Canton, Massachusetts · Saved source text
Fiscal Year 2019 Comprehensive Annual Financial Report
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Source page 41
Basic Financial Statements Town of Canton, Massachusetts Page 33 of 130 Comprehensive Annual Financial Report
Source page 42
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
JUNE 30, 2019
Primary Government
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 34,044,171 $ 10,600,023 $ 44,644,194
Investments 13,475,926 - 13,475,926
Receivables, net:
Property taxes 159,209 - 159,209
Tax liens 1,312,844 31,186 1,344,030
User fees - 3,329,503 3,329,503
Departmental and other 1,064,306 - 1,064,306
Intergovernmental 2,812,072 - 2,812,072
Prepaid items 1,609 - 1,609
Deposit held by third party 61,800 - 61,800
Capital assets not being depreciated 14,889,380 2,766,888 17,656,268
Capital assets, net of accumulated depreciation 96,434,714 43,488,473 139,923,187
Total Assets 164,256,031 60,216,073 224,472,104
Deferred Outflows of Resources
Related to net pension liability 9,542,362 645,939 10,188,301
Related to net other postemployment benefits liability 21,029 750 21,779
Total Deferred Outflows of Resources 9,563,391 646,689 10,210,080
Liabilities
Warrants and accounts payable 3,766,042 496,164 4,262,206
Accrued payroll and withholdings 4,170,571 27,177 4,197,748
Retainage payable 61,675 44,472 106,147
Tax refunds payable 968,747 - 968,747
Health claims incurred but not reported Accrued 884,633 - 884,633
interest 191,830 147,419 339,249
Other liabilities 36,243 8,597 44,840
Bond anticipation notes payable 1,500,000 1,000,000 2,500,000
Noncurrent liabilities:
Due within one year 4,733,200 2,532,403 7,265,603
Due in more than one year 150,113,570 25,851,607 175,965,177
Total Liabilities 166,426,511 30,107,839 196,534,350
Deferred Inflows of Resources Related
to net pension liability 1,154,601 78,157 1,232,758
Related to net other postemployment benefits liability 7,808,125 278,497 8,086,622
Total Deferred Inflows of Resources 8,962,726 356,654 9,319,380
Net Position
Net investment in capital assets 85,225,980 23,248,847 108,474,827
Restricted for:
Nonexpendable permanent funds 533,994 - 533,994
Expendable permanent funds 756,678 - 756,678
Debt service 929,952 - 929,952
Federal and State grants 2,360,208 - 2,360,208
Community preservation 2,207,989 - 2,207,989
Gift funds 2,871,202 - 2,871,202
Other specific purposes 771,260 - 771,260
Unrestricted (97,227,078) 7,149,422 (90,077,656)
Total Net Position $ (1,569,815) $ 30,398,269 $ 28,828,454
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 34 of 130 Comprehensive Annual Financial ReportSource page 43
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2019
Program Revenues Net (Expenses) Revenues and Changes in Net Position
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total
Primary government:
Governmental activities:
General government $ 6,597,325 $ 1,072,993 $ 876,121 $ - $ (4,648,211) $ (4,648,211)
Public safety 20,028,852 3,553,243 432,638 - (16,042,971) (16,042,971)
Education 72,945,712 2,402,968 19,214,047 7,055 (51,321,642) (51,321,642)
Public works 8,254,354 293,344 26,147 677,627 (7,257,236) (7,257,236)
Health and human services 1,598,126 95,143 362,332 - (1,140,651) (1,140,651)
Culture and recreation 4,763,997 490,079 36,432 110,487 (4,126,999) (4,126,999)
Interest expense 595,390 - 44,610 - (550,780) (550,780)
Total governmental activities 114,783,756 7,907,770 20,992,327 795,169 (85,088,490) (85,088,490)
Business-type activities:
Water 6,656,972 6,631,764 - - $ (25,208) (25,208)
Sewer 6,415,007 6,798,905 - - 383,898 383,898
Rink 15,301 - - 450,000 434,699 434,699
Total business-type activities 13,087,280 13,430,669 - 450,000 793,389 793,389
Total Primary Government $ 127,871,036 $ 21,338,439 $ 20,992,327 $ 1,245,169 (85,088,490) 793,389 (84,295,101)
General Revenues:
Property taxes 76,504,860 - 76,504,860
Tax liens 218,223 - 218,223
Motor vehicle and other excise 4,913,963 - 4,913,963
Hotel and meals taxes 617,748 - 617,748
Payments in lieu of taxes 242,736 - 242,736
Grants and contributions not restricted
to specific programs 2,255,103 - 2,255,103
Penalties and interest on taxes 284,011 - 284,011
Unrestricted investment income 792,608 195,048 987,656
Transfers (net) (1,500,000) 1,500,000 -
Total general revenues and transfers 84,329,252 1,695,048 86,024,300
Change in Net Position (759,238) 2,488,437 1,729,199
Net Position:
Beginning of year, as restated (see Note IV) (810,577) 27,909,832 27,099,255
End of year $ (1,569,815) $ 30,398,269 $ 28,828,454
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 35 of 130 Comprehensive Annual Financial ReportSource page 44
TOWN OF CANTON, MASSACHUSETTS
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2019
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Assets
Cash and cash equivalents $ 17,572,420 $ 1,438,500 $ 12,505,609 $ 31,516,529
Investments 7,788,023 - 1,390,360 9,178,383
Receivables, net of allowance for uncollectibles:
Property taxes 158,381 - 828 159,209
Tax liens 1,309,397 - 3,447 1,312,844
Motor vehicle excise 390,130 - - 390,130
Intergovernmental 1,500,585 - 1,311,487 2,812,072
Departmental and other - - 449,781 449,781
Prepaid items 1,609 - - 1,609
Due from other funds 668,748 - - 668,748
Total Assets 29,389,293 1,438,500 15,661,512 46,489,305
Deferred Outflows of Resources - - - -
Total Assets and Deferred Outflows of Resources $ 29,389,293 $ 1,438,500 $ 15,661,512 $ 46,489,305
Liabilities
Warrants and accounts payable $ 1,381,801 $ 897,384 $ 213,456 $ 2,492,641
Accrued payroll and withholdings 4,114,932 937 54,702 4,170,571
Retainage payable - 61,675 - 61,675
Tax refunds payable 968,747 - - 968,747
Other liabilities 35,693 - 550 36,243
Due to other funds - - 668,748 668,748
Bond anticipation notes payable - 1,500,000 - 1,500,000
Total Liabilities 6,501,173 2,459,996 937,456 9,898,625
Deferred Inflows of Resources
Unavailable revenues - property taxes 1,311,503 - 4,275 1,315,778
Unavailable revenues - excise taxes 390,130 - - 390,130
Unavailable revenues - intergovernmental 929,952 - - 929,952
Unavailable revenues - other - - 301,694 301,694
Total Deferred Inflows of Resources 2,631,585 - 305,969 2,937,554
Fund Balances
Nonspendable 1,609 - 532,385 533,994
Restricted 110,803 239,480 13,885,702 14,235,985
Committed 976,324 - - 976,324
Assigned 1,680,982 - - 1,680,982
Unassigned 17,486,817 (1,260,976) - 16,225,841
Total Fund Balances 20,256,535 (1,021,496) 14,418,087 33,653,126
Total Liabilities, Deferred Inflows of Resources,
and Fund Balances $ 29,389,293 $ 1,438,500 $ 15,661,512 $ 46,489,305
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 36 of 130 Comprehensive Annual Financial ReportSource page 45
TOWN OF CANTON, MASSACHUSETTS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION
JUNE 30, 2019
Total Governmental Fund Balances $ 33,653,126
Capital assets used in governmental activities are not financial resources and therefore are
not reported in the funds. 111,324,094
Other long-term assets are unavailable to pay current-period expenditures 2,937,554
Deferred outflows and inflows of resources to be recognized in future fiscal years
are not available resources and, therefore, are not reported in the funds:
Deferred outflows related to net pension liability 9,542,362
Deferred outflows related to net other postemployment benefits liability 21,029
Deferred inflows related to net pension liability (1,154,601)
Deferred inflows related to net other postemployment benefits liability (7,808,125)
Net effect of reporting deferred outflows and inflows of resources 600,665
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. 4,953,346
In the Statement of Activities, interest is accrued on outstanding long-term debt
whereas in the governmental funds interest is not reported until due. (191,830)
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 (25,214,122)
Unamortized premiums on bonds (1,279,107)
Capital leases payable (21,713)
Compensated absences (2,021,640)
Net pension liability (45,716,162)
Net other postemployment benefits liability (80,594,026)
Net effect of reporting long-term liabilities (154,846,770)
Net Position of Governmental Activities $ (1,569,815)
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 37 of 130 Comprehensive Annual Financial ReportSource page 46
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FISCAL YEAR ENDED JUNE 30, 2019
Nonmajor Total
General Capital Governmental Governmental
Fund Projects Funds Funds
Revenues:
Property taxes $ 76,035,207 $ - $ 615,225 $ 76,650,432
Tax liens 220,536 - - 220,536
