HomeMy WebLinkAboutBP Financial Audit 2019FINANCIAL STATEMENTS OF
SOUTHERN CAYUGA LAKE
INTERMUNICIPAL WATER COMMISSION
of the Towns of Dryden, Ithaca, and Lansing
and the Villages of Cayuga Heights and Lansing
1402 EAST SHORE DRIVE
ITHACA, NEW YORK 14850
For the Year Ended December 31, 2019
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
INDEX
December 31, 2019
Page
IndependentAuditor's Report ..........................................................................................................
-
Management's Discussion and Analysis..................................................................................
II -IX
Statementof Net Position................................................................................................................1
Statement of Revenues, Expenses, and Changes in Net Position....................................................2
Statementof Cash Flows.................................................................................................................3
Notes to Financial Statements....................................................................................................
4-18
Schedule of Changes in Total OPEB Liability and Related Ratios...............................................19
Schedule of the Commission's Proportionate Share of the Net Pension Liability ........................20
Schedule of the Commission's Pension Contributions..................................................................21
Operating Expenses — Natural Classification................................................................................22
Independent Auditor's Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards........................................................................................
23-25
WI,i ♦ 0 i
V, 1 164 i � •
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
INDEPENDENT AUDITOR'S REPORT
Board of Commissioners
Southern Cayuga Lake Intermunicipal Water Commission
Ithaca, New York 14850
Report on the Financial Statements
We have audited the accompanying financial statements of the Southern Cayuga Lake
Intermunicipal Water Commission, as of and for the year ended December 31, 2019, and the
related notes to the financial statements, which collectively comprise the Commission's basic
financial statements as listed in the index.
Management's Responsibility 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.
Auditor's Responsibility
Our responsibility is to express opinions 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 and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial
statements 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 entity's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
410 East Upland Road
Ithaca, New York 14850
607-272-5550 / 607-273-6357 (Fax)
www.swcllp.com
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of Southern Cayuga Lake Intermunicipal Water Commission, as
of December 31, 2019, and the changes in financial position, and its cash flows for the year then
ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, the Schedule of Changes in Total OPEB Liability and
Related Ratios, the Schedule of the Commission's Proportionate Share of the Net Pension
Liability and the Schedule of the Commission's Pension Contributions be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial statements
in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise Southern Cayuga Lake Intermunicipal Water Commission's basic financial
statements. The supplementary information presented on page 22 is presented for purposes of
additional analysis and is not a required part of the basic financial statements.
The 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. Such
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 auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated, in all material respects, in relation to the
basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
August 6, 2020 on our consideration of the Southern Cayuga Lake Intermunicipal Water
Commission's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering Southern Cayuga
Lake Intermunicipal Water Commission's internal control over financial reporting and
compliance.
a4avl, +: `+� . •� i"
Sciarabba Walker & Co., LLP
Ithaca, New York
August 6, 2020
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
The following is a discussion and analysis of the Southern Cayuga Lake Intermunicipal Water
Commission's (the Commission) financial performance for the year ended December 31, 2019.
This discussion and analysis is designed to a.) assist the reader in focusing on significant
financial issues, b.) provide an overview of the Commission's financial activity, and c.) identify
changes in the Commission's financial position (its ability to address the next and subsequent
year challenges).
This section is a summary of the Commission's financial activities based on current known facts,
decisions, or conditions. The results of the current year are discussed in comparison with the
prior year with an emphasis placed on the current year. This section is only an introduction and
should be read in conjunction with the Commission's financial statements, which immediately
follows this section.
ABOUT THE ENTITY
The Southern Cayuga Lake Intermunicipal Water Commission is a Joint Entity of its five
member municipalities, the Towns of Dryden, Ithaca, and Lansing, and the Villages of Cayuga
Heights and Lansing. The Commission was formed by an Agreement of Municipal Cooperation
under New York State General Municipal Law Article 5G in 1977. The Commission, as an
executive body, manages the Commission's assets including a water treatment plant, a
transmission main, and 20 full time staff members. The Commission is comprised of two
appointed members from each of the five member municipalities. One member must be an
elected official of the municipality. Officers of the Commission are elected annually; the
Treasurer has historically been the Supervisor of the Town of Ithaca. The Town of Ithaca, the
largest member municipality, serves as the employer of record and as such maintains the
fiduciary, trust and agency funds that are not reflected in this report. The Commission audits
monthly vouchers for payment prior to their review by the Town of Ithaca board.
