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Home My WebLink About2008 Town Audit' TOWN OF GROTON Groton, New York ' FINANCIAL REPORT I December 31, 2008 L RECEIVED - FILED OFFICE OF THE TOWN C LEPIK 101 CONGER BLVD., GROTON, NY DATE 9��a 0,5' 71 0 AM(&) TOWN CLERK ' TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2008 IndependentAuditor's Report................................................................................................................. 1 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 Fund Town - Outside Village .............. 4 Budgetary Comparison Schedule - Regulatory Basis - General Fund - Part -town ................................ 5 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayFund - Town-wide................................................................................................... 6 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayFund - Part-town.............................................................................................................. 7 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - LightingDistrict Fund..................................................................................................................... 8 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - FireProtection District Fund........................................................................................................... 9 Statement of Fiduciary Net Assets -Regulatory Basis - Fiduciary Funds .............................................. 10 Schedule of Noncurrent Assets and Liabilities................................................................................... 11 Notes to Financial Statements.............................................................................................................. 12-20 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. Frederick J. Ciaschi, C.P.A. Ciaschi • Dietershagen . Little . Mickelson & Company, LLP Certified Public Accountants and Consultants 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, as of and for the year ended December 31, 2008, as listed in the table of contents. These financial statements are the responsibility of the Town of Groton'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 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 practices differ from 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, 2008, 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. September 2, 2009 Ithaca, New York CORTLAND ITHACA 39 Church Street 401 East State Street - Suite 500 Cortland, New York 13045 Ithaca, New York 14850 607-753-7439 607-272-4444 fax 607-753-7874 fax 607-273-8372 www.cdlm.com WATKINS GLEN 108 West Fourth Street Watkins Glen, New York 14891 607-535-4443 fax 607-535-6220 TOWN OF GROTON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2008 See Independent Auditor's Report and Notes to Financial Statements -2- General General Fund Town Fund Outside Village Part -town ASSETS Assets: Cash and cash equivalents - Unrestricted $ 725,451 $ 103,694 Restricted cash and cash equivalents 8,586 Investments - Restricted 50,000 Loans receivable Total Assets $ 784,037 $ 103,694 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 9,801 $ 225 Accrued liabilities 9,275 529 Deferred revenues Total Liabilities 19,076 754 Fund Balances: Fund Balances - Reserved: Encumbrances Capital Unemployment insurance 8,586 Total Reserved 8,586 -0- Fund Balances - Unreserved, Reported in: General Fund: Designated - Ensuing year's budget 125,000 35,000 Undesignated 631,375 67,940 Special Revenue Funds: Designated - Ensuing year's budget Undesignated Total Fund Balances 764,961 102,940 Total Liabilities and Fund Balances $ 784,037 $ 103,694 See Independent Auditor's Report and Notes to Financial Statements -2- 24,604 $ 293 $ 359 $ 28,434 53,038 293 359 127,000 3,400 123,612 250,612 3,400 -0- 115,000 20,000 406,706 86,738 38,984 772,318 110,138 38,984 $ 825,356 $ 110,431 $ 39,343 $ -2a- $ $ 35,282 38,238 92,453 92,453 -0- 92,453 165,973 130,400 123,612 8,586 -0- -0- 262,598 160,000 699,315 135,000 79,301 611,729 -0- 79,301 1,868,642 -0- $ 171,754 $ 2,034,615 Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Fund Fund District District Grant Governmental Town -wide Part -town Fund Fund Fund Funds $ 641,744 $ 110,431 $ 39,343 $ $ 79,301 $ 1,699,964 8,586 183,612 233,612 92,453 92,453 $ 825,356 $ 110,431 $ 39,343 $ -0- $ 171,754 $ 2,034,615 24,604 $ 293 $ 359 $ 28,434 53,038 293 359 127,000 3,400 123,612 250,612 3,400 -0- 115,000 20,000 406,706 86,738 38,984 772,318 110,138 38,984 $ 825,356 $ 110,431 $ 39,343 $ -2a- $ $ 35,282 38,238 92,453 92,453 -0- 92,453 165,973 130,400 123,612 8,586 -0- -0- 262,598 160,000 699,315 135,000 79,301 611,729 -0- 79,301 1,868,642 -0- $ 171,754 $ 2,034,615 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2008 See Independent Auditor's Report and Notes to Financial Statements -3- General General Fund Town Fund Outside Village Part -town REVENUES Real property taxes $ 380,435 $ 127,240 Real property tax items 7,052 Nonproperty tax items 41,469 Departmental income 2,335 1,205 Intergovernmental charges 1,200 23 Use of money and property 19,066 3,294 Licenses and permits 12,706 6,096 Fines and forfeitures 23,650 Sale of property and compensation for loss 37 Miscellaneous local sources 1,104 State sources 74,827 Total Revenues 522,412 179,327 EXPENDITURES Current: General governmental support 327,652 Public safety 36,960 Public health 86,000 Transportation 61,917 Economic assistance and opportunity 12,875 Culture and recreation 6,391 35,263 Home and community services 593 43,553 Employee benefits 116,966 9,823 Total Expenditures 563,354 174,639 Excess of (Expenditures) Revenues (40,942) 4,688 OTHER FINANCING SOURCES (USES) Total Other Financing (Uses) Sources -0- -0- Net Changes in Fund Balances (40,942) 4,688 Fund Balances, Beginning of Year 805,903 98,252 Fund Balances, End of Year $ 764,961 $ 102,940 See Independent Auditor's Report and Notes to Financial Statements -3- 609,851 407,152 4,256 82,246 Special Revenue Funds 692,097 435,535 Highway Highway Lighting Fire Protection Special Total Fund Fund District District Grant Governmental Town -wide Part -town Fund Fund Fund Funds $ 558,700 $ 232,299 $ 6,000 $ 90,000 $ $ 1,394,674 7,052 74,704 116,173 7,974 11,514 148,525 149,748 22,941 5,539 844 276 51,960 18,802 23,650 37 1,104 131,772 206,599 730,166 4441314 6,844 90,000 8,250 1,981,313 609,851 407,152 4,256 82,246 28,383 692,097 435,535 4,256 38,069 8,779 2,588 -0- -0- -0- 38,069 8,779 2,588 734,249 101,359 36,396 $ 772,318 $ 110,138 $ 38,984 $ -3a- 327,652 90,000 126,960 86,000 1,083,176 12,875 41,654 44,146 237,418 90,000 -0- 1,959,881 0- 8,250 21,432 0- -0- -0- 0- 8,250 21,432 71,051 1,847,210 0- $ 79,301 $ 1,868,642 TOWN OF GROTON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND TOWN - OUTSIDE VILLAGE FOR THE YEAR ENDED DECEMBER 31, 2008 REVENUES Real property taxes Real property tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State sources Total Revenues 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) OTHER FINANCING SOURCES (USES1 Total Other Financing (Uses) Sources Excess of Revenues and Other Financing SourcesOver (Expenditures) and Other (Uses) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Original Final 327,652 Fay. (Unfay.) Budget Budget Actual Variance $ 380,498 $ 380,498 $ 380,435 $ (63) 3,500 3,500 7,052 3,552 2,100 2,100 2,335 235 1,800 1,800 1,200 (600) 19,200 19,200 19,066 (134) 12,000 12,000 12,706 706 22,600 22,600 23,650 1,050 (125,000) (128,919) 37 37 1,104 1,104 55,000 55,000 74,827 19,827 496,698 496,698 522,412 25,714 377,073 374,788 327,652 47,136 40,650 40,650 36,960 3,690 200 200 200 63,075 63,188 61,917 1,271 13,850 13,875 12,875 1,000 8,350 8,500 6,391 2,109 3,500 3,500 593 2,907 115,000 120,916 116,966 3,950 621,698 625,617 563,354 62,263 (125,000) (128,919) (40,942) 87,977 -0- -0- (125,000) (128,919) 125,000 128,919 $ -0- $ -0- -0- -0- (40,942) $ 87,977 (40,942) 805,903 Fund Balance, End of Year $ 764,961 See Independent Auditor's Report and Notes to Financial Statements -4- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND - PART -TOWN FOR THE YEAR ENDED DECEMBER 31, 2008 REVENUES Real property taxes Nonproperty tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Total Revenues EXPENDITURES Current: General governmental support Public health 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 (Uses) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Budget Budget Actual Variance $ 127,240 $ 127,240 $ 127,240 $ -0- 34,300 34,300 41,469 7,169 1,400 1,400 1,205 (195) 850 850 23 (827) 2,500 2,500 3,294 794 6,100 6,100 6,096 (4) 172,390 172,390 179,327 6,937 4,150 4,054 4,054 86,000 86,000 86,000 -0- 47,500 47,596 35,263 12,333 53,540 53,540 43,553 9,987 111200 11,200 9,823 1,377 202,390 202,390 174,639 27,751 (30,000) (30,000) 4,688 34,688 -0- -0- -0- -0- (30,000) (30,000) 4,688 $ 34,688 30,000 30,000 $ -0- $ -0- 4,688 98,252 $ 102,940 See Independent Auditor's Report and Notes to Financial Statements -5- TOWN OF GROTON BUGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND - TOWN -WIDE FOR THE YEAR ENDED DECEMBER 31, 