Intergovernmental 18,501,717 7,055 4,936,157 23,444,929
Motor vehicle and other excises 4,903,303 - - 4,903,303
Hotel and meals taxes 617,748 - - 617,748
Licenses and permits 1,257,881 - - 1,257,881
Penalties and interest on taxes 284,011 - - 284,011
Payments in lieu of taxes 242,736 - - 242,736
Fines and forfeitures 87,062 - - 87,062
Charges for services - - 2,034,480 2,034,480
Departmental and other revenue 1,559,811 - 3,067,283 4,627,094
Investment income 660,397 - 64,064 724,461
Contributions and donations - - 1,009,365 1,009,365
Total Revenues 104,370,409 7,055 11,726,574 116,104,038
Expenditures:
Current:
General government 4,268,732 - 351,185 4,619,917
Public safety 11,928,326 867,457 1,614,462 14,410,245
Education 44,480,684 1,725,185 5,627,915 51,833,784
Public works 5,801,184 2,611,907 688,042 9,101,133
Health and human services 977,434 - 148,195 1,125,629
Culture and recreation 2,192,102 - 3,689,541 5,881,643
Pension benefits 14,173,028 - - 14,173,028
Employee benefits 13,014,350 - 55,659 13,070,009
State and county assessments 1,230,700 - - 1,230,700
Debt service:
Principal 3,786,421 - - 3,786,421
Interest 874,950 24,851 - 899,801
Total Expenditures 102,727,911 5,229,400 12,174,999 120,132,310
Excess (Deficiency) of Revenues Over (Under) Expenditures 1,642,498 (5,222,345) (448,425) (4,028,272)
Other Financing Sources (Uses):
Issuance of bonds and notes - 2,121,000 1,849,000 3,970,000
Premiums from bonds and notes 83,700 133,000 293,363 510,063
Issuance of refunding bonds 1,398,300 - - 1,398,300
Payments on refunding bonds (1,482,000) - - (1,482,000)
Transfers in 1,477,213 447,610 803,509 2,728,332
Transfers out (2,744,727) - (1,483,605) (4,228,332)
Total Other Financing Sources (Uses) (1,267,514) 2,701,610 1,462,267 2,896,363
Net Change in Fund Balances 374,984 (2,520,735) 1,013,842 (1,131,909)
FUND BALANCES - Beginning of year 19,881,551 1,499,239 13,404,245 34,785,035
FUND BALANCES - End of year $ 20,256,535 $ (1,021,496) $ 14,418,087 $ 33,653,126
See acompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 38 of 130 Comprehensive Annual Financial ReportSource page 47
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, 2019
Net Change in Fund Balances - Total Governmental Fund Balances $ (1,131,909)
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 10,233,283
Disposal of capital assets (27,693)
Depreciation expense (5,604,742)
Net effect of reporting capital assets 4,600,848
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. (1,363,410)
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 (3,970,000)
Premiums from bonds and notes (510,063)
Issuance of refunding bonds (1,398,300)
Payments on refunding bonds 1,482,000
Amortization of premiums on bonds and notes payable 277,772
Payments on capital leases 21,273
Repayments of debt 3,786,421
Net effect of reporting long-term debt (310,897)
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. (647,667)
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. 26,639
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:
Compensated absences (104,778)
Pension benefits (1,011,190)
Other postemployment benefits (816,874)
Net effect of reporting long-term liabilities (1,932,842)
Change in Net Position of Governmental Activities $ (759,238)
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 39 of 130 Comprehensive Annual Financial ReportSource page 48
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
JUNE 30, 2019
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 3,245,145 $ 3,762,518 $ 3,592,360 $ 10,600,023 $ 2,527,642
Investments - - - - 4,297,543
Receivables (net):
User charges 1,675,772 1,653,731 - 3,329,503 -
Tax liens 15,592 15,594 - 31,186 -
Departmental and other - - - - 224,395
Deposit held by third party - - - - 61,800
Total current assets 4,936,509 5,431,843 3,592,360 13,960,712 7,111,380
Noncurrent assets:
Nondepreciable capital assets 1,290,628 - 1,476,260 2,766,888 -
Depreciable capital assets (net of depreciation) 30,075,119 13,413,354 - 43,488,473 -
Total noncurrent assets 31,365,747 13,413,354 1,476,260 46,255,361 -
Total Assets 36,302,256 18,845,197 5,068,620 60,216,073 7,111,380
Deferred Outflows of Resources
Related to net pension liability 327,045 260,820 58,074 645,939 -
Related to net other postemployment benefit liability 517 199 34 750 -
Total Deferred Outflows of Resources 327,562 261,019 58,108 646,689 -
Liabilities
Current liabilities:
Warrants and accounts payable 211,789 8,724 275,651 496,164 1,273,401
Accrued payroll and withholdings 18,481 8,696 - 27,177 -
Retainage payable - - 44,472 44,472 -
Health claims incurred but not reported - - - - 884,633
Accrued interest 99,264 48,155 - 147,419 -
Other liabilities 8,597 - - 8,597 -
Bond anticipation notes payable 1,000,000 - - 1,000,000 -
Compensated absences 1,764,996 7,876 - 1,772,872 -
Bonds and notes payable 21,762 737,769 - 759,531 -
Total current liabilities 3,124,889 811,220 320,123 4,256,232 2,158,034
Noncurrent liabilities:
Compensated absences 65,285 23,629 - 88,914 -
Net other postemployment benefit liability 1,982,877 762,554 129,158 2,874,589 -
Net pension liability 1,566,826 1,249,556 278,221 3,094,603 -
Bonds and notes payable 15,302,534 4,490,967 - 19,793,501 -
Total noncurrent liabilities 18,917,522 6,526,706 407,379 25,851,607 -
Total Liabilities 22,042,411 7,337,926 727,502 30,107,839 2,158,034
Deferred Inflows of Resources
Related to net pension liability 39,571 31,558 7,028 78,157 -
Related to net other postemployment benefit liability 192,106 73,878 12,513 278,497 -
Total Deferred Outflows of Resources 231,677 105,436 19,541 356,654 -
Net Position
Net investment in capital assets 13,632,441 8,184,618 1,431,788 23,248,847 -
Unrestricted 723,289 3,478,236 2,947,897 7,149,422 4,953,346
Total Net Position $ 14,355,730 $ 11,662,854 $ 4,379,685 $ 30,398,269 $ 4,953,346
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 40 of 130 Comprehensive Annual Financial ReportSource page 49
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2019
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Operating Revenues:
Charges for services $ 6,631,764 $ 6,798,905 $ - $ 13,430,669 $ -
Employee contributions - - - - 3,990,806
Employer contributions - - - - 11,650,823
Stop loss reimbursements - - - - 3,252,099
Total Operating Revenues 6,631,764 6,798,905 - 13,430,669 18,893,728
Operating Expenses:
Operating costs 3,094,669 1,230,230 15,181 4,340,080 -
Massachusetts Water Resources Authority assessment 1,884,292 4,433,841 - 6,318,133 -
Contractual services - - - - 450,000
Depreciation 1,190,875 618,421 - 1,809,296 -
Employee benefits - - - - 19,875,285
Total Operating Expenses 6,169,836 6,282,492 15,181 12,467,509 20,325,285
Operating Income (Loss) 461,928 516,413 (15,181) 963,160 (1,431,557)
Nonoperating Revenues (Expenses):
Investment income 64,741 65,436 64,871 195,048 68,147
Interest expense (487,136) (132,515) (120) (619,771) -
Total Nonoperating Revenues (Expenses) (422,395) (67,079) 64,751 (424,723) 68,147
Income Before Capital Contributions
and Transfers 39,533 449,334 49,570 538,437 (1,363,410)
Capital contributions - - 450,000 450,000 -
Transfers in - - 1,500,000 1,500,000 -
Total Capital Contributions and Transfers - - 1,950,000 1,950,000 -
Change in Net Position 39,533 449,334 1,999,570 2,488,437 (1,363,410)
Total Net Position - Beginning of the Year,
as restated (see Note IV) 14,316,197 11,213,520 2,380,115 27,909,832 6,316,756
Total Net Position - End of the Year $ 14,355,730 $ 11,662,854 $ 4,379,685 $ 30,398,269 $ 4,953,346
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 41 of 130 Comprehensive Annual Financial ReportSource page 50
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED JUNE 30, 2019
Governmental
Business-Type Activities Activities
Total Internal
Enterprise Service
Water Sewer Rink Funds Funds
Cash Flows from Operating Activities:
Receipts from users $ 6,948,398 $ 6,911,383 $ - $ 13,859,781 $ -
Receipts from interfund services provided - - - - 18,897,227
Payments to employees (884,896) (309,042) - (1,193,938) -
Payments to vendors (3,886,038) (5,287,201) 211,544 (8,961,695) -
Payments for interfund services used - - - - (19,151,364)
Net Cash Provided by (Used in) Operating
Activities 2,177,464 1,315,140 211,544 3,704,148 (254,137)
Cash Flows from Noncapital Financing Activities:
Transfers in - - 1,500,000 1,500,000 -
Net Cash Provided by Noncapital
Financing Activities - - 1,500,000 1,500,000 -
Cash Flows from Capital and Related Financing Activities:
Proceeds from capital contributions - - 450,000 450,000 -
Proceeds from the issuance of bonds and notes 1,000,000 - - 1,000,000 -
