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Home My WebLink About2010 Town AuditTOWN OF GROTON Groton, New York FINANCIAL REPORT December 31, 2010 ' TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2010 IndependentAuditor's Report............................................................................................................................ 1 Ll Financial Statements Balance Sheet - Regulatory Basis - Governmental Funds........................................................................ 2-2a Statement of Revenues, Expenditures, and Changes in Fund Balances - Regulatory Basis - Governmental Funds..................................................................... 3-3a Budgetary Comparison Schedule - Regulatory Basis - General Townwide Fund .................................... 4 Budgetary Comparison Schedule - Regulatory Basis - General Fund Parttown...................................... 5 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayTownwide Fund................................................................................................... Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - 6 HighwayFund Parttown............................................................................................................................ 7 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - LightingDistrict Fund................................................................................................................................. 8 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - Fire Protection District Fund..................................................................................................................... Statement of Fiduciary Net Assets - Regulatory Basis - Fiduciary Funds ................................................ Schedule of Noncurrent Assets and Liabilities........................................................................................... 10 11 Notes to Financial Statements.............................................................................................................. 12-19 Ll Ciaschi . Dietershagen . Little . Mickelson & Company, LLP Cel-tifred Public ACC01111017ts and Coi7sultants Frederick J. Ciaschi, C.P.A. INDEPENDENT AUDITOR'S REPORT Supervisor and Town Board Town of Groton Groton, New York We have audited the accompanying financial statements of the Town of Groton (the Town), as of and for the year ended December 31, 2010, as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described more fully in Note 1, the Town of Groton has prepared these financial statements using accounting practices in conformity with the requirements of the Office of Comptroller of the State of New York as applied to governmental units, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, the financial statements referred to above presented fairly, in all material respects, the cash and unencumbered cash balances of each fund of the Town of Groton, as of December 31, 2010, and their respective cash receipts and disbursements, and budgetary results for the year then ended, on the basis of accounting described in Note 1. This report is intended solely for the information and use of the Town Board and management of the Town of Groton and the Office of the State Comptroller of the State of New York and is not intended to be and should not be used by anyone other than these specified parties. b Al October 10, 2011 Ithaca, New York CORTLAND -1- ITHACA WATKINS GLEN 39 Church Street 401 East State Street - Suite 500 108 West Fourth Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 fax 607-753-7874 fax 607-273-8372 fax 607-535-6220 www.cdlm.com John H. Dietershagen, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie Conley Jordan, C.P.A. Patrick S. Jordan, C.P.A. Duane R. Shoen, C.P.A. Lesley L. Horner, C.P.A. D. Leslie Spurgin, C.P.A. Ciaschi . Dietershagen . Little . Mickelson & Company, LLP Cel-tifred Public ACC01111017ts and Coi7sultants Frederick J. Ciaschi, C.P.A. INDEPENDENT AUDITOR'S REPORT Supervisor and Town Board Town of Groton Groton, New York We have audited the accompanying financial statements of the Town of Groton (the Town), as of and for the year ended December 31, 2010, as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described more fully in Note 1, the Town of Groton has prepared these financial statements using accounting practices in conformity with the requirements of the Office of Comptroller of the State of New York as applied to governmental units, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, the financial statements referred to above presented fairly, in all material respects, the cash and unencumbered cash balances of each fund of the Town of Groton, as of December 31, 