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2013 Comprehensive Annual Financial Report (PDF)
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Basic Financial Statements Town of Canton, Massachusetts Page 33 of 120 Comprehensive Annual Financial Report
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TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2013
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 32,490,525 $ 3,895,759 $ 36,386,284
Receivables, net:
Property taxes 576,418 - 576,418
Tax liens and foreclosures 1,531,791 58,457 1,590,248
User fees - 3,046,460 3,046,460
Departmental and other 1,255,514 - 1,255,514
Intergovernmental 4,209,590 - 4,209,590
Deposit held by third party 58,400 - 58,400
Other assets 228,660 - 228,660
Capital assets not being depreciated 11,633,638 624,852 12,258,490
Capital assets, net of accumulated depreciation 90,261,352 45,364,576 135,625,928
Total Assets 142,245,888 52,990,104 195,235,992
Liabilities
Warrants and accounts payable 1,691,555 41,784 1,733,339
Accrued payroll and withholdings 3,398,683 24,588 3,423,271
Tax refunds payable 1,152,000 - 1,152,000
Health claims incurred but not reported 912,916 - 912,916
Accrued interest 445,797 237,544 683,341
Other liabilities 30,657 10,000 40,657
Bond anticipation notes payable 334,800 1,875,000 2,209,800
Noncurrent liabilities:
Due within one year 4,948,221 2,122,944 7,071,165
Due in more than one year 71,525,895 28,266,054 99,791,949
Total Liabilities 84,440,524 32,577,914 117,018,438
Net Position
Invested in capital assets, net of related debt 61,957,511 16,381,614 78,339,125
Restricted for:
Nonexpendable permanent funds 419,585 - 419,585
Federal and State grants 2,014,737 - 2,014,737
MSBA grant 5,160,240 - 5,160,240
Other purposes 3,174,291 - 3,174,291
Unrestricted (14,921,000) 4,030,576 (10,890,424)
Total Net Position $ 57,805,364 $ 20,412,190 $ 78,217,554
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 35 of 120 Comprehensive Annual Financial ReportSource page 46
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2013
Program Revenues Net (Expenses) Revenues and Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary government:
Governmental activities:
General government $ 5,809,111 $ 554,773 $ 37,976 $ - $ (5,216,362) $ (5,216,362)
Public safety 16,060,024 2,790,608 188,945 - (13,080,471) (13,080,471)
Education 61,782,205 2,253,878 16,190,152 - (43,338,175) (43,338,175)
Public works 6,286,770 210,642 18,197 550,999 (5,506,932) (5,506,932)
Health and human services 1,314,086 85,978 226,382 - (1,001,726) (1,001,726)
Culture and recreation 2,985,722 396,771 22,171 - (2,566,780) (2,566,780)
Interest expense 1,668,538 - 277,330 - (1,391,208) (1,391,208)
Total governmental activities 95,906,456 6,292,650 16,961,153 550,999 (72,101,654) (72,101,654)
Business-type activities:
Water 5,853,408 6,702,942 - - $ 849,534 849,534
Sewer 5,173,053 5,344,425 - - 171,372 171,372
Rink 390,072 431,671 - - 41,599 41,599
Total business-type activities 11,416,533 12,479,038 - - 1,062,505 1,062,505
Total Primary Government $ 107,322,989 $ 18,771,688 $ 16,961,153 $ 550,999 (72,101,654) 1,062,505 (71,039,149)
General Revenues:
Property taxes 58,966,309 - 58,966,309
Tax liens 421,708 - 421,708
Motor vehicle and other excise 3,914,171 - 3,914,171
Hotel and meals taxes 460,905 - 460,905
Payments in lieu of taxes 224,311 - 224,311
Grants and contributions not restricted
to specific programs 2,202,728 - 2,202,728
Penalties and interest on taxes 323,695 - 323,695
Unrestricted investment income 201,635 16,768 218,403
Miscellaneous 188,275 - 188,275
Transfers (net) 1,063,245 (1,063,245) -
Total general revenues and transfers 67,966,982 (1,046,477) 66,920,505
Change in Net Position (4,134,672) 16,028 (4,118,644)
Net Position:
Beginning of year, as restated (see Note III. C) 61,940,036 20,396,162 82,336,198
End of year $ 57,805,364 $ 20,412,190 $ 78,217,554
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 36 of 120 Comprehensive Annual Financial ReportSource page 47
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2013
Nonmajor Total
General Governmental Governmental
Fund Funds Funds
Assets
Cash and cash equivalents $ 18,785,224 $ 8,983,668 $ 27,768,892
Receivables, net of allowance for uncollectibles:
Property taxes 576,418 - 576,418
Tax liens and foreclosures 1,531,791 - 1,531,791
Departmental and other 547,033 444,198 991,231
Intergovernmental 3,210,035 999,555 4,209,590
Due from other funds 472,315 - 472,315
Other assets 228,660 - 228,660
Total Assets $ 25,351,476 $ 10,427,421 $ 35,778,897
Liabilities and Fund Balances
Liabilities:
Warrants and accounts payable $ 1,131,795 $ 266,196 $ 1,397,991
Accrued payroll and withholdings 3,148,230 250,453 3,398,683
Tax refunds payable 1,152,000 - 1,152,000
Deferred revenues 5,620,685 444,198 6,064,883
Other liabilities 29,963 694 30,657
Due to other funds - 472,315 472,315
Bond anticipation notes payable - 334,800 334,800
Total Liabilities 11,082,673 1,768,656 12,851,329
Fund Balances:
Nonspendable - 419,585 419,585
Restricted 5,160,240 8,707,938 13,868,178
Committed 470,608 - 470,608
Assigned 361,035 - 361,035
Unassigned 8,276,920 (468,758) 7,808,162
Total Fund Balances 14,268,803 8,658,765 22,927,568
Total Liabilities and Fund Balances $ 25,351,476 $ 10,427,421 $ 35,778,897
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 120 Comprehensive Annual Financial ReportSource page 48
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2013
Total Governmental Fund Balances $ 22,927,568
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 101,894,990
Other assets are not available to pay for current-period expenditures and are therefore
deferred in the funds. 6,064,883
Assets and liabilities of the Town's internal service funds are included in the
Statement of Net Position, but are not reported in the governmental funds. 3,837,836
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in governmental fund interest is not reported until due. (445,797)
