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… (3,013,978) (921,377) 685 (3,934,670) -
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of investments………………………………………………… - - - - (15,471)
Investment income………………………………………………………………… 41,249 31,841 308 73,398 58,663
NET CASH FROM INVESTING ACTIVITIES……………………………………… 41,249 31,841 308 73,398 43,192
NET CHANGE IN CASH AND CASH EQUIVALENTS…………………………… (2,478,074) (231,838) (13,931) (2,723,843) 974,217
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR…… 4,031,804 1,946,607 97,221 6,075,632 3,365,828
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR………………$ 1,553,730 $ 1,714,769 $ 83,290 $ 3,351,789 $ 4,340,045
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)………………………………………………………… $ 394,181 $ 482,443 $ 14,217 $ 890,841 $ 880,941
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation…………………………………………………………………… 453,428 475,908 19,888 949,224 -
Other revenues………………………………………………………………… 45,047 16,442 - 61,489 -
Changes in assets and liabilities:
Water and sewer liens…………………………………………………… 6,496 8,505 - 15,001 -
User fees…………………………………………………………………… 117,604 19,022 - 136,626 -
Special assessments……………………………………………………… - 10,405 - 10,405 -
Working capital deposit…………………………………………………… - - - - (3,800)
Warrants payable…………………………………………………………… 34,725 (59,673) (285) (25,233) 55,886
Accrued payroll…………………………………………………………… 6,022 471 (288) 6,205 (1,002)
Health claims payable……………………………………………………… - - - - (1,000)
Other post employment benefits………………………………………… 74,000 31,000 16,000 121,000 -
Accrued compensated absences………………………………………… 11,000 5,000 2,000 18,000 -
Total adjustments……………………………………………………… 748,322 507,080 37,315 1,292,717 50,084
NET CASH FROM OPERATING ACTIVITIES…………………………………… $ 1,142,503 $ 989,523 $ 51,532 $ 2,183,558 $ 931,025
See notes to basic financial statements.
Town of Canton, Massachusetts 32 Comprehensive Annual Financial Report