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2012 Comprehensive Annual Financial Report (PDF)
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended
June 30, 2012Source page 2
On the cover: The Neponset Street water treatment facility was dedicated to Edward M. Sullivan, considered a tireless pioneer in Canton’s move to establish a more independent local water supply. rd M. Sullivan ed on the Board of Selectmen, mittee, and the MWRA Advisory Boar from the Residents of Canton. rd of Selectmen Victor D. Del Vecchio Avril T. Elkort :lvatori, Jr. er 23, 2012 The Edward M. Sullivan facility, which is the second water treatment plant constructed by the Town, became operational in April, 2012. These plants will allow the Town to treat water from its wells, which will be less costly than purchasing water from the Massachusetts Water Resource Authority. [Original embedded text, retained for comparison] On the cover: The Neponset Street water treatment facility was dedicated to Edward M. Sullivan, considered a tireless pioneer in Canton’s move to establish a more independent local water supply. The Edward M. Sullivan facility, which is the second water treatment plant constructed by the Town, became operational in April, 2012. These plants will allow the Town to treat water from its wells, which will be less costly than purchasing water from the Massachusetts Water Resource Authority.
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Town of Canton, Massachusetts
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2011 through June 30, 2012
Prepared by the Finance DepartmentSource page 4
TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2012
TABLE OF CONTENTS
Introductory Section................................................................................................................................................. 1
Letter of Transmittal ................................................................................................................................................ 1
Organizational Chart ............................................................................................................................................... 7
Principal Officials..................................................................................................................................................... 8
Certificate of Achievement for Excellence in Financial Reporting .......................................................................... 9
Financial Section .................................................................................................................................................... 11
Independent Auditors’ Report ............................................................................................................................... 11
Management’s Discussion and Analysis .............................................................................................................. 13
Basic Financial Statements................................................................................................................................... 22
Statement of Net Assets.................................................................................................................................... 23
Statement of Activities ....................................................................................................................................... 24
Governmental Funds – Balance Sheet ............................................................................................................. 26
Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the
Statement of Net Assets ................................................................................................................................. 27
Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances .................... 28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities ....................................................................................... 29
Proprietary Funds – Statement of Net Assets ................................................................................................... 30
Proprietary Funds – Statement of Revenues, Expenses and Changes in Fund Net Assets ............................ 31
Proprietary Funds – Statement of Cash Flows ................................................................................................. 32
Fiduciary Funds – Statement of Fiduciary Net Assets ...................................................................................... 33
Fiduciary Funds – Statement of Changes in Fiduciary Net Assets ................................................................... 34
Notes to Basic Financial Statements ................................................................................................................ 35
Required Supplementary Information ................................................................................................................... 67
Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual . 68
Retirement System Schedules .......................................................................................................................... 70
Retirement system schedule of funding progress ........................................................................................ 71
Retirement system schedule of employer contributions ............................................................................... 72
Other Postemployment Benefits Plan Schedules ............................................................................................. 73Source page 5
Other postemployment benefit plan funding progress & employer contributions ......................................... 74
Other postemployment benefit plan actuarial methods and assumptions .................................................... 75
Notes to Required Supplementary Information..................................................................................................... 76
Combining Statements .......................................................................................................................................... 79
Nonmajor Governmental Funds ........................................................................................................................ 80
Nonmajor Governmental Funds - Combining Balance Sheet ...................................................................... 82
Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances........................................................................................................................... 86
Internal Service Funds ...................................................................................................................................... 91
Internal Service Funds – Combining Statement of Net Assets .................................................................... 92
Internal Service Funds – Combining Statement of Revenues, Expenses, and
Changes in Fund Net Assets ........................................................................................................................ 93
Internal Service Funds – Combining Statement of Cash Flows ................................................................... 94
Fiduciary Funds ................................................................................................................................................. 95
Agency Fund – Statement of Changes in Assets and Liabilities .................................................................. 96
Statistical Section ................................................................................................................................................... 97
Net Assets by Component – Last Ten Fiscal Years ............................................................................................. 98
Changes in Net Assets – Last Ten Fiscal Years .................................................................................................. 99
Fund Balances, Governmental Funds – Last Ten Fiscal Years ......................................................................... 100
Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years ...................................................... 101
Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates –
Last Ten Fiscal Years ....................................................................................................................................... 102
Principal Taxpayers – Current Year and Nine Years Ago .................................................................................. 103
Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................................... 104
Ratios of Outstanding Debt and General Bonded Debt – Last Ten Fiscal Years............................................... 105
Direct and Overlapping Governmental Activities Debt........................................................................................ 106
Computation of Legal Debt Margin – Last Ten Fiscal Years .............................................................................. 107
Demographic and Economic Statistics – Last Ten Fiscal Years ........................................................................ 108
Principal Employers (Excluding Town) – Current Year and Nine Years Ago ..................................................... 109
Full-time Equivalent Town Employees by Function - Last Ten Fiscal Years ......................................................110
Operating Indicators by Function/Program – Last Ten Fiscal Years .................................................................. 111
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .............................................................. 112Source page 6
Introductory Section The Town leased fifteen acres of its former landfill to Southern Sky Renewable Energy for installation of a 5.6 megawatt solar panel facility. This facility started to generate electricity for municipal and school buildings in the first quarter of fiscal 2013. Expected results include new recurring operational revenue and reductions in energy costs totalling $400,000 in first year of operation.