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 (39,784,084)
Unamortized deferred charge on refunding 67,627
Unamortized premiums on bonds (226,766)
Capital leases payable (25,634)
Landfill closure (131,000)
Compensated absences (1,496,537)
Other post employment benefits (34,877,722)
Net effect of reporting long-term liabilities (76,474,116)
Net Position of Governmental Activities $ 57,805,364
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 120 Comprehensive Annual Financial ReportSource page 49
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2013
Nonmajor Total
General Governmental Governmental
Fund Funds Funds
Revenues:
Property taxes $ 59,063,932 $ - $ 59,063,932
Tax liens 219,962 - 219,962
Intergovernmental 16,482,297 3,230,163 19,712,460
Motor vehicle and other excises 3,473,978 - 3,473,978
Hotel and meals taxes 460,905 - 460,905
Licenses and permits 1,043,909 - 1,043,909
Penalties and interest on taxes 323,695 - 323,695
Payments in lieu of taxes 224,311 - 224,311
Fines and forfeitures 109,411 - 109,411
Charges for services - 1,474,669 1,474,669
Departmental and other revenue 789,078 2,667,898 3,456,976
Investment income 82,234 60,712 142,946
Contributions and donations - 398,308 398,308
Total Revenues 82,273,712 7,831,750 90,105,462
Expenditures:
Current:
General government 3,588,583 316,923 3,905,506
Public safety 9,438,094 940,372 10,378,466
Education 33,426,326 4,680,130 38,106,456
Public works 4,307,652 1,112,606 5,420,258
Health and human services 770,010 572,294 1,342,304
Culture and recreation 1,513,010 317,194 1,830,204
Pension benefits 11,733,329 - 11,733,329
Employee benefits 10,226,332 101,055 10,327,387
State and county assessments 959,538 - 959,538
Debt service:
Principal 4,385,178 - 4,385,178
Interest 1,677,804 - 1,677,804
Total Expenditures 82,025,856 8,040,574 90,066,430
Excess (Deficiency) of Revenues Over (Under) Expenditures 247,856 (208,824) 39,032
Other Financing Sources (Uses):
Proceeds from bonds and notes - 2,603,159 2,603,159
Premiums from bonds and notes 101,385 64,857 166,242
Transfers in 2,259,575 1,576,014 3,835,589
Transfers out (1,726,092) (1,046,252) (2,772,344)
Total Other Financing Sources (Uses) 634,868 3,197,778 3,832,646
Net Change in Fund Balances 882,724 2,988,954 3,871,678
FUND BALANCES - Beginning of year 13,386,079 5,669,811 19,055,890
FUND BALANCES - End of year $ 14,268,803 $ 8,658,765 $ 22,927,568
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 120 Comprehensive Annual Financial ReportSource page 50
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2013
Net Change in Fund Balances - Total Governmental Fund Balances $ 3,871,678
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 2,150,550
Depreciation expense (4,053,881)
Net effect of reporting capital assets (1,903,331)
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 activity,
whereas these activities are not presented in the Statement of Revenues, Expenditures and
Changes in Fund Balances. (783,104)
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 assets. Also governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when debt is first issued,
whereas these amounts are deferred and amortized in the Statement of Activities. The
net amounts are reflected here as reconciling items:
Proceeds from bonds and notes (2,603,159)
Amortization of deferred charges on refunding (28,567)
Amortization of premiums on bonds and notes payable 42,142
Payments on capital leases 32,913
Repayments of debt 4,385,178
Net effect of reporting long-term debt 1,828,507
Revenues in the Statement of Activities that do not provide current financial resources are
fully deferred in the Statement of Revenues, Expenditures and Changes in Fund Balances.
Therefore, the recognition of revenue for various types of accounts receivable differ between
the two statements. The amount presented represents the difference in deferred revenue. 378,146
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 a
accruals between this year and the prior year. (4,309)
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 (154,537)
Other post employment benefits (7,394,722)
Net effect of reporting long-term liabilities (7,522,259)
Change in Net Position of Governmental Activities $ (4,134,672)
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 120 Comprehensive Annual Financial ReportSource page 51
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2013
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 2,190,170 $ 1,661,997 $ 43,592 $ 3,895,759 $ 4,721,633
Receivables (net):
User charges 1,713,373 1,332,427 660 3,046,460 -
Tax liens 29,532 28,925 - 58,457 -
Departmental and other - - - - 264,283
Deposit held by third party - - - - 58,400
Total current assets 3,933,075 3,023,349 44,252 7,000,676 5,044,316
Noncurrent assets:
Nondepreciable capital assets 624,852 - - 624,852 -
Capital assets (net of depreciation) 30,252,334 14,936,154 176,088 45,364,576 -
Total noncurrent assets 30,877,186 14,936,154 176,088 45,989,428 -
Total Assets 34,810,261 17,959,503 220,340 52,990,104 5,044,316
Liabilities
Current liabilities:
Warrants and accounts payable 22,866 4,766 14,152 41,784 293,564
Accrued payroll and withholdings 14,485 7,382 2,721 24,588 -
Health claims incurred but not reported - - - - 912,916
Accrued interest 152,850 84,694 - 237,544 -
Other liabilities 10,000 - - 10,000 -
Bond anticipation notes payable 1,575,000 300,000 - 1,875,000 -
Compensated absences 32,223 8,770 4,221 45,214 -
Bonds and notes payable 1,402,220 667,510 8,000 2,077,730 -
Total current liabilities 3,209,644 1,073,122 29,094 4,311,860 1,206,480
Noncurrent liabilities:
Compensated absences 96,667 26,310 12,662 135,639 -
Other post employment benefits 639,924 290,316 184,518 1,114,758 -
Bonds and notes payable 19,113,734 7,867,923 34,000 27,015,657 -
Total noncurrent liabilities 19,850,325 8,184,549 231,180 28,266,054 -
Total Liabilities 23,059,969 9,257,671 260,274 32,577,914 1,206,480
Net Position
Invested in capital assets, net of related debt 9,137,587 7,109,939 134,088 16,381,614 -
