Canton, Massachusetts · Saved source text
2014 Comprehensive Annual Financial Report (PDF)
Saved text from 129 source pages. Transcription and OCR may contain errors; verify figures and wording against the original. Retrieved 2026-10-15.
Source page 43
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 44
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 45
Basic Financial Statements Town of Canton, Massachusetts Page 35 of 119 Comprehensive Annual Financial Report
Source page 46
This page intentionally left blank. Town of Canton, Massachusetts Page 36 of 119 Comprehensive Annual Financial Report
Source page 47
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 48
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 49
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 50
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 51
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 52
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 53
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 54
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 55
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 56
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 57
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 58
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 59
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 60
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 61
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 ReportSource page 62
Capital Assets – Capital assets, which include land, land improvements, buildings and
improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer
mains, and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded
at the estimated fair market value at the date of donation. Interest incurred during the
construction phase of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
All purchases and construction costs in excess of $25,000 are capitalized at the date of acquisition
or construction, respectively, with expected lives of greater than one year. The costs of normal
maintenance and repairs that do not add to the value of the asset or materially extend assets lives
are not capitalized.
Capital assets (excluding land and construction-in-process) are depreciated by the Town on a
straight-line-basis over the following estimated useful lives:
Land improvements 20-50 years
Buildings and improvements 20-50 years
Machinery and equipment 3-20 years
Vehicles 5 years
Infrastructure 40-50 years
Interfund Balances – Activity between funds that are representative of lending arrangements
outstanding at the end of the fiscal year are referred to as either due to/from other funds or
advances to/from other funds. All other outstanding balances between funds are reported as due
to/from other funds.
Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as internal balances.
Interfund Transfers – During the course of its operations, resources are permanently reallocated
between and within funds. These transactions are reported as transfers in and transfers out in the
individual fund statements. Transfers between and within governmental and fiduciary funds are
eliminated from the governmental activities in the statement of activities. Any residual balances
outstanding between the governmental activities and the business–type activities are reported in
the statement of activities as transfers, net.
Investment Income – Excluding the permanent funds, investment income derived from major and
nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by
state law. Investment income of the proprietary funds is voluntarily assigned to the general fund.
Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but
unused vacation and sick-pay benefits. Compensated absence liabilities related to both
governmental and business-type activities are normally paid from the funds reporting payroll and
related expenditures. Amounts related to these benefits are accrued when incurred in the
government-wide and proprietary fund financial statements. A liability for these amounts is
reported in Governmental Funds only if they have matured.
Town of Canton, Massachusetts Page 52 of 119 Comprehensive Annual Financial ReportSource page 63
Long-term Obligations – Long-term debt is reported as liabilities in the government-wide and
proprietary fund statement of net position. Bond premiums and discounts are amortized over the
life of the bonds using the effective interest method. Bond anticipation notes payable are reported
net of the applicable bond premium or discount.
In the governmental fund financial statements, the face amount of long-term debt issued is
reported as other financing sources. Premiums received on a debt issuance are reported as other
financing sources while discounts are reported as other financing uses. Issuance costs are
exclusively reported as general government expenditures regardless of whether they are withheld
from the actual proceeds.
Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position
will sometimes report a separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The government only has one item that qualifies for reporting
in this category. It is the prepaid expenses reported in the government-wide statement of net
position and governmental funds balance sheet.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. The Town has only
one type of item, which arises only under a modified accrual basis of accounting, which qualifies
for reporting in this category. Accordingly, the item unavailable revenue is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from
four sources: property taxes, excise taxes, Massachusetts School Building Authority grants and
other. These amounts are deferred and recognized as an inflow of resources in the period that the
amounts become available.
Net Position – In the government-wide financial statements, net position reported as “net
investment in capital assets” includes capital assets, net of accumulated depreciation, less the
principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital
related debt are not considered to be capital related debt.
Net position is reported as restricted when amounts are not available for appropriation or are
legally restricted by outside parties for a specific use. Net position has been restricted for the
following:
Nonexpendable permanent funds represent the endowment portion of donor restricted trusts
that support governmental programs.
Federal and State grants represent assets that have restrictions placed on them from federal
and state granting agencies.
Massachusetts School Building Authority grant represents a capital grant to fund a portion of
the debt service on outstanding school construction debt that will be amortized over the life of
the bonds in accordance with state law.
Other purposes represent assets that are restricted by donors for specific governmental
programs and uses.
Town of Canton, Massachusetts Page 53 of 119 Comprehensive Annual Financial ReportSource page 64
Fund Equity – In the fund financial statements, fund balance for governmental funds is reported
in classifications that comprise a hierarchy based primarily on the extent in which the Town is
required to honor constraints on the specific purpose for which amounts in the funds can be spent.
Fund balance is reported in five components – non-spendable, restricted, committed, assigned,
and unassigned as described below:
Non-spendable represents amounts that cannot be spent because they are either (a) not in
spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be
maintained intact such as the corpus of an endowment.
Restricted represents amounts that have constraints placed either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law
through constitutional provisions or enabling legislation. Enabling legislation authorizes the
Town to assess, levy, charge or otherwise mandate payment of resources (from external
resource providers) and includes a legally enforceable requirement (compelled by external
parties) that those resources be used only for the specific purposes stipulated in the
legislation.
Committed represents amounts that can only be used for specific purposes pursuant to
formal action of the Town Meeting through Town Meeting Articles, which represent the
most binding constraint that give rise to committed fund balance. Those committed amounts
cannot be used for any other purpose unless the Town Meeting removes or changes the
specified use by taking the same type of action (through Town Meeting Articles) it
employed previously to commit those amounts.
Assigned represents amounts that are constrained by the Town’s intent to be used for
specific purposes, but are neither restricted nor committed. The Board of Selectmen has by
ordinance authorized the Finance Director to assign fund balance. The Town Meeting may
also assign fund balance as it does when appropriating fund balance to cover a gap between
estimated revenue and appropriations in the subsequent year’s appropriated budget.