Proceeds from the issuance of refunding bonds 2,783,100 123,600 - 2,906,700 -
Premiums from the issuance of bonds and notes 323,184 - - 323,184 -
Payments of refunded bonds (3,060,000) (128,000) - (3,188,000) -
Acquisition and construction of capital assets (1,008,246) (109,329) (1,345,853) (2,463,428) -
Principal payments on bonds and notes (1,661,700) (925,771) (6,000) (2,593,471) -
Interest payments on bonds and notes (612,773) (154,184) (120) (767,077) -
Net Cash Used in Capital and Related
Financing Activities (2,236,435) (1,193,684) (901,973) (4,332,092) -
Cash Flows from Investing Activities:
Investment income 64,741 65,436 64,871 195,048 68,147
Investment of operating cash - - - - (103,622)
Net Cash Provided by (Used in) Investing Activities 64,741 65,436 64,871 195,048 (35,475)
Net Change in Cash and Cash Equivalents 5,770 186,892 874,442 1,067,104 (289,612)
Cash and Cash Equivalents:
Beginning of the year 3,239,375 3,575,626 2,717,918 9,532,919 2,817,254
End of the year $ 3,245,145 $ 3,762,518 $ 3,592,360 $ 10,600,023 $ 2,527,642
Reconciliation of Operating Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Operating Income (Loss) $ 461,928 $ 516,413 $ (15,181) $ 963,160 $ (1,431,557)
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation 1,190,875 618,421 - 1,809,296 -
Changes in assets, deferred outflows of resources,
liabilities and deferred inflows of resources:
Receivables 316,634 112,478 - 429,112 3,499
Prepaid items - - - - 41,962
Deferred outflows of resources (24,480) (24,160) (6,277) (54,917) -
Accounts payable and accrued expenses 153,291 32,475 219,261 405,027 1,131,959
Net other postemployment liability (190,658) (76,696) (12,670) (280,024) -
Net pension liability 236,711 188,779 42,032 467,522 -
Deferred inflows of resources 33,163 (52,570) (15,621) (35,028) -
Net Cash Provided by (Used in) Operating
Activities $ 2,177,464 $ 1,315,140 $ 211,544 $ 3,704,148 $ (254,137)
Noncash capital and related financing activities:
Amortization of bond premium $ 89,934 $ 15,680 $ - $ 105,614 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 42 of 130 Comprehensive Annual Financial ReportSource page 51
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2019
Other Private
Postemployment Purpose Agency
Benefits Trust Fund Trust Funds Funds
Assets
Cash and cash equivalents $ 14,518 $ 77,522 $ 1,024,486
Investments:
Equity mutual funds 3,783,258 - -
Bond mutual funds 1,421,718 - -
Total Assets 5,219,494 77,522 1,024,486
Liabilities
Warrants payable - 5,000 25,385
Agency liabilities - - 999,101
Total Liabilities - 5,000 1,024,486
Net Position
Restricted for other postemployment benefits 5,219,494 - -
Held in trust for private purposes - 72,522 -
Total Net Position $ 5,219,494 $ 72,522 $ -
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 43 of 130 Comprehensive Annual Financial ReportSource page 52
TOWN OF CANTON, MASSACHUSETTS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FISCAL YEAR ENDED JUNE 30, 2019
Other Private
Postemployment Purpose
Benefits Trust Fund Trust Funds
Additions
Contributions:
Employer $ 4,523,578 $ -
Other - 2,500
Total contributions 4,523,578 2,500
Investment income:
Interest and dividends 241,701 2,170
Net appreciation in fair value of investments 35,731 -
Less - investment management fees (13,732) -
Net investment earnings 263,700 2,170
Other income - -
Total Additions 4,787,278 4,670
Deductions
Education - scholarships - 17,500
Retiree benefits 3,723,578 -
Total Deductions 3,723,578 17,500
CHANGE IN NET POSITION 1,063,700 (12,830)
NET POSITION AT BEGINNING OF YEAR 4,155,794 85,352
NET POSITION AT END OF YEAR $ 5,219,494 $ 72,522
See accompanying notes to basic financial statements.
Town of Canton, Massachusetts Page 44 of 130 Comprehensive Annual Financial ReportSource page 53
TOWN OF CANTON, MASSACHUSETTS
NOTES TO BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2019
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 2019, the Town’s share of the operating and debt service expenses was $1,207,788.
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.
Town of Canton, Massachusetts Page 45 of 130 Comprehensive Annual Financial ReportSource page 54
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 46 of 130 Comprehensive Annual Financial ReportSource page 55
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 47 of 130 Comprehensive Annual Financial ReportSource page 56
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 48 of 130 Comprehensive Annual Financial ReportSource page 57
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, donated
works of art and similar items, and capital assets received in a service concession arrangement are
reported at acquisition value rather than fair value. 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
Town of Canton, Massachusetts Page 49 of 130 Comprehensive Annual Financial ReportSource page 58
government-wide and proprietary fund financial statements. A liability for these amounts is
reported in Governmental Funds only if they have matured.
Long-term Obligations – Long-term debt is reported as liabilities in the government-wide and
proprietary fund statement of net position. Bond premiums and discounts are 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 two types of items that are reported on the
government-wide statement of net position which relate to outflows from changes in the net
pension liability and the other postemployment benefit liability. The deferred pensions will be
recognized in pension expense in future years as more fully described in Note III, subsection A.
The deferred other postemployment benefits will be recognized in employee benefits expense in
future years as more fully described in Note III, subsection C.
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 three
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 other items are reported on the government-wide statement of net position and
relate to inflows from changes in the net pension liability and the other postemployment benefit
liability. The deferred pensions will be recognized in pension expense in future years as more
fully described in Note III, subsection A. The deferred other postemployment benefits will be
recognized in employee benefits expense in future years as more fully described in Note III,
subsection C.
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:
Town of Canton, Massachusetts Page 50 of 130 Comprehensive Annual Financial ReportSource page 59
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.
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
Town of Canton, Massachusetts Page 51 of 130 Comprehensive Annual Financial ReportSource page 60
also assign fund balance as it does when appropriating fund balance to cover a gap between
estimated revenue and appropriations in the subsequent year’s appropriated budget.
Unassigned represents amounts that have not been restricted, committed or assigned to
specific purposes within the general fund. The general fund is the only fund that reports a
positive unassigned fund balance amount. Other governmental funds besides the general
fund can only report a negative unassigned fund balance amount.
When both restricted and unrestricted resources are available for use, it is the Town’s policy to
use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as
they are needed. When unrestricted resources (committed, assigned and unassigned) are available
for use it is the Town’s policy to use committed resources first, then assigned, and then
unassigned as they are needed.
The Town has not established financial policies with respect to maintaining minimum fund
balance amounts.
Stabilization Funds – The Town maintains a general stabilization fund which may be used for any
municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals
$8,490,281 at June 30, 2019 and is reported as unassigned fund balance in the General Fund.
Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify
encumbrances that arise from the issuance of purchase orders resulting from normal purchasing
activity approved by the Finance Department as assigned, and (2) classify encumbrances that
result from an action of the Town Meeting as committed. Encumbrances of funds already
restricted, or committed are included within the classification of those fund balances and not
reported separately. The Town reports $480,982 of encumbrances from normal purchasing
activity in the general fund as assigned and $976,324 of encumbrances from Town Meeting
Articles in the general fund as committed. There are no encumbrances reported in any other fund.