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Introductory Section Letter of Transmittal December 6, 2012 To the Honorable Selectmen and Citizens of the Town of Canton: At the close of each fiscal year, state law requires the Town of Canton to publish a complete set of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the Town of Canton, Massachusetts, for the fiscal year ending June 30, 2012 for your review. The report is designed to be used by the elected and appointed officials of the Town and others who require information related to its management and progress, such as bond analysts, banking institutions and rating agencies as well as the residents and taxpayers of Canton. This report consists of management’s representations concerning the finances of the Town of Canton. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. Management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh their benefits, the Town of Canton’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The Town of Canton’s financial statements have been audited by Powers & Sullivan, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Canton for the fiscal year ended June 30, 2012 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town of Canton’s financial statements for the fiscal year ended June 30, 2012 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. Town of Canton, Massachusetts 1 Comprehensive Annual Financial Report
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The independent audit of the financial statements of the Town of Canton was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Canton’s separately issued Reports of Federal Award Programs. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Canton’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town Canton was incorporated as a Town in 1797. The Town is located in eastern Massachusetts, approximately 18 miles southwest of Boston, has a population of approximately 21,000 and a land area of approximately 19 square miles. It is situated at the junction of Interstates 95/128 and 93, with access to Route 24, providing an excellent location for residents, businesses and commuters. The Town offers the further convenience of a commuter rail service to Boston and Providence along with Amtrak passenger service to Boston and New York being available at the nearby Route 128 Station. The Town has a rich and varied industrial heritage, serving as the location of Paul Revere’s copper rolling mills in post-Colonial times, and as the site of rubber, chemical and woolen manufacturing in more recent times. Commercial enterprises play a key role in the Town’s fiscal stability and are considered a major asset to the community. The prime commercial areas are well located so as to allow direct highway access without affecting the community’s small town charm. Many of the Town’s lakes, ponds and wetlands have been protected and preserved for present enjoyment and future generations. Among the protected areas are the Eleanor Cabot Bradley Reservation, an 82 acre estate that blends open fields, woodlands and gardens in the shadow of Great Blue Hill and Pequitside Farm, a town- owned 33 acre conservation and recreation area which offers playing fields, picnicking, hiking and cross country skiing. The Town offers a full range of traditional municipal services including police and fire protection, ambulance and rescue services, education, maintenance of streets and infrastructure, solid waste collection and disposal, health and human services, cultural and recreational, administrative and financial services. The Town is a member community of the Massachusetts Water Resources Authority (MWRA) for its water and sewer services. The Town prides itself on its quality school system. Canton students consistently perform well on national and state tests and over 95% of students graduating from the high school go on to higher education. The Town is the location of the Blue Hills Regional Technical School which provides expanded vocational education opportunities for high school students of Canton and eight other area communities. Canton is also home to one of the two campuses of Massasoit Community College. The campus is a multi-level facility with specialized labs and art studios that support the technical and visual arts programs of the College. The campus also includes the Milton Art Museum, Akillian Gallery and the College’s Professional Development Center. Town of Canton, Massachusetts 2 Comprehensive Annual Financial Report
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The Town has reached its 10% affordable housing requirement mandated by the Commonwealth of Massachusetts (Commonwealth), which is an important milestone as communities under the 10% threshold are subject to an appeals process that can overturn local zoning board decisions. This will allow the Town to maintain its commitment to developing much needed affordable housing units in areas of the Town that can accommodate the growth. The Town operates under the Selectmen, Town Administrator and Open Town Meeting form of government. The five elected Selectmen make policy decisions, and the Town Administrator is responsible for carrying out the policies of the Selectmen and for managing the day-to-day operations of the Town. The policies and procedures of the Board of Selectmen are detailed in the Administrative Code that will continue to evolve and be created over time to best serve the community. An elected, five-member School Committee appoints a School Superintendent who administers the public school system of the Town. School Committee members, like the Selectmen, are elected at-large to three-year staggered terms. An annual operating budget is approved by Town Meeting two months prior to the start of the fiscal year. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government) and department (e.g. finance) allowing the department heads to allocate resources within the department as they see fit. Transfers between departments, however, need special approval by Town Meeting unless specifically exempted by state statute. Factors Affecting Economic Condition The Town maintains a strong commercial tax base which represented 23% of the total assessed property value in 2012. Market value per capita is approximately $200,000 and the Town’s per capita income is significantly higher than the state average, which adds to the fiscal strength of the community. Through proactive measures by Town management, the Town has been able to attract and retain several large international companies such as Reebok, Dunkin’ Brands and LoJack. In addition, Organogenesis, the world leader in regenerative medicine, was enticed to remain and expand in Canton with $12.9 million in incentives as part of the Commonwealth’s $1.0 billion Life Sciences Initiative. The Town also received approximately $850,000 in State grant funds to upgrade roads and sidewalks in the Dan Road area where Organogenesis resides. The Board of Selectmen and the local Economic Development Committee (EDC) are committed to negotiating Tax Incremental Financing (TIF) agreements that enhance the Town’s tax base. A formal TIF policy has been published to provide consistent and rational evaluation criteria to better support the investment in terms of reduced taxes to the Town in exchange for promoting commercial development. Both the Selectmen and the EDC were also instrumental in developing a series of internet based presentations to encourage Canton as an attractive business destination and also a comprehensive guide to assist business with local permitting processes. In addition, a Special Tax Assessment agreement was recently approved by the Town to allow Harbar LLC, a tortilla and specialty flatbread manufacturer, to expand by acquiring an 84,000 square foot vacant building. The Town was recently ranked 5th out of 351 municipalities by the Massachusetts High Technology Council’s MassTrack program. MassTrack was created to measure the support of state and local officials for the priorities of the technology economy, including supporting technology development and growth. One of the main factors in attaining this ranking was the Town’s adoption of the Massachusetts General Law (MGL) chapter 43D expedited permitting law that allows Town Meeting to designate targeted developments for a streamlined permit review process. As part of adopting this legislation, a Permit Advisory Committee was also formed to bring together the Town of Canton, Massachusetts 3 Comprehensive Annual Financial Report
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key permit granting departments to assist any proponent of the commercial development through the permitting process. The Town also utilized a $150,000 state grant it received to purchase permitting software and to contract with a permit specialist to assist with implementing streamlined permitting procedures. The Town has also been lauded as a prime destination for the biotechnology industry by the Massachusetts Biotechnology Council (MBC). Through its BioReady Communities Campaign, the MBC rates a community’s readiness to host and attract biotechnology research and manufacturing facilities. The Town was one of only 19 Massachusetts communities to receive a Platinum ranking from the MBC, which is the highest attainable. To achieve this ranking a community must have a building that is already permitted for biotechnology uses and has at least 20,000 square feet available for biotechnology uses or has a shovel ready, pre-permitted land site that has already completed a state environmental review. The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden by a majority vote at a Town election. While revenue increases have been limited in recent years, fixed costs, including health insurance and pension costs, have increased substantially. Several years ago, the Town’s management made the difficult choice to cut services and raise fees in order to balance the budget. With more cuts looming in future years, the Town’s voters approved a $4.5 million Proposition 2 ½ tax override for fiscal year 2009 that allowed for the restoration of most of the budget cuts from the prior years. The tax override was planned to be phased in over a three year period with an annual cost to the average residential homeowner of $450. As a result of the Proposition 2 ½ tax override, Standard and Poor’s upgraded the Town’s bond rating from ‘AA+’ to ‘AAA’, their highest rating given. The override and the resulting revenue flexibility to restore lost services and stabilize budgets in future fiscal years were cited as prominent factors in the upgrade. Standard and Poor’s also cited the Town’s strong wealth and income levels in addition to strong reserve levels and financial management policies. Due to a very mild winter in fiscal year 2012, the Town did not rely on reserve funds to pay for snow and ice removal. In addition, the Town’s health insurance budget provided surplus funds continuing to realize savings from previously implemented plan reforms. These positive expenditures coupled with better than expected revenues from Building Permit fees and Excise Taxes resulted in increasing cash reserves by $2 million in fiscal year 2012. The Town’s reserves are approximately $7.9 million, which is 10.7% of the fiscal year 2013 general fund operating budget. The Town is committed to maintaining its reserves at a level expected from communities with the highest possible bond rating. The financial challenges will continue in fiscal year 2013. The Town has negotiated changes to its health insurance plans which will require higher out of pocket costs from its employees and retirees but stabilize rates. The Town will use some of this savings to fund a modest cost of living raise for its employees and to fund its Other Postemployment Benefits (OPEB) obligations. The Town also took the prudent and extraordinary step of balancing the fiscal year 2013 budget without the usage of any cash reserves. Capital Financing As part of the annual budget process, the Capital Planning Committee (CPC) recommends the capital budget for the upcoming year and prepares a five-year plan to address the long-term capital needs of the Town. The capital spending plan for the five year period from fiscal year 2013 through fiscal year 2017 has an estimated cost of $23.5 million, with $5.2 million to be funded from estimated revenues with the remainder to be funded from the issuance of bonds. The CPC’s capital plan has allocated $4.9 million for municipal departments, $3.9 million for the school department, $10.3 million for the water enterprise fund, $4.2 million for the sewer enterprise fund, and $235,000 for the rink enterprise fund. Town of Canton, Massachusetts 4 Comprehensive Annual Financial Report