2010, and their respective cash receipts and disbursements, and budgetary results for the year then ended, on the basis of accounting described in Note 1. This report is intended solely for the information and use of the Town Board and management of the Town of Groton and the Office of the State Comptroller of the State of New York and is not intended to be and should not be used by anyone other than these specified parties. b Al October 10, 2011 Ithaca, New York CORTLAND -1- ITHACA WATKINS GLEN 39 Church Street 401 East State Street - Suite 500 108 West Fourth Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 fax 607-753-7874 fax 607-273-8372 fax 607-535-6220 www.cdlm.com TOWN OF GROTON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2010 General General Townwide Parttown Fund Fund ASSETS Assets: Cash and cash equivalents - Unrestricted $ 615,279 $ 77,906 Restricted cash and cash equivalents 107149 Investments - Unrestricted 60,000 Investments - Restricted Loans receivable, net of allowance Total Assets $ 685,428 $ 77,906 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 11,521 $ 697 Accrued liabilities 1,919 223 Deferred revenues Total Liabilities 13,440 920 Fund Balances: Fund Balances - Reserved: Encumbrances Capital Unemployment insurance 101149 Total Reserved 10,149 -0- Fund Balances - Unreserved, Reported in: General Fund: Designated - Ensuing year's budget 156,000 35,000 Undesignated 505,839 41,986 Special Revenue Funds: Designated - Ensuing year's budget Undesignated Total Fund Balances 671,988 76,986 Total Liabilities and Fund Balances $ 685,428 $ 77,906 See Independent Auditor's Report and Notes to Financial Statements -2- $ 385469 $ 99 $ 319 $ $ $ 51,105 8,249 10,391 37685 3,685 46,718 99 319 -0- 3,685 65,181 133,300 133,300 278,476 278,476 10,149 411,776 -0- -0- -0- -0- 421,925 135,000 30,000 375,894 931127 43,638 922,670 1237127 43,638 $ 969,388 $ 123,226 $ 43,957 $ -2a- 191,000 547,825 165,000 82,336 594,995 -0- 827336 1,920,745 -0- $ 86,021 $ 1,985,926 Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 640,912 $ 123,226 $ 43,957 $ $ 821336 $ 1,583,616 10,149 50,000 110,000 278,476 2787476 3,685 3,685 $ 969,388 $ 123,226 $ 43,957 $ -0- $ 86,021 $ 1,985,926 $ 385469 $ 99 $ 319 $ $ $ 51,105 8,249 10,391 37685 3,685 46,718 99 319 -0- 3,685 65,181 133,300 133,300 278,476 278,476 10,149 411,776 -0- -0- -0- -0- 421,925 135,000 30,000 375,894 931127 43,638 922,670 1237127 43,638 $ 969,388 $ 123,226 $ 43,957 $ -2a- 191,000 547,825 165,000 82,336 594,995 -0- 827336 1,920,745 -0- $ 86,021 $ 1,985,926 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2010 See Independent Auditor's Report and Notes to Financial Statements -3- General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 3817166 $ 131,174 Real property tax items 4,973 Nonproperty tax items 471389 Departmental income 2,735 1,223 Intergovernmental charges 11450 600 Use of money and property 5,120 739 Licenses and permits 14,795 61774 Fines and forfeitures 17,960 Sale of property and compensation for loss 1,017 State sources 58,959 Total Revenues 488,175 187,899 EXPENDITURES Current: General governmental support 316,668 175 Public safety 45,692 Public health 348 96,000 Transportation 64,681 Economic assistance and opportunity 131200 250 Culture and recreation 57730 49,301 Home and community services 1,113 451643 Employee benefits 91,019 6,658 Total Expenditures 5381451 198,027 Excess of (Expenditures) Revenues (50,276) (10,128) OTHER FINANCING SOURCES (USESR Total Other Financing (Uses) Sources -0- -0- Net Changes in Fund Balances (50,276) (10,128) Fund Balances, Beginning of Year 722,264 87,114 Fund Balances, End of Year $ 671,988 $ 76,986 See Independent Auditor's Report and Notes to Financial Statements -3- 669,766 432,473 3,449 105,321 Special Revenue Funds 7751087 463,017 Highway Highway Lighting Fire Protection Special Total Townwide Partown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 573,300 $ 2461525 $ 6,000 $ 1001000 $ $ 1,438,165 4,973 88,815 136,204 1,262 5,220 163,064 165,114 7,805 1,685 170 147 15,666 21,569 17,960 675 1,692 129,788 188,747 7441844 466,813 6,170 100,000 1,409 17995,310 669,766 432,473 3,449 105,321 30,544 7751087 463,017 31449 (30,243) 3,796 2,721 -0- -0- -0- (30,243) 37796 2,721 952,913 119,331 401917 $ 922,670 $ 123,127 $ 43,638 $ -3a- 316,843 100,000 145,692 96,348 1,170, 369 13,450 55,031 46,756 233,542 100,000 -0- 21078,031 0- 17409 (82,721) 0- -0- -0- 0- 17409 (82, 721) 0- 807927 2,003,466 0- $ 82,336 $ 1,9207745 TOWN OF GROTON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2010 Original Final EXPENDITURES Current: General governmental support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Fay. (U nfay. ) Variance -0- 1,473 485 (150) (4,980) 1,795 (2,540) 1,017 2,019 (881) 