Unassigned represents amounts that have not been restricted, committed or assigned to
specific purposes within the general fund. The general fund is the only fund that reports a
positive unassigned fund balance amount. Other governmental funds besides the general
fund can only report a negative unassigned fund balance amount.
When both restricted and unrestricted resources are available for use, it is the Town’s policy to
use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as
they are needed. When unrestricted resources (committed, assigned and unassigned) are available
for use it is the Town’s policy to use committed resources first, then assigned, and then
unassigned as they are needed.
The Town has not established financial policies with respect to maintaining minimum fund
balance amounts.
Stabilization Funds – The Town maintains a general stabilization fund which may be used for any
municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals
$5,074,180 at June 30, 2014 and is reported as unassigned fund balance in the General Fund.
Town of Canton, Massachusetts Page 54 of 119 Comprehensive Annual Financial ReportSource page 65
Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify
encumbrances that arise from the issuance of purchase orders resulting from normal purchasing
activity approved by the Finance Department as assigned, and (2) classify encumbrances that
result from an action of the Town Meeting as committed. Encumbrances of funds already
restricted, or committed are included within the classification of those fund balances and not
reported separately. The Town reports $92,993 of encumbrances from normal purchasing activity
in the general fund as assigned. There are no encumbrances reported in any other fund.
The following table reflects the Town’s fund equity categorizations:
Nonmajor
Governmental
General Funds Total
Nonspendable:
Nonexpendable trust funds $ - $ 432,785 $ 432,785
Restricted:
General government - 3,131,683 3,131,683
Public safety - 2,529,579 2,529,579
Education - 2,178,108 2,178,108
Culture and recreation - 165,919 165,919
Community preservation - 476,621 476,621
Capital outlay - 2,427,694 2,427,694
Other purposes - 634,941 634,941
Committed:
General government 81,865 - 81,865
Public works 141,715 - 141,715
Other purposes 134,568 - 134,568
Assigned:
Purchase orders 92,993 - 92,993
Subsequent years' budget 801,000 - 801,000
Unassigned 9,815,657 (1,187,828) 8,627,829
$ 11,067,798 $ 10,789,502 $ 21,857,300
E. Excess of Expenditures Over Appropriations and Deficits
During fiscal year 2014, expenditures exceeded appropriations in the General Fund for state and
county assessments, which were funded from available funds.
The Town also incurred individual fund deficits totaling $1,187,828, in two special revenue funds
and two capital projects funds that are reported in the non-major governmental funds. These
deficits will be funded through grant revenues and bond proceeds during fiscal year 2015.
F. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure for contingent assets and liabilities at the date of the basic financial statements and the
Town of Canton, Massachusetts Page 55 of 119 Comprehensive Annual Financial ReportSource page 66
reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results
could vary from estimates that were used.
II. Detailed Notes to All Funds
A. Deposits and Investments
A cash and investment pool is maintained that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The
deposits and investments of trust funds are held separately from those of other funds.
State laws and regulations require the Town to invest funds only in pre-approved investment
instruments which include but are not necessarily limited to bank deposits, money markets,
certificates of deposit, U.S. obligations, repurchase agreements, and the State Treasurer’s
investment pool (the Pool). In addition, the statutes impose various limitations on the amount and
length of investments and deposits. Repurchase agreements cannot be for a period of over ninety
days, and the underlying security must be a United States obligation.
The Pool meets the criteria of an external investment pool. The Pool is administered by the
Massachusetts Municipal Depository Trust (the MMDT), which was established by the Treasurer
of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the
same as the value of the Pool shares.
Custodial Credit Risk: Deposits - In the case of deposits, this is the risk that in the event of a bank
failure, the government’s deposits may not be returned to it. The Town has adopted a policy that
no more than 25% of the Town’s cash may be comprised of unsecured bank deposits, except for a
30 day reprieve during times of heavy collections. The credit worthiness of banks will be tracked
by Veribanc, or other bank credit worthiness reporting systems, and the Treasurer will move or
collateralize deposits as a result of negative reports. At year-end, the carrying amount of the
Town's deposits was $27,656,263 and the bank balance was $28,319,663. Of the Town's bank
balance, $27,556,034 was covered by federal depository insurance or the Depositor’s Insurance
Fund; $473,186 was collateralized and the remainder was exposed to custodial credit risk because
it was uninsured and uncollateralized.
Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of
the invested party not being able to provide required payments to investors, ceasing to exist, or
filing of bankruptcy, the Town may not be able to recover the full amount of its principal
investment and/or investment earnings. The Town has adopted a policy to review the financial
institutions financial statements and the background of each advisor. All securities not held
directly by the Town will be held in the Town’s name and tax identification number by a third
party custodian and evidenced by safekeeping receipts showing individual CUSIP numbers for
each security. The investments in MMDT are not exposed to custodial credit risk as their
existence is not evidenced by securities that exist in physical or book form. The Town’s
$2,760,000 investment in a repurchase agreement is held by a counterparty, but not in the Town’s
name. The repurchase agreement is fully collateralized with U.S. government securities.
Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates. The Town’s policy limits investments
of operating funds to one year or less.
Town of Canton, Massachusetts Page 56 of 119 Comprehensive Annual Financial ReportSource page 67
Concentration of Credit Risk – The Town has adopted a policy to limit the amount of investments
that may be invested in a single issuer to 10% of the Town’s investments, except for U.S
government obligations, investments fully collateralized with U.S. government obligations and
the Pool (MMDT). At June 30, 2014, Town has 26% of its investments in repurchase agreements
collateralized with United States government backed securities and 44% in MMDT.
Credit Risk – The Town has adopted a policy to only purchase investment grade securities with a
high concentration in securities rated ‘A’ or better.
