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HomeMy WebLinkAbout9594 2023 Financial ReportTOWN OF GROTON Groton, New York FINANCIAL REPORT For the Year Ended December 31, 2023 TOWN OF GROTON TABLE OF CONTENTS Independent Auditors’ Report 1-3 Financial Statements Balance Sheet - Governmental Funds 4 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 5 Budgetary Comparison Schedule - General Town-Wide Fund 6 Budgetary Comparison Schedule - General Part-Town Fund 7 Budgetary Comparison Schedule - Special Revenue Fund - Highway Town-Wide Fund 8 Budgetary Comparison Schedule - Special Revenue Fund - Highway Part-Town Fund 9 Schedule of Noncurrent Assets, Deferred Outflows of Resources, Noncurrent Liabilities, and Deferred Inflows of Resources 10 Notes to Financial Statements 11-24 Supplemental Information Combining Balance Sheet – Non-Major Governmental Funds 25 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds 26 INDEPENDENT AUDITORS’ REPORT To the Town Board Town of Groton Groton, New York Adverse Opinion We have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Town of Groton, (the Town), as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise a portion of the Town’s basic financial statements as listed in the table of contents. In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on the Financial Statements as a Whole section of our report, the accompanying financial statements referred to above do not present fairly the financial position of the Town, as of December 31, 2023, or the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Adverse Opinion on the Financial Statements as a Whole As discussed in Note 1 to the financial statements, management has not presented Government-wide financial statements, a complete set of notes, or required supplementary information to display the financial position and changes in financial position of its governmental activities. Accounting principles generally accepted in the United States of America require the presentation of Government- wide financial statements, a complete set of notes, and required supplementary information. The amounts that would be reported in Government-wide financial statements, a complete set of notes, and required supplementary information of the Town of Groton’s governmental activities have not been determined. We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Town, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion. Insero & Co. CPA s, LLP The Highest Standard | (800) 232-9547 | www.inserocpa.com 2 Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town’s ability to continue as a going concern for a reasonable period of time. 3 We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control- related matters that we identified during the audit. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The Combining Balance Sheet - Non- Major Governmental Funds; and the Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Non-Major Governmental Funds (supplementary information), are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Respectfully submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York August 6, 2024 TOWN OF GROTON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2023 See Notes to Financial Statements 4 General General Highway Highway Non-Major Total Town-Wide Part-Town Town-Wide Part-Town Governmental Governmental Fund Fund Fund Fund Funds Funds ASSETS Cash and Cash Equivalents - Unrestricted 457,109$ 275,604$ 175,622$ 1,091,768$ 51,393$ 2,051,496$ Cash and Cash Equivalents - Restricted 129,801 - - - 43,094 172,895 Investments - Restricted - - 472,551 - - 472,551 Other Receivables, Net 1,095 - 3,700 - - 4,795 Due From Other Governments - 18,300 - 73,398 - 91,698 Prepaid Expenses 6,990 - 2,952 - - 9,942 Total Assets 594,995$ 293,904$ 654,825$ 1,165,166$ 94,487$ 2,803,377$ LIABILITIES AND FUND BALANCES Liabilities Accounts Payable 9,125$ 295$ 18,680$ -$ 310$ 28,410$ Accrued Liabilities 13,770 5,423 19,106 20,904 - 59,203 Unearned Revenue 151,737 - - - - 151,737 Total Liabilities 174,632 5,718 37,786 20,904 310 239,350 Fund Balances Nonspendable 6,990 - 2,952 - - 9,942 Restricted 129,801 - 472,551 - 43,094 645,446 Assigned 203,239 94,507 141,536 1,144,262 51,083 1,634,627 Unassigned 80,333 193,679 - - - 274,012 Total Fund Balances 420,363 288,186 617,039 1,144,262 94,177 2,564,027 Liabilities and Fund Balances 594,995$ 293,904$ 654,825$ 1,165,166$ 94,487$ 2,803,377$ Major Funds Special Revenue Funds TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2023 See Notes to Financial Statements 5 General General Highway Highway Non-Major Total Town-Wide Part-Town Town-Wide Part-Town Governmental Governmental Fund Fund Fund Fund Funds Funds Revenues Real Property Taxes 504,500$ 192,500$ 705,000$ 184,500$ 157,300$ 1,743,800$ Real Property Tax Items 3,838 - - - - 3,838 Nonproperty Tax