Unrestricted 2,612,705 1,591,893 (174,022) 4,030,576 3,837,836
Total Net Position $ 11,750,292 $ 8,701,832 $ (39,934) $ 20,412,190 $ 3,837,836
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 120 Comprehensive Annual Financial ReportSource page 52
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2013
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 6,560,157 $ 5,337,114 $ 431,671 $ 12,328,942 $ -
Employee contributions - - - - 3,311,389
Employer contributions - - - - 9,471,272
Stop loss reimbursements - - - - 907,452
Other 142,785 7,311 - 150,096 -
Total Operating Revenues 6,702,942 5,344,425 431,671 12,479,038 13,690,113
Operating Expenses:
Operating costs 2,031,570 914,546 363,506 3,309,622 -
MWRA assessment 2,143,385 3,313,092 - 5,456,477 -
Depreciation 993,754 637,835 25,411 1,657,000 -
Employee benefits - - - - 14,531,906
Total Operating Expenses 5,168,709 4,865,473 388,917 10,423,099 14,531,906
Operating Income (Loss) 1,534,233 478,952 42,754 2,055,939 (841,793)
Nonoperating Revenues (Expenses):
Investment income 10,226 6,542 - 16,768 58,689
Interest expense (684,699) (307,580) (1,155) (993,434) -
Total Nonoperating Revenues (Expenses) (674,473) (301,038) (1,155) (976,666) 58,689
Income (Loss) Before Transfers 859,760 177,914 41,599 1,079,273 (783,104)
Transfers in 136,270 11,595 2,213 150,078 -
Transfers out (744,799) (388,281) (80,243) (1,213,323) -
Change in Net Position 251,231 (198,772) (36,431) 16,028 (783,104)
Total Net Position - Beginning of the Year,
as restated (see Note III. C.) 11,499,061 8,900,604 (3,503) 20,396,162 4,620,940
Total Net Position - End of the Year $ 11,750,292 $ 8,701,832 $ (39,934) $ 20,412,190 $ 3,837,836
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 120 Comprehensive Annual Financial ReportSource page 53
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2013
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,730,754 $ 5,378,471 $ 452,469 $ 12,561,694 $ -
Receipts from interfund services provided - - - - 13,425,830
Receipts from other operating revenues 142,785 7,311 - 150,096 -
Payments to employees (788,074) (462,760) (169,017) (1,419,851) -
Payments to vendors (3,223,009) (3,691,634) (140,554) (7,055,197) -
Payments for interfund services used - - - - (13,837,284)
Net Cash Provided by (Used in) Operating
Activities 2,862,456 1,231,388 142,898 4,236,742 (411,454)
Cash Flows from Noncapital Financing Activities:
Advances (to) from other funds (36,200) - (11,956) (48,156) -
Transfers in 136,270 11,595 2,213 150,078 -
Transfers out (744,799) (388,281) (80,243) (1,213,323) -
Net Cash Provided by (Used in) Noncapital
Financing Activities (644,729) (376,686) (89,986) (1,111,401) -
Cash Flows from Capital and Related Financing Activities:
Proceeds from the issuance of bonds and notes 4,713,800 450,000 - 5,163,800 -
Acquisition and construction of capital assets (2,075,781) (184,782) - (2,260,563) -
Principal payments on bonds and notes (3,978,675) (871,014) (8,000) (4,857,689) -
Interest payments on bonds and notes (636,303) (259,701) (1,320) (897,324) -
Net Cash Used in Capital and Related
Financing Activities (1,976,959) (865,497) (9,320) (2,851,776) -
Cash Flows from Investing Activities:
Investment income 10,226 6,542 - 16,768 58,689
Investment of operating cash - - - - 626,712
Net Cash Provided by Investing Activities 10,226 6,542 - 16,768 685,401
Net Change in Cash and Cash Equivalents 250,994 (4,253) 43,592 290,333 273,947
Cash and Cash Equivalents:
Beginning of the year 1,939,176 1,666,250 - 3,605,426 4,447,686
End of the year $ 2,190,170 $ 1,661,997 $ 43,592 $ 3,895,759 $ 4,721,633
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 1,534,233 $ 478,952 $ 42,754 $ 2,055,939 $ (841,793)
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 993,754 637,835 25,411 1,657,000 -
Changes in assets and liabilities:
Receivables 170,597 41,357 20,798 232,752 (264,283)
Amounts held by insurance carrier - - - - 227,074
Accounts payable and accrued expenses 153,872 73,244 53,935 281,051 238,427
Health claims incurred but not reported - - - - 229,121
Other liabilities 10,000 - - 10,000 -
Net Cash Provided by (Used in) Operating
Activities $ 2,862,456 $ 1,231,388 $ 142,898 $ 4,236,742 $ (411,454)
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 120 Comprehensive Annual Financial ReportSource page 54
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2013
Other Post Private
Employment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 643 $ 129,979 $ 824,533
Investments 154,423 - -
Total Assets 155,066 129,979 824,533
Liabilities
Warrants payable - - 4,713
Agency liabilities - - 819,820
Total Liabilities - - 824,533
Net Position
Held in trust for other post employment benefits 155,066 - -
Held in trust for private purposes - 129,979 -
Total Net Position $ 155,066 $ 129,979 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 120 Comprehensive Annual Financial ReportSource page 55
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
YEAR ENDED JUNE 30, 2013
Other Post Private
Employment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employer $ 50,000 $ -
Investment income:
Interest and dividends 5,066 7,291
Total Additions 55,066 7,291
Deductions
Life and health insurance premiums paid for retirees - -
Education - scholarships - 12,350
Total Deductions - 12,350
CHANGE IN NET POSITION 55,066 (5,059)
NET POSITION AT BEGINNING OF YEAR 100,000 135,038
NET POSITION AT END OF YEAR $ 155,066 $ 129,979
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 45 of 120 Comprehensive Annual Financial ReportSource page 56
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2013
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 2013, the Town’s share of the operating and debt service expenses was $1,173,074.
There is no equity interest reported in these financial statements. Complete audited financial
statements can be obtained directly from the District’s administrative office located at 800
Randolph Street, Canton, MA 02021.