At June 30, 2014 the credit quality ratings of investments were as follows:
Corporate U.S. Government
Quality Ratings Fixed Agencies & Certificates
(Moody's) Income Treasuries of Deposit Totals
AAA $ - $ 3,739,575 $ - $ 3,739,575
AA2 51,081 - - 51,081
A2 108,500 - - 108,500
A3 275,687 - - 275,687
BAA2 53,474 - - 53,474
Not rated - - 4,434,401 4,434,401
Totals - All $ 488,742 $ 3,739,575 $ 4,434,401 $ 8,662,718
At June 30, 2014 the Town had the following investments and maturities:
Time Until Maturity (Years)
Fair Less More
Investment Type Value Than 1 1-5 6-10 Than 10
Corporate fixed income securities $ 488,742 $ - $ 488,742 $ - $ -
U.S. government obligations 3,739,575 177,914 3,486,497 75,164 -
Certificates of deposit 4,434,401 2,591,122 1,843,279 - -
Total Town investments with maturities 8,662,718 $ 2,769,036 $ 5,818,518 $ 75,164 $ -
Other Investments:
Equities $ 1,298,903
Mutual funds 1,169,605
Repurchase agreements 2,760,000
External investment pool (MMDT) 4,189,317
Total Town investments $ 18,080,543
Town of Canton, Massachusetts Page 57 of 119 Comprehensive Annual Financial ReportSource page 68
B. Receivables
Receivables as of year-end for the Town's individual major and non-major governmental funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes $ 496,947 $ (45,036) $ 451,911
Tax liens and foreclosures 1,343,188 - 1,343,188
Community preservation surcharges 3,485 - 3,485
Motor vehicle and other excise taxes 457,846 (245,158) 212,688
Ambulance fees 448,200 (187,128) 261,072
Public safety details 123,509 (6,393) 117,116
Intergovernmental 3,553,660 - 3,553,660
Total $ 6,426,835 $ (483,715) $ 5,943,120
Receivables as of year-end for Town's proprietary funds are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Water user charges $ 1,832,166 $ - $ 1,832,166
Water liens 21,026 - 21,026
Sewer user charges 1,646,307 - 1,646,307
Sewer liens 24,410 - 24,410
Rink user charges 3,197 - 3,197
Stop loss receivables 64,885 - 64,885
Total $ 3,591,991 $ - $ 3,591,991
Governmental funds report deferred inflows of resources in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period. The following
identifies the components of deferred inflows of resources in the governmental funds:
Other
General Governmental
Fund Funds Total
Receivable type:
Real estate and personal property taxes $ 210,428 $ - $ 210,428
Tax liens and foreclosures 1,341,202 1,986 1,343,188
Motor vehicle and other excise taxes 212,688 - 212,688
Community preservation surcharges - 3,485 3,485
Ambulance fees - 261,072 261,072
Public safety details - 117,116 117,116
Intergovernmental 2,860,353 - 2,860,353
Total $ 4,624,671 $ 383,659 $ 5,008,330
Town of Canton, Massachusetts Page 58 of 119 Comprehensive Annual Financial ReportSource page 69
School Building Assistance Reimbursement – As of June 30, 2014, the Town expects to receive
the balance of grants from the Commonwealth of Massachusetts under various construction
reimbursement regulations totaling approximately $3.2 million applicable to approved school
construction costs which includes both principal and interest. Approximately $2.9 million of
such costs are reimbursed to the Town in equal installments over the life of the related bond
issues and are subject to appropriation only by the State Legislature. Approximately $0.3 million
is due in a lump sum during fiscal year 2015. In the Governmental funds, a receivable of
approximately $3.2 million under the caption Intergovernmental; has been recorded. This
includes the reimbursable portion of the principal balance and the lump sum payout as of June 30,
2014.
C. Interfund Receivables, Payables and Transfers
The composition of interfund balances at June 30, 2014 is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds - $ 39,618
Roadway Improvements
The outstanding balances between funds result mainly from the timing difference between the
dates that reimbursable expenditures occur, the intergovernmental reimbursements are received
and the payments to the general fund are made.
The composition of interfund transfers for the fiscal year ended June 30, 2014 is as follows:
Transfers In
Nonmajor
General Governmental
Transfers Out Fund Funds Total
General Fund $ - $ 1,022,902 $ 1,022,902 (1)
Nonmajor Governmental Funds 1,444,745 288,468 1,733,213 (2)
Water Enterprise Fund 756,170 - 756,170 (3)
Sewer Enterprise Fund 394,399 - 394,399 (3)
Rink Enterprise Fund 82,015 - 82,015 (3)
Total $ 2,677,329 $ 1,311,370 $ 3,988,699
(1) Transfers to nonmajor governmental funds to for capital projects ($1,231,370) and
retirement buyback reserves ($80,000).
(2) Transfers to general fund to supplement operating budgets and transfers between
nonmajor governmental funds for various capital projects.
(3) Transfers to general fund for indirect costs.