Items - 124,480 - 432,336 - 556,816 Departmental Income 1,816 879 - - - 2,695 Intergovernmental Charges - - 178,159 - - 178,159 Use of Money and Property 3,849 1,371 4,284 4,674 263 14,441 Licenses and Permits 15,213 15,121 - - - 30,334 Fines and Forfeitures 21,813 - - - - 21,813 Sale of Property and Compensation for Loss 480 - 4,950 - - 5,430 Miscellaneous Local Sources 1,293 - 3,639 - - 4,932 State Sources 74,684 25,878 - 300,598 - 401,160 Federal Sources 97,927 - - - - 97,927 Total Revenues 725,413 360,229 896,032 922,108 157,563 3,061,345 Expenditures General Governmental Support 410,180 - - - - 410,180 Public Safety 34,186 - - - 156,000 190,186 Public Health - 177,000 - - - 177,000 Transportation 74,869 - 641,905 677,808 3,281 1,397,863 Economic Assistance and Opportunity 7,800 - - - - 7,800 Culture and Recreation 3,187 65,098 - - - 68,285 Home and Community Services 1,447 66,719 - - - 68,166 Employee Benefits 129,056 13,050 59,340 81,176 - 282,622 Total Expenditures 660,725 321,867 701,245 758,984 159,281 2,602,102 Excess of Revenues (Expenditures)64,688 38,362 194,787 163,124 (1,718) 459,243 OTHER FINANCING SOURCES (USES) Interfund Transfers In - - 97,927 - - 97,927 Interfund Transfers (Out)(97,927) - - - (97,927) Total Other Financing Sources (Uses) (97,927) -97,927 --- Net Changes in Fund Balances (33,239) 38,362 292,714 163,124 (1,718) 459,243 Fund Balances, Beginning of Year 453,602 249,824 324,325 981,138 95,895 2,104,784 Fund Balances, End of Year 420,363$ 288,186$ 617,039$ 1,144,262$ 94,177$ 2,564,027$ Special Revenue Funds Major Funds TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL TOWN-WIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2023 See Notes to Financial Statements 6 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 504,500$ 504,500$ 504,500$ -$ Real Property Tax Items 4,600 4,600 3,838 (762) Departmental Income 1,450 1,450 1,816 366 Use of Money and Property 1,600 1,600 3,849 2,249 Licenses and Permits 11,000 11,000 15,213 4,213 Fines and Forfeitures 14,200 14,200 21,813 7,613 Sale of Property and Compensation for Loss - - 480 480 Miscellaneous Local Sources - - 1,293 1,293 State Sources 63,000 63,000 74,684 11,684 Federal Sources - 97,927 97,927 - Total Revenues 600,350 698,277 725,413 27,136 Expenditures General Governmental Support 515,563 515,563 410,180 105,383 Public Safety 36,320 36,320 34,186 2,134 Transportation 75,484 75,484 74,869 615 Economic Assistance and Opportunity 9,100 9,100 7,800 1,300 Culture and Recreation 5,970 5,970 3,187 2,783 Home and Community Services 1,500 1,500 1,447 53 Employee Benefits 136,413 136,413 129,056 7,357 Total Expenditures 780,350 780,350 660,725 119,625 Excess of Revenues (Expenditures)(180,000) (82,073) 64,688 146,761 Other Financing Sources (Uses) Interfund Transfers (Out)- (97,927) (97,927)- Total Other Financing Sources (Uses)- (97,927) (97,927) - Excess of Revenue and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (180,000) (180,000) (33,239) 146,761$ Appropriated Fund Balances 180,000 180,000 Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 453,602 Fund Balance, End of Year 420,363$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE GENERAL PART-TOWN FUND FOR THE YEAR ENDED DECEMBER 31, 2023 See Notes to Financial Statements 7 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 192,500$ 192,500$ 192,500$ $ - Nonproperty Tax Items 64,000 64,000 124,480 60,480 Departmental Income 1,100 1,100 879 (221) Use of Money and Property 500 500 1,371 871 Licenses and Permits 9,050 9,050 15,121 6,071 Miscellaneous Local Sources 1,000 1,000 - (1,000) State Sources 25,878 25,878 25,878 - Total Revenues 294,028 294,028 360,229 66,201 Expenditures General Governmental Support 10,342 10,106 - 10,106 Public Health 177,000 177,000 177,000 - Economic Assistance and Opportunity 250 250 - 250 Culture and Recreation 91,000 91,000 65,098 25,902 Home and Community Services 72,536 72,772 66,719 6,053 Employee Benefits 17,900 17,900 13,050 4,850 Total Expenditures 369,028 369,028 321,867 47,161 Excess of Revenues (Expenditures) (75,000) (75,000) 38,362 113,362$ Appropriated Fund Balances 75,000 75,000 Net Change in Fund Balance -$ -$ Fund Balance, Beginning of Year 249,824 Fund Balance, End of Year 288,186$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND HIGHWAY TOWN-WIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2023 See Notes to Financial Statements 8 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 705,000$ 705,000$ 705,000$ $ - Intergovernmental Charges 178,159 178,159 178,159 - Use of Money and Property 1,000 1,000 4,284 3,284 Sale of Property and Compensation for Loss 5,000 5,000 4,950 (50) Miscellaneous Local Sources 3,000 3,000 3,639 639 Total Revenues 892,159 892,159 896,032 3,873 Expenditures General Governmental Support 24,200 13,394 - 13,394 Transportation 691,259 799,952 641,905 158,047 