Town of Canton, Massachusetts Page 52 of 130 Comprehensive Annual Financial ReportSource page 61
The following table reflects the Town’s fund equity categorizations:
Capital Nonmajor
General Projects Governmental Total
Nonspendable:
Nonexpendable trust funds $ - $ - $ 532,385 $ 532,385
Prepaid items 1,609 - - 1,609
Restricted:
Recreation revolving - - 340,308 340,308
Parking revolving - - 220,108 220,108
Library revolving - - 105,393 105,393
Other Town revolving - - 373,710 373,710
School revolving - - 1,792,331 1,792,331
General municipal private grants - - 678,219 678,219
Ambulance receipts reserved - - 1,979,720 1,979,720
Community preservation - - 2,203,714 2,203,714
Police grants - - 370,823 370,823
Other Town grants - - 120,164 120,164
School grants - - 1,797,300 1,797,300
General municipal donations - - 2,334,971 2,334,971
School donations - - 208,385 208,385
Insurance recoveries - - 17,930 17,930
Roadway improvements - 191,987 - 191,987
Other capital outlay - 47,493 182,117 229,610
Library trust funds - - 565,159 565,159
Conservation trust funds - - 155,366 155,366
Other trust funds - - 36,153 36,153
Other purposes 110,803 - 403,831 514,634
Committed:
Police 96,519 - - 96,519
Education 74,163 - - 74,163
Infrastructure 490,717 - - 490,717
Public buildings 94,347 - - 94,347
Other purposes 220,578 - - 220,578
Assigned:
Purchase orders 480,982 - - 480,982
Subsequent years' budget 1,200,000 - - 1,200,000
Unassigned 17,486,817 (1,260,976) - 16,225,841
$20,256,535 $ (1,021,496) $14,418,087 $33,653,126
E. Excess of Expenditures Over Appropriations and Deficits
During fiscal year 2019, no expenditures exceeded appropriations in the General Fund.
The Town incurred individual fund deficits totaling $1,260,976 in Capital Project Major Fund.
These deficits will be funded through bond proceeds during fiscal year 2020.
Town of Canton, Massachusetts Page 53 of 130 Comprehensive Annual Financial ReportSource page 62
F. Use of Estimates
The preparation of basic financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure for contingent assets and liabilities at the date of the basic financial statements and the
reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results
could vary from estimates that were used.
II. Detailed Notes to All Funds
A. Deposits and Investments
A cash and investment pool is maintained that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The
deposits and investments of trust funds are held separately from those of other funds.
State laws and regulations require the Town to invest funds only in pre-approved investment
instruments which include but are not necessarily limited to bank deposits, money markets,
certificates of deposit, U.S. obligations, repurchase agreements, and the State Treasurer’s
investment pool (the Pool). In addition, the statutes impose various limitations on the amount and
length of investments and deposits. Repurchase agreements cannot be for a period of over ninety
days, and the underlying security must be a United States obligation.
The Pool meets the criteria of an external investment pool. The Pool is administered by the
Massachusetts Municipal Depository Trust (the MMDT), which was established by the Treasurer
of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the
same as the value of the Pool shares.
Custodial Credit Risk: Deposits - In the case of deposits, this is the risk that in the event of a bank
failure, the government’s deposits may not be returned to it. The Town has adopted a policy that
no more than 25% of the Town’s cash may be comprised of unsecured bank deposits, except for a
30 day reprieve during times of heavy collections. The credit worthiness of banks will be tracked
by Veribanc, or other bank credit worthiness reporting systems, and the Treasurer will move or
collateralize deposits as a result of negative reports. At year-end, the carrying amount of the
Town's deposits was $34,827,193 and the bank balance was $36,397,497. Of the Town's bank
balance, $32,813,449 was covered by federal depository insurance or the Depositor’s Insurance
Fund; $3,379,966 was collateralized and the remainder was exposed to custodial credit risk
because it was uninsured and uncollateralized.
Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of
the invested party not being able to provide required payments to investors, ceasing to exist, or
filing of bankruptcy, the Town may not be able to recover the full amount of its principal
investment and/or investment earnings. The Town has adopted a policy to review the financial
institutions financial statements and the background of each advisor. All securities not held
directly by the Town will be held in the Town’s name and tax identification number by a third
party custodian and evidenced by safekeeping receipts showing individual CUSIP numbers for
each security. The investments in the MMDT are not exposed to custodial credit risk as their
existence is not evidenced by securities that exist in physical or book form. The Town’s
investment in a repurchase agreement is held by a counterparty, but not in the Town’s name. The
Town of Canton, Massachusetts Page 54 of 130 Comprehensive Annual Financial ReportSource page 63
repurchase agreement is fully collateralized with U.S. government securities. The Town’s
investments in negotiable certificates of deposit are fully covered by federal depository insurance.
Fair Value of Investments – The Town reports its investments at fair value. The Town
categorizes its fair value measurements within the fair value hierarchy established by GAAP.
This hierarchy is based on valuation inputs used to measure the fair value of the asset or liability.
The three levels of the hierarchy are as follows:
• Level 1 – Inputs are quoted prices in active markets for identical investments at the
measurement date.
• Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or
indirectly observable for the investment through correlation with market data at the
measurement date and for the duration of the instrument’s anticipated life.
• Level 3 – Inputs reflect the Town’s best estimate of what market participants would use
in pricing the investment at the measurement date.
The following table presents the Town’s investments carried at fair value on a recurring basis in
the statement of net position at June 30, 2019:
Fair Value Measurements Using
6/30/19 Level 1 Level 2 Level 3
Investments by fair value level
Debt securities:
U.S. government obligations $ 7,459,002 $ 1,073,409 $ 6,385,593 $ -
Corporate fixed income securities 2,076,645 - 2,076,645 -
Negotiable certificates of deposit 1,454,900 - 1,454,900 -
Bond mutual funds 1,711,450 - 1,711,450 -
Repurchase agreements 2,330,000 - 2,330,000 -
Total debt securities 15,031,997 1,073,409 13,958,588 -
Equity securities:
Common stock 2,195,647 2,195,647 - -
Equity mutual funds 3,783,258 - 3,783,258 -
Total equity securities 5,978,905 2,195,647 3,783,258 -
Total investments by fair value level 21,010,902 $ 3,269,056 $ 17,741,846 $ -
Investments measured at amortized cost
State investment pool 8,603,527
Total investments measured at fair value $ 29,614,429
Debt and equity securities classified in Level 1 are valued using prices quoted in active markets
for those securities. Corporate fixed income securities, U.S. governmental obligations, negotiable
certificates of deposit, bond mutual funds and repurchase agreements classified in Level 2 are
valued using matrix pricing based on the securities’ relationship to benchmark quoted prices.
The State Treasurer’s investment pool (MMDT) is valued at amortized cost. The MMDT’s
Town of Canton, Massachusetts Page 55 of 130 Comprehensive Annual Financial ReportSource page 64
investment advisor may value the pool using an alternative valuation method that more accurately
reflects the fair value in accordance with the pools fair value pricing policies should amortized
cost not approximate the fair value of the pool. There are no restrictions or limits on withdrawals
from the pool and no direct fees are charged to participants.
Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates. The Town’s policy limits investments
of operating funds to one year or less.
At June 30, 2019, the Town had the following investments with maturities:
Maturities in Years
Investments 6/30/19 Less than 1 1-5 6 - 10
Corporate fixed income securities $ 2,076,645 $ 713,289 $ 1,173,897 $ 189,459
U.S. government obligations 7,459,002 1,345,282 5,824,034 289,686
Negotiable certificates of deposit 1,454,900 1,454,900 - -
Repurchase agreements 2,330,000 2,330,000 - -
State investment pool 8,603,527 8,603,527 - -
Total investments with maturities $ 21,924,074 $14,446,998 $ 6,997,931 $ 479,145
Concentration of Credit Risk – The Town has adopted a policy to limit the amount of investments
that may be invested in a single issuer to 10% of the Town’s investments, except for U.S
government obligations, investments fully collateralized with U.S. government obligations and
the Pool (MMDT). At June 30, 2019, Town has 25% of its investments in U.S. government
obligations and 29% of its investments in the MMDT.
Credit Risk – The Town has adopted a policy to only purchase investment grade securities with a
high concentration in securities rated ‘A’ or better.