Town of Canton, Massachusetts Page 59 of 119 Comprehensive Annual Financial ReportSource page 70
D. Capital Assets
Capital asset activity for governmental activities for the year ended June 30, 2014, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets not being depreciated:
Land $ 11,158,868 $ - $ - $ 11,158,868
Construction in process 474,770 530,961 - 1,005,731
Total capital assets not being depreciated 11,633,638 530,961 - 12,164,599
Capital assets being depreciated:
Land improvements 2,765,111 - - 2,765,111
Buildings 77,555,239 - - 77,555,239
Building improvements 23,679,870 825,998 - 24,505,868
Machinery and equipment 6,429,607 406,569 - 6,836,176
Vehicles 4,795,440 433,702 (131,812) 5,097,330
Infrastructure 19,131,062 442,571 - 19,573,633
Total capital assets being depreciated 134,356,329 2,108,840 (131,812) 136,333,357
Less accumulated depreciation for:
Land improvements (1,154,368) (167,343) - (1,321,711)
Buildings (21,246,639) (1,745,924) - (22,992,563)
Building improvements (9,897,988) (923,469) - (10,821,457)
Machinery and equipment (3,379,124) (240,703) - (3,619,827)
Vehicles (4,173,519) (531,428) 97,232 (4,607,715)
Infrastructure (4,243,339) (483,809) - (4,727,148)
Total accumulated depreciation (44,094,977) (4,092,676) 97,232 (48,090,421)
Total capital assets being depreciated, net 90,261,352 (1,983,836) (34,580) 88,242,936
Total governmental activities capital assets, net $ 101,894,990 $ (1,452,875) $ (34,580) $ 100,407,535
Capital asset activity for business-type activities for the year ended June 30, 2014, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Capital assets being depreciated:
Buildings 18,758,743 - - 18,758,743
Building improvements 167,425 - - 167,425
Machinery and equipment 1,447,226 886,536 - 2,333,762
Vehicles 916,240 - (35,000) 881,240
Infrastructure 53,016,890 2,181,928 - 55,198,818
Total capital assets being depreciated 74,306,524 3,068,464 (35,000) 77,339,988
Less accumulated depreciation for:
Buildings (3,025,411) (438,653) - (3,464,064)
Building improvements (62,293) (8,621) - (70,914)
Machinery and equipment (729,341) (181,433) - (910,774)
Vehicles (740,510) (59,634) 35,000 (765,144)
Infrastructure (24,384,393) (1,046,999) - (25,431,392)
Total accumulated depreciation (28,941,948) (1,735,340) 35,000 (30,642,288)
Total capital assets being depreciated, net 45,364,576 1,333,124 - 46,697,700
Total business-type activities capital assets, net $ 45,989,428 $ 1,333,124 $ - $ 47,322,552
Town of Canton, Massachusetts Page 60 of 119 Comprehensive Annual Financial ReportSource page 71
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Water
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Capital assets being depreciated:
Buildings 17,495,139 - - 17,495,139
Building improvements 27,465 - - 27,465
Machinery and equipment 924,732 508,242 - 1,432,974
Vehicles 576,364 - (35,000) 541,364
Infrastructure 24,182,780 1,292,868 - 25,475,648
Total capital assets being depreciated 43,206,480 1,801,110 (35,000) 44,972,590
Less accumulated depreciation for:
Buildings (2,709,427) (408,530) - (3,117,957)
Building improvements (2,060) (1,373) - (3,433)
Machinery and equipment (448,791) (117,885) - (566,676)
Vehicles (429,233) (44,612) 35,000 (438,845)
Infrastructure (9,364,635) (485,793) - (9,850,428)
Total accumulated depreciation (12,954,146) (1,058,193) 35,000 (13,977,339)
Total capital assets being depreciated, net 30,252,334 742,917 - 30,995,251
Total Water capital assets, net $ 30,877,186 $ 742,917 $ - $ 31,620,103
Business-type Activities: Sewer
Capital assets being depreciated:
Buildings $ 1,263,604 $ - $ - $ 1,263,604
Machinery and equipment 264,697 378,294 - 642,991
Vehicles 310,716 - - 310,716
Infrastructure 28,834,110 889,060 - 29,723,170
Total capital assets being depreciated 30,673,127 1,267,354 - 31,940,481
Less accumulated depreciation for:
Buildings (315,984) (30,123) - (346,107)
Machinery and equipment (119,114) (45,384) - (164,498)
Vehicles (282,117) (15,022) - (297,139)
Infrastructure (15,019,758) (561,206) - (15,580,964)
Total accumulated depreciation (15,736,973) (651,735) - (16,388,708)
Total capital assets being depreciated, net 14,936,154 615,619 - 15,551,773
Total Sewer capital assets, net $ 14,936,154 $ 615,619 $ - $ 15,551,773
Town of Canton, Massachusetts Page 61 of 119 Comprehensive Annual Financial ReportSource page 72
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Rink
Capital assets being depreciated:
Building improvements $ 139,960 $ - $ - $ 139,960
Machinery and equipment 257,797 - - 257,797
Vehicles 29,160 - - 29,160
Total capital assets being depreciated 426,917 - - 426,917
Less accumulated depreciation for:
Building improvements (60,233) (7,248) - (67,481)
Machinery and equipment (161,436) (18,164) - (179,600)
Vehicles (29,160) - - (29,160)
Total accumulated depreciation (250,829) (25,412) - (276,241)
Total capital assets being depreciated, net 176,088 (25,412) - 150,676
Total Rink capital assets, net $ 176,088 $ (25,412) $ - $ 150,676
Depreciation expense was charged to functions/programs as follows:
Governmental Activities: Business-Type Activities:
General government $ 162,655 Water $ 1,058,193
Public safety 528,352 Sewer 651,735
Education 2,304,019 Rink 25,412
Public works 738,534 $ 1,735,340
Health and human services 14,928
Culture and recreation 344,188
$ 4,092,676
E. Leases
In a prior year, the Town entered into a non-cancelable lease for the purchase of a school bus.
This lease qualifies as a capital lease for accounting purposes and, therefore, has been recorded at
the present value of the future minimum lease payments as of the inception date.
Assets acquired through capital leases are as follows:
Amount
Asset:
School bus $ 77,711
Less: accumulated depreciation (54,397)
Total $ 23,314
Town of Canton, Massachusetts Page 62 of 119 Comprehensive Annual Financial ReportSource page 73
The future minimum lease payments and the present value of the minimum lease
payments at June 30, 2014, are as follows:
Fiscal Year Ended June 30, Amount
2015 $ 13,445
Total minimum lease payments 13,445
Less: amounts representing interest (423)
Present value of minimum lease payments $ 13,022
`
F. Temporary Debt
The Town is authorized to borrow on a temporary basis to fund the following:
Current Operating Costs – Prior to collection of revenues, expenditures may be financed through
the issuance of revenue or tax anticipation notes (RANS or TANS).
Capital Projects and Other Approved Costs – Projects may be temporarily funded through the
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases,
prior to the issuance of these temporary notes, the governing body must take the necessary legal
steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed
the aggregate amount of bonds authorized or the grant award amount.