2008 Current: Transportation Original Final 609,851 Fay. (Unfay.) Employee benefits Budget Budget Actual Variance REVENUES 792,224 889,924 692,097 197,827 Real property taxes $ 558,700 $ 558,700 $ 558,700 $ -0- Intergovernmental charges 148,524 148,524 148,525 1 Use of money and property 25,000 25,000 22,941 (2,059) Total Revenues 732,224 732,224 730,166 (2,058) EXPENDITURES Current: Transportation 685,174 782,874 609,851 173,023 Employee benefits 107,050 107,050 82,246 24,804 Total Expenditures 792,224 889,924 692,097 197,827 Excess of Revenues (60,000) (157,700) 38,069 195,769 OTHER FINANCING SOURCES (USES) Interfund transfers (out) (55,000) -0- Total Other Financing (Uses) Sources (55,000) -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) (115,000) (157,700) 38,069 $ 195,769 Appropriated Fund Balance 115,000 157,700 Net Change in Fund Balance $ -0- $ -0- 38,069 Fund Balance, Beginning of Year 734,249 Fund Balance, End of Year $ 772,318 See Independent Auditor's Report and Notes to Financial Statements -6- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND - PART -TOWN FOR THE YEAR ENDED DECEMBER 31, 2008 See Independent Auditor's Report and Notes to Financial Statements -7- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 232,299 $ 232,299 $ 232,299 $ -0- Nonproperty tux items 63,000 63,000 74,704 11,704 Use of money and property 5,000 5,000 5,539 539 State sources 110,730 128,479 131,772 3,293 Total Revenues 411,029 428,778 444,314 15,536 EXPENDITURES Current: Transportation 394,230 411,979 407,152 4,827 Employee benefits 36,799 36,799 28,383 8,416 Total Expenditures 431,029 448,778 435,535 13,243 Excess of (Expenditures) (20,000) (20,000) 8,779 28,779 OTHER FINANCING SOURCES (USES) Total Other Financing Sources -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) (20,000) (20,000) 8,779 $ 28,779 Appropriated Fund Balance 20,000 20,000 Net Change in Fund Balance $ -0- $ -0- 8,779 Fund Balance, Beginning of Year 101,359 Fund Balance, End of Year $ 110,138 See Independent Auditor's Report and Notes to Financial Statements -7- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2008 REVENUES Real property taxes Use of money and property Total Revenues EXPENDITURES Current: Transportation Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Budget Budget Actual $ 6,000 $ 6,000 $ 6,000 $ 844 6,000 6,000 6,844 Fay. (U nfay. ) Variance -0- 844 844 6,000 6,000 4,256 1,744 6,000 6,000 4,256 1,744 -0- -0- 2,588 2,588 -0- -0- -0- -0- -0- -0- 2,588 $ 2,588 $ -0- $ -0- 2,588 36,396 $ 38,984 See Independent Auditor's Report and Notes to Financial Statements -8- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2008 See Independent Auditor's Report and Notes to Financial Statements -9- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 90,000 $ 90,000 $ 90,000 $ -0- Total Revenues 90,000 90,000 90,000 -0- EXPENDITURES Current: Public Safety 90,000 90,000 90,000 -0- Total Expenditures 90,000 90,000 90,000 -0- Excess of Revenues -0- -0- -0- -0- OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing SourcesOver (Expenditures) and Other (Uses) -0- -0- -0- $ -0- Net Change in Fund Balance $ -0- $ -0- -0- Fund Balance, Beginning of Year -0- Fund Balance, End of Year $ -0- See Independent Auditor's Report and Notes to Financial Statements -9- TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUND DECEMBER 31, 2008 ASSETS Total Assets Agency Fund $ -0- LIABILITIES Total Liabilities $ -0- See Independent Auditor's Report and Notes to Financial Statements -10- TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2008 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 - 11 - $ 563,000 730,059 1,999,178 $ 3,292,237 $ 75,568 $ 75,568 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 Note 1 - Summary of Significant Accountinq Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the requirements of the Office of 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 the Governmental Accounting Standards Board (GASB) Statement 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments or GASB Statement 45, Accounting 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 Reportinq Entity The Town of Groton, which is located in the County of Tompkins in the State of New York, was established in 1817. The Town is governed by Town Law, general municipal laws of the State of New York 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, highways 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 Number 14, "The Financial Reporting Entity," as amended by GASB Statement Number 39, "Determining Whether Certain Organizations are