Canton, Massachusetts · Saved source text
Latest Bond Issuance Report March 2017
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Financial Section The Town’s Council on Aging Department purchased a new twenty passenger wheelchair accessible senior citizen bus to provide transportation assistance to elderly and disabled citizens who are unable to drive on their own.
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INDEPENDENT AUDITOR’S REPORT
Honorable Board of Selectmen
Town of Canton, Massachusetts
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the Town of Canton,
Massachusetts, (the “Town”) as of and for the year ended June 30, 2016 which collectively comprise the
Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
out audit opinions.
Town of Canton, Massachusetts Page 15 of 123 Comprehensive Annual Financial ReportSource page 84
Town of Canton
Page Two
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the Town, as of June 30, 2016, and the respective
changes in financial position and, where applicable, cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, the schedules of the Town’s proportionate share of net pension liability and the
Town’s contributions to pension plan, the schedule of the Commonwealth’s share of the net pension
liability of the Massachusetts Teacher’s Retirement System, the funding progress and contribution
funding for other postemployment benefits, and budgetary comparison information as listed in the table of
contents, be presented to supplement the basic financial statements. Such information, although not part
of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The introductory section, combining and individual
nonmajor fund financial statements, and statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual
nonmajor fund financial statements are the responsibility of management and were derived from and
relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in
relation to the basic financial statements as a whole. The introductory and statistical sections have not
been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on them.
Town of Canton, Massachusetts Page 16 of 123 Comprehensive Annual Financial ReportSource page 85
Town of Canton
Page Three
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report dated November 17,
2016, on our consideration of the Town of Canton, Massachusetts’ internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
Roselli, Clark and Associates
Certified Public Accountants
Woburn, Massachusetts 01801
November 17, 2016
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Management’s Discussion and Analysis Town of Canton, Massachusetts Page 19 of 123 Comprehensive Annual Financial Report
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As the management of the Town, we offer readers of the accompanying financial statements this narrative
overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2016.
Financial Highlights
The assets and deferred outflows of the Town exceeded its liabilities and deferred inflows at the close
of the most recent fiscal year by approximately $58.1 million (total net position).
The government’s total net position increased by approximately $7.4 million. This consisted
primarily of an increase in governmental activities’ net position by approximately $3.6 million
(13.0% of total governmental activities’ net position) and an increase in Business - type activities’ net
position of approximately $3.8 million (16.6% of Business-type activities).
The Town’s Unassigned Fund Balance reported in the General Fund was approximately $13.0 million
(14.9% of General Fund expenditures). Total Fund Balance in the General Fund was approximately
$15.7 million (18.1% of General Fund expenditures). The Town reported total fund balances of
almost $10.7 million in the Combined Nonmajor Governmental Funds. Over $10.4 million in
Restricted Fund Balances, combined with almost $0.5 million in Nonspendable Fund Balances was
offset by Unassigned Fund Deficits of over $0.2 million.
The Town’s total debt decreased by almost $5.1 million during the fiscal year. Detail of this net
decrease is illustrated as follows:
Issuances of debt
Governmental Activities $ 1,882,000
Business-Type Activities 1,196,000
Debt payments:
Governmental Activities (4,446,624)
Business-Type Activities (3,251,265)
Amortization of premium:
Governmental Activities (353,697)
Business-Type Activities (88,433)
$ (5,062,019)
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also
contains other supplementary information in addition to the basic financial statements themselves.
The layout and relationship of the financial statements and supplementary information is visually
illustrated as follows:
Town of Canton, Massachusetts Page 21 of 123 Comprehensive Annual Financial ReportSource page 90
Required Supplementary Management Discussion and Analysis
Information
Government-wide Financial Statements
Governmental Fund Financial Statements
Basic Proprietary Fund Financial Statements
Financial Statements
Fiduciary Fund Financial Statements
Notes to the Basic Financial Statements
Required Supplementary
Information – Budgetary Reporting with Notes, Pension and
Other than MD&A Other Postemployment Benefits
Other Supplementary
Combining Fund Financial Statements/Schedules
Information
Government-wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. The statement of position presents information on all of the Town’s assets, deferred outflows,
liabilities and deferred inflows, with the net result reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the Town is
improving or deteriorating. The statement of activities presents information showing how the
government’s net position changed during the most recent fiscal year. All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave.)
The government-wide financial statements consist of two classifications; (1) those whose activities are
principally supported by taxes and intergovernmental revenue (governmental activities), and (2) those
whose activities are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities).
The governmental activities of the Town include general government, public safety, highways and streets,
sanitation, education, economic development, debt service, fringe benefits and culture and recreation.
The business-type activities of the Town are comprised of water, sewer and rink enterprise funds.
Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The Town, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
Town of Canton, Massachusetts Page 22 of 123 Comprehensive Annual Financial ReportSource page 91
legal requirements. All of the funds of the Town can be divided into three categories: governmental
funds, proprietary funds, and fiduciary funds.
Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such
as fund balance associated with inventories, and other amounts that are classified based on the relative
strength of the constraints that control the purposes for which specific amounts can be spent. Beginning
with the most binding constraints, fund balance amounts will be reported in the following classifications:
• Restricted—amounts constrained by external parties, constitutional provision, or enabling
legislation
• Committed—amounts constrained by a government using its highest level of decision-making
authority
• Assigned—amounts a government intends to use for a particular purpose
• Unassigned—amounts that are not constrained at all will be reported in the general fund or in
other major funds if negative
Governmental funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a government’s near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions.
The Town maintains 16 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the General Fund and Capital Projects Fund, which are considered to be
major funds. Data from the other 14 governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the
form of combining statements.
The Town adopts an annual appropriated budget for its general fund and its enterprise fund. A budgetary
comparison schedule has been provided for the general fund to demonstrate compliance with this budget.
Proprietary funds – The Town maintains two types of proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The Town uses an enterprise fund to account for its water, sewer and rink enterprise funds.
Internal service funds are used to report activities that service all other Town Departments. The Town
uses internal service funds to account for self-insured health insurance claims.
Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statement because
Town of Canton, Massachusetts Page 23 of 123 Comprehensive Annual Financial ReportSource page 92
the resources of those funds are not available to support the Town’s own programs. The accounting used
for fiduciary funds is much like that used for proprietary funds.