HIGHLIGHTS
Financial Highlights:
• On August 8, 2019 the Commission increased the wholesale water rate charged to the
five (5) member municipalities to $5.41 per thousand gallons beginning in 2020 based on
a 5,000 gallon minimum per quarter.
• In 2012, the Commission identified a need to plan for future capital improvements and
replacements and in 2013, authorized and established the HJ- Capital
Improvement/Replacement Capital Project Fund. This capital fund continues to be
funded from the annual Operating Fund budget.
II
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
Financial Highlights (Continued):
Since 2012, in order to protect the integrity of the system by ensuring an uninterrupted
water supply to our member municipalities, the Commission has replaced approximately
7,800 feet of transmission main. In 2019, to provide redundancy for the system,
installation of approximately 514 feet of a second transmission main between the Raw
Water Pump Station and the Treatment Plant was completed.
In 2018, the Commission entered into an agreement with North Point Technology for a
complete Supervisory Control and Data Acquisition (SCADA) system replacement. The
project replaced obsolete and unsupported hardware and all outdated system components.
The replacement system project improved reliability of treatment and distribution system
control along with enhanced data acquisition. The project was funded from the HJ -
Capital Improvement/Replacement Capital Project Fund and was completed in 2019.
In 2018, the Commission approved the addition of a fourth pump at the Raw Water Pump
Station. The project was awarded to Jones Specialty Services, and the electrical portion
of the project was awarded to Kahrs Construction. The addition of a fourth pump enabled
us to supply the proper quantity of water to the treatment plant in the event another pump
was out of service for repair. The project was funded from the HJ- Capital
Improvement/Replacement Capital Project Fund and was completed in 2019.
In 2006, the Commission authorized and established a "General Fringe Benefit Cash
Reserve" savings account. The purpose for establishing this reserve is to fiscally meet
unanticipated economic increases in employee fringe benefits that may occur within the
current budgeted operating cycle. (E.g. NYS Retirement, Health Insurance). The
Commission will continue to review, and when necessary, add funds to the reserve. At
December 31, 2019 there is $105,703 on deposit.
• At December 31, 2019 current assets increased by $252,580 or 7%.
• At December 31, 2019 current liabilities increased by $579,132 or 165%.
• At December 31, 2019 net position increased by $252,351 or 3%.
• At December 31, 2019 capital assets increased by $604,684 or 6%.
• At December 31, 2019 long-term principal indebtedness decreased by $185,000 or 6%.
III
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts: MD&A (this section), the basic financial statements,
and required supplementary information. The basic financial statements include the statement of
net position; statement of revenues, expenses, and changes in net position; and statement of cash
flows.
The statement of net position presents the Commission's assets, deferred outflows of resources,
liabilities, and deferred inflows of resources with the difference reported as net position.
Increases and decreases in net position can be an indicator of improvement or deterioration of the
Commission's financial position.
Changes in net position during the year are reported in the statement of revenues, expenses and
changes in net position. All revenues, expenses, and changes are reported as the underlying event
occurs that results in revenue, expense, or change. The statement of cash flows presents
information on actual cash inflows or outflows as they occur.
The financial statements also include notes that explain some of the information in the statements
and provide more detailed data. The statements are followed by a section of required
supplementary information that further explains and supports the financial statements.
FINANCIAL ANALYSIS OF THE COMMISSION AS A WHOLE
The Commission continues to fund operations, long-term debt, and maintenance from rates and
fees collected in its role as the water treatment and supply source for its five (5) member
municipalities. Commission staff also operates the distribution system in the member
municipalities. The system collectively is known as the Bolton Point — Municipal Water System
(BP -MWS).
Current assets increased by $252,580 or 7%.
Total net position increased by $252,351 or 3%.
Capital assets increased by $604,684 (net of depreciation expense of $538,098) or 6%.
Unrestricted net position decreased by $538,453 or 64%.
The Commission's current ratio (ratio of current assets to current liabilities) was 4.44:1 on
December 31, 2019.