B. Government-Wide and Fund Financial Statements
In 2013, the Town implemented GASB Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources, and Net Position. As a result of the
implementation, the basic financial statements were renamed to the statement of net position and
statement of revenues, expenses and changes in net position. These statements were formerly
referred to as the statement of net assets and statement of revenues, expenses and changes in net
assets. All previous references to net assets have been replaced with the concept of net position
in accordance with GASB 63. The Town did not have any assets or liabilities that were required
to be reported as deferred outflows of resources and deferred inflows of resources in these
financial statements.
Town of Canton, Massachusetts Page 46 of 120 Comprehensive Annual Financial ReportSource page 57
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. Likewise the primary government is reported
separately from the legally separate component unit for which the primary government is
financially accountable.
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.
Major Fund Criteria – Major funds must be reported if both of the following criteria are met:
1) The total assets, liabilities, revenues, or expenditures/expenses of an individual
governmental or enterprise fund are at least ten percent of the corresponding element
(assets, liabilities, etc.) for all funds of that category or type (total governmental or total
enterprise funds), and
2) The total assets, liabilities, 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
Town of Canton, Massachusetts Page 47 of 120 Comprehensive Annual Financial ReportSource page 58
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 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.
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 fund:
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.
Town of Canton, Massachusetts Page 48 of 120 Comprehensive Annual Financial ReportSource page 59
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.
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 Post-Employment 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.
C. 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.
Town of Canton, Massachusetts Page 49 of 120 Comprehensive Annual Financial ReportSource page 60
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.
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.
Town of Canton, Massachusetts Page 50 of 120 Comprehensive Annual Financial ReportSource page 61
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.
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 deferred and
amortized over the life of the bonds using the effective interest method. Bond anticipation notes
payable are reported net of the applicable bond premium or discount.
In the governmental fund financial statements, the face amount of long-term debt issued is
reported as other financing sources. Premiums received on a debt issuance are reported as other
financing sources while discounts are reported as other financing uses. Issuance costs are
exclusively reported as general government expenditures regardless of whether they are withheld
from the actual proceeds.
Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position
will sometimes report a separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The Town does not have any items that qualify for reporting as
a deferred outflow.
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 does not
have any items that qualify for reporting as a deferred inflow.
Net Position – In the government-wide financial statements, net position reported as “invested in
capital assets, net of related debt” includes capital assets, net of accumulated depreciation, less
the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of
capital related debt are not considered to be capital 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.
Town of Canton, Massachusetts Page 51 of 120 Comprehensive Annual Financial ReportSource page 62
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.
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.
Town of Canton, Massachusetts Page 52 of 120 Comprehensive Annual Financial ReportSource page 63
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
$4,610,294 at June 30, 2013 and is reported as unassigned fund balance in the General Fund.
Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify
encumbrances that arise from the issuance of purchase orders resulting from normal purchasing
activity approved by the Finance Department as assigned, and (2) classify encumbrances that
result from an action of the Town Meeting as committed. Encumbrances of funds already
restricted, or committed are included within the classification of those fund balances and not
reported separately. The Town reports $326,035 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 $ - $ 419,585 $ 419,585
Restricted:
General government - 2,080,168 2,080,168
Public safety - 2,145,756 2,145,756
Education - 2,096,216 2,096,216
Culture and recreation - 394,440 394,440
Capital outlay - 1,662,878 1,662,878
Other purposes 5,160,240 328,480 5,488,720
Committed:
General government 238,738 - 238,738
Public works 130,911 - 130,911
Other purposes 100,959 - 100,959
Assigned:
Purchase orders 326,035 - 326,035
Subsequent years' budget 35,000 - 35,000
Unassigned 8,276,920 (468,758) 7,808,162
$ 14,268,803 $ 8,658,765 $ 22,927,568
E. Excess of Expenditures Over Appropriations and Deficits
During fiscal year 2013, 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 $468,758, in one special revenue fund
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 2014.
Town of Canton, Massachusetts Page 53 of 120 Comprehensive Annual Financial ReportSource page 64
F. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure for contingent assets and liabilities at the date of the basic financial statements and the
reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results
could vary from estimates that were used.
II. Detailed Notes to All Funds
A. Deposits and Investments
A cash and investment pool is maintained that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The
deposits and investments of trust funds are held separately from those of other funds.
State laws and regulations require the Town to invest funds only in pre-approved investment
instruments which include but are not necessarily limited to bank deposits, money markets,
certificates of deposit, U.S. obligations, repurchase agreements, and 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 $31,687,338 and the bank balance was $32,850,376. Of the Town's bank
balance, $31,824,104 was covered by federal depository insurance or the Depositor’s Insurance
Fund; $912,164 was collateralized and $114,108 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
$1,410,000 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.
Town of Canton, Massachusetts Page 54 of 120 Comprehensive Annual Financial ReportSource page 65
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.
Concentration of Credit Risk – The Town has adopted 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, 2013, Town has 24% of its investments in repurchase agreements
collateralized with United States government backed securities and 73% 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. None of the Town’s investments at June 30,
2013 are rated.
At June 30, 2013 the Town had the following investments:
Fair
Investment Type Value
Mutual funds $ 154,423
Repurchase agreements 1,410,000
External investment pool (MMDT) 4,244,100
Total Town investments $ 5,808,523
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 $ 616,499 $ (40,081) $ 576,418
Tax liens and foreclosures 1,531,791 - 1,531,791
Motor vehicle and other excise taxes 771,341 (224,308) 547,033
Ambulance fees 347,564 (109,123) 238,441
Public safety details 220,534 (14,777) 205,757
Intergovernmental 4,209,590 - 4,209,590
Total $ 7,697,319 $ (388,289) $ 7,309,030
Town of Canton, Massachusetts Page 55 of 120 Comprehensive Annual Financial ReportSource page 66
Receivables as of year-end for Town's proprietary funds are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Water user charges $ 1,713,373 $ - $ 1,713,373
Water liens 29,532 - 29,532
Sewer user charges 1,332,427 - 1,332,427
Sewer liens 28,925 - 28,925
Rink user charges 660 - 660
Stop loss receivables 264,283 - 264,283
Total $ 3,369,200 $ - $ 3,369,200
Governmental funds report deferred revenue 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 revenues in the governmental funds:
Other
General Governmental
Fund Funds Total
Receivable type:
Real estate and personal property taxes $ 331,826 $ - $ 331,826
Tax liens and foreclosures 1,531,791 - 1,531,791
Motor vehicle and other excise taxes 547,033 - 547,033
Ambulance fees - 238,441 238,441
Public safety details - 205,757 205,757
Intergovernmental 3,210,035 - 3,210,035
Total $ 5,620,685 $ 444,198 $ 6,064,883
School Building Assistance Reimbursement – As of June 30, 2013, the Town expects to receive
the balance of grants from the Commonwealth of Massachusetts totaling $3.7 million that are
applicable to approved school construction costs which includes both principal and interest.