Employee Benefits 81,700 81,740 59,340 22,400 Total Expenditures 797,159 895,086 701,245 193,841 Excess of Revenues (Expenditures)95,000 (2,927) 194,787 197,714 Other Financing Sources (Uses) Interfund Transfers In - 97,927 97,927 - Total Other Financing (Uses) Sources - 97,927 97,927 - Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources 95,000 95,000 292,714 197,714$ Appropriated Fund Balances 80,000 80,000 Planned Fund Balance (175,000) (175,000) Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 324,325 Fund Balance, End of Year 617,039$ TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND HIGHWAY PART-TOWN FUND FOR THE YEAR ENDED DECEMBER 31, 2023 See Notes to Financial Statements 9 Original Final Fav. (Unfav.) Budget Budget Actual Variance Revenues Real Property Taxes 184,500$ 184,500$ 184,500$ -$ Nonproperty Tax Items 210,000 210,000 432,336 222,336 Use of Money and Property 1,700 1,700 4,674 2,974 State Sources 277,049 318,852 300,598 (18,254) Total Revenues 673,249 715,052 922,108 207,056 Expenditures Transportation 750,249 792,052 677,808 114,244 Employee Benefits 78,000 78,000 81,176 (3,176) Total Expenditures 828,249 870,052 758,984 111,068 Excess of Revenues (Expenditures)(155,000) (155,000) 163,124 318,124$ Appropriated Fund Balances 155,000 155,000 Net Change in Fund Balance $ -$ - Fund Balance, Beginning of Year 981,138 Fund Balance, End of Year 1,144,262$ TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS, DEFERRED OUTFLOWS OF RESOURCES, NONCURRENT LIABILITIES, AND DEFERRED INFLOWS OF RESOURCES DECEMBER 31, 2023 See Notes to Financial Statements 10 Noncurrent Governmental Assets Land 563,000$ Infrastructure 46,156 Buildings 982,176 Machinery and Equipment 2,353,614 Total Noncurrent Governmental Assets 3,944,946$ Deferred Outflows of Resources Pensions 299,801$ Total Deferred Outflows of Resources 299,801$ Noncurrent Governmental Liabilities Compensated Absences 57,770$ Net Pension (Asset)/Liability 479,083 Total Noncurrent Governmental Liabilities 536,853$ Deferred Inflows of Resources Pensions 24,179$ Total Deferred Inflows of Resources 24,179$ TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 11 Note 1 Summary of Significant Accounting Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the accounting principles prescribed by the Accounting and Reporting Manual permitted by the Office of Comptroller of the State of New York to meet the requirements of New York State and are not intended to be a complete presentation in accordance with accounting principles generally accepted in the United States (U.S. GAAP) established by the Governmental Accounting Standards Board (GASB). The financial statements do not include a Statement of Net Position or a Statement of Activities for the Governmental Activities, prepared on the accrual basis of accounting, or a Management’s Discussion and Analysis or other required supplementary information. Under the accrual basis of accounting the Town would have recorded capital assets, net of accumulated depreciation, as well as other long-term liabilities in the government-wide financial statements. The amount of these departures has not been determined. The Town’s more significant accounting policies are described below. Financial Reporting Entity The Town, which is located in the County of Tompkins (the County) in New York State (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 GASB Statement No. 14, “The Financial Reporting Entity,” as amended. • The primary government, which is the Town; • Organizations for which the primary government is financially accountable; and • 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. Based on the application of these criteria, there were no component units to include in the Town reporting entity. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 12 Note 1 Summary of Significant Accounting Policies - Continued Fund Accounting 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. A supplemental schedule, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. The Town records its transactions in the fund types described below. Governmental Funds 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: Major Funds • General Funds - (Part-town and Town-wide) 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 maintain two General Funds. • Special Revenue Funds - Used to account for the proceeds of specific revenue sources legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: o Highway Funds - (Part-town and Town-wide) were established pursuant to Highway Law §141 and are used to account for revenues and expenditures for highway purposes. Highway Law §277 requires expenditures for repairs and improvements outside a village be financed by the area outside the village. Therefore, a town with a village must maintain two Highway Funds. Non-Major Special Revenue Funds o Special District Fund - (Fire Protection District) Established by the Town to record transactions for operations and maintenance of fire protection activities. o Special Grant Fund - Established by the Town to account for Community Development Block Grants. o Special District Fund - (Lighting District) Established by the Town to record transactions for operations and maintenance of lighting. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 13 Note 1 Summary of Significant Accounting Policies - Continued Supplemental Schedule Supplemental schedules are used to establish accounting control and accountability for noncurrent governmental assets, deferred outflows of resources, liabilities, and deferred inflows of resources. They are concerned only with the measurement of financial position and not results of operations. Noncurrent Governmental Assets and Deferred Outflows of Resources Capital assets purchased for general governmental purposes are recorded as expenditures in the Governmental Funds and are capitalized at cost in the noncurrent government assets. Contributed fixed assets are recorded at fair market value at the date of contributions. Capital 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 capital assets, nor has interest been capitalized on general capital assets that are construction in progress. Noncurrent Governmental Liabilities and Deferred Inflows of Resources The Liability and Deferred Inflow of Resources balances represent long-term obligations to current and former employees. Basis of Accounting/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. The Town considers property tax receivables collected within 60 days after year end to be available and recognizes them as revenues of the current year. All other revenues that are deemed collectible with 90 days after year end are recognized as revenues in the current year. 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. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 14 Note 1 Summary of Significant Accounting Policies - Continued Basis of Accounting/Measurement Focus - Continued 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 vest or accumulate are charged as an expenditure when paid. • Supplemental Schedule - 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. Compensated absences represent time earned by employees and unpaid at year end based on their respective pay rates. The pension liability represents the Town's actuarially determined proportionate share of the New York State Employee Retirement System's pension plan liability. Deferred Inflows and Deferred Outflows of Resources The Town has deferred inflows of resources related to the pension on the Schedule of Noncurrent Assets, Liabilities, and Deferred Inflows and Outflows of Resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The Deferred Outflows of Resources represents a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The deferred inflows and outflows of resource amounts related to the pensions were determined by actuaries based on their evaluation of the NYSLRS Pension Plan. 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 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. Budget Policies • 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. • After public hearings are conducted to obtain taxpayer comments, no later than November 20, the Town Board adopts the budget. • All modifications of the budget must be approved by the Town Board. • Appropriations lapse at year end. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 15 Note 1 Summary of Significant Accounting Policies - Continued 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. Budgetary Basis of Accounting Budgets are adopted annually on a basis consistent with requirements of New York 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. 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. Vacation, Sick Leave, and Compensated Absences Employees of the Town are granted vacation and sick leave in varying amounts. In the event of termination or retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 960 hours which is payable upon termination or retirement. The value of unused employee sick leave at year end is recorded in the Schedule of Noncurrent Government Liabilities. Payment of sick leave recorded in the Schedule of Noncurrent Assets Deferred Outflows of Resources, Liabilities and Deferred Inflows of 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. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 16 Note 1 Summary of Significant Accounting Policies - Continued Vacation, Sick Leave, and Compensated Absences - Continued 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. Unearned Revenue Unearned revenue represents funds received under the American Rescue Plan Act of 2021. The Town plans to recognize the funds as revenue in subsequent periods when the eligible expenses are incurred. Fund Balance Classifications The Town follows GASB Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” Statement No. 54 changes the terminology and classification of fund balance to reflect spending constraints on resources, rather than availability for appropriation. This approach is intended to provide users more consistent and understandable information about a fund’s net resources. Constraints are broken into five classifications: nonspendable, restricted, assigned, and unassigned. These classifications serve to inform readers of the financial statements of the extent to which the government is bound to honor any constraints on specific purposes for which resources in a fund can be spent. • Nonspendable - Consists of assets inherently nonspendable in the current period either because of their form or because they must be maintained intact; including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and endowments principal. • Restricted - Consists of amounts subject to legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments and enforced externally; or through constitutional provisions or enabling legislation. Most of the Town’s legally adopted reserves are reported here. • Assigned - Consists of amounts subject to a purpose constraint representing an intended use established by the government’s highest level of decision-making authority or their designated body or official. The purpose of the assignment must be narrower than the purpose of the General Fund. In funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. • Unassigned - Represents the residual classification of the government’s General Funds and could report a surplus or deficit. In funds other than the General Fund, the unassigned classification should only be used to report a deficit balance resulting from overspending amounts restricted, committed, or assigned for specific purposes. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 17 Note 1 Summary of Significant Accounting Policies - Continued Fund Balance Classifications - Continued The Town has not adopted any resolutions to commit fund balance. Currently, fund balance is assigned by the Town Supervisor for encumbrances and designations. By resolution, the Town Board approves fund balance appropriations for next year’s budget. The Town applies expenditures against nonspendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and then unassigned fund balance. Legally Adopted Reserves Fund balance reserves are created to satisfy legal restrictions, plan for future expenditures or relate to resources not available for general use or appropriation. The following reserve funds are available to the Town within New York State. These reserve funds are established through Board action or voter approval and a separate identity must be maintained for each reserve. Earnings on the invested resources become part of the respective reserve funds; however, separate bank accounts are not necessary for each reserve fund. These reserves are reported in the fund financial statements as Restricted Fund Balance. Reserves currently in use by the Town include the following: • Unemployment Insurance Reserve - Used to pay the cost of reimbursement to the State Unemployment Insurance Fund for payments made to claimants where the employer has elected to use the benefit reimbursement method. The reserve may be established by board action and is funded by budgetary appropriations and such other funds as may be legally appropriated. Within 60 days after the end of any fiscal year, excess amounts may either be transferred to another reserve or the excess applied to the appropriations of the next succeeding fiscal year’s budget. If the employer elects to convert tax (contribution) basis, any excess of funds over a sum sufficient to pay pending claims may be transferred to any other Reserve Fund. This reserve is accounted for in the General Fund. • Capital Reserve - Capital Reserve is used to accumulate funds to finance all or a portion of future capital projects for which bonds may be issued. This reserve is accounted for in the General and Highway Town-wide Funds. New Accounting Standard The Town adopted and implemented the following current Statement of the GASB effective for the year ended December 31, 2023: • GASB has issued Statement No. 96, “Subscription-Based Information Technology Arrangements.” The Town has evaluated the pronouncement and determined there is no material impact on its financial statements. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 18 Note 1 Summary of Significant Accounting Policies - Continued Future Changes in Accounting Standards • GASB has issued Statement No. 101, “Compensated Absences,” effective for the year ending December 31, 2024. The Town will evaluate the impact this pronouncement may have on its financial statements and will implement as applicable and when material. Note 2 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 Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. The Town 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, as well as certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies, as well as obligations of New York State, its municipalities, and its 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% 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, state statutes govern the Town’s investment policies, as discussed previously in these Notes. GASB 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. The Town’s aggregate bank balances of $2,674,813, including certificates of deposit, are either insured or collateralized with securities held by the pledging financial institution in the Town’s name. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 19 Note 2 Cash and Investments - Continued The Town chooses to disclose 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, with 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, 2023, the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category Certificate of Highway - Town-Wide Fund Deposit (6 month) Total $ 472,551 $ 472,551 2 $ 472,551 $ 472,551 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. The Town restricts cash that has internal (Board) or external restriction placed upon its use. Restricted cash at December 31, 2023 was comprised of amounts set aside to fund Board-approved reserve funds and the homeowner loan program. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 20 Note 3 Noncurrent Government Assets (Capital Assets) Changes in capital assets for fiscal year ended December 31, 2023 are as follows: Balance Balance Beginning End of of Year Additions Year 563,000$ -$ -$ 563,000$ 46,156 - - 46,156 879,984 102,192 - 982,176 2,341,051 31,337 18,774 2,353,614 3,830,191$ 133,529$ 18,774$ 3,944,946$ Deletions/ Reclass Total Land Buildings Machinery and Equipment Infrastructure Note 4 Current Liabilities Accounts payable consist of amounts owed by the Town for various goods and services. Accrued liabilities represent payroll expenses accrued at year end. Note 5 Pension Plan Plan Description The Town participates in the New York State and Local Employees' Retirement System (the System). This is a cost-sharing multiple-employer defined benefit retirement system. The System provides retirement benefits, as well as death and disability benefits. 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. Funding Policy Plan members who joined the System before July 27, 1976 are not required to make contributions. Those joining after July 27, 1976 and before January 1, 2010 with less than ten years of membership are required to contribute 3% of their annual salary. Those joining NYSERS on or after January 1, 2010 and before April 1, 2012 are required to contribute 3% of their annual salary for their entire working career. Those joining NYSERS on or after April 1, 2012 are required to contribute between 3% and 6%, dependent on salary for their entire working career. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 21 Note 5 Pension Plan - Continued Funding Policy - Continued Under the authority of the New York State Retirement and Social Security Law, 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 the employer to the Pension Accumulation Fund. The Town is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2023 $ 66,976 2022 66,436 2021 98,765 The Town’s contributions made to the System were equal to 100% of the contributions required for each year. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension At December 31, 2023, the Town reported the following liability for its proportionate share of the net pension (asset)/liability for the System. The net pension (asset)/liability was measured as of March 31, 2023. The total pension liability used to calculate the net pension (asset)/liability was determined by an actuarial valuation. The Town’s proportionate share of the net pension (asset)/liability was based on a projection of the Town’s long-term share of contributions to the System relative to the projected contributions of all participating members, actuarially determined. This information was derived from a report provided to the Town by the ERS System. ERS Actuarial Valuation Date April 1, 2022 Net Pension (Asset)/Liability 21,444,032,790$ Town’s Proportionate Share of the Plan’s Total Net Pension (Asset)/Liability 479,083 Town's Share of the Plan's Total Net Pension (Asset)/Liability 0.0022341% TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 22 Note 5 Pension Plan - Continued Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension - Continued Pension expense was $178,881 for the year ended December 31, 2023. At December 31, 2023, the Town’s reported