IV
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
FINANCIAL ANALYSIS OF THE COMMISSION AS A WHOLE (Continued)
Figure A-1 presents condensed information derived from the Commission's Statement of Net
Position:
FIGURE A-1
Condensed Statement of Net Position
2018
2019
Change
Current assets
Non-current assets
$
3,880,401
10,005,692
$
4,132,981
10,610,376
$
252,580
604,684
Total Assets
$
13,886,093
$
14,743,357
$
857,264
Deferred pension outflow
Deferred OPEB outflow
$
478,613
211,843
$
307,347
195,749
$
( 171,266)
16,094
Total Deferred Outflows of Resources
$
690,456
$
503,096
$
187,360
Current liabilities
Non-current liabilities
$
351,923
6,049,545
$
931,055
5,923,904
$
579,132
125,641
Total Liabilities
$
6,401,468
$
6,854,959
$
453,491
Deferred pension inflow
Deferred OPEB inflow
$
392,331
-
$
100,366
256,027
$
( 291,965)
256,027
Total Deferred Inflows of Resources
$
392,331
$
356,393
$
35,938
Invested in capital assets, net of debt
Restricted net position
Unrestricted net position
$
6,838,065
105,492
839,193
$
7,628,658
105,703
300,740
$
790,593
211
538,453
Total Net Position
$
7,782,750
$
8,035,101
$
252,351
V
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
FINANCIAL ANALYSIS OF THE COMMISSION AS A WHOLE (Continued)
Figure A-2 presents condensed information derived from the Commission's Statement of
Revenues, Expenses, and Changes in Net Position:
FIGURE A-2
Condensed Statement of Revenues,
Expenses, and Changes in Net
2018
2019
Position
REVENUES
Operating revenues
$
4,171,096
$
4,408,647
Nonoperating revenues
20,532
6,003
Total Revenues
$
4,191,628
$
4,414,650
EXPENSES
Operating Expenses:
Source of supply
$
256,352
$
296,145
Purification
654,900
660,428
Transmission and distribution
637,425
701,145
Administration
542,612
993,028
Employee benefits
451,702
450,114
Pension expense
162,457
189,406
Change in OPEB
264,724
249,097
Depreciation
512,953
538,098
Total operating expenses
3,483,125
4,077,461
Nonoperating expenses
94,113
84,838
Total Expenses
$
3,577,238
$
4,162,299
INCREASE IN NET POSITION
$
614,390
$
252,351
VI
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
FINANCIAL ANALYSIS OF THE COMMISSION AS A WHOLE (Continued)
The Statement of Cash Flows presents detailed information about the cash activities of the
Commission during the year. The statement is divided into five parts. The first section deals with
operating cash flows and shows the net cash used in the operating activities. The second section
reflects cash flows from nonoperating, noninvesting, and noncapital financing purposes. The
third section deals with the cash flows from capital and related financing activities. This section
deals with the cash used for the acquisition and construction of capital assets and related items
and related funding received. The fourth section reflects the cash flows from investing activities
and shows interest received from investing activities. The fifth section reconciles the net cash
provided by operating activities to the operating income reflected in the Statement of Revenue,
Expenses, and Changes in Net Position. Cash and cash equivalents increased by $147,343 for the
year ended December 31, 2019.
Figure A-3 presents condensed information derived from the Commission's Statement of Cash
Flows:
FIGURE A-3
Condensed Statement of Cash Flows
2018
2019
Cash provided by (used in):
Operating activities
$ 1,377,426
$ 1,554,809
Non capital financing activities
-
-
Capital and related financing activities
( 1,613,187)
( 1,418,841)
Investing activities
5,532
11,375
(Decrease) Increase in cash
( 230,229)
147,343
Cash, beginning of year
3,342,497
3,112,268
Cash, end of year
$ 31112,268
$ 3,259,611
VII
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
CAPITAL ASSETS
The Commission records expenditures for land, buildings, equipment, machinery, and
infrastructure (water transmission systems) as capital assets in the Statement of Net Position.
Annual depreciation expense is recorded in the Statement of Revenues, Expenses, and Changes
in Net Position to reflect the use of these assets over their useful lives. Land and construction in
progress are not subject to depreciation. The Commission's depreciation methods, assumptions
regarding useful lives, and capitalization thresholds are described in Notes 11-1 and lI in the
current year's Notes to the Financial Statements.
Figure A-4
Changes in Net Capital Assets
2018
2019
Ch0n e
Land
$ 55,507
$ 55,507
$ -
Construction in progress
350,278
-
( 350,278)
Buildings
5,367,582
5,250,410
( 117,172)
Equipment & Machinery
267,739
758,704
490,965
Infrastructures
3,964,585
4,545,755
581,170
Total Capital Assets
$ 10,005,691
$ 10,610,376
$ 604,685
Major additions in 2019 included:
Infrastructures: T -Main Replacement, raw water pump
SCADA system
Equipment and Machinery
phone system, AC unit
Total
$ 1,434,779
two vehicles, data logger,
97,745
$ 1,532,524
The Commission currently has one active capital project.