At June 30, 2019, the credit quality ratings of investments were as follows:
Corporate U.S. Government Negotiable State
Quality Ratings Fixed Agency Certificates Repurchase Investment
(Moody's) Income Obligations of Deposit Agreements Pool Totals
AAA $ - $ 6,385,593 $ - $ - $ - $ 6,385,593
A1 186,580 - - - - 186,580
A2 368,302 - - - - 368,302
A3 628,288 - - - - 628,288
BAA1 639,477 - - - - 639,477
BAA2 253,998 - - - - 253,998
Not rated - - 1,454,900 2,330,000 8,603,527 12,388,427
Totals - All $2,076,645 $ 6,385,593 $ 1,454,900 $ 2,330,000 $ 8,603,527 $20,850,665
Town of Canton, Massachusetts Page 56 of 130 Comprehensive Annual Financial ReportSource page 65
B. Receivables
Receivables as of year-end for the Town's individual major and non-major governmental funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes $ 158,381 $ - $ 158,381
Tax liens and foreclosures 1,312,844 - 1,312,844
Community preservation surcharges 828 - 828
Motor vehicle and other excise taxes 681,298 (291,168) 390,130
Ambulance fees 645,954 (344,260) 301,694
Public safety details 148,087 - 148,087
Intergovernmental 2,812,072 - 2,812,072
Total $ 5,759,464 $ (635,428) $ 5,124,036
Receivables as of year-end for Town's proprietary funds are as follows:
Gross Allowance for Net
Amount Uncollectibles Amount
Receivables:
Water user charges $ 1,675,772 $ - $ 1,675,772
Water liens 15,592 - 15,592
Sewer user charges 1,653,731 - 1,653,731
Sewer liens 15,594 - 15,594
Rink user charges 19,710 (19,710) -
Stop loss receivables 224,395 - 224,395
Total $ 3,604,794 $ (19,710) $ 3,585,084
Governmental funds report deferred inflows of resources in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period. The following
identifies the components of deferred inflows of resources in the governmental funds:
Other
General Governmental
Fund Funds Total
Receivable type:
Real estate and personal property taxes $ 2,106 $ - $ 2,106
Tax liens and foreclosures 1,309,397 3,447 1,312,844
Motor vehicle and other excise taxes 390,130 - 390,130
Community preservation surcharges - 828 828
Ambulance fees - 301,694 301,694
Intergovernmental 929,952 - 929,952
Total $ 2,631,585 $ 305,969 $ 2,937,554
Town of Canton, Massachusetts Page 57 of 130 Comprehensive Annual Financial ReportSource page 66
School Building Assistance Reimbursement – As of June 30, 2019, the Town expects to receive
the balance of grants from the Commonwealth of Massachusetts under various construction
reimbursement regulations totaling approximately $1.0 million applicable to approved school
construction costs which includes both principal and interest. These costs are reimbursed to the
Town in equal installments over the life of the related bond issues and are subject to appropriation
only by the State Legislature. In the Governmental funds, a receivable of approximately $0.9
million under the caption Intergovernmental has been recorded for the reimbursable portion of the
principal balance as of June 30, 2019.
C. Interfund Receivables, Payables and Transfers
The composition of interfund balances at June 30, 2019 is as follows:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds - $ 668,748
Roadway Improvements
$ 668,748
The outstanding balances between funds result mainly from the timing difference between the
dates that (1) reimburseable expenditures occur, (2) the intergovernmental reimbursements are
received and (3) the payments to the general fund are made.
The composition of interfund transfers for the fiscal year ended June 30, 2019 is as follows:
Transfers In
Capital Nonmajor Rink
General Projects Governmental Enterprise
Transfers Out Fund Fund Funds Fund Total
General Fund $ - $ 447,610 $ 797,117 $ 1,500,000 $ 2,744,727 (1)
Nonmajor Governmental Funds 1,477,213 - 6,392 - 1,483,605 (2)
Total $ 1,477,213 $ 447,610 $ 803,509 $ 1,500,000 $ 4,228,332
(1) Transfers to capital projects fund for various capital purposes, transfers to nonmajor governmental funds for
retirement buyback reserves and special education purposes, transfers to rink enterprise fund for capital outlays.
(2) Transfers to general fund to supplement operating budgets, transfers between nonmajor governmental funds
for capital purposes.
Town of Canton, Massachusetts Page 58 of 130 Comprehensive Annual Financial ReportSource page 67
D. Capital Assets
Capital asset activity for the year ended June 30, 2019, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets not being depreciated:
Land $ 11,158,868 $ 2,065,500 $ - $ 13,224,368
Construction in process 104,967 1,665,012 (104,967) 1,665,012
Total capital assets not being depreciated 11,263,835 3,730,512 (104,967) 14,889,380
Capital assets being depreciated:
Land improvements 3,389,961 202,958 - 3,592,919
Buildings 79,996,182 70,084 - 80,066,266
Building improvements 33,173,104 548,884 - 33,721,988
Machinery and equipment 10,281,079 1,332,379 - 11,613,458
Vehicles 6,542,634 1,319,335 (772,878) 7,089,091
Infrastructure 27,686,389 3,134,098 - 30,820,487
Total capital assets being depreciated 161,069,349 6,607,738 (772,878) 166,904,209
Less accumulated depreciation for:
Land improvements (2,001,488) (195,804) - (2,197,292)
Buildings (30,208,112) (1,807,824) - (32,015,936)
Building improvements (15,174,967) (1,389,665) - (16,564,632)
Machinery and equipment (5,998,317) (690,858) - (6,689,175)
Vehicles (5,016,521) (760,884) 745,185 (5,032,220)
Infrastructure (7,210,533) (759,707) - (7,970,240)
Total accumulated depreciation (65,609,938) (5,604,742) 745,185 (70,469,495)
Total capital assets being depreciated, net 95,459,411 1,002,996 (27,693) 96,434,714
Total governmental activities capital assets, net $ 106,723,246 $ 4,733,508 $ (132,660) $ 111,324,094
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities:
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Construction in process 85,935 2,056,101 - 2,142,036
Total capital assets not being depreciated 710,787 2,056,101 - 2,766,888
Capital assets being depreciated:
Buildings 18,758,743 - - 18,758,743
Building improvements 341,427 - - 341,427
Machinery and equipment 2,954,826 106,000 - 3,060,826
Vehicles 1,161,120 - - 1,161,120
Infrastructure 59,319,337 345,799 - 59,665,136
Total capital assets being depreciated 82,535,453 451,799 - 82,987,252
Less accumulated depreciation for:
Buildings (5,218,675) (438,653) - (5,657,328)
Building improvements (34,624) (17,071) - (51,695)
Machinery and equipment (1,760,914) (224,980) - (1,985,894)
Vehicles (963,152) (61,808) - (1,024,960)
Infrastructure (29,712,118) (1,066,784) - (30,778,902)
Total accumulated depreciation (37,689,483) (1,809,296) - (39,498,779)
Total capital assets being depreciated, net 44,845,970 (1,357,497) - 43,488,473
Total business-type activities capital assets, net $ 45,556,757 $ 698,604 $ - $ 46,255,361
Town of Canton, Massachusetts Page 59 of 130 Comprehensive Annual Financial ReportSource page 68
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Water
Capital assets not being depreciated:
Land $ 624,852 $ - $ - $ 624,852
Construction in process - 665,776 - 665,776
Total capital assets not being depreciated 624,852 665,776 - 1,290,628
Capital assets being depreciated:
Buildings 17,495,139 - - 17,495,139
Building improvements 241,742 - - 241,742
Machinery and equipment 2,228,335 106,000 - 2,334,335
Vehicles 804,504 - - 804,504
Infrastructure 28,864,361 236,470 - 29,100,831
Total capital assets being depreciated 49,634,081 342,470 - 49,976,551
Less accumulated depreciation for:
Buildings (4,752,077) (408,530) - (5,160,607)
Building improvements (32,132) (12,087) - (44,219)
Machinery and equipment (1,335,044) (165,566) - (1,500,610)
Vehicles (620,306) (52,628) - (672,934)
Infrastructure (11,970,998) (552,064) - (12,523,062)
Total accumulated depreciation (18,710,557) (1,190,875) - (19,901,432)
Total capital assets being depreciated, net 30,923,524 (848,405) - 30,075,119
Total Water capital assets, net $ 31,548,376 $ (182,629) $ - $ 31,365,747
Business-type Activities: Sewer
Capital assets being depreciated:
Buildings $ 1,263,604 $ - $ - $ 1,263,604
Buildings and improvements 99,685 - - 99,685
Machinery and equipment 726,491 - - 726,491
Vehicles 356,616 - - 356,616
Infrastructure 30,454,976 109,329 - 30,564,305
Total capital assets being depreciated 32,901,372 109,329 - 33,010,701
Less accumulated depreciation for:
Buildings (466,598) (30,123) - (496,721)
Buildings and improvements (2,492) (4,984) - (7,476)
Machinery and equipment (425,870) (59,414) - (485,284)
Vehicles (342,846) (9,180) - (352,026)
Infrastructure (17,741,120) (514,720) - (18,255,840)
Total accumulated depreciation (18,978,926) (618,421) - (19,597,347)
Total capital assets being depreciated, net 13,922,446 (509,092) - 13,413,354
Total Sewer capital assets, net $ 13,922,446 $ (509,092) $ - $ 13,413,354
Town of Canton, Massachusetts Page 60 of 130 Comprehensive Annual Financial ReportSource page 69
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities: Rink
Capital assets not being depreciated:
Land $ - $ - $ - $ -
Construction in process 85,935 1,390,325 - 1,476,260
Total capital assets not being depreciated 85,935 1,390,325 - 1,476,260
Total capital assets being depreciated, net - - - -
Total Rink capital assets, net $ 85,935 $ 1,390,325 $ - $ 1,476,260
Depreciation expense was charged to functions/programs as follows:
Governmental Activities: Business-Type Activities:
General government $ 200,304 Water $ 1,190,875
Public safety 929,592 Sewer 618,421
Education 2,888,593 $ 1,809,296
Public works 1,123,361
Health and human services 82,854
Culture and recreation 380,038
$ 5,604,742
Rink Capital Assets – During a prior fiscal year, a portion of the roof of the ice rink used in the
Rink Enterprise Fund operations collapsed due to the significant snowfall in the area. The ice
rink is leased from the Commonwealth and, therefore, the building is not a capital asset of the
Rink Enterprise Fund. The remaining capital assets of the Rink Enterprise Fund were sold or
disposed during fiscal year 2017. The Town is currently reconstructing the rink with available
insurance recoveries, grants, bond proceeds and other available local funds.