Notes to the Financial Statements - The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Information - In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information which includes the schedules of the Town’s
proportionate share of the net pension liability, contributions to the pension plan, the Commonwealth’s
share of the net pension liability of the Massachusetts Teacher’s Retirement System, the funding progress
and contribution funding of its obligation to provide other postemployment benefits to its employees as
well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual –
General Fund and notes to this schedule.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the Town, assets exceeded liabilities by approximately $58.1 million at the
close of the most recent fiscal year.
Condensed net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2016 2015 2016 2015 2016 2015
Assets
Currrent and other assets $ 45,653,102 $ 42,666,718 $ 13,703,899 $ 10,487,690 $ 59,357,001 $ 53,154,408
Capital assets, net 106,518,180 104,451,895 46,585,494 46,382,802 153,103,674 150,834,697
Total assets 152,171,282 147,118,613 60,289,393 56,870,492 212,460,675 203,989,105
Deferred outflows of resources 6,285,161 1,517,174 425,452 102,700 6,710,613 1,619,874
Liabilities
Long-term liabilities 106,918,110 106,335,287 29,212,130 31,151,262 136,130,240 137,486,549
Other liabilities 16,630,012 14,305,453 4,781,999 3,092,633 21,412,011 17,398,086
Total liabilities 123,548,122 120,640,740 33,994,129 34,243,895 157,542,251 154,884,635
Deferred inflows of resources 3,280,618 - 222,070 - 3,502,688 -
Net Position
Net investment in capital assets 78,591,436 76,109,604 17,457,708 16,386,618 96,049,144 92,496,222
Restricted 9,006,548 9,193,516 - - 9,006,548 9,193,516
Unrestricted (55,970,281) (57,308,073) 9,040,938 6,342,679 (46,929,343) (50,965,394)
Total Net Position $ 31,627,703 $ 27,995,047 $ 26,498,646 $ 22,729,297 $ 58,126,349 $ 50,724,344
By far, the largest portion (over $96.0 million) of the Town’s net position reflects its investment in capital
assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used to
acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town’s
investment in its capital assets is reported net of related debt, the resources needed to repay this debt must
Town of Canton, Massachusetts Page 24 of 123 Comprehensive Annual Financial ReportSource page 93
be provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
An additional portion, approximately $9.0 million, of the Town’s net position represents resources that
are subject to external restrictions on how they may be used. Unrestricted net position is reported as a
deficit of approximately $46.9 million due to the recognition of net pension liabilities of approximately
$41.6 million and other postemployment benefits of approximately $45.7.
Condensed changes in net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2016 2015 2016 2015 2016 2015
Revenues
Program revenues:
Charges for services $ 7,571,242 $ 7,263,743 $ 13,601,983 $ 13,938,215 $ 21,173,225 $ 21,201,958
Operating grants and contributions 15,841,950 13,609,976 2,093 37,338 15,844,043 13,647,314
Capital grants and contributions 1,562,827 2,832,069 - - 1,562,827 2,832,069
General revenues:
Property taxes and tax liens 67,168,983 63,720,607 - - 67,168,983 63,720,607
Unrestricted grants and contributions 2,013,767 2,213,169 - - 2,013,767 2,213,169
Other 8,099,043 5,933,217 38,296 27,019 8,137,339 5,960,236
Total Revenues 102,257,812 95,572,781 13,642,372 14,002,572 115,900,184 109,575,353
Expenses
General government 5,764,062 5,683,805 - - 5,764,062 5,683,805
Public safety 16,584,359 15,312,760 - - 16,584,359 15,312,760
Education 60,963,021 54,772,830 - - 60,963,021 54,772,830
Public works 7,581,355 7,227,459 - - 7,581,355 7,227,459
Health and human services 1,536,513 1,609,060 - - 1,536,513 1,609,060
Culture and recreation 3,698,331 3,006,143 - - 3,698,331 3,006,143
Debt service 672,768 722,667 - - 672,768 722,667
Water - - 5,692,320 5,253,139 5,692,320 5,253,139
Sewer - - 5,925,780 5,416,303 5,925,780 5,416,303
Rink - - 79,670 405,752 79,670 405,752
Total Expenses 96,800,409 88,334,724 11,697,770 11,075,194 108,498,179 99,409,918
Change in net position before transfers 5,457,403 7,238,057 1,944,602 2,927,378 7,402,005 10,165,435
Transfers (1,824,747) - 1,824,747 - - -
Change in net position 3,632,656 7,238,057 3,769,349 2,927,378 7,402,005 10,165,435
Net position, beginning of year 27,995,047 55,346,471 22,729,297 22,143,339 50,724,344 77,489,810
Restatement for net pension liability - (34,589,481) - (2,341,420) - (36,930,901)
Net position, beginning of year,
as restated 27,995,047 20,756,990 22,729,297 19,801,919 50,724,344 40,558,909
Net position, end of year $ 31,627,703 $ 27,995,047 $ 26,498,646 $ 22,729,297 $ 58,126,349 $ 50,724,344
Town of Canton, Massachusetts Page 25 of 123 Comprehensive Annual Financial ReportSource page 94
Governmental Activities – The governmental activities increased net position by over $3.6 million
(13.0% of governmental activities’ net position). The increase is primarily the result of revenue surpluses
of approximately $3.4 million due to higher than forecasted motor vehicle excise, building permit
revenues and local receipts; and approximately $0.4 million in unspent budgeted appropriations.
Fiscal Year 2016 Expenses and Program Revenues – governmental activities are graphically presented as
follows:
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
Functional expenses
$20,000,000
Program Revenues
$10,000,000
$0
Major revenue sources of governmental activities consist of revenue from; (1) Operating grants and
contributions which comprised approximately 15% of the total governmental activity revenues; an
increase of $2.2 million over the prior year. This was directly a result of an increase of over $2 million
due to nonemployee special
funding payments from the Revenues
Commonwealth reported in a
manner required under GASB 68; 2%
(2) Property taxes which 7%
8%
2%
represented 66% of total revenues; Property taxes
which increased over the prior 15%
Operating grants and contributions
year by $3.4 million which was Capital grants and contributions
66% Charges for services
the legally allowed amount under Other
proposition 2 1/2% after factoring Intergovernmental (unrestricted)
in the increase in assessment and
new growth; and (3) Other
revenues increased primarily due
to an insurance recovery of over
$2 million related to storm damages received by the Town. It is expected that these damages to a
building not owned (but insured) by the Town will be repaired by 2018. In addition, the Town
experienced increases to many of its local receipts as the economy remained in an expansion mode. No
other revenue sources exceeded 10% of total revenues in either fiscal 2016 or 2015.