VIII
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
MANAGEMENT'S DISCUSSION AND ANALYSIS
DECEMBER 31, 2019
DEBT ADMINISTRATION
Constitutional Debt Limit
The Commission is restricted by the New York State Constitution on the manner of creating and
paying indebtedness. The Commission itself can only issue debt of $1,000,000 per year. The
member municipalities, however, can issue debt on behalf of the Commission, but all respective
governing boards must be in agreement. That indebtedness is automatically excluded from their
debt limits pursuant to the provisions of Article VIII section 5B of the New York State
Constitution.
Detailed information regarding the Commission's long-term liabilities is presented in the 2019
Notes to the Financial Statements.
Figure A-5
Outstanding Debt
2018
2019
Change
Statutory Installment Bonds
$ 3,150,000
$ 2,965,000
$ ( 185,000)
Compensated Absences
54,363
62,828
8,465
Net Pension Liability
122,040
283,278
161,238
Other Post -Employment Benefits
2,908,142
2,802,798
( 105 344
Total
$ 6,234,545
1 $ 6,113,904
1 $ ( 120,641)
Commission debt is historically recorded as debt held jointly and severally by the member
municipalities.
Factors Bearing on the Commission's Future
It is the view of the Commission and Management of the Bolton Point — Municipal Water
System that no negative ensuing issues are anticipated to impede the future success and growth
of the water system.
FINANCIAL CONTACT
The Commission's financial statements are designed to present users (citizens, taxpayers,
customers, investors and creditors) with a general overview of the Commission's finances and to
demonstrate the Commission's accountability. If you have questions about the report or need
additional financial information, contact the Commission Treasurer, Bill Goodman, Town of
Ithaca, 215 North Tioga Street, Ithaca, NY 14850, or the General Manager, Steve Riddle,
Southern Cayuga Lake Intermunicipal Water Commission, 1402 East Shore Drive, Ithaca, NY
14850.
IX
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
STATEMENT OF NET POSITION
December 31, 2019
ASSETS
CURRENT ASSETS:
Cash
$ 3,153,908
Cash, restricted
105,703
Accounts receivable:
16,778
Water rents
819,983
Due from other governments
4,778
Other receivables
7,000
Prepaid expenses
41,609
TOTAL CURRENT ASSETS
4,132,981
CAPITAL ASSETS, net
10,610,376
TOTAL ASSETS
14,743,357
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED PENSION OUTFLOW 307,347
DEFERRED OPER OUTFLOW 195,749
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 15,246,453
LIABILITIES
CURRENT LIABILITIES:
Accounts payable
$ 594,870
Accrued liabilities
129,407
Accrued interest
16,778
Long-term debt, current portion
190,000
TOTAL CURRENT LIABILITIES
931,055
LONG-TERM DEBT, non-current
2,775,000
COMPENSATED ABSENCES
62,828
NET PENSION LIABILITY
283,278
OPER LIABILITY
2,802,798
TOTAL LIABILITIES
6,854,959
DEFERRED INFLOWS OF RESOURCES
DEFERRED PENSION INFLOW 100,366
DEFERRED OPEB INFLOW 256,027
NET POSITION
INVESTED IN CAPITAL ASSETS, net of related debt 7,628,658
RESTRICTED 105,703
UNRESTRICTED 300,740
TOTAL NET POSITION 8,035,101
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND NET POSITION $ 15,246,453
See notes to financial statements.
-1-
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
STATEMENT OF REVENUES, EXPENSES, AND CHANGES
IN NET POSITION
For the Year Ended December 31, 2019
OPERATING REVENUES:
Water charges
Other operating revenue
TOTAL OPERATING REVENUES
OPERATING EXPENSES:
Source of supply
Purification
Transmission and distribution
Administration
Employee benefits
Pension expense
Change in OPEB
Depreciation
TOTAL OPERATING EXPENSES
OPERATING INCOME
NONOPERATING REVENUES EXPENSES):
Loss on disposal of assets
Interest expense
Interest income
TOTAL NONOPERATING REVENUES (EXPENSES)
CHANGE IN NET POSITION
NET POSITION, beginning of year
NET POSITION, end of year
See notes to financial statements.