Temporary notes are general obligations of the Town and carry maturity dates that are limited by
state law. Interest expenditures and expenses for temporary borrowings are accounted for in the
general fund and enterprise funds, respectively. Temporary notes outstanding at June 30, 2014,
are payable as follows:
Interest Maturity July 1, June 30,
Type Rate Date 2013 Additions Retirements 2014
BAN 1.25% Matured $ 334,800 $ - $ (334,800) $ -
BAN 1.50% 3/27/15 - 1,985,950 - 1,985,950
Total Governmental Notes 334,800 1,985,950 (334,800) 1,985,950
BAN 1.25% Matured 1,875,000 - (1,875,000) -
BAN 1.50% 3/27/15 - 930,000 - 930,000
Total Business-Type Notes 1,875,000 930,000 (1,875,000) 930,000
Total Notes Payable $ 2,209,800 $ 2,915,950 $ (2,209,800) $ 2,915,950
Short-term (BANs) issued for nonmajor governmental funds were issued for a fire truck
($800,000), departmental equipment ($190,000) and school building improvements ($995,950).
Those issued for business-type funds were issued for water projects ($530,000) and sewer
projects ($400,000).
Town of Canton, Massachusetts Page 63 of 119 Comprehensive Annual Financial ReportSource page 74
G. Long–Term Obligations
The Town issues general obligation bonds and notes to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds and notes have been issued for
both governmental and business-type activities. Additionally, the Town incurs various other
long-term obligations relative to associated personnel costs.
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize
indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance
with this section of the law is designated as being “inside the debt limit.” In addition, the Town
may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is
designated as being “outside the debt limit”.
On August 22, 2013, the Town received $1,030,000 from the Massachusetts Water Resources
Authority, of which $463,500 was in the form of a grant and $566,500 was issued as an interest
free loan payable in equal installments over five years. The proceeds will be used to fund sewer
inflow and infiltration improvements. Also, on August 22, 2013, the Town issued a $1,090,000
interest free loan with the Massachusetts Water Resources authority, payable in equal installment
over ten years. The proceeds will be used to fund a water tank repair project.
On November 13, 2013, the Town issued general obligation refunding bonds of $2,870,000 (par
value) with variable interest rates of 3.0% to 4.0%. The debt proceeds, along with $240,397 of
premium, were used to retire $2,950,000 of callable bonds. As a result of the current refunding,
the Town reduced its total debt service requirements by $184,260, which resulted in an economic
gain (difference between the present value of the debt service payments on the old and new debt)
of $179,565.
Also on November 13, 2013, the Town issued general obligation refunding bonds of $4,665,000
(par value) with variable interest rates of 2.0% to 5.0%. The debt proceeds, along with $304,148
of premium, were used to retire $4,885,000 of callable bonds. As a result of the current
refunding, the Town reduced its total debt service requirements by $517,037, which resulted in an
economic gain of $462,424.
On March 15, 2014, the Town issued general obligation refunding bonds of $10,975,000 (par
value) with variable interest rates of 2.5% to 5.0%. The debt proceeds, along with $1,674,870 of
premium and $4,856,532 of available Town funds, were used to retire $17,125,000 of callable
bonds. As a result of the current refunding, the Town reduced its total debt service requirements
by $2,738,354 (inclusive of the impact of the portion funded by the Town), which resulted in an
economic gain of $2,057,748.
Also on March 15, 2014, the Town issued $2,350,000 of general obligation bonds with variable
interest rates of 2.5% to 5.0%. $2,050,000 of the proceeds, along with $47,800 of available
funds, was used to retire BANS maturing on March 27, 2014. Funds were used for the purchase
of public works equipment ($175,000), water system improvements ($1,875,000) and sewer
system improvements ($300,000).
Town of Canton, Massachusetts Page 64 of 119 Comprehensive Annual Financial ReportSource page 75
The following reflects the current year activity in the long-term liability accounts:
Beginning Ending Due within
Balance Additions Deletions Balance one year
Governmental Activities:
Bond and note indebtedness $ 39,784,084 $ 15,360,400 $ (26,005,084) $ 29,139,400 $ 3,819,900
Unamortized bond premium 226,766 1,927,123 (253,399) 1,900,490 414,813
Unamortized deferred charge on refiunding (67,627) - 67,627 - -
Capital leases 25,634 - (12,612) 13,022 13,022
Landfill closure 131,000 - (27,000) 104,000 27,000
Compensated absences 1,496,537 459,865 (374,134) 1,582,268 395,567
Other postemployment benefits 34,877,722 12,616,370 (5,154,839) 42,339,253 -
Total Governmental Activities $ 76,474,116 $ 30,363,758 $ (31,759,441) $ 75,078,433 $ 4,670,302
Business-Type Activities - Water:
Bond and note debt $ 20,524,105 $ 4,307,300 $ (2,860,105) $ 21,971,300 $ 1,642,500
Unamortized bond premium - 354,792 (2,392) 352,400 59,950
Unamortized deferred charge on refunding (8,151) - 8,151 - -
Compensated absences 128,890 27,623 (32,223) 124,290 31,073
Other postemployment benefits 639,924 192,004 (19,431) 812,497 -
Total Water 21,284,768 4,881,719 (2,906,000) 23,260,487 1,733,523
Business-Type Activities - Sewer:
Bond and note debt 8,594,655 2,758,800 (2,709,900) 8,643,555 816,265
Unamortized bond premium - 196,174 (16,735) 179,439 41,547
Unamortized deferred charge on refunding (59,222) - 59,222 - -
Compensated absences 35,080 45,496 (8,770) 71,806 17,952
Other postemployment benefits 290,316 87,088 (5,426) 371,978 -
Total Sewer 8,860,829 3,087,558 (2,681,609) 9,266,778 875,764
Business-Type Activities - Rink:
Bond and note debt 42,000 - (8,000) 34,000 8,000
Compensated absences 16,883 3,340 (4,221) 16,002 4,001
Other postemployment benefits 184,518 40,499 (176) 224,841 -
Total Rink 243,401 43,839 (12,397) 274,843 12,001
Total Business-Type Activities $ 30,388,998 $ 8,013,116 $ (5,600,006) $ 32,802,108 $ 2,621,288
The governmental activities liabilities will be liquidated by the general fund. The business-type
liabilities will be liquidated by the enterprise fund reporting the liabilities.