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Major operating expenses in Expenses
total increased by approximately
$8.5 million. This was primarily
1% 1%
due to an increase in employee 4% 6%
8%
benefit related costs. Direct 17% General government
benefits consisting primarily of Public safety
health insurance and pension Education
costs were approximately $4.5 Public works
million greater than the prior Health and human services
63% Culture and recreation
year. An additional $2.2 million
Interest expense
was due to the expense side of
the special funding situation
described above under revenue.
These costs were spread across
all functions that included payroll with the most modest increases were in public safety and education
which are the Town’s two most labor intensive functions. The remaining increases of $1.7 million were
due to additional costs spread in minor amounts across all functions with the largest increases associated
with depreciation and consolidating the ice rink operations into the general fund.
Business-type Activities – Net position of the business-type activities increased almost $3.8 million over
the prior year. This was due to an increase in the sewer usage rate, an increase in water and sewer
consumption, and a reduction in the reliance on water from outside sources. Predominantly all business-
type activities revenues were from user charges.
Business – type activities
20
15
10
5
User charges Expenses and indirect
charges
Town of Canton, Massachusetts Page 27 of 123 Comprehensive Annual Financial ReportSource page 96
Fund-wide Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental funds – The focus of the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a
combined ending fund balance of approximately $24.1 million, an increase of approximately $0.7 million
over the prior year. The increase was primarily the result of revenues exceeding expenditures in the
general fund due to higher than expected motor vehicle excise, building permit and other local revenues.
This positive situation was a direct result of the continued economic expansion; this was offset by capital
expenditures exceeding bond issuance in the Town’s major capital project’s fund.
Unassigned fund balance in the general fund was approximately $13.0 million or 14.9% of general fund
expenditures. This is available for spending at the government’s discretion. Assigned fund balance, as a
result of encumbrances and amounts budgeted for next fiscal year of approximately $1.8 million, and
committed fund balance for carryover articles of approximately $0.9 million bring total fund balance in
the general fund to approximately $15.7 million or 18.1% of general fund expenditures.
The remainder of governmental fund balances are included as Combined Nonmajor Fund Balances and
are classified as either (1) non-spendable, due to being the corpus of an endowment in the amount of
approximately $0.5 million; (2) restricted due to constraints placed externally by third-parties in the
amount of approximately $10.4 million; (3) amounts restricted for capital projects of approximately $0.2
million, or (4) unassigned as they reflect negative balances due to grant deficits and the use of short-term
notes as funding sources for construction of approximately $2.4 million. These are expected to be funded
in future years through grant reimbursements and permanent financing.
Proprietary funds – The Town’s proprietary funds are made up of (1) the Water, Sewer and Rink
Enterprise Funds which provides the same type of information found in the government-wide financial
statements under business-type activities, and discussed in that section but in more detail; and (2) the
Town’s Internal Service Fund which accounts for the Town’s Health Claims Fund.
The Health Claims Fund has a Net Position balance of approximately $5.4 million. This was flat with
respect to the prior year as revenues and expenses were approximately the same amount.
Health Claims Fund
15
14
13
12
11
10
Revenues Expenses
Town of Canton, Massachusetts Page 28 of 123 Comprehensive Annual Financial ReportSource page 97
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget included revisions to the following
line items:
Approximately $0.2 million in increases allocated to public safety.
Approximately $0.5 million in decreases allocated to general government.
Approximately $0.6 million in increases allocated to public works.
Approximately $0.1 million in increases to education.
Approximately $0.1 million in increases to culture and recreation.
All of the amendments were between operating line items in the original budget and were for operating
purposes. The overall bottom line final budget increased $0.5 million from the original budget,
primarily as a result of funding snow and ice removal costs.
Major budget to actual differences on the revenue side included property tax and excise, which exceeded
budget by approximately $2.5 million, licenses and permits which exceeded budget by $0.3 million and
departmental revenues which exceeded budget by $0.5 million.
On the expenditure side, numerous minor favorable variances which in total approximated $0.4 million
existed.
Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary
Information following the footnotes to the report.
Capital Asset and Debt Administration
Capital Assets – The Town’s investment in capital assets for its governmental and business type
activities as of June 30, 2016 amounts to approximately $153.1 million (net of accumulated depreciation)
an increase from the previous year’s balance of approximately $2.3 million as additions exceeded the
annual deprecation provision.
Major capital asset additions included, school building improvements, and roadway improvements.
Additional information on the Town’s capital assets can be found in Note II subsection D.
Long-term Debt – State statutes limit the amount of general obligation debt a governmental entity may
issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately
$204.2 million, which is significantly in excess of the Town’s outstanding general obligation debt
classified as inside the debt limit.
At the end of the current fiscal year, the Town had total debt outstanding of approximately $54.4 million.
The entire amount comprises debt backed by the full faith and credit of the government.
The Town’s most recent credit evaluation resulted in the Town maintaining its “AAA” rating from
Standard and Poor‘s Investment Services for general obligation debt. This is the highest investment grade
possible.
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The Town’s total debt decreased by approximately $5.1 million during the fiscal year as previously
detailed.
The Town also holds a proportionate share of debt of other governmental units that provide services
within the Town’s boundaries. The debt service from such arrangements is assessed annually to the
Town.
Bond anticipation note payable balances outstanding at year-end amount to approximately $3.7 million
and relate to departmental equipment, building repairs and school improvements.
Additional information on the Town’s short-term and long-term debt can be found in Note II under
subsections F and G.
Economic Factors and Next Year’s Budgets and Rates
Consistent with both State and National work force trends, the Town’s unemployment rates improved
dramatically and are now exceeding historical unemployment rate data dating back almost 40 years.
The Town’s property tax base is made up predominantly of residential real estate taxes, which
comprise nearly 63.2% of the Town’s property tax base. The Town also relies heavily on its
commercial and industrial property tax base, which in aggregate comprise 36.8% of the Town’s
property tax base. The Town uses a split rate in assessing taxes, thus commercial, industrial and
personal property tax rates are just over double the residential rate. In addition, Chapter 580 of the
Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase
taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy.