E. Leases
The Town entered into a non-cancelable lease for the purchase of a school bus. This lease
qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the
present value of the future minimum lease payments as of the inception date.
Assets acquired through capital leases are as follows:
Amount
Asset:
School bus $ 104,250
Less: accumulated depreciation (83,400)
Total $ 20,850
Town of Canton, Massachusetts Page 61 of 130 Comprehensive Annual Financial ReportSource page 70
The future minimum lease payments and the present value of the minimum lease payments at
June 30, 2019, are as follows:
Fiscal Year Ended June 30, Amount
2020 21,713
Total minimum lease payments 21,713
Less: amounts representing interest -
Present value of minimum lease payments $ 21,713
F. Temporary Debt
The Town is authorized to borrow on a temporary basis to fund the following:
Current Operating Costs – Prior to collection of revenues, expenditures may be financed through
the issuance of revenue or tax anticipation notes (RANS or TANS).
Capital Projects and Other Approved Costs – Projects may be temporarily funded through the
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases,
prior to the issuance of these temporary notes, the governing body must take the necessary legal
steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed
the aggregate amount of bonds authorized or the grant award amount.
Temporary notes are general obligations of the Town and carry maturity dates that are limited by
state law. Interest expenditures and expenses for temporary borrowings are accounted for in the
general fund and enterprise funds, respectively.
Temporary notes outstanding as of June 30, 2019, are payable as follows:
Interest Maturity July 1, June 30,
Type Rate Date 2018 Additions Retirements 2019
BAN 2.25% 05/22/20 $ - $ 1,500,000 $ - $ 1,500,000
Total Governmental Notes - 1,500,000 - 1,500,000
BAN 2.25% 05/22/20 - 1,000,000 - 1,000,000
Total Business-Type Notes - 1,000,000 - 1,000,000
Total Notes Payable $ - $ 2,500,000 $ - $ 2,500,000
Governmental activities notes were issued for school modular classrooms and business-type
activities notes were issued for water treatment facility improvements.
Town of Canton, Massachusetts Page 62 of 130 Comprehensive Annual Financial ReportSource page 71
G. Long–Term Obligations and Debt
The Town issues general obligation bonds and notes to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds and notes have been issued for
both governmental and business-type activities. Additionally, the Town incurs various other
long-term obligations relative to associated personnel costs.
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize
indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance
with this section of the law is designated as being “inside the debt limit.” In addition, the Town
may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is
designated as being “outside the debt limit”.
The following reflects the current year activity in the long-term liability accounts:
Beginning Ending Due within
Balance Additions Deletions Balance one year
Governmental Activities:
General obligation bonds (a) $ 24,821,400 $ 5,368,300 $ (5,253,800) $ 24,935,900 $ 3,869,900
Unamortized bond premium 1,046,816 510,063 (277,772) 1,279,107 321,261
Notes from direct borrowings and placements (a) 292,843 - (14,621) 278,222 14,916
Capital leases 42,986 - (21,273) 21,713 21,713
Compensated absences 1,916,862 583,994 (479,216) 2,021,640 505,410
Net pension liability 38,809,535 18,384,003 (11,477,376) 45,716,162 -
Net other postemployment benefits liability (b) 87,533,609 5,236,332 (12,175,915) 80,594,026 -
Total Governmental Activities $ 154,464,051 $ 30,082,692 $ (29,699,973) $ 154,846,770 $ 4,733,200
Business-Type Activities - Water:
General obligation bonds (a) $ 17,309,100 $ 2,783,100 $ (4,521,700) $ 15,570,500 $ 1,437,300
Unamortized bond premium 486,780 323,184 (89,934) 720,030 127,696
Notes from direct borrowings and placements (a) 977,000 - (200,000) 777,000 200,000
Compensated absences 97,705 13,768 (24,426) 87,047 21,762
Net pension liability 1,330,115 630,073 (393,362) 1,566,826 -
Net other postemployment benefits liability (b) 2,153,614 128,848 (299,585) 1,982,877 -
Total Water 22,354,314 3,878,973 (5,529,007) 20,704,280 1,786,758
Business-Type Activities - Sewer:
General obligation bonds (a) 3,408,500 123,600 (763,500) 2,768,600 547,800
Unamortized bond premium 51,561 - (15,680) 35,881 9,423
Notes from direct borrowings and placements (a) 2,714,526 - (290,271) 2,424,255 180,546
Compensated absences 7,044 26,222 (1,761) 31,505 7,876
Net pension liability 1,060,777 502,488 (313,709) 1,249,556 -
Net other postemployment benefits liability (b) 828,215 49,558 (115,219) 762,554 -
Total Sewer 8,070,623 701,868 (1,500,140) 7,272,351 745,645
Business-Type Activities - Rink:
Bond and note debt 6,000 - (6,000) - -
Net pension liability 236,189 111,883 (69,851) 278,221 -
Net other postemployment benefits liability (b) 140,278 8,392 (19,512) 129,158 -
Total Rink 382,467 120,275 (95,363) 407,379 -
Total Business-Type Activities $ 30,807,404 $ 4,701,116 $ (7,124,510) $ 28,384,010 $ 2,532,403
(a) Reclassifications were made to beginning balances for the adoption of GASB Statement No. 88.
(b) As restated (see Note IV)
Town of Canton, Massachusetts Page 63 of 130 Comprehensive Annual Financial ReportSource page 72
The governmental activities liabilities will be liquidated by the general fund. The business-type
liabilities will be liquidated by the enterprise fund reporting the liabilities.
