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Home My WebLink About2007 Town AuditTOWN OF G ROTON Groton, New York FINANCIAL REPORT December 31, 2007 RECI"IVED - FILED OFFICE OF THE TOWN CLEPIK 101 CONGER BLVD., GROG ON, NY DATE a ad,' TIME, - AM • TOWN CL ERS{ ' TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2007 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 - Townwide Fund .................................. 4 Budgetary Comparison Schedule - Regulatory Basis - General Fund - Parttown.................................... 5 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - Highway Townwide Fund........................................................................................................................ 6 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - Highway Fund Parttown.......................................................................................................................... 7 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - Lighting District Fund.............................................................................................................................. 8 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - Fire Protection District Fund................................................................................................................... 9 Statement of Fiduciary Net Assets - Regulatory Basis - Fiduciary Funds ................................................ 10 Schedule of Noncurrent Assets and Liabilities........................................................................................... 11 Notes to Financial Statements.............................................................................................................. 12-19 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, CRA. Lesley L. Horner, C.P.A. D. Leslie Spurgin, C.P.A. Frederick J. Ciaschi, CRA Supervisor and Town Board Town of Groton Groton, New York Ciaschi • Dietershagen . Little. Mickelson & Company, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the Town of Groton, as of and for the year ended December 31, 2007, 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 present fairly, in all material respects, the cash and unencumbered cash balances of each fund of the Town of Groton, as of December 31, 2007, 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. c August 11, 2008 Ithaca, New York CORTLAND 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, 2007 ASSETS Assets: Cash and cash equivalents - Unrestricted Cash and cash equivalents - Restricted Loans receivable Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Deferred revenues Total Liabilities Fund Balances: Fund Balances - Reserved: Encumbrances Capital Unemployment insurance Total Reserved Fund Balances - Unreserved, Reported in: General Fund: Designated - Ensuing year's budget Undesignated Special Revenue Funds: Designated - Ensuing year's budget Undesignated Total Fund Balances Total Liabilities and Fund Balances General General Townwide Parttown Fund Fund $ 8081361 $ 98,876 101961 $ 819, 322 $ 987876 $ 97964 $ 276 3,455 348 13,419 624 1,161 10,961 12,122 -0- 1251000 301000 6681781 68,252 805,903 98,252 $ 819,322 $ 987876 See Independent Auditor's Report and Notes to Financial Statements -2- $ Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 7461338 $ 1121280 $ 361765 $ $ 717051 $ 178737671 651424 761385 941083 941083 $ 8111762 $ 1127280 $ 367765 $ -0- $ 1657134 $ 270447 139 601517 $ 107921 $ 369 $ $ $ 821047 161996 207799 941083 94,083 771513 101921 369 -0- 94,083 1961929 977700 65,424 163,124 -0- -0- 1151000 20,000 4562125 81,359 367396 734,249 1011359 367396 $ 8117762 $ 112,280 $ 361765 $ -2a- -0- -0- 98, 861 651424 10,961 175,246 1551000 7371033 1351000 711051 6441931 -0- 717051 1,847,210 -0- $ 165,134 $ 270441139 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2007 See Independent Auditor's Report and Notes to Financial Statements -3- General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 3457977 $ 1277120 Real property tax items 57973 Nonproperty tax items 871447 2,683 Departmental income 21354 1,579 Intergovernmental charges 17800 850 Use of money and property 331937 4,357 Licenses and permits 127978 107162 Fines and forfeitures 197771 Sale of property and compensation for loss 17 Miscellaneous local sources 270 State sources 737592 Federal sources Total Revenues 5847116 1467751 EXPENDITURES Current: General governmental support 310,263 150 Public safety 297480 Public health 80,000 Transportation 591549 Economic assistance and opportunity 121500 Culture and recreation 327275 14,296 Home and