Consistent with both State and National indices, the Town’s housing market experienced a downward
trend from 2005 – 2010. Housing prices began to stabilize during fiscal year 2011 and recently are
beginning to see an upward trend. During 2016, houses in the Town continued selling at greater than
their assessed values, as a result, the Town expects its housing market to continue to maintain or
slightly outpace National indices. In addition, The Town has residential developments in various
stages of completion. These are expected to be completed in the near future.
The Town has responded well to the recent economic challenges. Reductions in local revenue,
primarily interest income and other reductions in revenue have caused the Town to aggressively seek
other revenue producing initiatives in order to maintain appropriations in ways that preserved local
service levels. The Town has been very successful in that regard.
All of the above items were considered when the Town developed its budget for fiscal year 2017. The
budget was adopted in May 2016 and the Town’s tax rate was certified in November 2016.
Town of Canton, Massachusetts Page 30 of 123 Comprehensive Annual Financial ReportSource page 99
Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for all those with
an interest in the government’s finances. Questions concerning any of the information provided in this
report or request for additional financial information should be addressed to the Office of the Finance
Director, 801 Washington Street, Canton, Massachusetts 02021.
Town of Canton, Massachusetts Page 31 of 123 Comprehensive Annual Financial ReportSource page 100
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Basic Financial Statements Town of Canton, Massachusetts Page 33 of 123 Comprehensive Annual Financial Report
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TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2016
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 29,017,957 $ 9,624,043 $ 38,642,000
Investments 8,800,037 - 8,800,037
Receivables, net:
Property taxes 551,133 - 551,133
Tax liens and foreclosures 1,262,801 30,150 1,292,951
User fees - 4,049,706 4,049,706
Departmental and other 1,034,290 - 1,034,290
Intergovernmental 3,148,597 - 3,148,597
Prepaid items 1,715,366 - 1,715,366
Deposit held by third party 122,921 - 122,921
Capital assets not being depreciated 13,738,642 624,852 14,363,494
Capital assets, net of accumulated depreciation 92,779,538 45,960,642 138,740,180
Total Assets 152,171,282 60,289,393 212,460,675
Deferred Outflows of Resources
Deferred pensions 6,285,161 425,452 6,710,613
Total Deferred Outflows of Resources 6,285,161 425,452 6,710,613
Liabilities
Warrants and accounts payable 2,331,135 505,795 2,836,930
Accrued payroll and withholdings 3,666,480 23,979 3,690,459
Retainage payable 115,341 - 115,341
Tax refunds payable 2,550,000 - 2,550,000
Health claims incurred but not reported 740,988 - 740,988
Accrued interest 250,715 196,052 446,767
Other liabilities 39,489 10,000 49,489
Bond anticipation notes payable 2,385,000 1,300,000 3,685,000
Noncurrent liabilities:
Due within one year 4,550,864 2,746,173 7,297,037
Due in more than one year 106,918,110 29,212,130 136,130,240
Total Liabilities 123,548,122 33,994,129 157,542,251
Deferred Inflows of Resources
Deferred pensions 3,280,618 222,070 3,502,688
Total Deferred Inflows of Resources 3,280,618 222,070 3,502,688
Net Position
Net investment in capital assets 78,591,436 17,457,708 96,049,144
Restricted for:
Nonexpendable permanent funds 471,585 - 471,585
Expendable permanent funds 341,753 - 341,753
Debt service 2,125,785 - 2,125,785
Federal and State grants 1,347,318 - 1,347,318
Community preservation 1,395,425 - 1,395,425
Gift funds 2,031,263 - 2,031,263
Other specific purposes 1,293,419 - 1,293,419
Unrestricted (55,970,281) 9,040,938 (46,929,343)
Total Net Position $ 31,627,703 $ 26,498,646 $ 58,126,349
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 35 of 123 Comprehensive Annual Financial ReportSource page 104
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2016
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 $ 5,764,062 $ 776,450 $ 127,304 $ - $ (4,860,308) $ (4,860,308)
Public safety 16,584,359 3,123,869 399,605 - (13,060,885) (13,060,885)
Education 60,963,021 2,788,752 14,573,089 - (43,601,180) (43,601,180)
Public works 7,581,355 316,164 237,324 1,417,491 (5,610,376) (5,610,376)
Health and human services 1,536,513 97,633 383,435 - (1,055,445) (1,055,445)
Culture and recreation 3,698,331 468,374 38,167 145,336 (3,046,454) (3,046,454)
Interest expense 672,768 - 83,026 - (589,742) (589,742)
Total governmental activities 96,800,409 7,571,242 15,841,950 1,562,827 (71,824,390) (71,824,390)
Business-type activities:
Water 5,692,320 7,084,917 - - $ 1,392,597 1,392,597
Sewer 5,925,780 6,517,066 2,093 - 593,379 593,379
Rink 79,670 - - - (79,670) (79,670)
Total business-type activities 11,697,770 13,601,983 2,093 - 1,906,306 1,906,306
Total Primary Government $ 108,498,179 $ 21,173,225 $ 15,844,043 $ 1,562,827 (71,824,390) 1,906,306 (69,918,084)
General Revenues:
Property taxes 67,168,983 - 67,168,983
Tax liens 204,512 - 204,512
Motor vehicle and other excise 4,376,168 - 4,376,168
Hotel and meals taxes 601,227 - 601,227
Payments in lieu of taxes 225,405 - 225,405
Grants and contributions not restricted
to specific programs 2,013,767 - 2,013,767
Penalties and interest on taxes 254,164 - 254,164
Unrestricted investment income 246,862 38,296 285,158
Insurance recoveries 2,190,705 - 2,190,705
Transfers (net) (1,824,747) 1,824,747 -
Total general revenues and transfers 75,457,046 1,863,043 77,320,089
Change in Net Position 3,632,656 3,769,349 7,402,005
Net Position:
Beginning of year 27,995,047 22,729,297 50,724,344
End of year $ 31,627,703 $ 26,498,646 $ 58,126,349
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 36 of 123 Comprehensive Annual Financial ReportSource page 105
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2016
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Assets
Cash and cash equivalents $ 16,304,708 $ 722,746 $ 9,540,529 $ 26,567,983
Investments 3,982,225 - 1,271,042 5,253,267
Receivables, net of allowance for uncollectibles:
Property taxes 546,198 - 4,935 551,133
Tax liens and foreclosures 1,260,489 - 2,312 1,262,801
Motor vehicle excise 299,187 - - 299,187
Intergovernmental 2,125,785 92,532 930,280 3,148,597
Departmental and other 11,239 - 532,489 543,728
Prepaid items 1,715,366 - - 1,715,366
Due from other funds 699,024 - - 699,024
Total Assets 26,944,221 815,278 12,281,587 40,041,086
Deferred Outflows of Resources - - - -
Total Assets and Deferred Outflows of Resources $ 26,944,221 $ 815,278 $ 12,281,587 $ 40,041,086
Liabilities