These 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. In the Governmental funds,
an intergovernmental receivable of approximately $3.2 million has been recorded, which
represents the reimbursable portion of the principal balance as of June 30, 2013.
Town of Canton, Massachusetts Page 56 of 120 Comprehensive Annual Financial ReportSource page 67
C. Interfund Receivables, Payables and Transfers
The composition of interfund balances at June 30, 2013 is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds - $ 472,315
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, 2013 is as follows:
Transfers In
Nonmajor Water Sewer Rink
General Governmental Enterprise Enterprise Enterprise
Transfers Out Fund Funds Fund Fund Fund Total
General Fund $ - $ 1,576,014 $ 136,270 $ 11,595 $ 2,213 $ 1,726,092 (1)
Nonmajor Governmental Funds 1,046,252 - - - - 1,046,252 (2)
Water Enterprise Fund 744,799 - - - - 744,799 (3)
Sewer Enterprise Fund 388,281 - - - - 388,281 (3)
Rink Enterprise Fund 80,243 - - - - 80,243 (3)
Total $ 2,259,575 $ 1,576,014 $ 136,270 $ 11,595 $ 2,213 $ 3,985,667
(1) Transfers to nonmajor governmental funds to fund new senior center ($1,360,000), other capital projects ($136,014), and
retirement buyback reserves ($80,000). Transfers to enterprise funds to supplement operations.
(2) Transfers to general fund to supplement operating budgets.
(3) Transfers to general fund for indirect costs.
Town of Canton, Massachusetts Page 57 of 120 Comprehensive Annual Financial ReportSource page 68
D. Capital Assets
Capital asset activity for governmental activities for the year ended June 30, 2013, 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 - 474,770
Total capital assets not being depreciated 11,158,868 474,770 - 11,633,638
Capital assets being depreciated:
Land improvements 2,765,111 - - 2,765,111
Buildings 77,555,239 - - 77,555,239
Building improvements 23,506,112 173,758 - 23,679,870
Machinery and equipment 6,004,269 425,338 - 6,429,607
Vehicles 4,390,730 404,710 - 4,795,440
Infrastructure 18,459,088 671,974 - 19,131,062
Total capital assets being depreciated 132,680,549 1,675,780 - 134,356,329
Less accumulated depreciation for:
Land improvements (985,722) (168,646) - (1,154,368)
Buildings (19,500,713) (1,745,926) - (21,246,639)
Building improvements (8,999,513) (898,475) - (9,897,988)
Machinery and equipment (2,841,545) (537,579) - (3,379,124)
Vehicles (3,940,141) (233,378) - (4,173,519)
Infrastructure (3,773,462) (469,877) - (4,243,339)
Total accumulated depreciation (40,041,096) (4,053,881) - (44,094,977)
Total capital assets being depreciated, net 92,639,453 (2,378,101) - 90,261,352
Total governmental activities capital assets, net $ 103,798,321 $ (1,903,331) $ - $ 101,894,990
Capital asset activity for business-type activities for the year ended June 30, 2013, 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 - - 1,447,226
Vehicles 812,472 103,768 - 916,240
Infrastructure 50,860,095 2,156,795 - 53,016,890
Total capital assets being depreciated 72,045,961 2,260,563 - 74,306,524
Less accumulated depreciation for:
Buildings (2,586,758) (438,653) - (3,025,411)
Building improvements (53,672) (8,621) - (62,293)
Machinery and equipment (592,235) (137,106) - (729,341)
Vehicles (679,377) (61,133) - (740,510)
Infrastructure (23,372,906) (1,011,487) - (24,384,393)
Total accumulated depreciation (27,284,948) (1,657,000) - (28,941,948)
Total capital assets being depreciated, net 44,761,013 603,563 - 45,364,576
Total business-type activities capital assets, net $ 45,385,865 $ 603,563 $ - $ 45,989,428
Town of Canton, Massachusetts Page 58 of 120 Comprehensive Annual Financial ReportSource page 69
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 - - 924,732
Vehicles 472,596 103,768 - 576,364
Infrastructure 22,210,767 1,972,013 - 24,182,780
Total capital assets being depreciated 41,130,699 2,075,781 - 43,206,480
Less accumulated depreciation for:
Buildings (2,300,896) (408,531) - (2,709,427)
Building improvements (687) (1,373) - (2,060)
Machinery and equipment (356,317) (92,474) - (448,791)
Vehicles (389,093) (40,140) - (429,233)
Infrastructure (8,913,399) (451,236) - (9,364,635)
Total accumulated depreciation (11,960,392) (993,754) - (12,954,146)
Total capital assets being depreciated, net 29,170,307 1,082,027 - 30,252,334
Total Water capital assets, net $ 29,795,159 $ 1,082,027 $ - $ 30,877,186
Business-type Activities: Sewer
Capital assets being depreciated:
Buildings $ 1,263,604 $ - $ - $ 1,263,604
Machinery and equipment 264,697 - - 264,697
Vehicles 310,716 - - 310,716
Infrastructure 28,649,328 184,782 - 28,834,110
Total capital assets being depreciated 30,488,345 184,782 - 30,673,127
Less accumulated depreciation for:
Buildings (285,862) (30,122) - (315,984)
Machinery and equipment (92,645) (26,469) - (119,114)
Vehicles (261,124) (20,993) - (282,117)
Infrastructure (14,459,507) (560,251) - (15,019,758)
Total accumulated depreciation (15,099,138) (637,835) - (15,736,973)
Total capital assets being depreciated, net 15,389,207 (453,053) - 14,936,154
Total Sewer capital assets, net $ 15,389,207 $ (453,053) $ - $ 14,936,154
Town of Canton, Massachusetts Page 59 of 120 Comprehensive Annual Financial ReportSource page 70
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 (52,985) (7,248) - (60,233)