Town of Canton, Massachusetts Page 65 of 119 Comprehensive Annual Financial ReportSource page 76
The following is a summary of outstanding long-term debt obligations as of June 30, 2014:
Interest Beginning Ending
Description of Issue Rate Balance Additions Maturities Balance
Governmental Activities:
General Obligation Bonds 2.00 - 5.00% $ 33,397,159 $ 175,000 $(23,449,159) $ 10,123,000
Refunding Bonds 2.00 - 4.00% 6,386,925 15,185,400 (2,555,925) 19,016,400
Total Governmental Activities 39,784,084 15,360,400 (26,005,084) 29,139,400
Add: Unamortized bond premium 226,766 1,927,123 (253,399) 1,900,490
Less: Unamortized deferred charge on refunding (67,627) - 67,627 -
Total Governmental Activities, net $ 39,943,223 $ 17,287,523 $ (26,190,856) $ 31,039,890
Business-Type Activities - Water:
General Obligation Bonds 2.00 - 5.00% $ 19,336,800 $ 1,875,000 $ (2,502,800) $ 18,709,000
Refunding Bonds 3.25 - 4.00% 409,305 1,342,300 (266,305) 1,485,300
Massachusetts Water Resource Authority 0.00% 778,000 1,090,000 (91,000) 1,777,000
Total Water 20,524,105 4,307,300 (2,860,105) 21,971,300
Add: Unamortized bond premium - 354,792 (2,392) 352,400
Less: Unamortized deferred charge on refunding (8,151) - 8,151 -
Total Water, net 20,515,954 4,662,092 (2,854,346) 22,323,700
Business-Type Activities - Sewer:
General Obligation Bonds 2.00 - 5.00% 3,079,000 300,000 (960,000) 2,419,000
Refunding Bonds 3.25 - 4.00% 2,080,770 1,892,300 (1,589,770) 2,383,300
Massachusetts Water Resource Authority 0.00% - 566,500 - 566,500
Massachusetts Water Pollution Abatement Trust 2.00% 3,434,885 - (160,130) 3,274,755
Total Sewer 8,594,655 2,758,800 (2,709,900) 8,643,555
Add: Unamortized bond premium - 196,174 (16,735) 179,439
Less: Unamortized deferred charge on refunding (59,222) - 59,222 -
Total Sewer, net 8,535,433 2,954,974 (2,667,413) 8,822,994
Business-Type Activities - Rink:
General Obligation Bonds 2.00 - 4.25% 42,000 - (8,000) 34,000
Total Rink 42,000 - (8,000) 34,000
Total Business-Type Activities, net $ 29,093,387 $ 7,617,066 $ (5,529,759) $ 31,180,694
The following represents authorized and unissued debt as of June 30, 2014:
Project Amount
Governmental:
School building improvements $ 2,041,458
Other capital projects 1,588,986
Business-type:
Water projects 421,250
Sewer system improvements 1,974,095
Sewer other capital projects 276,750
Rink compressor 245,000
Total Authorized and Unissued $ 6,547,539
Town of Canton, Massachusetts Page 66 of 119 Comprehensive Annual Financial ReportSource page 77
Payments on outstanding bond balances due in future years consist of the following:
Governmental Activities
Year Ending Principal Interest
June 30, Balance Balance Total
2015 $ 3,819,900 $ 1,132,879 $ 4,952,779
2016 3,677,700 972,437 4,650,137
2017 3,383,800 838,851 4,222,651
2018 3,015,600 713,119 3,728,719
2019 2,762,800 593,953 3,356,753
2020 - 2024 9,862,200 1,445,188 11,307,388
2025 - 2029 2,135,400 273,221 2,408,621
2030 - 2032 482,000 29,675 511,675
Total $ 29,139,400 $ 5,999,323 $ 35,138,723
Business-Type Activities: Water
Year Ending Principal Interest
June 30, Balance Balance Total
2015 $ 1,642,500 $ 700,620 $ 2,343,120
2016 1,637,500 647,761 2,285,261
2017 1,593,400 599,868 2,193,268
2018 1,502,800 535,978 2,038,778
2019 1,497,700 491,718 1,989,418
2020 - 2024 6,985,500 1,814,196 8,799,696
2025 - 2029 5,208,900 873,477 6,082,377
2030 - 2033 1,903,000 123,935 2,026,935
Total $ 21,971,300 $ 5,787,553 $ 27,758,853
Business-Type Activities: Sewer
Year Ending Principal Interest
June 30, Balance Balance Total
2015 $ 816,265 $ 226,022 $ 1,042,287
2016 816,765 202,722 1,019,487
2017 810,132 181,880 992,012
2018 802,367 160,763 963,130
2019 793,771 138,289 932,060
2020 - 2024 2,264,250 439,567 2,703,817
2025 - 2029 1,594,508 194,292 1,788,800
2030 - 2032 745,497 28,830 774,327
Total $ 8,643,555 $ 1,572,365 $ 10,215,920
Business-Type Activities: Rink
Year Ending Principal Interest
June 30, Balance Balance Total
2015 $ 8,000 $ 980 $ 8,980
2016 8,000 780 8,780
2017 6,000 540 6,540
2018 6,000 360 6,360
2019 6,000 180 6,180
Total $ 34,000 $ 2,840 $ 36,840
Town of Canton, Massachusetts Page 67 of 119 Comprehensive Annual Financial ReportSource page 78
III. Other Information
A. Retirement System
Retirement System Description – The Town contributes to the Norfolk County Retirement System
(the “System”), a multiple-employer defined benefit pension plan established under Chapter 32 of
the Commonwealth of Massachusetts General Laws (MGL) and is administered by Norfolk
County Retirement Board (the “Board”).
The System provides retirement, disability and death benefits to plan members and beneficiaries.
Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan.
Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits
imposed by the Commonwealth’s state law during those years are borne by the Commonwealth
and are deposited into the pension fund directly. Cost-of-living adjustments granted after 1997
must be approved by the Board and are borne by the System. The System issues a publicly
available unaudited financial report in accordance with guidelines established by the
Commonwealth of Massachusetts’ Public Employee Retirement Administration Commission
(PERAC) that includes financial statements and required supplementary information. The report
may be obtained by writing to the Norfolk County Retirement System, 480 Neponset Street,
Canton, MA 02021.
Funding Policy – Plan members are required to contribute to the System at rates ranging from 5%
to 11% of annual covered compensation. The Town is required to pay into the System for its
share of the system-wide actuarial determined contribution that is apportioned among the
employers based on active current payroll. The contributions of plan members and the Town are
governed by Chapter 32 of the MGL. The Town’s contributions to the System for the fiscal years
ended June 30, 2014, 2013, and 2012 were $3,169,146, $3,041,784, and $2,957,615 respectively,
which equaled its required contribution for each year. Schedules of funding progress and
contribution funding are included as required supplementary information.
B. Massachusetts Teachers’ Retirement System
Teachers and certain administrative employees of the School Department participate in a
contributory retirement system administered by the Massachusetts Teachers Retirement Board.
Contributions to that system totaled $8,712,743 for the fiscal year and were made entirely by the
Commonwealth of Massachusetts, on behalf of the Town, which does not contribute directly to
this system.
C. Other Postemployment Benefits (OPEB)
Plan Description – The Town administers a single-employer defined benefit healthcare plan (the
“Plan”). The Plan provides health and life insurance benefits to current and future retirees, their
dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B.
Specific benefit provisions and contribution rates are established by collective bargaining
agreements, state law, and Town ordinance. All benefits are provided through the Town’s self-
funded insurance program described previously. The Plan does not issue a stand–alone financial
report. The number of participants in the Plan consists of 630 active employees and 569 retired
employees for a total of 1,199.
Funding Policy – The contribution requirements of Plan members and the Town are established
and may be amended by the Town, through negotiation with the Town employee unions.
Town of Canton, Massachusetts Page 68 of 119 Comprehensive Annual Financial ReportSource page 79
Retirees contribute 25 percent of the calculated contribution through pension benefit deductions.
The remainder of the cost is funded by the Town. The Town currently contributes enough money
to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the
Plan are paid by the Town.
Annual OPEB Cost and Net OPEB Obligation – The Town’s annual OPEB cost is calculated
based on the annual required contribution “ARC” of the employer, an actuarially determined
amount that is calculated in accordance with GASB Statement number 45. The ARC represents
a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year
and amortize any unfunded liabilities over a period not to exceed thirty years. The following
table reflects the activity regarding the Town’s OPEB obligation:
Annual required contribution (ARC) $ 13,072,909
Interest on net OPEB obligation 1,511,684
Adjustment to ARC (1,648,632)
Annual OPEB cost 12,935,961
Contributions made $ (5,179,872)
Increase in net OPEB obligation 7,756,089
Net OPEB obligation at beginning of year 35,992,480
Net OPEB obligation at end of year $ 43,748,569
Trend information regarding annual OPEB cost, the percentage of the annual OPEB cost
contributed and the net OPEB obligation is as follows:
Annual OPEB Percentage of
Fiscal Year Cost AOPEBC Net OPEB
Ending (AOPEBC) Contributed Obligation
June 30, 2012 $ 12,639,000 35% $ 28,323,000
June 30, 2013 $ 12,195,272 37% $ 35,992,480
June 30, 2014 $ 12,935,961* 40% $ 43,748,569
* Reflected in the Statement of Activities as follows:
The AOPEBC at June 30, 2014 was charged to the following functional programs: General
Government $528,049; Public Safety $2,582,237; Education $8,391,845; Public Works $564,212;
Health and Human Services $164,395; Culture and Recreation $385,632; Water $192,004; Sewer
$87,088; and Rink $40,499.
Funding Status and Funding Progress – The funded status of the Plan at June 30, 2014, based on
the most recent actuarial valuation performed as of January 1, 2013, was as follows (in millions):
Town of Canton, Massachusetts Page 69 of 119 Comprehensive Annual Financial ReportSource page 80
Actuarial
Accrued
Liability UAAL as a
Actuarial (AAL) Entry Unfunded Percentage
Value of Age Normal AAL Funded Covered of Covered
Assets Cost (UAAL) Ratio Payroll Payroll
(A) (B) (B – A) (A/B) (C) ((B-A)/C)
$ 0.1 $142.8 $142.7 0.07% $36.5 391%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events into the future. Amounts determined
regarding the funded status of the Plan and the ARC of the employer are subject to continual
revision as estimates are compared to actual results and past expectations. The schedules of
funding progress, presented as required supplementary information (RSI) following the notes to
the financial statements, present multi-year trend information about whether the actuarial values
of plan assets are increasing or decreasing over time relative to the AAL for benefits.
Methods and Assumptions – Projections of benefits for financial reporting purposes are based on
the substantive Plan and include the types of benefits provided at the time of each valuation and
the historical pattern of sharing of benefit costs between the employer and the Plan members to
that point. The actuarial methods and assumptions used include techniques that are designed to
reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long-term perspective of the calculations. The significant methods and
assumptions as of the latest valuation are as follows:
Valuation date: January 1, 2013
Actuarial cost method Projected Unit Credit
Amortization method Level percent of pay, 3% increasing
Remaining amortization period: 26 years as of January 1, 2013 (closed)
Interest discount rate: 4.2 percent
Inflation rate: 3.0 percent
Healthcare/Medical cost trend rate: 9 percent grading down to 5 percent in year 2020 and
thereafter
D. Risk Financing
The Town is exposed to various risks of loss related to torts: theft of, damage to and destruction
of assets; errors and omissions; and natural disasters for which the Town carries commercial
insurance. The amount of claim settlements has not exceeded insurance coverage in any of the
previous three years.