Warrants and accounts payable $ 1,322,313 $ 591,890 $ 249,365 $ 2,163,568
Accrued payroll and withholdings 3,531,574 600 134,306 3,666,480
Retainage payable - 115,341 - 115,341
Tax refunds payable 2,550,000 - - 2,550,000
Other liabilities 39,489 - - 39,489
Due to other funds - - 699,024 699,024
Bond anticipation notes payable - 2,385,000 - 2,385,000
Total Liabilities 7,443,376 3,092,831 1,082,695 11,618,902
Deferred Inflows of Resources
Unavailable revenues - property taxes 1,369,195 - 7,247 1,376,442
Unavailable revenues - motor vehicle excise 299,187 - - 299,187
Unavailable revenues - intergovernmental 2,125,785 - - 2,125,785
Unavailable revenues - other 11,239 - 532,489 543,728
Total Deferred Inflows of Resources 3,805,406 - 539,736 4,345,142
Fund Balances
Nonspendable - - 471,585 471,585
Restricted - 163,154 10,421,619 10,584,773
Committed 886,722 - - 886,722
Assigned 1,846,942 - - 1,846,942
Unassigned 12,961,775 (2,440,707) (234,048) 10,287,020
Total Fund Balances 15,695,439 (2,277,553) 10,659,156 24,077,042
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $ 26,944,221 $ 815,278 $ 12,281,587 $ 40,041,086
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 123 Comprehensive Annual Financial ReportSource page 106
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2016
Total Governmental Fund Balances $ 24,077,042
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 106,518,180
Other long-term assets are unavailable to pay current-period expenditures 4,345,142
Deferred outflows and inflows of resources to be recognized in future pension expense
are not available resources and, therefore, are not reported in the funds:
Net difference between projected and actual earnings on pension plan investments 5,220,609
Differences between expected and actual experience 788,735
Changes in assumptions (3,280,618)
Changes in proportion and differences between Town contributions and
proportionate share of contributions 275,817
Net effect of reporting deferred outflows and inflows of resources from pensions 3,004,543
Assets, deferred outflows of resources and liabilities and deferred inflows of resources of the
Town's internal service funds are included in the Statement of Net Position, but are not
reported in the governmental funds. 5,402,485
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in the governmental funds interest is not reported until due. (250,715)
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 (25,616,026)
Unamortized premiums on bonds (1,131,980)
Capital leases payable (84,246)
Landfill closure (52,000)
Compensated absences (1,533,841)
Net pension liability (38,926,647)
Other postemployment benefits (44,124,234)
Net effect of reporting long-term liabilities (111,468,974)
Net Position of Governmental Activities $ 31,627,703
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 123 Comprehensive Annual Financial ReportSource page 107
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Revenues:
Property taxes $ 66,702,218 $ - $ 521,506 $ 67,223,724
Tax liens 147,456 - - 147,456
Intergovernmental 14,191,580 - 4,910,428 19,102,008
Motor vehicle and other excises 4,555,904 - - 4,555,904
Hotel and meals taxes 601,227 - - 601,227
Licenses and permits 1,035,070 - - 1,035,070
Penalties and interest on taxes 254,164 - - 254,164
Payments in lieu of taxes 225,405 - - 225,405
Fines and forfeitures 119,540 - - 119,540
Charges for services - - 1,747,854 1,747,854
Departmental and other revenue 1,239,870 37,253 3,229,142 4,506,265
Investment income 168,008 - 30,218 198,226
Contributions and donations - - 488,456 488,456
Total Revenues 89,240,442 37,253 10,927,604 100,205,299
Expenditures:
Current:
General government 3,978,642 16,925 96,834 4,092,401
Public safety 10,352,360 308,237 1,141,012 11,801,609
Education 37,781,322 2,924,035 5,763,196 46,468,553
Public works 4,809,315 1,108,591 2,015,655 7,933,561
Health and human services 1,003,187 - 161,239 1,164,426
Culture and recreation 1,917,534 - 784,075 2,701,609
Pension benefits 9,802,225 - - 9,802,225
Employee benefits 11,384,011 - 98,441 11,482,452
State and county assessments 927,338 - - 927,338
Debt service:
Principal 3,931,624 - - 3,931,624
Interest 1,061,042 - - 1,061,042
Total Expenditures 86,948,600 4,357,788 10,060,452 101,366,840
Excess (Deficiency) of Revenues Over (Under) Expenditures 2,291,842 (4,320,535) 867,152 (1,161,541)
Other Financing Sources (Uses):
Issuance of bonds and notes - 1,367,000 - 1,367,000
Premiums from bonds and notes 11,148 - - 11,148
Issuance of refunding bonds 515,000 - - 515,000
Payments on refunding bonds (526,148) - - (526,148)
Insurance recoveries - - 2,354,811 2,354,811
Transfers in 1,647,854 566,892 80,000 2,294,746
Transfers out (832,786) - (3,286,707) (4,119,493)
Total Other Financing Sources (Uses) 815,068 1,933,892 (851,896) 1,897,064
Net Change in Fund Balances 3,106,910 (2,386,643) 15,256 735,523
FUND BALANCES - Beginning of year 12,588,529 109,090 10,643,900 23,341,519
FUND BALANCES - End of year $ 15,695,439 $ (2,277,553) $ 10,659,156 $ 24,077,042
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 123 Comprehensive Annual Financial ReportSource page 108
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, 2016
Net Change in Fund Balances - Total Governmental Fund Balances $ 735,523
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 6,844,641
Disposal of assets (64,315)
Depreciation expense (4,714,041)
Net effect of reporting capital assets 2,066,285
In the Statement of Activities, Internal Service Funds established to administer the Town's
health insurance and worker's compensation activities are included within the Statement of
activities whereas these activities are not presented in the Statement of Revenues,
Expenditures and Changes in Fund Balances. 66,082
The issuance of long-term debt provides current financial resources to governmental funds,
while the repayment of the principal of long-term debt consumes the financial resources of
governmental funds. Neither has any effect on net position. Also governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when debt is first issued,
whereas these amounts are amortized in the Statement of Activities. The net amounts are
reflected here as reconciling items:
Issuance of general obligation bonds and notes (1,367,000)
Premiums from bonds and notes (11,148)
Issuance of refunding bonds (515,000)
Payments on refunding bonds 526,148
Amortization of premiums on bonds and notes payable 353,697
Payments on capital leases 20,004
Repayments of debt 3,931,624
Net effect of reporting long-term debt 2,938,325
Revenues in the Statement of Activities that do not provide current financial resources are
unavailable in the Statement of Revenues, Expenditures and Changes in Fund Balances.