Component Units." a. The primary government, which is the Town of Groton; 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 Number 14, as amended By GASB Number 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 of Groton 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- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 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 (General - Part -town and General Town - Outside Villaqe) The General Funds 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 that are legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: a) Hiqhwav Funds The Highway Funds (Town -wide and Part -town) were established pursuant to Highway Law, Section 141, and used to account for revenues and expenditures for highway purposes. Highway Law, Section 277, requires that 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 Twes 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. Aqencv Fund The 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, 2008 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 government purposes. ii. Noncurrent Government Liabilitv 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 that are 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 the 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 their fair market value at the time received. No provision for depreciation is made. Noncurrent government liabilities are recorded at the 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 January 1 to May 31 by the Town. The County of Tompkins subsequently enforces uncollected real property taxes. The County pays an amount representing uncollected real property taxes transmitted to the County for enforcement to the Town no later than May 31. -14- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 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 the proposed 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 of New York. 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 as of the date of donation. 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 of Groton. 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 which 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, 2008 H. Vacation and 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 800 hours, which is payable upon termination or retirement. The value of unused employee sick leave at year end has been recorded in the 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 that 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 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 of Groton Is investment policies are governed by New York State statutes. In addition, the Town of Groton has its own written investment policy. The Town of Groton 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 New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by Federal Deposit Insurance. 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. The underlying securities must be obligations of the Federal Government. Underlying securities 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, New York State statutes govern the Town's investment policies, as discussed previously in these notes. Governmental Accounting Standards Board Statement Number 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- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 The Town's aggregate bank balances of $1,947,592, including certificate of deposit, are either insured or collateralized with securities held by the pledging financial institution in the Town's name. The Town chooses to disclose its investments by specifically identifying each. The Town's investment policy for these investments is also governed by New York 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, 2008 the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category General and Highway Fund - Town -wide Funds $ 110,000 $ 110,000 Highway Fund - Town -wide $ 123,612 $ 123,612 Certificate of Deposit (6 month) (1) Certificate of Deposit (6 month) (1) The Town does not typically purchase investments for a long enough duration to cause it to believe that 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, 2008 consisted of the following, which are stated at net realizable value. Depreciation Amount Special Grant Fund Rehabilitation Loans $ 92,453 The balance of loans receivable represents two loans in the amounts of $86,417 and $6,036. The smaller loan was made in 2007. An interest -only payment of $2,900 was made on the loan in 2008. In 2004 the Town Board authorized the Town Attorney to commence a foreclosure proceeding 