-2-
$ 4,189,712
218,935
4,408,647
296,145
660,428
701,145
993,028
450,114
189,406
249,097
538,098
4,077,461
331,186
( 5,372)
( 84,838)
11,375
( 78,835)
252,351
7,782,750
$ 8,035,101
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from services provided $ 4,327,491
Payments for goods and services ( 623,732)
Payments for wages and benefits ( 2,148,950)
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,554,809
CASH FLOWS FROM NON -CAPITAL FINANCING:
Operating subsidies
NET CASH PROVIDED EY NON -CAPITAL
FINANCING ACTIVITIES
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Proceeds from sale of fixed assets
Acquisition of capital assets
Principal paid on capital debt
Interest paid on capital debt
NET CASH USED IN CAPITAL AND
RELATED FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest on cash
NET CASH PROVIDED BY INVESTING ACTIVITIES
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH, beginning of year
CASH, end of year
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Operating income
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation
Changes in receivables
Changes in prepaid expenses
Changes in deferred outflows of resources
Changes in deferred inflows of resources
Changes in liabilities
NET CASH PROVIDED BY OPERATING ACTIVITIES
See notes to financial statements.
-3-
34,091
( 1,182,245)
( 185,000)
( 85,687)
( 1,418,841)
11,375
11,375
147,343
3,112,268
$ 3,259,611
$ 331,186
538,098
81,156)
24,081)
187,360
35,938)
639,340
$ 1,554,809
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
NOTES TO FINANCIAL STATEMENTS
For the Year Ended December 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Southern Cayuga Lake Intermunicipal
Water Commission (the Commission) have been prepared in conformity with generally
accepted accounting principles (GAAP) as applied to government units. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting
body for establishing governmental accounting and financial reporting principles.
A. Reporting Entity
The Town of Ithaca, Town of Dryden, Town of Lansing, Village of Cayuga
Heights and Village of Lansing jointly own and operate the Southern Cayuga
Lake Intermunicipal Water Commission. The venture operated under the terms of
an original agreement dated March 1, 1977 and has been amended several times,
the last of which is dated September 11, 2017. This agreement is still in force.
Significant provisions of the agreement are as follows:
The executive body of the Southern Cayuga Lake Intermunicipal Water
Commission consists of ten members. Each member municipality appoints
two members. Of the members so appointed, at least one member from each
municipality shall be an elected official from the governing body. The
Treasurer must be Chief Financial Officer of one of the member
municipalities. Currently, the Supervisor for the Town of Ithaca is the
Treasurer of the Commission. The Treasurer is annually voted on by the
Commission.
2. Maintenance, operating, and debt retirement costs are funded primarily
through water rent revenues collected by the member municipalities and paid
over to the Commission quarterly.
B. Financial Statement Presentation
GASB establishes standards for external financial reporting for a special—purpose
government engaged only in business -type activities, such as the Commission.
The components of net position are classified into three categories as follows:
• Invested in Capital Assets, Net of Related Debt
Consists of capital assets including restricted capital assets, net of
accumulated depreciation and reduced by the outstanding balances of any
bonds, mortgages, notes or other borrowings that are attributable to the
acquisition, construction, or improvement of those assets.
• Restricted Net Position
Consists of net assets with constraints placed on the use either by 1)
external groups such as creditors, grantors, contributors, or laws or
regulations of other governments; or 2) law through constitutional
provisions or enabling legislation.
• Unrestricted Net Position
All other net assets that do not meet the definition of "restricted" or
"invested in capital assets, net of related debt."
C. Measurement Focus and Basis of Accounting
For financial reporting purposes the Commission is considered a special-purpose
government engaged only in business -type activities. Accordingly, the
Commission's financial statements have been prepared on the accrual basis of
accounting with a flow of economic resources measurement focus. Revenues are
reported when earned and expenditures when materials or services are received.
All intercompany accounts and transactions have been eliminated.
D. Budgetary Data
Budget Policies - The budget policies are as follows:
a. No later than the first Commission regular meeting in September, the
Treasurer submits a budget to the Commission for approval. Once
approved, but not later than October 5, the Commission Treasurer submits
the approved budget as the "Tentative Budget" for the fiscal year
commencing the following January 1, to the Town Clerk of the
municipality the Treasurer is Chief Financial Officer of. The tentative
budget includes proposed expenditures and the proposed means of
financing for all funds.
b. No later than November 15, the municipality tasked with approving the
budget will review the tentative budget, accept it as the Commission's
preliminary budget, and advertise and hold a public hearing on the
preliminary budget, no later than November 20.
c. All modifications of the budget must be approved by the Commission.
d. Following the public hearing, the municipality tasked with oversight of the
Commission budget will consider final adoption of the budget.
e. The Commission will publish the newly adopted budget and circulate it to
the Commission member municipalities.
f. Appropriations lapse at year-end.
E. Cash and Investments
For purposes of the Statement of Net Position, the Commission considers all
highly liquid investments with an original maturity of three months or less to be
cash equivalents.