Therefore, the recognition of revenue for various types of accounts receivable differ between
the two statements. The amount presented represents the difference in unavailable revenue. (350,934)
In the Statement of Activities, interest is accrued on outstanding long-term debt;
whereas in governmental funds interest is not reported until due. The net
amount presented here as a reconciling item represents the difference in
accruals between this year and the prior year. 34,577
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 26,000
Compensated absences 50,628
Pension benefits (699,361)
Other postemployment benefits (1,234,469)
Net effect of reporting long-term liabilities (1,857,202)
Change in Net Position of Governmental Activities $ 3,632,656
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 123 Comprehensive Annual Financial ReportSource page 109
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 4,632,662 $ 3,179,969 $ 1,811,412 $ 9,624,043 $ 2,449,974
Investments - - - - 3,546,770
Receivables (net):
User charges 2,207,256 1,842,450 - 4,049,706 -
Tax liens 13,820 16,330 - 30,150 -
Departmental and other - - - - 191,375
Deposit held by third party - - - - 122,921
Total current assets 6,853,738 5,038,749 1,811,412 13,703,899 6,311,040
Noncurrent assets:
Nondepreciable capital assets 624,852 - - 624,852 -
Capital assets (net of depreciation) 31,025,964 14,834,826 99,852 45,960,642 -
Total noncurrent assets 31,650,816 14,834,826 99,852 46,585,494 -
Total Assets 38,504,554 19,873,575 1,911,264 60,289,393 6,311,040
Deferred Outflows of Resources
Deferred pensions 215,411 171,791 38,250 425,452 -
Total Deferred Outflows of Resources 215,411 171,791 38,250 425,452 -
Liabilities
Current liabilities:
Warrants and accounts payable 504,804 614 377 505,795 167,567
Accrued payroll and withholdings 19,028 4,823 128 23,979 -
Health claims incurred but not reported - - - - 740,988
Accrued interest 135,074 60,978 - 196,052 -
Other liabilities 10,000 - - 10,000 -
Bond anticipation notes payable 1,300,000 - - 1,300,000 -
Compensated absences 22,278 3,734 3,914 29,926 -
Bonds and notes payable 1,718,992 991,255 6,000 2,716,247 -
Total current liabilities 3,710,176 1,061,404 10,419 4,781,999 908,555
Noncurrent liabilities:
Compensated absences 66,833 11,201 11,743 89,777 -
Other postemployment benefits 915,767 411,788 244,302 1,571,857 -
Net pension liability 1,334,130 1,063,978 236,901 2,635,009 -
Bonds and notes payable 17,771,449 7,132,038 12,000 24,915,487 -
Total noncurrent liabilities 20,088,179 8,619,005 504,946 29,212,130 -
Total Liabilities 23,798,355 9,680,409 515,365 33,994,129 908,555
Deferred Inflows of Resources
Deferred pensions 112,436 89,669 19,965 222,070 -
Total Deferred Outflows of Resources 112,436 89,669 19,965 222,070 -
Net Position
Net investment in capital assets 10,725,301 6,650,555 81,852 17,457,708 -
Unrestricted 4,083,873 3,624,733 1,332,332 9,040,938 5,402,485
Total Net Position $ 14,809,174 $ 10,275,288 $ 1,414,184 $ 26,498,646 $ 5,402,485
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 123 Comprehensive Annual Financial ReportSource page 110
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 7,084,917 $ 6,517,066 $ - $ 13,601,983 $ -
Employee contributions - - - - 3,424,160
Employer contributions - - - - 10,209,630
Stop loss reimbursements - - - - 497,643
Total Operating Revenues 7,084,917 6,517,066 - 13,601,983 14,131,433
Operating Expenses:
Operating costs 2,631,710 1,103,313 53,478 3,788,501 -
Massachusetts Water Resources Authority assessment 1,299,628 3,979,956 - 5,279,584 -
Depreciation 1,161,401 660,028 25,412 1,846,841 -
Employee benefits - - - - 14,113,987
Total Operating Expenses 5,092,739 5,743,297 78,890 10,914,926 14,113,987
Operating Income (Loss) 1,992,178 773,769 (78,890) 2,687,057 17,446
Nonoperating Revenues (Expenses):
Intergovernmental - 2,093 - 2,093 -
Investment income 22,988 13,481 1,827 38,296 48,636
Interest expense (599,581) (182,483) (780) (782,844) -
Total Nonoperating Revenues (Expenses) (576,593) (166,909) 1,047 (742,455) 48,636
Income (Loss) Before Transfers 1,415,585 606,860 (77,843) 1,944,602 66,082
Transfers in 387,695 - 1,787,052 2,174,747 -
Transfers out (350,000) - - (350,000) -
Total Transfers 37,695 - 1,787,052 1,824,747 -
Change in Net Position 1,453,280 606,860 1,709,209 3,769,349 66,082
Total Net Position - Beginning of the Year 13,355,894 9,668,428 (295,025) 22,729,297 5,336,403
Total Net Position - End of the Year $ 14,809,174 $ 10,275,288 $ 1,414,184 $ 26,498,646 $ 5,402,485
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 123 Comprehensive Annual Financial ReportSource page 111
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2016
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,962,201 $ 6,468,014 $ 20,000 $ 13,450,215 $ -
Receipts from interfund services provided - - - - 14,259,936
Payments to employees (804,344) (320,836) (9,641) (1,134,821) -
Payments to vendors (2,651,766) (4,728,408) (15,430) (7,395,604) -
Payments for interfund services used - - - - (14,185,159)
Net Cash Provided by (Used in) Operating
Activities 3,506,091 1,418,770 (5,071) 4,919,790 74,777
Cash Flows from Noncapital Financing Activities:
Intergovernmental operating grants - 2,093 - 2,093 -
Net Cash Provided by (Used in) Noncapital
Financing Activities 37,695 2,093 1,787,052 1,826,840 -
Cash Flows from Capital and Related Financing Activities:
Proceeds from the issuance of bonds and notes 1,300,000 561,000 - 1,861,000 -
Proceeds from the issuance of refunding bonds 585,000 50,000 - 635,000 -
Payments of refunded bonds (585,000) (50,000) - (635,000) -
Acquisition and construction of capital assets (1,646,420) (403,113) - (2,049,533) -
Principal payments on bonds and notes (1,708,750) (899,515) (8,000) (2,616,265) -
Interest payments on bonds and notes (671,804) (223,393) (780) (895,977) -
Net Cash Used in Capital and Related
Financing Activities (2,726,974) (965,021) (8,780) (3,700,775) -
Cash Flows from Investing Activities:
Investment income 22,988 13,481 1,827 38,296 48,636
Investment of operating cash - - - - (841,476)