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The Town’s target set aside to finance its capital plan is 5% to 6% of recurring revenues. A portion of its annual capital plan funds smaller capital projects on a pay-as-you-go basis through recurring revenues while larger capital projects are financed through borrowing. Major Initiatives During fiscal year 2012 the Town continued to proceed with several ‘green’ initiatives. Town Meeting previously approved an article to allow the site of the Town’s former landfill to be leased for the purposes of installing or constructing solar panels that can generate, store and transmit electricity. Southern Sky Renewable Energy LLC was selected and has completed constructing the solar farm and expects to commence operation in fiscal year 2013. The Town will benefit by receiving lease payments and by purchasing electricity at reduced costs. In addition, Town Meeting appropriated approximately $960,000 for the Town to enter into energy performance contracts for various energy efficient building upgrades. The energy savings from these projects are guaranteed to cover the construction costs thereby allowing the Town to complete these upgrades with no cost to the taxpayer. Town Meeting has approved the construction of two water treatment plants at a cost of approximately $13,500,000 to improve water quality, utilize local, less expensive, sources of water. The first of these plants, the James P. Moran Water Treatment Facility, became operational during fiscal year 2011. The second water treatment plant began operating in fiscal 2012. Also, $7,000,000 in sewer improvements were approved to reduce MWRA assessments for sewer treatment and to reduce outflows. To help finance this sewer project, the Town has received a $4.2 million loan from the Massachusetts Water Pollution Abatement Trust. The interest rate on this 20 year loan is fixed at 2% with principal forgiveness amounting to almost $500,000. The cost of these water and sewer projects is being funded entirely from utility rates and fees. Town management is continuing its efforts to assist in the redevelopment of the 42-acre Plymouth Rubber Company property. This is an important property to the Town as it occupies a location near Canton center and is adjacent to approximately 300 acres of land that includes three local ponds. The Board of Selectmen has made site cleanup and managing the water rights surrounding the property top priorities. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Canton for its comprehensive annual financial report for the fiscal year ended June 30, 2011. This was the sixth year that the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Town of Canton, Massachusetts 5 Comprehensive Annual Financial Report
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The publication of this CAFR represents an important achievement in the ability of the Town of Canton to provide enhanced financial information and accountability to its citizens, elected and appointed officials and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. Special thanks also go to the public accounting firm of Powers & Sullivan, LLC for their advice and assistance in the preparation of this report. Respectfully submitted, William T. Friel James R. Murgia Town Administrator Finance Director Town of Canton, Massachusetts 6 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts Comprehensive Annual Financial Report TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Blue Hills Board of Regional Library of Selectmen | | of Assessors School Trustees District Town School Board Planning Meeting Committee of Health Board \—— Town Library Moderator | | Superintendent || Public Health Planner Clerk Administrator Assessing Representative Director ___ Finance Board Board School Director Town Town Town Director of Canton ——______ es Committee Executive TownCounsel -— Assistant Personnel I Adv. Board Town Planner -—J Administrative SS Secretary Building Sealer of Weights| I Renovations and Measures Committee Secretary — Capital Outlay Committee Board of Selectmen Appointed Multiple Member Bodies -Register of Voters -Comm. on Disability -Zoning Board. of Appeals -Water/Sewer Rate Policy Commission - Youth Commission -Historical Commission -Fair Housing Committee -Cable Advisory Committee -Beautification Committee -Conservation Commission -Council on Aging -Industrial Develop. Financing Authority -Local Emergency Planning Committee -Traffic Study Committee -Industrial Development Commission a Council Animal Control aide a a Veteran’s Building Police Fire Dept. of Human Department Zoning Maintenance Resource of Finance — Recreation | | Conservation Commission] | Commission Department once Department nats — P ub Wonks Department a Department I Building VWeteran’s Building Police Fire Buperintendent Human Finance COA Animal of Resource Control Commissioner] | Director [Superintendent Chief Chief Public Works | [Administrator Director Director Officer Director Agent Recreation | | Conservation Commission 0 rganiza ionalC hart [Original embedded text, retained for comparison] Organizational Chart Town of Canton, Massachusetts 7 Comprehensive Annual Financial Report
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Town of Canton, Massachusetts
Principal Officials
Board of Selectmen
Robert E. Burr Jr., Chairman
Avril T. Elkort, Vice Chairman
Gerald A. Salvatori Jr., Clerk
Victor D. Del Vecchio, Member
John J. Connolly, Member
Town Administrator – William T. Friel
Finance Director – James R. Murgia
Town Accountant – Kathleen Dooley Butters
School Superintendent – Jeffrey W. Granatino
School Business Administrator – Kenneth Leon
Police Chief – Kenneth N. Berkowitz
Fire Chief – Charles E. Doody
DPW Superintendent – Michael T. Trotta
Town of Canton, Massachusetts 8 Comprehensive Annual Financial ReportSource page 15
Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Canton Massachusetts For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2011 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Ln Sandor~ Wy € Ge Executive Director Town of Canton, Massachusetts 9 Comprehensive Annual Financial Report [Original embedded text, retained for comparison] Certificate of Achievement for Excellence in Financial Reporting Town of Canton, Massachusetts 9 Comprehensive Annual Financial Report
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Financial Section Centon Council on Aging 781 828-1323 The Town’s Council on Aging department purchased a new twenty passenger senior citizen bus to provide transportation to seniors and disabled citizens who are unable to drive on their own. [Original embedded text, retained for comparison] Financial Section The Town’s Council on Aging department purchased a new twenty passenger senior citizen bus to provide transportation to seniors and disabled citizens who are unable to drive on their own.
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Financial Section Independent Auditors’ Report To the Honorable Board of Selectmen Town of Canton, Massachusetts We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of and for the fiscal year ended June 30, 2012, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Canton, Massachusetts' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Canton, Massachusetts, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 6, 2012, on our consideration of the Town of Canton, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Canton’s basic financial statements. The combining statements, as listed in the table of contents, are presented for the purpose of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. Town of Canton, Massachusetts 11 Comprehensive Annual Financial Report
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Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financials statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The introductory section and statistical tables, as listed in the table of contents, are presented for the purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. December 6, 2012 Town of Canton, Massachusetts 12 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis Town of Canton, Massachusetts 13 Comprehensive Annual Financial Report
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Management’s Discussion and Analysis As management of the Town of Canton, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2012. This is the tenth year our financial statements have been prepared under the Governmental Accounting Standards Board Statement Number 34 – Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. We encourage readers to consider the information presented in this report. The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides guidance on how to prepare financial statements in conformity with generally accepted accounting principals (GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to establish consistent reporting standards for all governments in the United States. This consistent application is the only way users (including citizens, the media, legislators and others) can assess the financial condition of one government compared to others. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Canton’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to private-sector business. The statement of net assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, education, public works, human services, culture and recreation, and interest expenditures. The business-type activities include the water, sewer and skating rink activities. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Town of Canton, Massachusetts 14 Comprehensive Annual Financial Report
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Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Canton adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town maintains two types of propriety funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water, sewer and skating rink activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among various functions. The Town uses internal service funds to account for health claims, workers’ compensation, unemployment claims and building insurance activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government- wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Town of Canton, Massachusetts 15 Comprehensive Annual Financial Report
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Government-wide Financial Analysis Governmental Activities As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For governmental activities, assets exceeded liabilities by $62.1 million at the close of fiscal year 2012. The overall financial condition of the Town’s governmental activities remained stable during fiscal year 2012. Governmental net assets of $64.0 million (103%), reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in its capital assets is reported net of its related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the net assets, $6.8 million (10.9%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets has a year-end deficit balance of ($8.6) million. The primary reason for this deficit balance is the $27.3 million other postemployment benefit long-term liability that has accumulated. The governmental net assets decreased by $3.6 million during the current fiscal year. This net decrease is attributable to various offsetting increases and decreases within the Governmental funds. Net Assets increased due to favorable General Fund budgetary results of $2.1 million, $797,000 of police department grant award in which no funds had been expended, $1.2 million in the state Chapter 90 capital grant revenue, and $431,000 of capital asset additions funded through General Fund appropriations. These increases were offset by a $7.9 million increase in the other postemployment benefit (OPEB) liability. The Town currently funds the postemployment benefits on a pay-as-you-go basis which is lower than the annual required contribution. The governmental expenses totaled $91.6 million of which $23.9 million (26%) was directly supported by program revenues. General revenues and transfers totaled $64.1 million, primarily coming from property taxes, motor vehicle excise, non-restricted state aid and other miscellaneous charges. Town of Canton, Massachusetts 16 Comprehensive Annual Financial Report
Source page 24
Condensed financial data for fiscal years 2012 and 2011 is presented below.