State statutes govern the Commission's investment policies. In addition, the
Commission has its own written investment policy. Commission monies must be
deposited in FDIC insured commercial banks or trust companies located within
the State. The Treasurer is authorized to use demand accounts and certificates of
deposit.
Permissible investments include obligations of the U.S. Treasury and U.S.
Agencies and obligations of New York State or its localities. Collateral is required
for demand 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 and obligations of the State and its municipalities
and school districts of Tompkins County only.
-5-
F. Accounts Receivable
G.
H.
I.
Accounts receivable are shown gross, with uncollectible amounts recognized
under the direct write-off method. No allowance for uncollectible accounts has
been provided since it is believed that such an allowance would not be material.
All receivables are expected to be collected within the subsequent fiscal year.
Prepaid Items
Prepaid items represent payments made by the Commission for which benefits
extend beyond year-end.
Capital Assets
Capital assets are reported at historical costs. The Commission depreciates capital
assets using the straight-line method over the estimated useful life of the assets.
Capitalization thresholds (the dollar value above which capital asset acquisitions
are added to the capital asset accounts) and estimated useful lives of capital assets
are as follows:
Building and improvements
Non -building improvements
Equipment and machinery
Infrastructure
Capitalization
Threshold
$ 5,000
5,000
5,000
Estimated
Useful Life
30-40 years
15-20 years
5-15 years
The Commission includes long-lived improvements to the water system as capital
assets. Infrastructure is reported at historical cost and is depreciated using the
straight-line method over the estimated useful lives.
Capitalization thresholds and estimated useful lives for infrastructure are as
follows:
Capitalization Estimated
Threshold Useful Life
Water system $ 5,000 20 years
J. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate
section for deferred outflows of resources. This separate financial statement
element, deferred outflows of resources, represents a consumption of net position
that applies to a future period(s) and so will not be recognized as an outflow of
resources (expense/expenditure) until then. The Commission has two items that
qualify for reporting in this category; the deferred outflow related to pensions and
deferred outflows related to other postemployment benefits, reported in the
Statement of Net Position.
In addition to liabilities, the statement of net position will sometimes report a
separate section for deferred inflows of resources. This separate financial
statement element, deferred inflows of resources, represents an acquisition of net
position that applies to a future period(s) and therefore, will not be recognized as
an inflow of resources (revenue) until that time. The Commission has two items
that qualify for reporting in this category; the deferred inflow related to pensions
and deferred inflows related to other postemployment benefits reported in the
Statement of Net Position.
'l•
K. Unemployment Insurance
As of January 1, 1978, the Commission employees are covered by unemployment
insurance. The Commission has chosen to discharge its liability to the New York
State Unemployment Insurance Fund by means of the benefit reimbursement
method. This is a dollar -for -dollar reimbursement to the Unemployment Insurance
Fund for the benefits paid to former employees and charged to the Commission's
account. The Commission is exempt from federal unemployment insurance tax.
L. Compensated Absences
The Commission's employees are granted vacation in varying amounts. In the
event of termination or upon retirement, an employee is normally entitled to
payment for accumulated vacation at various rates, subject to certain maximum
limitations.
Payment for accumulated vacation recorded in the General Long -Term Debt
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 for accumulated
vacation when such payments become due.
The Commission recognizes a liability for vacation leave and other compensated
absences with similar characteristics and additional salary -related payments as the
benefits are earned by the employees, based on the rendering of past service and
the probability that the employees will be compensated for the benefits through
paid time off or some other means. This includes vacation leave and other
compensated absences with similar characteristics that were earned but not used
during the current or prior periods and for which employees can receive
compensation in a future period. Amounts do not include leave expected to lapse
and includes leave that (new) employees will (eventually) qualify for.
M. Retiree Accumulated Sick Time
In addition to providing pension benefits, the Commission allows retired
employees to use accumulated sick time to offset the cost of health insurance.
When this accumulated sick time is depleted, the employee pays his/her share of
health insurance premiums. The employee does not have the option of taking the
accumulated sick time as a cash payment. Health care benefits are provided
through an insurance company whose premiums are based on the benefits paid
during the year. To be eligible for this benefit the employee must be a retiree from
the New York State Employee Retirement System.
N. Deferred Compensation
The Commission offers their employees a Deferred Compensation Plan (the Plan)
created in accordance with Internal Revenue Code Section 457. The Plan, which
is available to all eligible participants, permits participants to defer a portion of
their salary (25% of gross wages not to exceed $8,000) until future years.
Amounts deferred under the Plan are not available to the employee until
termination, retirement, death or unforeseeable emergency.