Net Cash Provided by (Used in) Investing Activities 22,988 13,481 1,827 38,296 (792,840)
Net Change in Cash and Cash Equivalents 839,800 469,323 1,775,028 3,084,151 (718,063)
Cash and Cash Equivalents:
Beginning of the year 3,792,862 2,710,646 36,384 6,539,892 3,168,037
End of the year $ 4,632,662 $ 3,179,969 $ 1,811,412 $ 9,624,043 $ 2,449,974
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 1,992,178 $ 773,769 $ (78,890) $ 2,687,057 $ 17,446
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,161,401 660,028 25,412 1,846,841 -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
Receivables (122,716) (49,052) 39,710 (132,058) 128,503
Amounts held by insurance carrier - - - - (64,521)
Deferred outflows of resources (163,413) (130,322) (29,017) (322,752) -
Accounts payable and accrued expenses 397,868 (6,013) (5,561) 386,294 (251,616)
Health claims incurred but not reported - - - - 244,965
Other postemployment benefits 53,391 20,922 10,002 84,315 -
Net pension liability 74,946 59,769 13,308 148,023 -
Deferred inflows of resources 112,436 89,669 19,965 222,070 -
Net Cash Provided by (Used in) Operating
Activities $ 3,506,091 $ 1,418,770 $ (5,071) $ 4,919,790 $ 74,777
Noncash capital and related financing activities:
Amortization of bond premium $ 53,310 $ 35,123 $ - $ 88,433 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 123 Comprehensive Annual Financial ReportSource page 112
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2016
Other Private
Postemployment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 7,738 $ 100,410 $ 1,373,818
Investments 1,980,803 - -
Total Assets 1,988,541 100,410 1,373,818
Liabilities
Warrants payable - - 13,269
Agency liabilities - - 1,360,549
Total Liabilities - - 1,373,818
Net Position
Held in trust for other postemployment benefits 1,988,541 - -
Held in trust for private purposes - 100,410 -
Total Net Position $ 1,988,541 $ 100,410 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 123 Comprehensive Annual Financial ReportSource page 113
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FISCAL YEAR ENDED JUNE 30, 2016
Other Private
Postemployment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employee $ 417,525 $ -
Employer 1,940,567 -
Other - 3,725
Total contributions 2,358,092 3,725
Investment income:
Interest and dividends 47,748 1,043
Total Additions 2,405,840 4,768
Deductions
Education - scholarships - 16,450
Retiree benefits 1,608,092 -
Total Deductions 1,608,092 16,450
CHANGE IN NET POSITION 797,748 (11,682)
NET POSITION AT BEGINNING OF YEAR 1,190,793 112,092
NET POSITION AT END OF YEAR $ 1,988,541 $ 100,410
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 45 of 123 Comprehensive Annual Financial ReportSource page 114
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2016
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 2016, the Town’s share of the operating and debt service expenses was $1,117,954.
There is no equity interest reported in these financial statements. Complete audited financial
statements can be obtained directly from the District’s administrative office located at 800
Randolph Street, Canton, Massachusetts 02021.
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the non-fiduciary activities of the primary government and
its component units. For the most part, the effect of interfund activity has been removed from
these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which rely
primarily on fees and charges for support.
Separate financial statements are provided for governmental funds, proprietary funds and
fiduciary funds, even though the fiduciary funds are excluded from the government-wide
financial statements. Major individual government funds and major individual enterprise funds
are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated
and presented in a single column.
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Major Fund Criteria – Major funds must be reported if both of the following criteria are met:
1) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of an individual governmental or enterprise fund are at least ten
percent of the corresponding element (assets and deferred outflows, liabilities and
deferred inflows, etc.) for all funds of that category or type (total governmental or total
enterprise funds), and
2) The total assets and deferred outflows, liabilities and deferred inflows, revenues, or
expenditures/expenses of the individual governmental fund or enterprise fund are at least
five percent of the corresponding element for all governmental and enterprise funds
combined.
Additionally, any other governmental or enterprise fund that management believes is particularly
significant to the basic financial statements may be reported as a major fund.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when a liability is incurred. Property taxes are
recognized as revenues in the fiscal year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider are met.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
provided by a given function or segment and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
The governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized when
susceptible to accrual (i.e. measurable and available). Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities of
the current period. Expenditures are recorded when the related fund liability is incurred, except
for unmatured interest on general long-term debt which is recognized when due, certain
compensated absences, claims and judgments which are recognized when the obligations are
expected to be liquidated with current expendable available resources.
The Town considers property tax revenues to be available if they are material and collected
within 60 days after the end of the fiscal year. Investment income associated with the current
fiscal period is susceptible to accrual and has been recognized as revenue of the current fiscal
period. All other revenue items are considered to be measurable and available only when the
cash is received and are recognized as revenue at that time.