The following is a summary of outstanding long-term debt obligations as of June 30, 2019:
Interest Beginning Ending
Description of Issue Rate Balance Additions Maturities Balance
Governmental Activities:
General Obligation Bonds 2.00 - 5.00% $ 13,794,000 $ 3,970,000 $ (2,083,000) $ 15,681,000
General Obligation Refunding Bonds 2.00 - 4.00% 11,027,400 1,398,300 (3,170,800) 9,254,900
Total General Obligation Bonds 24,821,400 5,368,300 (5,253,800) 24,935,900
Add: Unamortized bond premium 1,046,816 510,063 (277,772) 1,279,107
Total General Obligation Bonds, net 25,868,216 5,878,363 (5,531,572) 26,215,007
MA Office of Energy & Enivronmental Affairs 2.00% 292,843 - (14,621) 278,222
Total notes from direct borrowings and placements 292,843 - (14,621) 278,222
Total Governmental Activities debt $ 26,161,059 $ 5,878,363 $ (5,546,193) $ 26,493,229
Business-Type Activities - Water:
General Obligation Bonds 2.00 - 5.00% $ 12,600,000 $ - $ (4,026,000) $ 8,574,000
General Obligation Refunding Bonds 3.25 - 4.00% 4,709,100 2,783,100 (495,700) 6,996,500
Total General Obligation Bonds 17,309,100 2,783,100 (4,521,700) 15,570,500
Add: Unamortized bond premium 486,780 323,184 (89,934) 720,030
Total General Obligation Bonds, net 17,795,880 3,106,284 (4,611,634) 16,290,530
Massachusetts Water Resource Authority 0.00% 977,000 - (200,000) 777,000
Total notes from direct borrowings and placements 977,000 - (200,000) 777,000
Total Water debt $ 18,772,880 $ 3,106,284 $ (4,811,634) $ 17,067,530
Business-Type Activities - Sewer:
General Obligation Bonds 2.00 - 5.00% $ 2,366,000 $ - $ (277,000) $ 2,089,000
General Obligation Refunding Bonds 3.25 - 4.00% 1,042,500 123,600 (486,500) 679,600
Total General Obligation Bonds 3,408,500 123,600 (763,500) 2,768,600
Add: Unamortized bond premium 51,561 - (15,680) 35,881
Total General Obligation Bonds, net 3,460,061 123,600 (779,180) 2,804,481
Massachusetts Water Resource Authority 0.00% 113,300 - (113,300) -
Massachusetts Clean Water Trust 2.00% 2,601,226 - (176,971) 2,424,255
Total notes from direct borrowings and placements 2,714,526 - (290,271) 2,424,255
Total Sewer debt $ 6,174,587 $ 123,600 $ (1,069,451) $ 5,228,736
Business-Type Activities - Rink:
General Obligation Bonds 2.00% $ 6,000 $ - $ (6,000) $ -
Total Rink Debt $ 6,000 $ - $ (6,000) $ -
Total Business-Type Activities, net $ 24,953,467 $ 3,229,884 $ (5,887,085) $ 22,296,266
On May 1, 2019, the Town issued general obligation bonds of $3,970,000 paying interest at 2% -
5% per annum. The issuance was utilized for dam repairs ($1,571,000), land acquisition
($1,849,000), vehicles and equipment ($361,000) and roadway improvements ($189,000).
Town of Canton, Massachusetts Page 64 of 130 Comprehensive Annual Financial ReportSource page 73
Payments on outstanding bond balances due in future years consist of the following:
Direct Borrowings
Year Ending General Obligation Bonds and Placements
June 30 Principal Interest Principal Interest
Governmental Activities
2020 $ 3,869,900 $ 918,531 $ 14,916 $ 5,490
2021 3,817,200 761,931 15,215 5,190
2022 3,250,100 601,169 15,521 4,884
2023 2,857,400 469,063 15,833 4,573
2024 2,184,900 359,880 16,151 4,254
2025-2029 6,039,400 962,733 85,756 16,271
2030-2034 1,877,000 309,971 94,727 7,299
2035-2039 1,040,000 77,400 20,103 302
Total $ 24,935,900 $ 4,460,678 $ 278,222 $ 48,263
Business-Type Activities - Water
2020 $ 1,437,300 $ 538,494 $ 200,000 $ -
2021 1,388,400 484,464 200,000 -
2022 1,392,900 431,246 159,000 -
2023 1,393,100 374,758 109,000 -
2024 1,366,900 323,553 109,000 -
2025-2029 5,703,900 981,860 - -
2030-2034 2,498,000 227,122 - -
2035-2037 390,000 23,400 - -
Total $ 15,570,500 $ 3,384,897 $ 777,000 $ -
Business-Type Activities - Sewer
2020 $ 547,800 $ 83,979 $ 180,546 $ 46,680
2021 364,400 68,611 184,194 43,032
2022 307,000 55,141 187,915 39,311
2023 289,500 45,535 191,711 35,515
2024 288,200 36,586 195,584 31,642
2025-2029 671,700 100,131 1,038,808 97,321
2030-2032 300,000 19,875 445,497 8,955
Total $ 2,768,600 $ 409,858 $ 2,424,255 $ 302,456
Town of Canton, Massachusetts Page 65 of 130 Comprehensive Annual Financial ReportSource page 74
Massachusetts Office of Energy and Environmental Affairs (EEA)
The Town’s has an outstanding note from direct borrowings and placements issued to the EEA
under the Commonwealth’s Dam and Seawall Repair and Removal Fund. The note was issued on
February 24, 2015, payable at a 2% interest rate with payments through March 6, 2035.
Massachusetts Water Resource Authority (MWRA)
The Town’s has three outstanding notes from direct borrowings and placements issued to the
MWRA on November 15, 2010, May 7, 2012 and August 19, 2013 for $410,000, $500,000, and
$1,090,000, respectively. The notes are payable without interest in ten equal installments. Any
imputed interest is immaterial to the water enterprise fund.
Massachusetts Clean Water Trust (MCWT)
The Town’s has an outstanding note from direct borrowings and placements issued to the MCWT
for $3,745,695 with interest payable at 2% and payments through July 15, 2030. The financing
agreement with the MCWT contain a provision that in the event of default, outstanding amounts
due and payable shall be paid from any undisbursed proceeds on account or be deducted from any
state local aid distributions owed to the Town. This provision also allows the MCWT to declare
the entire outstanding principal amount due immediately.
Current Refunding
On May 1, 2019, the Town issued general obligation refunding bonds of $4,305,000, paying
interest at rates of 2% - 5% per annum. The proceeds, along with $437,684 of premiums, were
used to retire $4,670,000 of callable general obligation bonds. As a result of the current
refunding, the Town reduced its total debt service requirements by $389,554, which resulted in an
economic gain (difference between the present value of the debt service payments on the old and
new debt) of $343,257.
The following represents authorized and unissued debt as of June 30, 2019:
Project Amount
Governmental:
Infrastructure $ 9,172,000
School building improvements 3,130,000
Pool project 5,900,000
Other capital projects 766,500
Business-type:
Water projects 3,270,000
Sewer projects 864,790
Rink repairs 5,983,000
Total Authorized and Unissued $ 29,086,290
Town of Canton, Massachusetts Page 66 of 130 Comprehensive Annual Financial ReportSource page 75
III. Other Information
A. Retirement System
Retirement System Description – The Town contributes to the Norfolk County Retirement System
(the “System”), a cost-sharing multiple-employer defined benefit pension plan. The System was
established under Chapter 32 of the Commonwealth of Massachusetts General Laws (MGL) and
is administered by Norfolk County Retirement Board (the “Board”). Standalone audited financial
statements for the year ended December 31, 2018 were issued and are available at the Norfolk
County Retirement System, 480 Neponset Street, Canton, MA 02021.
The System provides retirement, disability and death benefits to plan members and beneficiaries.
Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan.
Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits
imposed by the Commonwealth’s state law during those years are borne by the Commonwealth
and are deposited into the pension fund directly. Cost-of-living adjustments granted after 1997
must be approved by the Board and are borne by the System.
Contributions Requirements – The System has elected provisions of Chapter 32, Section 22D (as
amended) of Massachusetts General Laws, which require that a funding schedule be established
to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating
employers are assessed their share of the total retirement cost based on the entry age, normal
actuarial cost method. The Town contributed $5,245,794 to the System in fiscal year 2019,
which equaled the actuarially-determined contribution requirement for the fiscal year.
Net Pension Liability – At June 30, 2019, the Town reported a liability of $48,810,765 for its
proportionate share of the net pension liability. The net pension liability was measured as of
December 31, 2018 and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation as of December 31, 2017. There were no material changes
to the System’s benefit terms since the previous actuarial valuation.
The Town’s proportion of the net pension liability is based on a projection of the Town’s long-
term share of contributions to the System relative to the projected contributions of all employers.
The Town’s proportion was approximately 7.50% at December 31, 2018, which was consistent
with the proportion measured at December 31, 2017.
Fiduciary Net Position –The System’s fiduciary net position was determined using the accrual
basis of accounting. The System’s accounting records are maintained on a calendar-year basis in
accordance with the standards and procedures established by PERAC. Contributions from
employers and employees are recognized in the period in which they become due pursuant to
formal commitments, statutory or contractual requirements. Benefit payments (including refunds
of employee contributions) are recorded when incurred, regardless of the timing of payment.
Investments are reported at fair value; fair value is determined as the price one would receive in
an orderly transaction between market participants at a measurement date.
Pension Expense – The Town recognized $6,325,433 in pension expense in the statement of
activities in fiscal year 2019; which was allocated to all functional expenses that applied.