3911345 Budget Budget Actual REVENUES 49,583 45,692 3,891 Real property taxes $ 3817166 $ 381,166 $ 3817166 $ Real property tax items 3,500 3,500 4,973 Departmental income 2,250 2,250 27735 Intergovernmental charges 11600 17600 17450 Use of money and property 107100 10,100 51120 Licenses and permits 13,000 137000 14,795 Fines and forfeitures 207500 20,500 17,960 Sale of property and compensation for loss (140,000) (50,276) 11017 State sources 55,090 561940 58,959 Total Revenues 4877206 4897056 488,175 EXPENDITURES Current: General governmental support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Fay. (U nfay. ) Variance -0- 1,473 485 (150) (4,980) 1,795 (2,540) 1,017 2,019 (881) 3911345 388,988 316,668 72,320 48,958 49,583 45,692 3,891 200 348 348 -0- 66,903 66,462 64,681 1,781 14,200 14,200 13,200 1,000 8,350 87350 51730 2,620 4,000 4,000 1,113 2,887 93,250 97,125 91,019 6,106 627,206 629,056 538,451 90,605 (140,000) (140,000) (50,276) 89,724 (10, 000) (10, 000) (150, 000) (150, 000) 150,000 150,000 $ -0- $ -0- -0- 10,000 (50,276) $ 997724 (50,276) 722,264 $ 671,988 See Independent Auditor's Report and Notes to Financial Statements i 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2010 See Independent Auditor's Report and Notes to Financial Statements -5- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 131,174 $ 131,174 $ 131,174 $ -0- Nonproperty tax items 33,500 33,500 47,389 13,889 Departmental income 1,300 1,300 1,223 (77) Intergovernmental charges 1,350 1,350 600 (750) Use of money and property 2,000 2,000 739 (1,261) Licenses and permits 5,100 5,100 6,774 1,674 Total Revenues 174,424 174,424 187,899 13,475 EXPENDITURES Current: General governmental support 4,150 1,259 175 1,084 Public health 96,000 96,000 96,000 -0- Economic assistance and opportunity 250 250 250 -0- Culture and recreation 48,750 51,229 49,301 1,928 Home and community services 53,274 53,686 45,643 8,043 Employee benefits 7,000 7,000 6,658 342 Total Expenditures 209,424 209,424 198,027 11,397 Excess of (Expenditures) Revenues (35,000) (35,000) (10,128) 24,872 OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (35,000) (35,000) (10,128) $ 24,872 Appropriated Fund Balances 35,000 35,000 Net Change in Fund Balance $ -0- $ -0- (10,128) Fund Balance, Beginning of Year 87,114 Fund Balance, End of Year $ 76,986 See Independent Auditor's Report and Notes to Financial Statements -5- 1 1 1 1 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2010 Current Transportation Original Final 669,766 Fay. (Unfay.) Employee benefits Budget Budget Actual Variance REVENUES 814,363 1,065,602 775,087 290,515 Real property taxes $ 5737300 $ 5737300 $ 573,300 $ -0- Intergovernmental charges 163,063 1631063 1631064 1 Use of money and property 137000 131000 71805 (5,195) Sale of property and compensation for loss (55,000) (55,000) 675 675 Total Revenues 749,363 7491363 744, 844 (4,519) EXPENDITURES (120,000) (371,239) (30,243) $ 340,996 Current Transportation 708,813 957,673 669,766 287,907 Employee benefits 105,550 107,929 105,321 2,608 Total Expenditures 814,363 1,065,602 775,087 290,515 Excess of (Expenditures) Revenues (65,000) (316,239) (30,243) 285,996 OTHER FINANCING SOURCES (USES1 Interfund transfers (out) (55,000) (55,000) 55,000 Total Other Financing (Uses) Sources (55,000) (55,000) -0- 55,000 Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (120,000) (371,239) (30,243) $ 340,996 Appropriated Fund Balances 120,000 371,239 Net Change in Fund Balance $ -0- $ -0- (30,243) Fund Balance, Beginning of Year 952,913 Fund Balance, End of Year $ 922,670 See Independent Auditor's Report and Notes to Financial Statements -6- 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2010 See Independent Auditor's Report and Notes to Financial Statements -7- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 2461525 $ 246,525 $ 246,525 $ -0- Nonproperty tax items 70,000 70,000 88,815 18,815 Use of money and property 3,000 3,000 1,685 (1,315) State sources 128,482 128,719 129,788 1,069 Total Revenues 448,007 448,244 466,813 18,569 EXPENDITURES Current: Transportation 447,482 446,692 432,473 14,219 Employee benefits 30,525 31,552 30,544 1,008 Total Expenditures 478,007 4787244 4637017 15,227 Excess of (Expenditures) Revenues (30,000) (30,000) 3,796 33,796 OTHER FINANCING SOURCES (USES1 Total Other Financing (Uses) Sources -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (30,000) (30,000) 3,796 $ 33,796 Appropriated Fund Balances 301000 30,000 Net Change in Fund Balance $ -0- $ -0- 3,796 Fund Balance, Beginning of Year 1197331 Fund Balance, End of Year $ 1237127 See Independent Auditor's Report and Notes to Financial Statements -7- 1 1 1 1 1 1 1 1 1 1 1 1 1 i TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2010 REVENUES Real property taxes Use of money and property Total Revenues EXPENDITURES Current: Transportation Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Budget Budget Actual $ 61000 $ 6,000 $ 6,000 $ 170 6,000 61000 6,170 Fay. (U nfay. ) Variance -0- 170 170 61000 6,000 3,449 2,551 6,000 6,000 3,449 2,551 -0- -0- 2,721 21721 -0- -0- -0- -0- -0- -0- 21721 $ 2,721 $ -0- $ -0- 2,721 40,917 $ 43,638 See Independent Auditor's Report and Notes to Financial Statements -8- 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31. 