Balance at Balance at
June 30, June 30, Increase
2012 2011 (Decrease)
Assets:
Current assets…………………………………………$ 34,692,593 $ 33,569,083 $ 1,123,510
Noncurrent assets (excluding capital)……………… 3,210,817 3,642,123 (431,306)
Capital assets………………………………………… 103,798,321 101,169,987 2,628,334
Total assets……………………………………… 141,701,731 138,381,193 3,320,538
Liabilities:
Current liabilities (excluding debt)………………… 7,720,913 8,376,753 (655,840)
Noncurrent liabilities (excluding debt)……………… 27,897,634 20,004,698 7,892,936
Current debt………………………………………… 6,641,098 5,541,382 1,099,716
Noncurrent debt……………………………………… 37,341,050 38,805,909 (1,464,859)
Total liabilities…………………………………… 79,600,695 72,728,742 6,871,953
Net Assets:
Invested in capital assets, net of related debt…… 63,962,326 60,831,489 3,130,837
Restricted……………………………………………… 6,774,650 7,457,544 (682,894)
Unrestricted…………………………………………… (8,635,940) (2,636,582) (5,999,358)
Total net assets………………………………… $ 62,101,036 $ 65,652,451 $ (3,551,415)
Year Ended Year Ended
June 30, June 30, Increase
2012 2011 (Decrease)
Program revenues:
Charges for services………………………………… $ 5,494,415 $ 5,052,197 $ 442,218
Operating grants and contributions………………… 16,776,734 15,381,360 1,395,374
Capital grants and contributions…………………… 1,659,561 162,497 1,497,064
Total program revenues……………………… 23,930,710 20,596,054 3,334,656
General Revenues:
Real estate and personal property taxes………… 56,128,582 54,892,887 1,235,695
Tax liens……………………………………………… 597,670 349,982 247,688
Motor vehicle excise taxes………………………… 3,101,266 3,286,609 (185,343)
Hotel/motel tax……………………………………… 38,309 - 38,309
Penalties and interest on taxes…………………… 263,511 305,814 (42,303)
Payments in lieu of taxes…………………………… 219,205 199,225 19,980
Nonrestricted grants and contributions…………… 2,026,227 2,201,430 (175,203)
Unrestricted investment income…………………… 166,466 195,037 (28,571)
Miscellaneous revenues…………………………… 382,614 471,501 (88,887)
Total general revenues………………………… 62,923,850 61,902,485 1,021,365
Total revenues…………………………………… 86,854,560 82,498,539 4,356,021
Expenses:
General government………………………………… 5,898,196 6,012,221 (114,025)
Public safety………………………………………… 15,490,670 14,845,911 644,759
Education……………………………………………… 58,649,480 57,174,814 1,474,666
Public works………………………………………… 5,703,015 5,964,437 (261,422)
Human services……………………………………… 1,221,862 1,133,985 87,877
Culture and recreation……………………………… 2,944,861 2,882,803 62,058
Interest………………………………………………… 1,664,859 1,797,797 (132,938)
Total expenses………………………………… 91,572,943 89,811,968 1,760,975
Excess (Deficiency) before transfers……………… (4,718,383) (7,313,429) 2,595,046
Transfers………………………………………………… 1,166,968 1,101,525 65,443
Change in net assets………………………………… $ (3,551,415) $ (6,211,904) $ 2,660,489
Town of Canton, Massachusetts 17 Comprehensive Annual Financial ReportSource page 25
Business-type Activities
The Town’s business-type activities include water, sewer and skating rink services. They are self-supporting and
each fund maintained their financial condition in fiscal year 2012.
Business-type water net assets of $8.8 million (77%) represent the investment in capital assets while $2.7 million
(23%) is unrestricted. Net assets increased by $500,000 as a result of a rate increase, offset by a $129,000
increase of the other postemployment benefit liability.
Business-type sewer net assets of $7.1 million (79%) represent the investment in capital assets while $1.8 (21%)
is unrestricted. Net assets decreased by $230,000 due to an increase in the costs of service and administration,
as well as a $58,000 increase of the other postemployment benefit liability.
Business-type rink net assets of $152,000 represent the investment in capital assets while unrestricted net assets
had a deficit balance of $416,000. Net assets decreased by $127,000 which was primarily due to an $110,000
increase in the other postemployment benefit liability. The Rink is currently operating at a breakeven level with no
reserves.
At the end of the current fiscal year, aside from the deficit unrestricted net assets reported in the business-type
rink fund noted above, all remaining business-type activities were able to report positive balances in all categories
of net assets. The same situation held true for the prior fiscal year.
Condensed financial data for fiscal years 2012 and 2011 is presented below.
Balance at Balance at
June 30, June 30, Increase
2012 2011 (Decrease)
Assets:
Current assets…………………………………………$ 6,894,939 $ 5,952,528 $ 942,411
Noncurrent assets (excluding capital)……………… - 5,986 (5,986)
Capital assets………………………………………… 45,385,865 40,738,817 4,647,048
Total assets……………………………………… 52,280,804 46,697,331 5,583,473
Liabilities:
Current liabilities (excluding debt)………………… 350,829 2,251,480 (1,900,651)
Noncurrent liabilities (excluding debt)……………… 1,161,000 873,000 288,000
Current debt………………………………………… 4,985,711 2,283,835 2,701,876
Noncurrent debt……………………………………… 25,648,102 21,296,813 4,351,289
Total liabilities…………………………………… 32,145,642 26,705,128 5,440,514
Net Assets:
Invested in capital assets, net of related debt…… 16,033,950 17,195,414 (1,161,464)
Unrestricted…………………………………………… 4,101,212 2,796,789 1,304,423
Total net assets………………………………… $ 20,135,162 $ 19,992,203 $ 142,959
Town of Canton, Massachusetts 18 Comprehensive Annual Financial ReportSource page 26
Year Ended Year Ended
June 30, June 30, Increase
2012 2011 (Decrease)
Program revenues:
Charges for services - Water……………………… $ 6,672,927 $ 6,965,364 $ (292,437)
Charges for services - Sewer……………………… 5,227,905 4,965,133 262,772
Charges for services - Rink………………………… 446,111 430,878 15,233
Total revenues…………………………………… 12,346,943 12,361,375 (14,432)
Expenses:
Water………………………………………………… 5,456,431 4,968,675 487,756
Sewer………………………………………………… 5,084,191 4,819,406 264,785
Rink…………………………………………………… 496,394 504,265 (7,871)
Total expenses………………………………… 11,037,016 10,292,346 744,670
Excess (Deficiency) before transfers……………… 1,309,927 2,069,029 (759,102)
Transfers………………………………………………… (1,166,968) (1,101,525) (65,443)
Change in net assets………………………………… $ 142,959 $ 967,504 $ (824,545)
Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows
and balances of spendable resources. Such information is useful in assessing financing requirements. In
particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year.