Machinery and equipment (143,273) (18,163) - (161,436)
Vehicles (29,160) - - (29,160)
Total accumulated depreciation (225,418) (25,411) - (250,829)
Total capital assets being depreciated, net 201,499 (25,411) - 176,088
Total Rink capital assets, net $ 201,499 $ (25,411) $ - $ 176,088
Depreciation expense was charged to functions/programs as follows:
Governmental Activities: Business-Type Activities:
General government $ 160,628 Water $ 993,754
Public safety 544,452 Sewer 637,835
Education 2,293,874 Rink 25,411
Public works 686,444 $ 1,657,000
Health and human services 20,046
Culture and recreation 348,437
$ 4,053,881
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 (38,855)
Total $ 38,856
Town of Canton, Massachusetts Page 60 of 120 Comprehensive Annual Financial ReportSource page 71
The future minimum lease payments and the present value of the minimum lease
payments at June 30, 2013, are as follows:
Fiscal Year Ended June 30, Amount
2014 $ 13,445
2015 13,445
Total minimum lease payments 26,890
Less: amounts representing interest (1,256)
Present value of minimum lease payments $ 25,634
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, 2013,
are payable as follows:
Interest Maturity July 1, June 30,
Type Rate Date 2012 Additions Retirements 2013
BAN 1.75% Matured $ 2,243,331 $ - $ (2,243,331) $ -
BAN 1.25% 3/27/14 - 334,800 - 334,800
Total Governmental Notes 2,243,331 334,800 (2,243,331) 334,800
BAN 1.75% Matured 3,037,000 - (3,037,000) -
BAN 1.25% 3/27/14 - 1,875,000 - 1,875,000
Total Business-Type Notes 3,037,000 1,875,000 (3,037,000) 1,875,000
Total Notes Payable $ 5,280,331 $ 2,209,800 $ (5,280,331) $ 2,209,800
Short-term (BANs) issued for nonmajor governmental funds were issued for departmental
equipment ($200,800) and school building improvements ($134,000). Those issued for business-
type funds were issued for water projects ($1,575,000) and sewer projects ($300,000).
Town of Canton, Massachusetts Page 61 of 120 Comprehensive Annual Financial ReportSource page 72
G. Long–Term Obligations
The Town issues general obligation bonds and notes to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds and notes have been issued for
both governmental and business-type activities. Additionally, the Town incurs various other
long-term obligations relative to associated personnel costs.
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize
indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance
with this section of the law is designated as being “inside the debt limit.” In addition, the Town
may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is
designated as being “outside the debt limit”.
The following reflects the current year activity in the long-term liability accounts:
Beginning Ending Due within
Balance Additions Deletions Balance one year
Governmental Activities:
Bond and note indebtedness $ 41,566,103 $ 2,603,159 $ (4,385,178) $ 39,784,084 $ 4,520,404
Unamortized bond premium 268,908 - (42,142) 226,766 39,116
Unamortized deferred charge on refiunding (96,194) - 28,567 (67,627) (25,045)
Capital leases 58,547 - (32,913) 25,634 12,612
Landfill closure 158,000 - (27,000) 131,000 27,000
Compensated absences 1,342,000 490,037 (335,500) 1,496,537 374,134
Other post employment benefits 27,483,000 11,897,086 (4,502,364) 34,877,722 -
Total Governmental Activities $ 70,780,364 $ 14,990,282 $ (9,296,530) $ 76,474,116 $ 4,948,221
Business-Type Activities - Water:
Bond and note debt $ 18,526,980 $ 3,288,800 $ (1,291,675) $ 20,524,105 $ 1,405,240
Unamortized deferred charge on refunding (11,595) - 3,444 (8,151) (3,020)
Compensated absences 116,000 41,890 (29,000) 128,890 32,223
Other post employment benefits 479,000 179,062 (18,138) 639,924 -
Total Water 19,110,385 3,509,752 (1,335,369) 21,284,768 1,434,443
Business-Type Activities - Sewer:
Bond and note debt 9,115,669 150,000 (671,014) 8,594,655 689,445
Unamortized deferred charge on refunding (84,241) - 25,019 (59,222) (21,935)
Compensated absences 30,000 12,580 (7,500) 35,080 8,770
Other post employment benefits 214,000 81,742 (5,426) 290,316 -
Total Sewer 9,275,428 244,322 (658,921) 8,860,829 676,280
Business-Type Activities - Rink:
Bond and note debt 50,000 - (8,000) 42,000 8,000
Compensated absences 14,000 6,383 (3,500) 16,883 4,221
Other post employment benefits 147,000 37,682 (164) 184,518 -
Total Rink 211,000 44,065 (11,664) 243,401 12,221
Total Business-Type Activities $ 28,596,813 $ 3,798,139 $ (2,005,954) $ 30,388,998 $ 2,122,944
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 62 of 120 Comprehensive Annual Financial ReportSource page 73
In March 2013, the Town issued $6,041,959 of general obligation bonds. The general obligation
bonds were used to finance school building repairs ($1,700,159), senior center plans ($450,000)
other governmental projects ($453,000), water system improvements ($3,288,800) and sewer
equipment ($150,000).
In prior years, the Town defeased general obligation bonds by placing the proceeds of the new
bonds in an irrevocable trust account to provide for all future debt service payments on the old
bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not
included in the Town’s financial statements. At June 30, 2013, $3,480,000 of defeased bonds
remain outstanding.