2010 REVENUES Real property taxes Total Revenues EXPENDITURES Current: Public Safety Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Budget Budget Actual Variance $ 100,000 $ 100,000 $ 100,000 $ -0- 100,000 100,000 100,000 -0- 100,000 100, 000 1001000 -0- 100,000 100,000 100,000 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- $ -0- -0- $ -0- -0- -0- $ -0- See Independent Auditor's Report and Notes to Financial Statements -9- Total Assets Total Liabilities TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31, 2010 ASSETS LIABILITIES See Independent Auditor's Report and Notes to Financial Statements -10- Agency Funds 1 1 1 1 1 TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2010 NONCURRENT GOVERNMENT ASSETS Land Buildings Machinery and equipment Total Noncurrent Government Assets NONCURRENT GOVERNMENT LIABILITIES Compensated absences Total Noncurrent Government Liabilities See Independent Auditor's Report and Notes to Financial Statements $ 563,000 730,059 2,054,631 $ 3,347,690 $ 91,668 $ 91,668 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2010 Note 1 - Summary of Siqnificant Accountinq Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the requirements of the Office of the Comptroller of the State of New York as applied to governmental units. The basis of accounting differs from generally accepted accounting principles primarily because the Town has not adopted Governmental Accounting Standards Board (GASB) Statement No. 34, "Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments" or GASB Statement No. 45, "Account and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions." The Governmental Accounting Standards Board is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The amount of these departures has not been determined. The Town's more significant accounting policies are described below. A. Financial Renortinq Entity The Town, which is located in the County of Tompkins (the County) in the State of New York (the State), was established in 1817. The Town is governed by Town Law, general municipal laws of the State and various local laws. The Town Board is the legislative body responsible for overall operations. The Town Supervisor serves as Chief Executive Officer and Chief Fiscal Officer. The following basic services are provided: fire protection, highway and street maintenance, recreation, public improvements, planning and zoning and general administration. All governmental activities and functions performed for the Town are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial reporting entity consists of the following, as defined by Governmental Accounting Standards Board (GASB) Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39, "Determining Whether Certain Organizations are Component Units." a. The primary government, which is the Town, b. Organizations for which the primary government is financially accountable, and; c. Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The decision to include a potential component unit in the reporting entity is based on the criteria set forth in GASB Statement No. 14, as amended by GASB Statement No. 39, including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, there were no component units to include in the Town reporting entity. B. Fund Accountinq The Town uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self -balancing set of accounts. -12- ii. Special Revenue Funds The Special Revenue Funds are used to account for the proceeds of specific revenue sources legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: a) Highwav Funds TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 area outside the village. Therefore, a town with a village must maintain two The Town records its transactions in the fund types described below: 1. Fund Cateqories a. Governmental Fund Tvpes The Governmental Fund types are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Fund types. The measurement focus of the Governmental Fund types is based upon determination of financial position and changes in financial position. The following are the Town's Governmental Fund types: i. General Funds The General Funds (Parttown and Town - Outside Village) are the principal operating funds and include all operations not required to be