community services 1,850 41,795 Employee benefits 1031741 97857 Total Expenditures 5491658 146,098 Excess of Revenues (Expenditures) 34,458 653 OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) -0- -0- Net Changes in Fund Balances 34,458 653 Fund Balances, Beginning of Year, As Restated 771,445 971599 Fund Balances, End of Year $ 8057903 $ 981252 See Independent Auditor's Report and Notes to Financial Statements -3- 310,413 Special Revenue Funds 841000 Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 5541890 $ 2367786 $ 6,000 $ 841000 $ $ 1,354,773 46,571 57973 1361687 961986 281205 90,130 2381789 680, 068 3501451 31942 177670 217603 123771 46,541 7, 249 31361 -0- 1261421 401748 91723 1,303 -0- 405 907473 -0- 467541 71249 37361 -0- 23,140 1021114 6877708 94,110 337035 19,771 71200 $ 7341249 $ 101,359 $ 361396 $ -0- $ 7,217 118471210 270 111,191 1841783 841819 847819 7267609 3571700 71303 841000 1027894 210097373 310,413 -3a- 841000 1131480 801000 5837082 3221246 3,942 9687819 121500 46,571 937042 1361687 961986 281205 2381789 680, 068 3501451 31942 847000 931042 1,9077259 46,541 7, 249 31361 -0- 91852 1021114 -0- -0- -0- -0- -0- -0- 467541 71249 37361 -0- 9,852 1021114 6877708 94,110 337035 611199 117451096 $ 7341249 $ 101,359 $ 361396 $ -0- $ 71,051 $ 118471210 -3a- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL - TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2007 See Independent Auditor's Report and Notes to Financial Statements M Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 3461188 $ 346,188 $ 3451977 $ (211) Real property tax items 37500 37500 57973 21473 Nonproperty tax items 1001000 1001000 871447 (12,553) Departmental income 27100 2,100 21354 254 Intergovernmental charges 500 21300 11800 (500) Use of money and property 121100 127100 331937 211837 Licenses and permits 121000 121000 127978 978 Fines and forfeitures 231000 231000 191771 (3,229) Sale of property and compensation for loss 17 17 Miscellaneous local sources 270 270 State sources 547000 547000 731592 191592 Total Revenues 5531388 5551188 584,116 281928 EXPENDITURES Current: General governmental support 3831194 3961315 3101263 86,052 Public safety 321186 32,187 291480 2,707 Public health 200 200 200 Transportation 601652 607837 591549 11288 Economic assistance and opportunity 137500 13,500 127500 11000 Culture and recreation 361950 40,289 321275 81014 Home and community services 21206 2,360 11850 510 Employee benefits 1097500 109,500 1037741 57759 Total Expenditures 6381388 6551188 5497658 1051530 Excess of (Expenditures) Revenues (85,000) (100,000) 341458 1347458 OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) (85,000) (100,000) 342458 $ 1347458 Appropriated Fund Balance 85,000 1007000 Net Change in Fund Balance $ -0- $ -0- 34,458 Fund Balance, Beginning of Year, As Restated 771,445 Fund Balance, End of Year $ 8051903 See Independent Auditor's Report and Notes to Financial Statements M TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND - PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2007 Fund Balance, Beginning of Year, As Restated Fund Balance, End of Year 977599 $ 98,252 See Independent Auditor's Report and Notes to Financial Statements -5- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 1271120 $ 127,120 $ 1277120 $ -0- Nonproperty tax items 21200 21200 21683 483 Departmental income 17400 11400 17579 179 Intergovernmental charges 850 850 850 -0- Use of money and property 21000 27000 41357 2,357 Licenses and permits 61100 61100 101162 41062 Total Revenues 1391670 1391670 1467751 7,081 EXPENDITURES Current: General governmental support 41150 457 150 307 Public health 807000 801000 80,000 -0- Culture and recreation 141500 157889 147296 11593 Home and community services 501720 527967 411795 111172 Employee benefits 101300 107357 97857 500 Total Expenditures 1591670 159,670 146,098 137572 Excess of (Expenditures) Revenues (20,000) (20,000) 653 207653 OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) (20,000) (20,000) 653 $ 201653 Appropriated Fund Balances 207000 207000 Net Change in Fund Balance $ -0- $ -0- 653 Fund Balance, Beginning of Year, As Restated Fund Balance, End of Year 977599 $ 98,252 See Independent Auditor's Report and Notes to Financial Statements -5- TOWN OF GROTON 5961311 7381027 BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS 1541945 SPECIAL REVENUE FUND - HIGHWAY TOWNWIDE FUND 871550 991498 FOR THE YEAR ENDED DECEMBER 31, 2007 21512 Total Expenditures Original Final 8373525 Fay. (Unfay.) Budget Budget Actual Variance REVENUES 467541 1781005 Real property taxes $ 5541890 $ 5541890 $ 554,890 $ -0- Intergovernmental