The following is a summary of outstanding long-term debt obligations as of June 30, 2013:
Interest Beginning Ending
Description of Issue Rate Balance Additions Maturities Balance
Governmental Activities:
General Obligation Bonds 2.00 - 5.00% $ 34,079,408 $ 2,603,159 $ (3,285,408) $ 33,397,159
Refunding Bonds 2.00 - 4.00% 7,486,695 - (1,099,770) 6,386,925
Total Governmental Activities 41,566,103 2,603,159 (4,385,178) 39,784,084
Add: Unamortized bond premium 268,908 - (42,142) 226,766
Less: Unamortized deferred charge on refunding (96,194) - 28,567 (67,627)
Total Governmental Activities, net $ 41,738,817 $ 2,603,159 $ (4,398,753) $ 39,943,223
Business-Type Activities - Water:
General Obligation Bonds 2.00 - 5.00% $ 17,166,000 $ 3,288,800 $ (1,118,000) $ 19,336,800
Refunding Bonds 3.25 - 4.00% 491,980 - (82,675) 409,305
Massachusetts Water Resource Authority 0.00% 869,000 - (91,000) 778,000
Total Water 18,526,980 3,288,800 (1,291,675) 20,524,105
Less: Unamortized deferred charge on refunding (11,595) - 3,444 (8,151)
Total Water, net 18,515,385 3,288,800 (1,288,231) 20,515,954
Business-Type Activities - Sewer:
General Obligation Bonds 2.00 - 5.00% 3,134,000 150,000 (205,000) 3,079,000
Refunding Bonds 3.25 - 4.00% 2,389,825 - (309,055) 2,080,770
Massachusetts Water Pollution Abatement Trust 2.00% 3,591,844 - (156,959) 3,434,885
Total Sewer 9,115,669 150,000 (671,014) 8,594,655
Less: Unamortized deferred charge on refunding (84,241) - 25,019 (59,222)
Total Sewer, net 9,031,428 150,000 (645,995) 8,535,433
Business-Type Activities - Rink:
General Obligation Bonds 2.00 - 4.25% 50,000 - (8,000) 42,000
Total Rink 50,000 - (8,000) 42,000
Total Business-Type Activities, net $ 27,596,813 $ 3,438,800 $ (1,942,226) $ 29,093,387
Town of Canton, Massachusetts Page 63 of 120 Comprehensive Annual Financial ReportSource page 74
Payments on outstanding bond balances due in future years consist of the following:
Governmental Activities
Year Ending Principal Interest
June 30, Balance Balance Total
2014 $ 4,520,404 $ 1,545,645 $ 6,066,049
2015 4,343,190 1,398,858 5,742,048
2016 4,207,140 1,219,918 5,427,058
2017 3,942,100 1,054,879 4,996,979
2018 3,596,475 903,578 4,500,053
2019 - 2023 14,732,775 2,552,781 17,285,556
2024 - 2028 3,695,000 421,388 4,116,388
2029 - 2032 747,000 54,699 801,699
Total $ 39,784,084 $ 9,151,746 $ 48,935,830
Business-Type Activities: Water
Year Ending Principal Interest
June 30, Balance Balance Total
2014 $ 1,405,240 $ 662,304 $ 2,067,544
2015 1,400,960 628,093 2,029,053
2016 1,398,465 583,492 1,981,957
2017 1,354,735 541,220 1,895,955
2018 1,265,315 483,595 1,748,910
2019 - 2023 6,001,390 1,859,853 7,861,243
2024 - 2028 4,885,000 994,459 5,879,459
2029 - 2033 2,813,000 224,406 3,037,406
Total $ 20,524,105 $ 5,977,422 $ 26,501,527
Business-Type Activities: Sewer
Year Ending Principal Interest
June 30, Balance Balance Total
2014 $ 689,445 $ 239,731 $ 929,176
2015 687,215 220,285 907,500
2016 684,060 198,521 882,581
2017 678,197 177,513 855,710
2018 676,677 157,517 834,194
2019 - 2023 2,469,172 506,541 2,975,713
2024 - 2028 1,648,238 236,255 1,884,493
2029 - 2032 1,061,651 52,901 1,114,552
Total $ 8,594,655 $ 1,789,264 $ 10,383,919
Business-Type Activities: Rink
Year Ending Principal Interest
June 30, Balance Balance Total
2014 $ 8,000 $ 1,159 $ 9,159
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 $ 42,000 $ 3,999 $ 45,999
Town of Canton, Massachusetts Page 64 of 120 Comprehensive Annual Financial ReportSource page 75
The following represents authorized and unissued debt as of June 30, 2013:
Project Amount
Governmental:
School building improvements $ 2,925,408
Fire ladder truck 810,000
Other capital projects 604,786
Business-type:
Water tank rehabiliation 1,090,000
Water meter replacement 631,250
Water other capital projects 620,000
Sewer pumping station 1,286,290
Sewer system improvements 1,254,305
Sewer meter replacement 378,750
Sewer other capital projects 298,000
Rink compressor 245,000
Total Authorized and Unissued $ 10,143,789
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, 2013, 2012, and 2011 were $3,041,784, $2,957,615, and $2,992,977 respectively,
which equaled its required contribution for each year. Schedules of funding progress and
contribution funding are included as required supplementary information.
Town of Canton, Massachusetts Page 65 of 120 Comprehensive Annual Financial ReportSource page 76
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 $8,648,037 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 Post-Employment 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.
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 #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) $ 12,260,294
Interest on net OPEB obligation 1,189,568
Adjustment to ARC (1,254,290)
Annual OPEB cost 12,195,572
Contributions made $ (4,526,092)
Increase in net OPEB obligation 7,669,480
Net OPEB obligation at beginning of year,
as restated 28,323,000
Net OPEB obligation at end of year $ 35,992,480
Town of Canton, Massachusetts Page 66 of 120 Comprehensive Annual Financial ReportSource page 77
The net OPEB obligation of the Town was overstated at June 30, 2012 by $100,000. This
overstatement was discovered by management during the current year and is a result of
understating the Town’s OPEB contributions in the prior fiscal year. Management also
discovered during the current year that certain employees were classified as rink rather than
governmental. The OPEB liability at June 30, 2012 related to these employees was determined to
be $161,000. As a result, the net position of governmental activities was restated from
$62,101,036 to $61,940,036 at June 30, 2012. Accordingly, the net position of the Business-type
activities was restated from $20,135,162 to $20,396,162 and the net position of the Rink
Enterprise Fund was restated from ($264,503) to ($3,503) at June 30, 2012.