The General Fund is the chief operating fund. At the end of the current fiscal year, unassigned fund balance of
the general fund was $7.1 million, while total fund balance was $13.4 million. Unassigned fund balance
represents 9% of total general fund expenditures, while total fund balance represents 17% of that same amount.
The General Fund’s fund balance increased by $158,000 which was the result of balancing the budget by using
($1.3) million of prior year reserves, offset by favorable budgetary results of $1.6 million.
The Town adopted an Other Postemployment Benefits Trust fund in fiscal year 2012. This irrevocable trust will
be used to set aside funds to be used towards the unfunded Other Postemployment Benefit liability. During
FY2012 the Town transferred $100,000 into the trust.
General Fund Budgetary Highlights
The Town has adopted a budget for the General Fund. Actual revenues exceeded budget amounts by $1 million.
Unexpended appropriations totaled $1.9 million of which $785,000 was carried forward to fiscal year 2013. Major
increases to the original budget include a $690,000 transfer to the stabilization funds and a $200,000 transfer to
fund the senior center.
Town of Canton, Massachusetts 19 Comprehensive Annual Financial ReportSource page 27
Capital Asset and Debt Administration
In prior fiscal years, the Town had refunded general obligation bonds by placing the proceeds in an irrevocable
trust to provide for future debt service payments. Accordingly, neither the asset nor the liability for the defeased
bonds is included in the Town’s financial statements. At June 30, 2012 a total of $4,063,000 of outstanding bonds
are considered defeased.
During fiscal year 2012 the Town issued $9.2 million of new General Obligation Bonds to retire maturing bond
anticipation notes and to provide permanent financing for several capital projects.
Outstanding long-term debt of governmental activities, as of June 30, 2012, totaled $41.6 million. Total debt
service expenditures on long-term governmental debt for the next five years average $4.1 million annually. The
Town had $2.2 million in governmental bond anticipation notes (BANs) outstanding at fiscal year-end.
The Water Enterprise Fund had $18.5 million of long-term debt and $2.8 million of BANs outstanding at year end.
The Sewer Enterprise Fund had $9.1 million of long-term debt and $200,000 of BANs outstanding at year end.
The Ice Rink Enterprise Fund had $50,000 of long-term debt outstanding at year end.
Major capital additions and projects include the following:
The governmental activities acquired $6.5 million of various capital assets in fiscal year 2012. $1.1
million of capital assets previously reported as construction in progress were placed into service and are
now being depreciated.
Business type activities include water additions of $5.5 million and sewer additions of $552,000. In
addition, $6.1 million of water capital assets and $5.2 million of sewer capital assets previously reported
as construction in progress were placed into service and are now being depreciated. There were no rink
additions in fiscal year 2012.
Depreciation expense was $3.9 million for governmental activities and $1.4 million for business-type
activities.
Please refer to the Notes 4, 6 and 8 for further discussion of the capital asset and debt activity.
Economic Factors and Next Year’s Budget and Rates
The fiscal year 2013 general fund operating budget of $74.7 million represents a $1.9 million or 2.6% increase
from the fiscal year 2012 budget. This is primarily due to a $1.5 million or 4.9% increase for the school
department’s budget to cover contractual obligations and to restore some programs eliminated previously due to
budget constraints. The fiscal year 2013 operating budget includes $785,000 of appropriations carried forward
from fiscal year 2012.
Property taxes in Massachusetts municipalities are limited to a levy growth of 2 ½% plus a factor for new
construction, unless voters at an election approve an increase for operating expenses or debt service for a
specific project (Proposition 2 ½). The Town has estimated that the tax levy growth from fiscal year 2012 to fiscal
year 2013, exclusive of debt service excluded from Proposition 2 ½, will be approximately $1.5 million or 2.7%.
The Town is scheduled to receive $6.8 million in state aid in fiscal year 2013, net of school construction grants.
This amount is $896,000 or 15.1% more than received in fiscal year 2012 primarily due to the formula used by the
state for aid to public education.
Town of Canton, Massachusetts 20 Comprehensive Annual Financial ReportSource page 28
The Water and Sewer Enterprise Funds’ rates were significantly changed recently after an outside consultant was engaged to conduct a rate study. The new rate structure includes quarterly base charges, which increase with meter size. The continuation of this new rate structure will increase sewer revenue by 4% while maintaining water revenue in fiscal year 2013. Requests for Information This financial report is designed to provide a general overview of the Town of Canton’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 801 Washington Street, Canton, Massachusetts 02021. Town of Canton, Massachusetts 21 Comprehensive Annual Financial Report
Source page 29
Basic Financial Statements Town of Canton, Massachusetts 22 Comprehensive Annual Financial Report
Source page 30
STATEMENT OF NET ASSETS
JUNE 30, 2012
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
CURRENT:
Cash and cash equivalents………………………………… $ 29,272,414 $ 3,605,426 $ 32,877,840
Investments………………………………………………… 1,942,324 - 1,942,324
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes……………… 621,348 - 621,348
Tax liens…………………………………………………… 815,490 52,307 867,797
Motor vehicle excise taxes……………………………… 106,840 - 106,840
User fees………………………………………………… - 3,285,362 3,285,362
Departmental and other………………………………… 214,479 - 214,479
Intergovernmental……………………………………… 864,364 - 864,364
Tax foreclosures…………………………………………… 514,555 - 514,555
Internal balances…………………………………………… 48,156 (48,156) -
Amounts held by insurance carrier………………………… 227,074 - 227,074
Working capital deposit…………………………………… 58,400 - 58,400
Other assets………………………………………………… 7,149 - 7,149
Total current assets………………………………………… 34,692,593 6,894,939 41,587,532
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Intergovernmental……………………………………… 3,210,817 - 3,210,817
Capital assets:
Nondepreciable…………………………………………… 11,158,868 624,852 11,783,720
Depreciable……………………………………………… 92,639,453 44,761,013 137,400,466
Total noncurrent assets…………………………………… 107,009,138 45,385,865 152,395,003
TOTAL ASSETS………………………………………………… 141,701,731 52,280,804 193,982,535
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 985,107 57,359 1,042,466
Accrued payroll……………………………………………… 3,047,694 23,573 3,071,267
Health claims payable……………………………………… 683,795 - 683,795
Tax refunds payable………………………………………… 1,220,000 - 1,220,000
Accrued interest……………………………………………… 441,488 169,897 611,385
Other liabilities……………………………………………… 359,916 - 359,916
Capital lease obligations…………………………………… 32,913 - 32,913
Landfill closure……………………………………………… 27,000 - 27,000
Compensated absences…………………………………… 923,000 100,000 1,023,000
Notes payable………………………………………………… 2,243,331 3,037,000 5,280,331
Bonds payable……………………………………………… 4,397,767 1,948,711 6,346,478
Total current liabilities……………………………………… 14,362,011 5,336,540 19,698,551
NONCURRENT:
Capital lease obligations…………………………………… 25,634 - 25,634
Landfill closure……………………………………………… 131,000 - 131,000
Compensated absences…………………………………… 419,000 60,000 479,000
Other postemployment benefits…………………………… 27,322,000 1,101,000 28,423,000
Bonds payable……………………………………………… 37,341,050 25,648,102 62,989,152
Total noncurrent liabilities………………………………… 65,238,684 26,809,102 92,047,786
TOTAL LIABILITIES…………………………………………… 79,600,695 32,145,642 111,746,337
NET ASSETS
Invested in capital assets, net of related debt……………… 63,962,326 16,033,950 79,996,276
Restricted for:
Permanent funds:
Expendable……….……………………………………… 320,672 - 320,672
Nonexpendable…………………………………………… 404,785 - 404,785
Grants and gifts……………………………………………… 566,101 - 566,101
MSBA Grant………………………………………………… 5,483,092 - 5,483,092
Unrestricted……………………………………………………… (8,635,940) 4,101,212 (4,534,728)
TOTAL NET ASSETS…………………………………………… $ 62,101,036 $ 20,135,162 $ 82,236,198
See notes to basic financial statements.