Town of Canton, Massachusetts Page 67 of 130 Comprehensive Annual Financial ReportSource page 76
Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2019, the
Town reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Net differences between projected and
actual earnings on pension plan investments $ 5,924,570 $ -
Differences between expected and
actual experience 2,655,515 -
Changes in assumptions 1,443,336 792,193
Changes in proportion and differences
between Town contributions and
proportionate share of contributions 164,880 440,565
Total $ 10,188,301 $ 1,232,758
The deferred outflows of resources and deferred inflows of resources are expected to be
recognized in the Town’s pension expense as follows:
Year ended June 30,
2019 $ 3,058,757
2020 2,525,364
2021 1,454,179
2022 1,917,243
Total $ 8,955,543
Actuarial Valuation – The measurement of the System’s total pension liability is developed by an
independent actuary. The latest actuarial valuation was performed as of December 31, 2017. The
significant actuarial assumptions used in the actuarial valuation included:
Actuarial cost method: Individual entry age normal
Amortization method: 4.0% increasing payments
Remaining amortization period: 11 years
Investment rate of return: 7.75%
Projected salary increases: 3.5% - 5.5%
Asset valuation method: Market value
Cost of living adjustments: 3.0% on the first $17,000 of benefits
Inflation rate: 4.0%
Mortality rates: Pre-retirement and post-retirement rates reflect the
RP-2014 Blue Collar Mortality with Scale MP-2014,
fully generational
Town of Canton, Massachusetts Page 68 of 130 Comprehensive Annual Financial ReportSource page 77
The investment rate of return assumption is a long-term assumption and is based on capital
market expectations by asset class, historical returns and professional judgment. The market
expectations analysis used a building-block approach, which included expected returns by asset
class and the target asset allocation. The target allocation and best estimates of arithmetic real
returns for each major asset class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Domestic Equity 32.0% 8.1%
International Equity 17.5% 8.2%
Fixed Income 19.0% 3.2%
Real Estate 9.0% 7.3%
Private Equity 8.5% 10.4%
Hedge Fund 9.0% 7.4%
Real Assets 5.0% 10.4%
Total 100.0%
The System’s investment policy’s total, blended expected rate of return seeks to meet or exceed
the assumed actuarial rate of return.
Discount Rate – The discount rate used to measure the total pension liability in the December 31,
2017 actuarial valuation report was 7.75%. This represents a reduction from the 8.0% discount
rate used in the previous actuarial valuation. The projection of cash flows used to determine the
discount rate assumed plan member contributions were made at the current contribution rate and
that employer contributions will be made at rates equal to the actuarially-determined contribution
rates and the member rate. Based on those assumptions, the System’s fiduciary net position was
projected to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Sensitivity Analysis – The following presents the Town’s proportionate share of the net pension
liability calculated using the discount rate of 7.75% as well as the Town’s proportionate share of
the net pension liability using a discount rate that is one percentage point lower (6.75%) or one
percentage point higher (8.75%) than the current rate (dollar amounts are in thousands):
Current
1% Decrease Discount 1% Increase
(6.75%) (7.75%) (8.75%)
Town’s proportionate share of
the net pension liability $ 61,213 $ 48,811 $ 38,267
B. Massachusetts Teachers’ Retirement System
Teachers and certain administrative employees of the School Department participate in the
Massachusetts Teachers’ Retirement System (“MTRS”), a cost-sharing multiple employer
defined benefit pension plan. The MTRS is managed by the Commonwealth on behalf of
municipal teachers and municipal teacher retirees. Like the System, MTRS was established
Town of Canton, Massachusetts Page 69 of 130 Comprehensive Annual Financial ReportSource page 78
under Chapter 32 of Massachusetts General Laws. The Commonwealth’s legislature has the
authority to amend or modify the MTRS’s funding policies.
The Commonwealth is a nonemployer contributor to the MTRS and is legally responsible by
statute for all actuarially determined employer contributions and future benefit requirements of
the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by
GASB Statement No. 68, Accounting and Financial Reporting for Pensions.
For the year ended June 30, 2019, the Commonwealth contributed $4,988,460 to the MTRS on
behalf of the Town. The Town’s proportionate share of the collective MTRS net pension liability
at this reporting date was 0.379413%, which was based on the actual, actuarially determined
contribution made by the Commonwealth on behalf of the Town as a percentage of the total
annual contribution made by the Commonwealth on behalf of all employers.
The table below presents the Town’s proportionate share of the following:
Paid (or assumed)
Commonwealth On Behalf Town
Portion of the Town Portion
Net pension liability $ 89,963,752 $ (89,963,752) $ —
Pension expense 9,116,524 (9,116,524) —
In addition to pension expense reported as previously discussed, the Town has recognized
intergovernmental revenue and pension expense of $9,116,524 associated with this arrangement.
C. Other Postemployment Benefits (OPEB)
The Town administers a single-employer defined benefit healthcare plan (the “OPEB Plan”). The
OPEB Plan provides health, dental and life insurance benefits (other postemployment benefits) to
current and future retirees, their dependents and beneficiaries in accordance with Section 20 of
Massachusetts General Law Chapter 32B.
Specific benefit provisions and contribution rates are established by collective bargaining
agreements, state law and Town ordinance. All benefits are provided through the Town’s
premium-based insurance program. The OPEB Plan does not issue a stand-alone financial report
and is presented as a fiduciary fund in the Town’s financial statements.
With respect to OPEB plan reporting, GASB issued GASB Statement No.’s 74, Financial
Reporting for Postemployment Benefit Plans Other Than Pensions, and Statement No, 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions.
Reporting requirements for governments who administer an OPEB plan as defined under the
accounting standard are required to present disclosures under both GASB 74 and GASB 75.
GASB 74 requires specific disclosures and required supplementary information that relate
directly to the fiduciary fund in which the OPEB Plan is recorded. GASB 75 address disclosures
related to the net OPEB liability required to be recorded by the government in its applicable
financial statements. A number of these disclosures are identical, especially if the measurement
date under GASB 75 is the same as the plan year-end date. When a different measurement date is
used different assumptions and calculations will result.
Town of Canton, Massachusetts Page 70 of 130 Comprehensive Annual Financial ReportSource page 79
For the year ended June 30, 2019, the Town elected to use a measurement date that was the same
as the plan year-end date thus the majority of the same disclosures are used and will not be
repeated.
GASB Statement No. 75
OPEB Plan disclosures that impact the Town’s net OPEB liability using a measurement date of
June 30, 2019 are summarized as follows:
Employees Covered by Benefit Terms – The following employees were covered by the benefit
terms as of June 30, 2019:
Active employees 675
Inactive employees 592
Total 1,267
Contributions – The contribution requirements of OPEB Plan members and the Town are
established and may be amended by the Town. Retirees contribute 25% of the set premium for
medical, dental and life insurance plans. The remainder of the cost is funded by general revenues
of the Town. The Town currently contributes enough money to the Plan to satisfy current
obligations on a pay-as-you-go basis. The costs of administering the OPEB Plan are paid by the
Town. For the year ended June 30, 2019, the Town’s average contribution rate was 9.7% of
covered payroll.
Net OPEB Liability – The Town’s net OPEB liability was measured as of June 30, 2019 using an
actuarial valuation as of July 1, 2018. The components of the net OPEB liability of the Town at
June 30, 2019 were as follows:
Total OPEB Liability $ 88,688,109
Plan fiduciary net position (5,219,494)
Net OPEB liability $ 83,468,615
Plan fiduciary net position as
a percentage of the total
OPEB liability 5.9%
Town of Canton, Massachusetts Page 71 of 130 Comprehensive Annual Financial ReportSource page 80
The total OPEB liability in the most recent actuarial valuation was determined using the
following key actuarial assumptions applied to all periods included in the measurement, unless
otherwise specified:
Investment rate of return 7.05%, net of OPEB plan investment expense,
including inflation.
Muncipal bond rate 2.79% as of June 30, 2019
Discount Rate 5.75%, net of OPEB plan investment
expense including inflation.
Inflation 2.75% annually as of June 30, 2019 and for future periods
Health Care Trend Rate 4.5%
Salary Increases 3.00% annually as of June 30, 2019 and for future periods
Cost of Living Adjustment Not applicable.
Pre-Retirement Mortality RP-2000 Employees Mortality Table projected generationally
with scale BB and a base year 2009 for males and females
Post-Retirement Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2009 for males and females
Disabled Mortality RP-2000 Healthy Annuitant Table projected generationally
with scale BB and a base year 2012 for males and females
Actuarial Cost Method Individual entry age normal
Key assumption changes effective Fiscal Year ending June 30, 2019
Single Equivalent Discount Rate 5.75% previously 5.25%
Health Care Trend Rate 4.5% previously 5.0%
Discount Rate – The discount rate used to measure the total OPEB liability was 5.75%.
Long Term Expected Rate of Return – The long-term expected rate of return on OPEB Plan
investments was determined using a building-block method in which best-estimate ranges of
expected future real rates of return (expected returns, net of OPEB Plan investment expense and
inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting the
expected future real rates of return by the target asset allocation percentage and by adding
expected inflation.
Town of Canton, Massachusetts Page 72 of 130 Comprehensive Annual Financial Report