Town of Canton, Massachusetts Page 47 of 123 Comprehensive Annual Financial ReportSource page 116
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.
Capital Projects Fund – is used to account for financial resources that are restricted,
committed or assigned to expenditures for capital outlays.
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 Permanent Funds are used to account for financial resources that are restricted to the
extent that only earnings, not principal, may be used for purposes that support the
governmental programs.
The proprietary fund financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are
recognized when earned and expenses are recorded when the liabilities are incurred.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund’s principal ongoing operations. The
principal operating revenues are user charges and fees, while operating expenses consist of
salaries, ordinary maintenance, assessments, indirect costs and depreciation. All revenues and
expenses not meeting this definition are reported as non-operating revenues and expenses.
The government reports the following major proprietary funds:
Water Enterprise Fund – is used to account for the operation of the Town’s water activities.
Costs associated with maintaining the related infrastructure and providing services to the
general public on a continuing basis, including depreciation, are financed or recovered
primarily through user charges.
Sewer Enterprise Fund – is used to account for the operation of the Town’s sewer activities.
Costs associated with maintaining the related infrastructure and providing services to the
general public on a continuing basis, including depreciation, are financed or recovered
primarily through user charges.
Rink Enterprise Fund – is used to account for the operation of the Town’s ice skating rink
activities.
Town of Canton, Massachusetts Page 48 of 123 Comprehensive Annual Financial ReportSource page 117
Additionally, the following proprietary fund type is reported:
Internal Service Fund – is used to account for the Town’s self-insured health insurance,
workers’ compensation, unemployment claims and building insurance activities. Because
these services primarily benefit governmental rather than business-type activities, they have
been included within governmental activities in the government-wide financial statements.
Fiduciary fund financial statements are reported using the economic resources measurement focus
and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a
trustee capacity and cannot be used to support the governmental programs.
The government reports the following fiduciary funds:
Other Postemployment Benefits Trust Fund – is used to accumulate funds for future payments
of other post-employment benefits for retirees such as health and life insurance.
Private-Purpose Trust Fund – is used to account for trust arrangements under which principal
and income benefit individuals, private organizations or other governments. This fund is
used for educational scholarships.
Agency Fund – is used to account for assets held in a purely custodial capacity. The Town’s
agency funds consist primarily of student activities and escrow and other deposits. Agency
funds apply the accrual basis of accounting but do not have a measurement focus.
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Equity
Deposits and Investments – The Town’s cash and cash equivalents are considered to be cash on
hand, demand deposits, and short-term investments with original maturities of three months or
less from the date of acquisition.
Investments of the Town are recorded at fair value in accordance with GASB Statement No. 72,
Fair Value Measurement and Application. Accordingly, the change in fair value of investments
is recognized as an increase or decrease to investment assets and investment income.
Receivables – Real estate and personal property taxes are assessed on January 1 every year. Bills
are sent quarterly and are due on August 1, November 1, February 1, and May 1, or thirty days
subsequent to the mailing date. Interest accrues on delinquent taxes at the rate of 14% per
annum. Motor vehicle excise are billed annually for each vehicle registered in the Town based on
vehicles reported to the Town by the Commonwealth of Massachusetts. Water and sewer user
fees are billed quarterly based on individual meter readings and are subject to interest and
penalties if not paid by the respective due dates. Property taxes, motor vehicle excise taxes and
water and sewer user fees are recorded as receivables in the fiscal year of the levy.
Real estate taxes and water and sewer user fees are secured through a lien process within 60 days
after the due date and are considered 100% collectible. Accordingly, an allowance for
uncollectible balances for these receivables is not reported. All personal property tax and excise
tax receivables are shown net of an allowance for uncollectible balances comprised of those
outstanding amounts greater than five years old. Other departmental receivables are shown net of
an allowance for uncollectible balances based on historical trends and specific account analysis.
Town of Canton, Massachusetts Page 49 of 123 Comprehensive Annual Financial ReportSource page 118
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.
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.
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Long-term Obligations – Long-term debt is reported as liabilities in the government-wide and
proprietary fund statement of net position. Bond premiums and discounts are amortized over the
life of the bonds using the effective interest method. Bond anticipation notes payable are reported
net of the applicable bond premium or discount.
In the governmental fund financial statements, the face amount of long-term debt issued is
reported as other financing sources. Premiums received on a debt issuance are reported as other
financing sources while discounts are reported as other financing uses. Issuance costs are
exclusively reported as general government expenditures regardless of whether they are withheld
from the actual proceeds.
Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position
will sometimes report a separate section for deferred outflows of resources. This separate
financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The Town has one item that is reported on the government-
wide statement of net position which relates to outflows from changes in the net pension liability.
This will be recognized in pension expense in future years as more fully described in Note III,
subsection A.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. The Town has two
items that are reported as deferred inflows of resources. The first arises only under a modified
accrual basis of accounting and, accordingly, the item unavailable revenue is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from
four sources: property taxes, excise taxes, intergovernmental and other. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts become
available. The second item is reported on the government-wide statement of net position which
relates to outflows from changes in the net pension liability. This will be recognized in pension
expense in future years as more fully described in Note III, subsection A.
Net Position – In the government-wide financial statements, net position reported as “net
investment in capital assets” includes capital assets, net of accumulated depreciation, less the
principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital
related debt are not considered to be capital related debt.
Net position is reported as restricted when amounts are not available for appropriation or are
legally restricted by outside parties for a specific use. Net position has been restricted for the
following:
Nonexpendable permanent funds represent the endowment portion of donor restricted trusts
that support governmental programs.
Expendable permanent funds represent the spendable portion of donor restricted trusts that
support governmental programs.
Debt service represents a 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.
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Federal and State grants represent assets that have restrictions placed on them from federal
and state granting agencies.
Community preservation represents assets that are restricted by state law for the purposes of
acquiring or developing open space and recreational facilities, historic resources and
affordable housing.
Gift funds represent assets that are restricted by donors for specific governmental programs
and uses.
Other specific purposes represent assets that are restricted by third parties 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 to 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 – nonspendable, restricted, committed, assigned, and
unassigned as described below:
Nonspendable 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.
Town of Canton, Massachusetts Page 52 of 123 Comprehensive Annual Financial Report