Town of Canton, Massachusetts 23 Comprehensive Annual Financial ReportSource page 31
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2012
Program Revenues
Operating Capital
Charges for Grants and Grants and Net (Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental Activities:
General government…………………… $ 5,898,196 $ 325,814 $ 317,806 $ - $ (5,254,576)
Public safety……………………………… 15,490,670 2,292,477 977,110 - (12,221,083)
Education………………………………… 58,649,480 2,155,031 15,069,123 419,698 (41,005,628)
Public works……………………………… 5,703,015 125,694 88,558 1,239,863 (4,248,900)
Human services………………………… 1,221,862 66,462 144,791 - (1,010,609)
Culture and recreation…………………… 2,944,861 528,937 90,537 - (2,325,387)
Interest…………………………………… 1,664,859 - 88,809 - (1,576,050)
Total Governmental Activities………… 91,572,943 5,494,415 16,776,734 1,659,561 (67,642,233)
Business-Type Activities:
Water……………………………………… 5,456,431 6,672,927 - - 1,216,496
Sewer……………………………………… 5,084,191 5,227,905 - - 143,714
Rink……………………………………….… 496,394 446,111 - - (50,283)
Total Business-Type Activities……… 11,037,016 12,346,943 - - 1,309,927
Total Primary Government…………… $ 102,609,959 $ 17,841,358 $ 16,776,734 $ 1,659,561 $ (66,332,306)
See notes to basic financial statements. (Continued)
Town of Canton, Massachusetts 24 Comprehensive Annual Financial ReportSource page 32
STATEMENT OF ACTIVITIES (Continued)
FISCAL YEAR ENDED JUNE 30, 2012
Primary Government
Governmental Business-Type
Activities Activities Total
Changes in net assets:
Net (expense) revenue from previous page…………… $ (67,642,233) $ 1,309,927 $ (66,332,306)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable………………………… 56,128,582 - 56,128,582
Tax liens……………………………………………… 597,670 - 597,670
Motor vehicle excise taxes…………………………… 3,101,266 - 3,101,266
Hotel/motel tax………………………………………… 38,309 - 38,309
Penalties and interest on taxes……………………… 263,511 - 263,511
Payments in lieu of taxes…………………………… 219,205 - 219,205
Grants and contributions not restricted to
specific programs…………………………………… 2,026,227 - 2,026,227
Unrestricted investment income…………………… 166,466 - 166,466
Miscellaneous………………………………………… 382,614 - 382,614
Transfers, net …………………………………………… 1,166,968 (1,166,968) -
Total general revenues and transfers………………… 64,090,818 (1,166,968) 62,923,850
Change in net assets……………………………… (3,551,415) 142,959 (3,408,456)
Net Assets:
Beginning of year……………………………………… 65,652,451 19,992,203 85,644,654
End of year………………………………………………$ 62,101,036 $ 20,135,162 $ 82,236,198
See notes to basic financial statements. (Concluded)
Town of Canton, Massachusetts 25 Comprehensive Annual Financial ReportSource page 33
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2012
Nonmajor Total
Governmental Governmental
ASSETS General Funds Funds
Cash and cash equivalents…………………………………$ 17,788,726 $ 7,036,002 $ 24,824,728
Investments………………………………………………… 124,239 1,191,373 1,315,612
Receivables, net of uncollectibles:
Real estate and personal property taxes……………… 621,348 - 621,348
Tax liens…………………………………………………… 815,490 - 815,490
Motor vehicle excise taxes……………………………… 106,840 - 106,840
Departmental and other………………………………… - 214,479 214,479
Intergovernmental……………………………………… 3,605,923 469,258 4,075,181
Tax foreclosures…………………………………………… 514,555 - 514,555
Due from other funds……………………………………… 436,899 36,200 473,099
Other assets………………………………………………… 7,149 - 7,149
TOTAL ASSETS…………………………………………… $ 24,021,169 $ 8,947,312 $ 32,968,481
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable…………………………………………$ 763,695 $ 166,275 $ 929,970
Accrued payroll…………………………………………… 2,821,074 226,620 3,047,694
Tax refunds payable…………………………………… 1,220,000 - 1,220,000
Other liabilities…………………………………………… 358,064 1,852 359,916
Deferred revenues……………………………………… 5,472,257 214,480 5,686,737
Due to other funds……………………………………… - 424,943 424,943
Notes payable…………………………………………… - 2,243,331 2,243,331
TOTAL LIABILITIES………………………………………… 10,635,090 3,277,501 13,912,591
FUND BALANCES:
Nonspendable…………………………………………… - 404,785 404,785
Restricted………………………………………………… 5,483,092 7,000,533 12,483,625
Assigned………………………………………………… 784,891 - 784,891
Unassigned……………………………………………… 7,118,096 (1,735,507) 5,382,589
TOTAL FUND BALANCES………………………………… 13,386,079 5,669,811 19,055,890
TOTAL LIABILITIES AND FUND BALANCES……………$ 24,021,169 $ 8,947,312 $ 32,968,481
See notes to basic financial statements.
Town of Canton, Massachusetts 26 Comprehensive Annual Financial ReportSource page 34
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2012
Total governmental fund balances……………………………………………………………………… $ 19,055,890
Capital assets (net) used in governmental activities are not financial resources
and, therefore, are not reported in the funds…………………………………………………… 103,798,321
Accounts receivable are not available to pay for current-period
expenditures and, therefore, are deferred in the funds………………………………………… 5,686,737
Internal service funds are used by management to account for health insurance,
municipal insurance, workers' compensation, and unemployment activities.
The assets and liabilities of the internal service funds are included in
the governmental activities in the statement of net assets……………………………… 4,620,940
In the statement of net assets, interest is accrued on outstanding long-term debt,
whereas in governmental funds interest is not reported until due…………………………… (441,488)
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported in the governmental funds
Bonds payable…………………………………………………………………………………… (41,566,103)
Landfill closure…………………………………………………………………………………… (158,000)
Capital leases…………………………………………………………………………………… (58,547)
Unamortized premium on bonds payable……………………………………………………… (268,908)
Other postemployment benefits………………………………………………………………… (27,322,000)
Compensated absences………………………………………………………………………… (1,342,000)
Net effect of reporting long-term liabilities……………………………………………… (70,715,558)
In the statement of net assets, deferred losses are reported for refundings of
debt, which are amortized over the shorter of the remaining life of the
refunding bonds or refunded bonds. In governmental funds, defeasances
of debt are expensed when the refunding bonds are issued…………………………………… 96,194
Net assets of governmental activities………………………………………………………………… $ 62,101,036
See notes to basic financial statements.