charges 123,771 123,771 1231771 -0- Use of money and property 201000 207000 403748 201748 Sale of property and compensation for loss 200 71400 77200 (200) Total Revenues 698,861 7061061 7267609 207548 EXPENDITURES Current: Transportation 5961311 7381027 5837082 1541945 Employee benefits 871550 991498 961986 21512 Total Expenditures 683,861 8373525 6807068 1571457 Excess of Revenues (Expenditures) 157000 (131,464) 467541 1781005 OTHER FINANCING SOURCES (USESI 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) (40,000) (131,464) 467541 $ 178,005 Appropriated Fund Balances 407000 1317464 Net Change in Fund Balance $ -0- $ -0- 467541 Fund Balance, Beginning of Year, As Restated 6871708 Fund Balance, End of Year $ 7341249 See Independent Auditor's Report and Notes to Financial Statements -6- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND - HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2007 Fund Balance, Beginning of Year, As Restated Fund Balance, End of Year 94,110 $ 101,359 See Independent Auditor's Report and Notes to Financial Statements -7- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 2361786 $ 2361786 $ 2367786 $ -0- Use of money and property 31000 3,000 91723 61723 State sources 1037570 1047650 111,191 67541 Total Revenues 3437356 3441436 3571700 131264 EXPENDITURES Current: Transportation 3331590 3341670 3221246 121424 Employee benefits 291766 291766 287205 11561 Total Expenditures 3637356 3641436 350,451 131985 Excess of (Expenditures) Revenues (20,000) (20,000) 7,249 271249 OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other (Uses) (20,000) (20,000) 77249 $ 271249 Appropriated Fund Balances 207000 207000 Net Change in Fund Balance $ -0- $ -0- 77249 Fund Balance, Beginning of Year, As Restated Fund Balance, End of Year 94,110 $ 101,359 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, 2007 Original Final Budget Budget Actual REVENUES Real property taxes $ 67000 $ 6,000 $ 61000 $ Use of money and property 11303 Total Revenues 61000 67000 71303 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 (Uses) Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Fay. (Unfay.) Variance -0- 1,303 17303 61000 6,000 37942 27058 6,000 6,000 37942 2,058 -0- -0- 31361 31361 -0- -0- -0- -0- -0- -0- 31361 $ 31361 $ -0- $ -0- 31361 331035 $ 36,396 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, 2007 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 84,000 $ 84,000 $ 84,000 $ -0- Total Revenues 847000 841000 847000 -0- EXPENDITURES Current: Public Safety 84,000 84,000 841000 -0- Total Expenditures 841000 841000 841000 -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 Sources Over (Expenditures) and Other (Uses) -0- -0- -0- $ -0- Appropriated Fund Balances 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 FUNDS DECEMBER 31, 2007 Agency Funds ASSETS Total Assets $ -0- LIABILITIES Total Liabilities $ -0- See Independent Auditor's Report and Notes to Financial Statements -10- TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABILITIES DECEMBER 31, 2007 NONCURRENT GOVERNMENT ASSETS Land $ 5631000 Buildings 7307059 Machinery and equipment 1,956,215 Total Noncurrent Government Assets $ 3,2491274 NONCURRENT GOVERNMENT LIABILITIES Compensated absences $ 647623 Total Noncurrent Government Liabilities $ 641623 See Independent Auditor's Report and Notes to Financial Statements -11 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2007 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. The Governmental Accounting Standards Board is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The amount of this departure 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 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 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 No. 14, as amended By GASB No. 39, including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, their 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, 2007 The Town records its transactions in the fund types described below: 1. Fund Cateqories Governmental Fund Types 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: General Fund (Townwide and Parttown) The General Fund is the principal operating fund and includes 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. Special Revenue Funds 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: Hiqhwav Funds The Highway Funds (Townwide and Parttown) 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. 