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, collectibility cannot be reasonably estimated. -17- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 3. Noncurrent Government Assets (Fixed Assets) The changes in fixed assets for the fiscal year ended December 31, 2008 are as follows: B. Liabilities Accounts payable consist 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 Equity -Reserves Purpose Amount General Fund Unemployment insurance reserve $ 8,586 Highway Fund - Town -wide Encumbrances 127,000 Highway Fund - Town -wide Capital 123,612 Highway Fund - Part -town Encumbrances 3,400 Total $ 262,598 D. Pension Plans 1. Plan Description The Town of Groton 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. Funding 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 3% 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. Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 563,000 Buildings 7301059 730,059 Machinery and equipment 1,956,215 42,963 1,999,178 Total $ 3,249,274 42,963 -0- 3,292,237 B. Liabilities Accounts payable consist 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 Equity -Reserves Purpose Amount General Fund Unemployment insurance reserve $ 8,586 Highway Fund - Town -wide Encumbrances 127,000 Highway Fund - Town -wide Capital 123,612 Highway Fund - Part -town Encumbrances 3,400 Total $ 262,598 D. Pension Plans 1. Plan Description The Town of Groton 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. Funding 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 3% 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. ii J TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 The Town of Groton is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2008 $ 54,660 2007 54,017 2006 52,805 The Town's contributions made to the System were equal to 100% of the contributions required for each year. Since 1989, the System's billings have been based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years ended March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17 year period, with an 8.75% interest factor added. Local governments were given the option to prepay this liability. The Town of Groton has paid this liability in full. On May 14, 2003, Chapter 49 of the Laws of 2003 of the State of New York was enacted which made the following changes to the System: • Requires minimum contributions by employers of 4.5% of payroll every year, including years in which the investment performance would make a lower contribution possible. • Changes the cycle of annual billing such that the contribution for a given fiscal year will be based on the value of the pension fund on the prior April 1 St (e.g. billings due February 2008 would be based on the pension value as of March 31, 2007). • Allows one-time financing of State fiscal year 2004-2005 pension cost by permitting local governments to bond, over five years, any required contribution in excess of 7% of estimated salaries or to amortize required contributions in excess of 7% over a five year period. [Superseded by Chapter 260 of the Laws of 2004. See below.] On July 30, 2004, Chapter 260 of the Laws of 2004 of the State of New York was enacted that allows local employers to bond or amortize a portion of their retirement bill for up to ten years in accordance with the following schedule: • For State fiscal year (SFY) 2004-05, the amount in excess of 7% of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the bonding/amortization was instituted. • For SFY 2005-06, the amount in excess of 9.5% of employees' covered pensionable salaries. • For SFY 2006-07, the amount in excess of 10.5% of employees' covered pensionable salaries. 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. -19- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2008 E. Other Postemployment Benefits The Town provides postretirement healthcare benefits to all employees who retire on 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% of the total premium of the Town for medical insurance for retirees. If the retirees attain insurance through a plan not established by the Town, the Town will pay up to $110 to each retiree to apply toward the retirees' premium cost. The postemployment benefit expenses are recognized as the costs are incurred. During the fiscal year, expenses of $2,640 were recognized for postemployment health care. F. Noncurrent Government Liabilities 1. Compensated Absences The Town has compensated absences outstanding as of December 31, 2008 in the amount of $75,568. Compensated absences represents the value earned and unused portion of accumulated sick leave. -20-