deferred outflows of resources and deferred inflows of resources related to the pensions from the following sources: ERS Deferred Outflows of Resources Differences Between Expected and Actual Experience 51,026$ Changes of Assumptions 232,674 Net Differences Between Projected and Actual Earnings on Pension Plan Investments - Changes in Proportion and Differences Between the Town’s Contributions and Proportionate Share of Contributions 16,101 Town’s Contributions Subsequent to the Measurement Date - Total Deferred Outflows of Resources 299,801$ Deferred Inflows of Resources Differences Between Expected and Actual Experience 13,454$ Changes of Assumptions 2,571 Net Differences Between Projected and Actual Earnings on Pension Plan Investments 2,815 Changes in Proportion and Differences Between the Town’s Contributions and Proportionate Share of Contributions 5,339 Total Deferred Inflows of Resources 24,179$ Note 6 Other Postemployment Benefits The Town provides post-retirement healthcare benefits to all employees who retire upon or after attaining at least 20 years of full-time service and who are enrolled at the time of retirement. Currently, there are four retirees who meet those eligibility requirements. The Town pays 25% 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 $204 per month to each retiree to apply toward retirees’ premium cost. Post-employment benefit expenses are recognized as costs are incurred. As of December 31, 2023, expenses of $15,300 were recognized for post-retirement health care. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 23 Note 7 Compensated Absences The Town has compensated absences outstanding as of December 31, 2023, in the amount of $57,770. Compensated absences represent the value of the earned and unused portion of accumulated sick leave. Note 8 Fund Balance Detail At December 31, 2023, restricted and assigned fund balance was as follows: Unemployment Appropriated Remaining Insurance Capital Fund Total for Next Fund Total Funds Reserve Reserve Balance Restricted Year’s Budget Balance Assigned General Town-Wide 10,516$ 119,285$ -$ 129,801$ 203,239$ -$ 203,239$ General Part-Town - - - - 94,507 - 94,507 Highway Town-Wide - 472,551 - 472,551 49,243 92,293 141,536 Highway Part-Town - - - - 190,400 953,862 1,144,262 Lighting District - - - - 3,200 47,883 51,083 Special Grant - - 43,094 43,094 - - - Totals 10,516$ 591,836$ 43,094$ 645,446$ 540,589$ 1,094,038$ 1,634,627$ Restricted Assigned Restricted Fund Balances Portions of fund balance are reserved and are not available for current expenditures as reported in the Balance Sheet. The restricted balances and activity for the year ended December 31, 2023 are as follows: Beginning Interest Released/ Ending Balance Additions Earned Appropriate d Balance Unemployment Insurance - General Fund 10,469$ -$ 47$ -$ 10,516$ Capital Reserve - General Fund 118,749 - 536 - 119,285 Capital Reserve - Highway Town-Wide Fund 293,905 175,000 3,646 - 472,551 Loan Funds - Special Grant Fund 43,067 - 27 - 43,094 Total 466,190$ 175,000$ 4,256$ -$ 645,446$ Restricted Fund Balance TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 24 Note 9 Commitments and Contingencies Risk Financing and Related Insurance General Information The Town is exposed to various risks of loss related to, but not limited to, torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omission; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. Note 10 Subsequent Events Subsequent to year end, and in accordance with the Town’s equipment plan, the Town purchased a Loader with a total cost of $225,184. TOWN OF GROTON COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2023 25 Total Fire Protection Special Lighting Non-Major District Grant District Governmental Fund Fund Fund Funds ASSETS Cash and Cash Equivalents - Unrestricted -$ -$ 51,393$ 51,393$ Cash and Cash Equivalents - Restricted - 43,094 - 43,094 Total Assets -$ 43,094$ 51,393$ 94,487$ LIABILITIES AND FUND BALANCES Liabilities Accounts Payable -$ -$ 310$ 310$ Total Liabilities - - 310 310 Fund Balances Restricted - 43,094 - 43,094 Assigned - - 51,083 51,083 Total Fund Balances - 43,094 51,083 94,177 Total Liabilities and Fund Balances -$ 43,094$ 51,393$ 94,487$ Special Revenue Funds TOWN OF GROTON COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2023 26 Total Fire Protection Special Lighting Non-Major District Grant District Governmental Fund Fund Fund Funds REVENUES Real Property Taxes 156,000$ -$ 1,300$ 157,300$ Use of Money and Property - 27 236 263 Total Revenues 156,000 27 1,536 157,563 EXPENDITURES Public Safety 156,000 - - 156,000 Transportation - - 3,281 3,281 Total Expenditures 156,000 - 3,281 159,281 Net Changes in Fund Balances - 27 (1,745) (1,718) Fund Balances, Beginning of Year - 43,067 52,828 95,895 Fund Balances, End of Year -$ 43,094$ 51,083$ 94,177$ Special Revenue Funds