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. Special Grant Fund The Special Grant Fund has been established by the Town to account for Community Development Block Grants. Fiduciary Fund Types 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: Trust and Aqencv Funds Trust and Agency Funds are used to account for money and/or property received and held in the capacity of trustee, custodian, or agent. These include Agency Funds. -13- TOWN OF GROTON ' NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 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. Noncurrent Government Asset Group The noncurrent government asset grouping accounts for land, buildings, improvements other than buildings, and equipment utilized for general government purposes. Noncurrent Government Liability Group The noncurrent government liability grouping accounts for all noncurrent liabilities of the Town. C. Basis of Accountinq/Measurem ent 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. Property 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, 2007 E. Budqets and Budqetary Accountinq 1. Budqet Policies - The budqet policies are as follows: 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 at the date. 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 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. 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 720 hours which is payable upon termination or retirement. -15- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 The value of unused employee sick leave at year end has been 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 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 3 - Detail Notes on All Funds A. Assets 1. Cash and Investments The Town of Groton's investment policies are governed by New York State statutes. In addition, the Town of Groton has its own written investment policy. 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 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 uncollateral ized or collateralized with securities held by the pledging financial institution's trust department or agent, but not in the Town's name. The Town's aggregate bank balances of $1,951,066 are either insured or collateralized with securities held by the pledging financial institution in the Town's name. -16- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 2. Fixed Assets The changes in fixed assets for the fiscal year ended December 31, 2007 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 $ $ $ 563,000 Buildings 7301059 7301059 Machinery and equipment 119357701 1221478 (101,964) 179567215 Total $ 3,228,760 $ 122,478 $ (101,964) $ 3,249,274 3. Loans Receivable Loans receivable at December 317 2007 consisted of the following, which are stated at net realizable value. Depreciation Amount Special Grant Fund Rehabilitation loans $ 947083 The balance of loans receivable represents two loans in the amounts of $86,417 and $7,666. The smaller loan was made in 2007. The Town did not receive any loan payments on the larger loan during the year ended 2006, but did receive a payment in 2007. 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, collectibility cannot be reasonably estimated. B. Liabilities 1. Pension Plans 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 their 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. Fundinq Policy 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. -17- TOWN OF GROTON ' NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 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 2007 $ 54,017 2006 52;805 2005 27,949 The Town's contributions made to the System were equal to 100% of the contributions required for each year. Since 1989, the Systems' 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 Systems' 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 Systems: • 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 1st (e.g. billings due February 2007 would be based on the pension value as of March 31, 2006). • 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. -18- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007 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 post -employment benefit expenses are recognized as the costs are incurred. During the fiscal year, expenses of $2,640 were recognized for post -employment health care. Noncurrent Government Liabilities Compensated Absences The Town has compensated absences outstanding as of December 31, 2007 in the amount of $64,623. Compensated absences represents the value earned and unused portion of accumulated sick leave. C. Fund Equity - Reserves Purpose Amount General - Townwide Fund Unemployment reserve $ 10,961 General - Townwide Fund Encumbrances 11161 Highway - Townwide Fund Encumbrances 97,700 Highway - Townwide Fund Capital 651424 Total $ 1757246 -19-