Effective, January 1, 1998, all amounts of compensation deferred under the Plan,
all property and rights purchased with the amounts, and all income attributable to
these amounts are the sole property of the employee.
-7-
O. Classification of Revenues
The Commission has classified its revenues as either operating or nonoperating
revenues according to the following criteria:
• Operating Revenues — Operating revenues include activities that have the
characteristics of exchange transactions, such as 1) water charges, 2)
plumbing permits charges, 3) main breaks repair charges, and (4) other.
• Nonoperating Revenues — Nonoperating revenues include activities that
have the characteristics of non-exchange transactions, such as gifts and
contributions, and other revenues that are defined as nonoperating
revenues by GASB, such as investment income and sale of capital assets.
P. Restricted Resources
When an expense is incurred for purposes for which both restricted and
unrestricted net position is available, it is the Commission's policy to apply
restricted funds before unrestricted funds, unless otherwise prohibited by legal
requirements.
Q. New Accounting Pronouncements
The GASB has issued the following new statements:
• Statement No. 83, Certain Asset Retirement Obligations, which will be
effective for the year ending December 31, 2020.
• Statement No. 84, Fiduciary Activities, which will be effective for the year
ending December 31, 2020.
• Statement No. 87, Leases, which will be effective for the year ending
December 31, 2022.
• Statement No. 88, Certain Disclosures Related to Debt, including Direct
Borrowings and Direct Placements, which will be effective for the year
ending December 31, 2020.
• Statement No. 89, Accounting for Interest Cost Incurred before the End of
a Construction Period, which will be effective for the year ending
December 31, 2021.
• Statement No. 90 Majority Equity Interests - an amendment of GASB
Statements No. 14 and No. 61 which will be effective for the year ending
December 31, 2020.
• Statement No. 91 Conduit Debt Obligations, which will be effective for
the year ending December 31, 2022.
• Statement No. 92 Omnibus 2020 which will be effective for the year
ending December 31, 2022.
• Statement No. 93 Replacement of Interbank Offered Rates, which will be
effective for the year ending December 31, 2022.
The Commission is currently reviewing these statements and plans on adoption,
as required.
NOTE 2 - CASH
The Commission's investment policies are governed by state statutes, as previously
described in these Notes. Deposits are valued at cost or cost plus interest and are
categorized as either:
1. Insured or collateralized with securities held by the entity or by its agent in the
entity's name;
2. Collateralized with securities held by the pledging financial institution's trust
department or agency in the entity's name; or
3. Uncollateralized.
Total financial institution (bank) balances at December 31, 2019, per the bank, were
$3,284,681
1 2 3
Cash in bank 3284.681 $ $
NOTE 3 - CAPITAL ASSETS
Capital asset balances and activity for the year ended December 31, 2019 were as
follows:
Beginning
Balance Additions
CAPITAL ASSETS THAT ARE
70,595
NOT DEPRECIATED:
107,110
Land
$ 55,507
Construction in progress
350,278
TOTAL NON -DEPRECIABLE
HISTORICAL COST
405,785
CAPITAL ASSETS THAT ARE
554,127
BEING DEPRECIATED:
$ 994,426 $
Buildings
10,301,092
Equipment and machinery
1,145,101
Infrastructures
4,670,575
TOTAL DEPRECIABLE
HISTORICAL COST
16,1 16,768
LESS: ACCUMULATED
DEPRECIATION:
Buildings
4,933,510
Equipment and machinery
877,362
Infrastructures
705,990
TOTAL ACCUMULATED
DEPRECIATION
6,516,862
TOTAL HISTORICAL COST, net $ 10,005,691
Disposals and Ending
Reclassifications Balance
350,278
350,278
97,745 ( 16,798)
1,434,779 610,388
1,532,524 593,590
$ 55,507
55,507
10,301,092
1,259,644
5,494,966
17,055,702
187,767
70,595
5,050,682
107,110
483,532
500,940
243,221
-
949,211
538,098
554,127
6,500,833
$ 994,426 $
389,741
$ 10,610,376
NOTE 4 - LIABILITIES
A. Pension Plans
Plan Description.
The Commission participates in the New York State and Local Employees'
Retirement System (ERS), and the Public Employees' Group Life Insurance Plan
(Systems). These are cost sharing multiple -employer retirement systems. The
Systems provide 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 Systems.
The Comptroller shall adopt and may amend rules and regulations for the
administration and transaction of the business of the Systems and for the custody
and control of their funds. The Systems issue 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, Gov. Alfred E. Smith State Office Building, Albany, NY 12244.
Funding Policy.