Group Health Insurance Plan – The Town maintains a "reinsured cost reimbursement program"
which covers the group health and dental insurance requirements of the Town employees. The
Plan is essentially a self-insurance program and employee claims in excess of $100,000 are
reinsured by the Plan. The Plan allows employees to participate in a Health Maintenance
Organization (HMO) or Preferred Provider Organization (PPO). The Town reimburses the costs
of the HMO and PPO 75 percent. The Town accrues an amount representing claims incurred but
not reported (IBNR), which is based on historical claims paid averages for the twelve months
prior to fiscal year end. At June 30, 2014, the amount of the liability for incurred but not reported
(IBNR) health insurance claims totaled $938,586. This liability is the best estimate based on
Town of Canton, Massachusetts Page 70 of 119 Comprehensive Annual Financial ReportSource page 81
available information. In the fund-wide financial statements, the Town reports the activities of
the Group Insurance Health Plan in the Internal Service Fund where revenues are recorded when
earned and expenses are recorded when the liability is incurred. Changes in the reported liability
since July 1, 2012, are as follows:
Balance at Claims and
Beginning Changes in Claims Balance at Current
of Year Estimates Payments End of Year Portion
Fiscal Year 2014 $ 912,916 $ 14,753,120 $(14,727,450) $ 938,586 $ 938,586
Fiscal Year 2013 684,000 14,435,304 (14,206,388) 912,916 912,916
Workers’ Compensation – The Town is also self-insured for their workers’ compensation
activities which are accounted for in the Internal Service Fund. Workers’ compensation claims
are administered by a third-party and are funded on a pay-as-you-go basis from annual
appropriations. The Town is premium based for all claims after July 1, 2008. The Town
purchases individual stop loss insurance in excess of the coverage provided in the amount of
$300,000. The estimated future workers’ compensation liability is not material at June 30, 2014,
and is therefore not reported.
E. Commitments
The Town has entered or is planning to enter into contracts for various projects for which it has
authorized approximately $7.0 million in debt.
F. Contingencies
The Town is party to other certain legal claims, which are subject to many uncertainties, and the
outcome of individual litigation matters in these situations cannot be reasonably estimated.
Although the amount of liability, if any, in these situations at June 30, 2014, cannot be
ascertained, management believes that the resulting liability, if any, should not materially affect
the basic financial statements of the Town at June 30, 2014. Other amounts received or
receivable from grantor agencies are subject to audit and adjustment by grantor agencies,
principally the federal and state governments. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures
which may be disallowed by the grantor cannot be determined at this time although the Town
expects such amounts, if any, to be immaterial.
The Town is subject to certain Federal arbitrage laws in accordance with long-term borrowing
agreements. Failure to comply with the rules could result in the payment of penalties. The Town
does not believe it has failed to comply with any of these agreements.
G. Landfill Closure and Post-Closure Care Costs
The Town’s landfill is closed and a final cover has been installed in accordance with Federal and
State laws and regulations. Those laws and regulations also require the Town to perform certain
maintenance and monitoring functions (“post-closure care”) at the site for 30 years after the
landfill cover is installed. In accordance with generally accepted accounting principles, the
estimated remaining cost of monitoring; $104,000 has been recorded as a governmental activities
liability; actual costs may be higher due to inflation, changes in technology, or changes in
regulations.
Town of Canton, Massachusetts Page 71 of 119 Comprehensive Annual Financial ReportSource page 82
H. Implementation of GASB pronouncements
Current Year Implementations –
In March 2012, the GASB issued GASB Statement No. 65, Items Previously Reported as Assets
and Liabilities. This Statement establishes accounting and financial reporting standards that
reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that
were previously reported as assets and liabilities and recognizes, as outflows of resources or
inflows of resources, certain items that were previously reported as assets and liabilities. This
Statement also provides other financial reporting guidance related to the impact of the financial
statement elements deferred outflows of resources and deferred inflows of resources, such as
changes in the determination of the major fund calculations and limiting the use of the term
deferred in financial statement presentations. The provisions of GASB 65 became effective for
the Town in fiscal year 2014 and did not have a material effect on its financial statements.
In March 2012, the GASB issued GASB Statement No. 66, an amendment of GASB Statements
No. 10 and No. 62. The objective of this Statement is to improve accounting and financial
reporting for a governmental financial reporting entity by resolving conflicting guidance that
resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting
and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.
The provisions of GASB 66 became effective for the Town in fiscal year 2014 and did not have a
material effect on its financial statements.
In April 2013, the GASB issued GASB Statement No. 70, Accounting and Financial Reporting
for Nonexchange Financial Guarantees. The objective of GASB 70 is to improve accounting and
financial reporting by governments that extend and receive nonexchange financial guarantees.
The provisions of GASB 70 became effective for the Town in fiscal year 2014 and did not have a
material effect on its financial statements.
Future Implementations –
In June 2012, the GASB issued GASB Statement No. 67, Financial Reporting for Pension Plans.
This Statement replaces the requirements of Statement No. 25, Financial Reporting for Defined
Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Statement 50 as
they relate to pension plans that are administered through trusts or similar arrangements meeting
certain criteria. This Statement builds upon the existing framework for financial reports of
defined benefit pension plans, which includes a statement of fiduciary net position (the amount
held in a trust for paying retirement benefits) and a statement of changes in fiduciary net position.
Statement 67 enhances note disclosures and RSI for both defined benefit and defined contribution
pension plans. Statement 67 also requires the presentation of new information about annual
money-weighted rates of return in the notes to the financial statements and in 10-year RSI
schedules. The provisions of GASB 67 become effective for the Norfolk County Retirement
System as of December 31, 2014 and the correlative impact will be reflected by the Town in
fiscal year 2015 through GASB 68 (see below). The Town believes the adoption of this statement
will have a material effect on the financial statements.
In June 2012, the GASB issued GASB Statement No. 68, Accounting and Financial Reporting
for Pensions — an amendment of GASB Statement No. 27. Statement 68 replaces the
requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental
Town of Canton, Massachusetts Page 72 of 119 Comprehensive Annual Financial Report