recorded in other funds. Some functions are required to be financed by taxpayers outside the village, therefore, a town with a village must keep two General Funds. ii. Special Revenue Funds The Special Revenue Funds are used to account for the proceeds of specific revenue sources legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: a) Highwav Funds The Highway Funds (Parttown and Town - Outside Village) were established pursuant to Highway Law, Section 141, and are used to account for revenues and expenditures for highway purposes. Highway Law, Section 277, requires expenditures for repairs and improvements outside the village be financed by the area outside the village. Therefore, a town with a village must maintain two Highway Funds. b) Special District Funds The Special District Funds (Lighting and Fire Protection District) have been established by the Town to record transactions for operations and maintenance for these activities. c) Special Grant Fund The Special Grant Fund has been established for by the Town to account for Community Development Block Grants. b. Fiduciary Fund Tvpes Fiduciary Fund Types are used to account for assets held by the local government in a trustee or custodial capacity. The Town reports the following Fiduciary Fund: i. Trust and Aqencv Fund The Trust and Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian or agent. -13- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 c. Account Groups Account groups are used to establish accounting control and accountability for noncurrent governmental assets and noncurrent governmental liabilities. The two account groups are not "funds." They are concerned only with the measurement of financial position and not results of operations. i. Noncurrent Government Asset Group The noncurrent government asset group accounts for land, buildings, improvements other than buildings and equipment utilized for general governmental purposes. ii. Noncurrent Government Liability Group The noncurrent government liability group accounts for all noncurrent liabilities of the Town. C. Basis of Accountinq/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - All Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues accrued include real property taxes, State and Federal aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from Federal and State grants are accrued when the expenditure is made. Expenditures are recorded when incurred. The cost of capital assets is recognized as an expenditure when the asset is received. Exceptions to this general rule are 1) pension costs, 2) expenditures for prepaid expenses and inventory -type items are recognized at the time of purchase, 3) principal and interest on indebtedness are not recognized as an expenditure until due, and 4) compensated absences, such as vacation and sick leave, which vests or accumulates are charged as an expenditure when paid. Account Groups - Noncurrent government assets are recorded at actual or estimated cost or, in the case of gifts or contributions, at fair market value at the time received. No provision for depreciation is made. Noncurrent government liabilities are recorded at par value of the principal amount. No liability is recorded for interest payable to maturity. D. Propertv Taxes Town real property taxes are levied annually on January 1, and become a lien on that date. Taxes are collected during the period of January 1 to March 31 by the Town. The County subsequently enforces uncollected real property taxes. The County pays uncollected real property taxes to the Town no later than May 31. 14 Fixed assets purchased for general governmental purposes are recorded as expenditures in the Governmental Funds and are capitalized at cost in the noncurrent government assets account group. Contributed fixed assets are recorded at fair market value at the date of contributions. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest been capitalized on general fixed assets that are construction in progress. G. Cash and Cash Equivalents For financial statement purposes, the Town considers all highly liquid investments with original maturities of three months or less as cash equivalents. -15- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 E. Budqets and Budqetary Accountinq 1. Budqet Policies a. No later than October 5, a tentative budget is submitted by the budget officer for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the Town Board adopts the budget. c. All modifications of the budget must be approved by the Town Board. d. Appropriations lapse at year-end. 2. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental Funds. Encumbrances are reported as reservations of fund balances, as they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. Budqetary Basis of Accountinq Budgets are adopted annually on a basis consistent with requirements of the State. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. An annual legal budget is not adopted for the Special Grant Fund, which is one of the Special Revenue Funds. Budgetary controls for the Special Grant Fund are established in accordance with the applicable grant agreements, which cover a period other than the Town's fiscal year. F. Noncurrent Government Assets - General Fixed assets purchased for general governmental purposes are recorded as expenditures in the Governmental Funds and are capitalized at cost in the noncurrent government assets account group. Contributed fixed assets are recorded at fair market value at the date of contributions. Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest been capitalized on general fixed assets that are construction in progress. G. Cash and Cash Equivalents For financial statement purposes, the Town considers all highly liquid investments with original maturities of three months or less as cash equivalents. -15- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 H. Vacation, Sick Leave and Compensatory Absences Employees of the Town are granted vacation and sick leave in varying amounts. In the event of termination or upon retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 840 hours which is payable upon termination or retirement. The value of unused employee sick leave at year-end is recorded in noncurrent government liability account group. Payment of sick leave recorded in the noncurrent government liability account group is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes sufficient resources will be made available for the payments of sick leave when such payment becomes due. Further, the Town recognizes a liability for vesting sick leave and other compensated absences with similar characteristics and additional salary related payments as employees earn benefits to the extent it is probable that the Town will compensate the employees for the benefits through cash payments (which may be conditioned on the employees' termination or retirement), rather than being taken as absences due to illness or other contingencies. The liability for compensated absences is calculated at rates in effect as of the Balance Sheet date and is recorded in the Governmental Funds if funded from current financial resources and the noncurrent government liability account group for amounts to be paid from future financial resources. Note 2 - Detail Notes on All Funds A. Assets 1. Cash and Investments The Town's investment policies are governed by State statutes. In addition, the Town has its own written investment policy. Town monies must be deposited in FDIC -insured commercial banks or trust companies located within the State. The Supervisor is authorized to use demand accounts and certificates of deposit for operating purposes. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements and obligations of the State or its localities. Collateral is required for demand and time deposits, and certificates of deposit not covered by FDIC. Obligations that may be pledged as collateral are obligations of the United States and its agencies, as well as obligations of the State, its municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the State. Underlying securities must be obligations of the Federal government and must have a market value of at least 105 percent of the cost of the repurchase agreement. Custodial credit risk is the risk that in the event of a bank failure, the Town's deposits may not be returned to it. While the Town does not have a specific policy for custodial credit risk, the State statutes govern the Town's investment policies, as discussed previously in these notes. Governmental Accounting Standards Board Statement No. 40 directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, and the deposits are either uncollateralized or collateralized with securities held by the pledging financial institution's trust department or agent, but not in the Town's name. -16- I 1 f 1 1 1 11 J TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 The Town's aggregate bank balances of $1,992,991 are either insured or collateralized with securities held by the pledging financial institution in the Town's name. The Town chooses to disclose investments by specifically identifying each. The Town's investment policy for these investments is also governed by State statutes, in addition to the Town's written policy. Investments are stated at fair value and are categorized as either: 1. Insured or registered, or investments held by the Town or by the Town's agent in the Town's name, or 2. Uninsured and unregistered, with investments held by the financial institution's trust department in