Town of Canton, Massachusetts 27 Comprehensive Annual Financial ReportSource page 35
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2012
Nonmajor Total
Governmental Governmental
General Funds Funds
REVENUES:
Real estate and personal property taxes,
net of tax refunds……………………………………………………… $ 56,246,748 $ - $ 56,246,748
Tax liens………………………………………………………..…………… 371,909 - 371,909
Motor vehicle excise taxes……………………………………………… 3,165,288 - 3,165,288
Hotel/motel tax…………………………………………………………… 38,309 - 38,309
Charges for services……………………………………………………… - 1,598,646 1,598,646
Penalties and interest on taxes………………………………………… 263,511 - 263,511
Payments in lieu of taxes………………………………………………… 219,205 - 219,205
Licenses and permits……………………………………………………… 912,233 - 912,233
Fines and forfeitures……………………………………………………… 99,500 35,126 134,626
Intergovernmental………………………………………………………… 15,227,821 5,343,327 20,571,148
Departmental and other…………………………………………………… 484,555 2,486,456 2,971,011
Contributions……………………………………………………………… - 349,244 349,244
Investment income………………………………………………………… 122,367 19,440 141,807
TOTAL REVENUES……………………………………………… 77,151,446 9,832,239 86,983,685
EXPENDITURES:
Current:
General government…………………………………………………… 3,463,997 1,102,237 4,566,234
Public safety…………………………………………………………… 8,886,916 822,405 9,709,321
Education……………………………………………………………… 32,221,771 7,310,687 39,532,458
Public works…………………………………………………………… 3,790,391 2,082,636 5,873,027
Human services………………………………………………………… 781,704 127,694 909,398
Culture and recreation………………………………………………… 1,464,677 414,673 1,879,350
Pension benefits……………………………………………………… 11,325,041 - 11,325,041
Employee benefits……………………………………………………… 10,303,739 100,000 10,403,739
State and county charges………………………………………………… 874,821 - 874,821
Debt service:
Principal………………………………………………………………… 4,306,220 - 4,306,220
Interest………………………………………………………………… 1,661,391 - 1,661,391
TOTAL EXPENDITURES………………………………………… 79,080,668 11,960,332 91,041,000
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES……………………………………… (1,929,222) (2,128,093) (4,057,315)
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes…………………………………………… - 2,932,908 2,932,908
Premium from issuance of debt………………………………………… 55,651 80,804 136,455
Capital lease financing…………………………………………………… - 51,211 51,211
Transfers in………………………………………………………………… 2,380,424 474,101 2,854,525
Transfers out……………………………………………………………… (348,800) (1,338,757) (1,687,557)
TOTAL OTHER FINANCING
SOURCES (USES)……………………………………………… 2,087,275 2,200,267 4,287,542
NET CHANGE IN FUND BALANCES……………………………………… 158,053 72,174 230,227
FUND BALANCES AT BEGINNING OF YEAR…………………………… 13,228,026 5,597,637 18,825,663
FUND BALANCES AT END OF YEAR…………………………………… $ 13,386,079 $ 5,669,811 $ 19,055,890
See notes to basic financial statements.
Town of Canton, Massachusetts 28 Comprehensive Annual Financial ReportSource page 36
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, 2012
Net change in fund balances - total governmental funds…………………………………………………………. $ 230,227
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
Capital outlay…………………………………………………………………………………………………… 6,516,224
Depreciation expense………………………………………………………………………………………… (3,887,890)
Net effect of reporting capital assets………………………………………………………………… 2,628,334
Revenues in the Statement of Activities that do not provide current financial
resources are fully deferred in the Statement of Revenues, Expenditures and
Changes in Fund Balances. Therefore, the recognition of revenue for various
types of accounts receivable (i.e., real estate and personal property, motor
vehicle excise, etc.) differ between the two statements. This amount represents
the net change in deferred revenue…………………………………………………………………………… (294,193)
The issuance of long-term debt (e.g., bonds and leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-
term debt consumes the financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of premiums, discounts, and similar items when debt is
first issued, whereas these amounts are deferred and amortized in the
Statement of Activities.
Capital lease financing……………………………………………………………………………………… (51,211)
Payments on capital leases………………………………………………………………………………… 53,891
Issuance of bonds and notes………………………………………………………………………………… (2,932,908)
Debt service principal payments…………………………………………………………………………… 4,306,220
Amortization of bond premiums……………………………………………………………………………… 44,855
Amortization of deferred charge on refunding……………………………………………………………… (35,001)
Net effect of reporting long-term debt……………………………………………………………… 1,385,846
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds.
Net change in compensated absences accrual…………………………………………………………… (141,000)
Net change in accrued interest on long-term debt………………………………………………………… (13,322)
Net change in other postemployment benefits…………………………………………………………… (7,885,000)
Net change in landfill accrual………………………………………………………………………………… 26,000
Net effect of recording long-term liabilities and amortizing deferred losses………………….. (8,013,322)
Internal service funds are used by management to account for health
insurance and workers' compensation activities.
The net activity of internal service funds is reported with Governmental Activities…………………… 511,693
Change in net assets of governmental activities……………………………………………………………………… $ (3,551,415)
See notes to basic financial statements.
Town of Canton, Massachusetts 29 Comprehensive Annual Financial ReportSource page 37
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2012
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
ASSETS
CURRENT:
Cash and cash equivalents……………………………$ 1,939,176 $ 1,666,250 $ - $ 3,605,426 $ 4,447,686
Investments…………………………………………… - - - - 626,712
Receivables, net of allowance for uncollectibles:
Tax liens……………………………………………… 26,430 25,877 - 52,307 -
User fees…………………………………………… 1,887,072 1,376,832 21,458 3,285,362 -
Amounts held by insurance carrier………………… - - - - 227,074
Working capital deposit……………………………… - - - - 58,400
Total current assets……………………………… 3,852,678 3,068,959 21,458 6,943,095 5,359,872
NONCURRENT:
Capital assets:
Nondepreciable……………………………………… 624,852 - - 624,852 -
Depreciable………………………………………… 29,170,307 15,389,207 201,499 44,761,013 -
Total noncurrent assets………………………… 29,795,159 15,389,207 201,499 45,385,865 -
TOTAL ASSETS………………………………………… 33,647,837 18,458,166 222,957 52,328,960 5,359,872
LIABILITIES
CURRENT:
Warrants payable……………………………………… 42,881 13,789 689 57,359 55,137
Accrued payroll………………………………………… 14,412 6,511 2,650 23,573 -
Due to other funds…………………………………… 36,200 - 11,956 48,156 -
Health claims payable………………………………… - - - - 683,795
Accrued interest……………………………………… 107,898 61,834 165 169,897 -
Compensated absences……………………………… 70,000 17,000 13,000 100,000 -
Notes payable………………………………………… 2,837,000 200,000 - 3,037,000 -
Bonds payable………………………………………… 1,288,978 651,733 8,000 1,948,711 -
Total current liabilities…………………………… 4,397,369 950,867 36,460 5,384,696 738,932
NONCURRENT:
Compensated absences……………………………… 46,000 13,000 1,000 60,000 -
Other postemployment benefits……………………… 479,000 214,000 408,000 1,101,000 -
Bonds payable………………………………………… 17,226,407 8,379,695 42,000 25,648,102 -
Total noncurrent liabilities……………………… 17,751,407 8,606,695 451,000 26,809,102 -
TOTAL LIABILITIES……………………………………… 22,148,776 9,557,562 487,460 32,193,798 738,932
NET ASSETS
Invested in capital assets, net of related debt………… 8,829,673 7,052,778 151,499 16,033,950 -
Unrestricted……………………………………………… 2,669,388 1,847,826 (416,002) 4,101,212 4,620,940
TOTAL NET ASSETS……………………………………$ 11,499,061 $ 8,900,604 $ (264,503) $ 20,135,162 $ 4,620,940
See notes to basic financial statements.