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, 2011 $ 11,610,000 37% $ 20,241,000
June 30, 2012 $ 12,639,000 35% $ 28,323,000
June 30, 2013 $ 12,195,572* 37% $ 35,992,480
* Reflected in the Statement of Activities as follows:
The AOPEBC at June 30, 2013 was charged to the following functional programs: General
Government $497,944; Public Safety $2,435,019; Education $7,913,410; Public Works $532,045;
Health and Human Services $155,022; Culture and Recreation $363,646; Water $179,062; Sewer
$81,742; and Rink $37,682.
Funding Status and Funding Progress – The funded status of the Plan at June 30, 2013, based on
the most recent actuarial valuation performed as of January 1, 2013, was as follows (in millions):
Actuarial
Accrued
Liability UAAL as a
Actuarial (AAL) Entry Unfunded Percentage
Value of Age Normal AAL Funded Covered of Covered
Assets Cost (UAAL) Ratio Payroll Payroll
(A) (B) (B – A) (A/B) (C) ((B-A)/C)
$ 0.1 $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.
Town of Canton, Massachusetts Page 67 of 120 Comprehensive Annual Financial ReportSource page 78
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, 2013, the amount of the liability for IBNR health insurance
claims totaled $912,916. This liability is the best estimate based on 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, 2011, are as
follows:
Balance at Claims and
Beginning Changes in Claims Balance at Current
of Year Estimates Payments End of Year Portion
Fiscal Year 2013 $ 684,000 $ 14,435,304 $(14,206,388) $ 912,916 $ 912,916
Fiscal Year 2012 820,000 12,729,480 (12,865,480) 684,000 684,000
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, 2013,
and is therefore not reported.
Town of Canton, Massachusetts Page 68 of 120 Comprehensive Annual Financial ReportSource page 79
E. Commitments
The Town has entered or is planning to enter into contracts for various projects for which it has
authorized approximately $10.0 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, 2013, 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, 2013. 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; $131,000 has been recorded as a governmental activities
liability; actual costs may be higher due to inflation, changes in technology, or changes in
regulations.
H. Implementation of GASB pronouncements
Current Year Implementations –
In November 2010, the GASB issued GASB Statement No. 60, Accounting and Financial
Reporting for Service Concession Arrangements. The objective of this Statement was to improve
financial reporting by addressing issues related to service concession arrangements. The
provisions of GASB 60 became effective for the Town in fiscal year 2013 and did not have a
material effect on its financial statements.
In November 2010, the GASB issued GASB Statement No. 61, The Financial Reporting Entity:
Omnibus—an amendment of GASB Statements No. 14 and No. 34. The objective of this
Statement was to improve financial reporting for a governmental financial reporting entity. The
requirements of Statement No. 14, The Financial Reporting Entity, and the related financial
reporting requirements of Statement No. 34, Basic Financial Statements—and Management’s
Discussion and Analysis—for State and Local Governments, were amended to better meet user
needs and to address reporting entity issues that have arisen since the issuance of those
Statements. The provisions of GASB 61 became effective for the Town in fiscal year 2013 and
did not have a material effect on its financial statements.
Town of Canton, Massachusetts Page 69 of 120 Comprehensive Annual Financial ReportSource page 80
In December 2010, the GASB issued GASB Statement No. 62, Codification of Accounting and
Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncement. The Statement was intended to enhance the usefulness of its Codification by
incorporating guidance that previously could only be found in certain Financial Accounting
Standards Board (“FASB”) and American Institute of Certified Public Accountants (“AICPA”)
pronouncements. The provisions of GASB 62 became effective for the Town in fiscal year 2013
and did not have a material effect on its financial statements.
In June 2011, the GASB issued GASB Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources, and Net Position. The objective of this
Statement was to provide financial reporting guidance for deferred outflows of resources and
deferred inflows of resources. Concepts Statement No. 4, Elements of Financial Statements,
introduced and defined those elements as a consumption of net assets by the government that is
applicable to a future reporting period, and an acquisition of net assets by the government that is
applicable to a future reporting period, respectively. The provisions of GASB 63 became
effective for the Town in fiscal year 2013 and did not have a material effect on its financial
statements.
In June 2011, the GASB issued GASB Statement No. 64, Derivative Instruments: Application of
Hedge Accounting Termination Provisions—an amendment of GASB Statement No. 53. The
objective of this Statement was to clarify whether an effective hedging relationship continues
after the replacement of a swap-counterparty or a swap-counterparty’s credit support provider.
The provisions of GASB 64 became effective for the Town in fiscal year 2013 and did not have a
material effect on its financial statements.
Future 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 this Statement are effective for
financial statements for periods beginning after December 15, 2012 (fiscal year 2014). The Town
is currently evaluating whether adoption will have a material impact on the 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 this Statement are effective for financial statements for periods beginning after
December 15, 2012 (fiscal year 2014). The Town is currently evaluating whether adoption will
have a material impact on the financial statements.
Town of Canton, Massachusetts Page 70 of 120 Comprehensive Annual Financial ReportSource page 81
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 this Statement are effective for financial statements for periods
beginning after June 15, 2013 (fiscal year 2014). The Town is currently evaluating whether
adoption will have a material impact 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
Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide
pensions through pension plans administered as trusts or similar arrangements that meet certain
criteria. Statement 68 requires governments providing defined benefit pensions to recognize their
long-term obligation for pension benefits as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits. The Statement
also enhances accountability and transparency through revised and new note disclosures and
required supplementary information. The provisions of this Statement are effective for financial
statements for periods beginning after June 15, 2013 (fiscal year 2014). The Town believes the
adoption of this statement will have a material impact on the financial statements.
In January 2013, the GASB issued GASB Statement No. 69, Government Combinations and
Disposals of Government Operations. GASB 69 established accounting and financial reporting
standards to government combinations and disposals of government operations. The provisions
of this Statement are effective for financial reporting periods beginning after December 15, 2013
(fiscal year 2015). The Town is currently evaluating whether adoption will have a material
impact on the 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 this Statement are effective for financial reporting periods beginning after June
15, 2013 (fiscal year 2014). The Town is currently evaluating whether adoption will have a
material impact on the financial statements.
I. Subsequent Events
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 ten 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.
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