the Town's name, or 3. Uninsured and unregistered, with investments held by the financial institution or its trust department, but not in the Town's name. At December 31, 2010 the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category General - Townwide and Certificate of Deposit Highway - Townwide Funds $ 110,000 $ 110,000 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 278,476 $ 278,476 (6 month) (1) The Town does not typically purchase investments for a long enough duration to cause it to believe it is exposed to any material interest rate risk. The Town does not typically purchase investments denominated in a foreign currency and is not exposed to foreign currency risk. 2. Loans Receivable Loans receivable at December 31, 2010 consisted of the following, which are stated at net realizable value: Description Amount Special Grant Fund Rehabilitation loans $ 90,102 Special Grant Fund Allowance for uncollectible loans (86,417) Special Grant Fund Rehabilitation loans $ 3,685 The balance of loans receivable represents two loans in the amounts of $86,417 and $3,685. The smaller loan was made in 2007; principal payments of $1,262 were made during 2010. The Town did not receive any loan payments on the larger loan during the year ended 2006. A principal payment of $647 and an interest -only payment of $2,900 were made on the loan in 2007 and 2008, respectively. No principal payments were made in 2009 or 2010. In 2004 the Town Board authorized the Town Attorney to commence foreclosure proceedings with respect to the larger loan. The Town is currently collecting on a judgment in the amount of $99,856 with respect to the larger loan, however, the balance has been deemed uncollectible. -17- ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 1 1 1 3. Noncurrent Government Assets (Fixed Assets) The changes in fixed assets for the fiscal year ended December 31, 2010 are as follows.- Balance ollows:Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 $ $ $ 563,000 Buildings 730,059 730,059 Machinery and equipment 1,9747608 103,422 23,399 2,054,631 Total $ 3,267,667 $ 103,422$ 23,399 $ 3,347,690 B. Liabilities Accounts payable consists of amounts owed by the Town for various goods and services. Accrued liabilities represents payroll expense accrued at year-end. Deferred revenues represent loans receivable in the Special Grant Fund. C. Fund Equitv-Reserves General - Townwide Fund Highway - Townwide Fund Highway - Townwide Fund Total D. Pension Plans 1. Plan Description Purpose Amount Unemployment insurance reserve $ 10,149 Encumbrances 133,300 Capital 278,476 $ 421,925 The Town participates in the New York State and Local Employees' Retirement System (ERS). This is a cost-sharing multiple -employer defined benefit retirement system. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of its funds. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. 2. Fundinq Policv The System is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 who contribute three percent of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. -18- 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2010 The Town is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2010 $ 39,817 2009 447535 2008 547660 The Town's contributions made to the System were equal to 100% of the contributions required for each year. On July 30, 2004, Chapter 260 of the Laws of 2004 of the State of New York was enacted which allows local employers to bond or amortize a portion of their retirement bill for up to ten years in accordance with a specified schedule. This law requires participating employers to make payments on a current basis, while bonding or amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 2005 through 2007. The Town has opted not to amortize. E. Other Postemplovment Benefits The Town provides postretirement healthcare benefits to all employees who retire upon or after attaining at least 20 years of full time service and who are enrolled in the Plan at the time of retirement. Currently, there are two retirees who meet those eligibility requirements. The Town pays 25 percent of the total premium of the Town for medical insurance for retirees until age 65. If retirees attain insurance through a plan not established by the Town, the Town will pay up to $110 per month to each retiree to apply toward retirees' premium cost. Post -employment benefit expenses are recognized as costs are incurred. During the fiscal year, expenses of $2,640 were recognized for post -employment health care. F. Noncurrent Government Liabilities 1. Compensated Absences The Town has compensated absences outstanding as of December 31, 2010 in the amount of $91,668. Compensated absences represents the value earned and unused portion of accumulated sick leave. - 19-