Town of Canton, Massachusetts 30 Comprehensive Annual Financial ReportSource page 38
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2012
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
OPERATING REVENUES:
Employee contributions …………………………………………… $ - $ - $ - $ - $ 3,571,341
Contributions………………………………………………………… - - - - 9,641,219
Charges for services ………………………………………………. 6,567,509 5,181,721 446,111 12,195,341 -
TOTAL OPERATING REVENUES ……………………………… 6,567,509 5,181,721 446,111 12,195,341 13,212,560
OPERATING EXPENSES:
Cost of services and administration ……………………………… 1,882,231 1,024,530 469,487 3,376,248 -
MWRA Assessment………………………………………………… 2,234,586 3,250,840 - 5,485,426 -
Depreciation………………………………………………………… 816,381 566,715 25,412 1,408,508 -
Employee benefits …………………………………………………… - - - - 12,729,480
TOTAL OPERATING EXPENSES ……………………………… 4,933,198 4,842,085 494,899 10,270,182 12,729,480
OPERATING INCOME (LOSS)………………………………… 1,634,311 339,636 (48,788) 1,925,159 483,080
NONOPERATING REVENUES (EXPENSES):
Investment income…………………………………………………… 3,203 3,595 - 6,798 24,659
Interest expense……………………………………………………… (523,233) (242,106) (1,495) (766,834) -
Intergovernmental…………………………………………………… 8,945 794 - 9,739 -
Other revenues……………………………………………………… 93,270 41,795 - 135,065 3,954
TOTAL NONOPERATING REVENUES,
(EXPENSES), NET…………………………………………… (417,815) (195,922) (1,495) (615,232) 28,613
INCOME (LOSS) BEFORE
CONTRIBUTIONS AND TRANSFERS……………………… 1,216,496 143,714 (50,283) 1,309,927 511,693
TRANSFERS:
Transfers out………………………………………………………… (716,685) (373,811) (76,472) (1,166,968) -
CHANGE IN NET ASSETS……………………………………… 499,811 (230,097) (126,755) 142,959 511,693
NET ASSETS AT BEGINNING OF YEAR…………………………… 10,999,250 9,130,701 (137,748) 19,992,203 4,109,247
NET ASSETS AT END OF YEAR…………………………………… $ 11,499,061 $ 8,900,604 $ (264,503) $ 20,135,162 $ 4,620,940
See notes to basic financial statements.
Town of Canton, Massachusetts 31 Comprehensive Annual Financial ReportSource page 39
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30, 2012
Business-type Activities - Enterprise Funds
Governmental
Activities -
Water Sewer Rink Internal Service
Fund Fund Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users…………………………………………… $ 6,480,014 $ 5,085,445 $ 424,653 $ 11,990,112 $ -
Receipts from interfund services provided……………………………………… - - - - 13,212,560
Receipts from other revenues…………………………………………………… 93,270 41,795 - 135,065 3,954
Payments to vendors……………………………………………………………… (3,168,676) (3,798,198) (138,913) (7,105,787) -
Payments to employees………………………………………………………… (838,668) (410,891) (210,459) (1,460,018) -
Payments for interfund services used…………………………………………… - - - - (12,834,497)
NET CASH FROM OPERATING ACTIVITIES…………………………………… 2,565,940 918,151 75,281 3,559,372 382,017
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out……………………………………………………………………… (716,685) (373,811) (76,472) (1,166,968) -
Advances to other funds………………………………………………………… (36,200) - - (36,200) -
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………… (752,885) (373,811) (76,472) (1,203,168) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes……………………………… 7,145,945 2,860,474 - 10,006,419 -
Acquisition and construction of capital assets………………………………… (6,852,114) (1,070,610) - (7,922,724) -
Principal payments on bonds and notes………………………………………… (1,618,089) (655,746) (10,000) (2,283,835) -
Interest expense…………………………………………………………………… (518,788) (239,722) (1,520) (760,030) -
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… (1,843,046) 894,396 (11,520) (960,170) -
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of investments………………………………………………… - - - - 296
Investment income………………………………………………………………… 3,203 3,595 - 6,798 24,659
NET CASH FROM INVESTING ACTIVITIES……………………………………… 3,203 3,595 - 6,798 24,955
NET CHANGE IN CASH AND CASH EQUIVALENTS…………………………… (26,788) 1,442,331 (12,711) 1,402,832 406,972
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR…… 1,965,964 223,919 12,711 2,202,594 4,040,714
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR………………$ 1,939,176 $ 1,666,250 $ - $ 3,605,426 $ 4,447,686
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)………………………………………………………… $ 1,634,311 $ 339,636 $ (48,788) $ 1,925,159 $ 483,080
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation…………………………………………………………………… 816,381 566,715 25,412 1,408,508 -
Other revenues………………………………………………………………… 93,270 41,795 - 135,065 3,954
Changes in assets and liabilities:
Water and sewer liens…………………………………………………… (13,525) (9,824) - (23,349) -
User fees…………………………………………………………………… (73,970) (104,631) (21,458) (200,059) -
Special assessments……………………………………………………… - 18,179 - 18,179 -
Amounts held by insurance carrier……………………………………… - - - - (227,074)
Working capital deposit…………………………………………………… - - - - 990,002
Warrants payable………………………………………………………… (13,459) 3,920 (1,299) (10,838) (731,695)
Accrued payroll…………………………………………………………… (68) 361 458 751 -
Health claims payable……………………………………………………… - - - - (136,250)
Other postemployment benefits………………………………………… 129,000 58,000 110,000 297,000 -
Due to other funds………………………………………………………… - - 11,956 11,956 -
Accrued compensated absences………………………………………… (6,000) 4,000 (1,000) (3,000) -
Total adjustments……………………………………………………… 931,629 578,515 124,069 1,634,213 (101,063)
NET CASH FROM OPERATING ACTIVITIES…………………………………… $ 2,565,940 $ 918,151 $ 75,281 $ 3,559,372 $ 382,017
See notes to basic financial statements.
Town of Canton, Massachusetts 32 Comprehensive Annual Financial ReportSource page 40
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2012
Private
OPEB Purpose Agency
Trust Fund Trust Funds Fund
ASSETS
CURRENT:
Cash and cash equivalents………………………… $ 100,000 $ 29,495 $ 745,892
Investments…………………………………………… - 105,543 -
TOTAL ASSETS………………………………………… 100,000 135,038 745,892
LIABILITIES
Warrants payable……………………………………… - - 5,629
Liabilities due depositors……………………………… - - 740,263
TOTAL LIABILITIES……………………………………… - - 745,892
NET ASSETS
Held in trust for OPEB and scholarships..………… $ 100,000 $ 135,038 $ -
See notes to basic financial statements.
Town of Canton, Massachusetts 33 Comprehensive Annual Financial Report