The Systems are 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 for their first 10 years in the system, and employees
who joined on or after January 1, 2010 who generally contribute 3% of their
salary for their entire length of service. 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.
The Commission is required to contribute at an actuarially determined rate. The
required contributions for the current year and preceding years were:
2019
$ 148,864
2018
142,944
2017
150,072
2016
150,192
2015
149,676
The contributions are paid each December 15''. Payment can be made in February
of the next year; however, by prepaying the annual contribution the Commission
saves a 2% annual charge.
Pension Liabilities and Deferred Outflows of Resources Related to Pensions.
At December 31, 2019, the Commission reported the following liability for its
proportionate share of the net pension liability for the Systems. The net pension
liability was measured as of March 31, 2019. The total pension liability used to
calculate the net pension liability was determined by an actuarial valuation.
Measurement date March 31, 2019
Net pension liability $ 283,278
Commission's portion of the Plan's total net pension liability 0.003998%
Change in proportionate share since prior measurement date 0.000217%
-10-
At year end December 31, 2019, the Commission recognized pension expenses of
$189,406. The Commission reported deferred outflows of resources related to
pensions from the following sources:
The Commission reported deferred inflows of resources related to pensions from
the following sources:
Deferred
2021
Outflows of
2022
Resources
Differences between expected and actual experience
$ 55,783
Changes of assumptions
71,204
Net difference between projected and actual
investment earnings on pension plan investments
-
Changes in proportion and differences between
employer contributions and proportionate share of
contributions
31,496
Contributions made after measurement date
148,864
Total
$ 307,347
The Commission reported deferred inflows of resources related to pensions from
the following sources:
The Commission's contributions subsequent to the measurement date for the
Systems amounted to $148,864.
The Commission's contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ended December
31, 2020. The Commission's balances of deferred outflows and inflows of
resources related to pension will be recognized in pension expense as follows:
2020
Deferred
2021
Inflows of
2022
Resources
Differences between expected and actual experience
$ 19,015
Changes of assumptions
-
Net difference between projected and actual
investment earnings on pension plan investments
72,704
Changes in proportion and differences between
employer contributions and proportionate share of
contributions
8,647
Total
$ 100,366
The Commission's contributions subsequent to the measurement date for the
Systems amounted to $148,864.
The Commission's contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ended December
31, 2020. The Commission's balances of deferred outflows and inflows of
resources related to pension will be recognized in pension expense as follows:
2020
$ 68,372
2021
( 48,324)
2022
( 1,246)
2023
39,314
Total
$ 58,116
Actuarial Assumptions.
The Commission's total pension liability as of the measurement date was
determined by using an actuarial valuation as of April 1, 2018, with update
-11-
procedures used to roll forward the total pension liability to March 31, 2019. The
actuarial valuations used the following actuarial assumptions:
Actuarial cost method
Inflation
Investment rate of return
Salary scale
Projected COLAs
Decrement tables
Entry age normal
2.5%
7.0%
4.2%
1.3%
04/01/10-03/31/15
System's experience
Annuitant mortality rates are based on April 1, 2010 — March 31, 2015 System's
experience with adjustments for mortality improvements based on the Society of
Actuaries Scale MP -2014.
The Commission's long-term rate of return on pension plan investments was
determined using a building block method in which best estimate ranges of
expected future real rates of return (expected returns net of investment expense
and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the
expected future real rates of return by each the target asset allocation percentage
and by adding expected inflation. Best estimate of the arithmetic real rates of
return for each major asset class included in the target asset allocation at the
valuation date of March 31, 2019 are as follows:
Discount rate.
The Discount rate used to calculate the total pension liability was 7.0%. The
projection of cash flows used to determine the discount rate assumes that the
contributions from plan members will be made at the current contribution rates
and that contributions from employers will be made at statutorily required rates,
actuarially determined. Based upon the assumptions, the Systems' fiduciary net
position was projected to be available to make all projected future benefit
payments of current plan members. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
-12-
Target
Long -Term Expected
Asset Class
Allocation
Real Rate of Return
Domestic equity
36%
4.55%
International equity
14%
6.35%
Privet equity
10%
7.50%
Real estate
10%
5.55%
Absolute return strategies
2%
3.75%
Opportunistic portfolio
3%
5.68%
Real assets
3%
5.29%
Bonds and mortgages
17%
1.31%
Cash
1%
-0.25%
Inflation -indexed bonds
4%
1.25%
100%
Discount rate.
The Discount rate used to calculate the total pension liability was 7.0%. The
projection of cash flows used to determine the discount rate assumes that the
contributions from plan members will be made at the current contribution rates
and that contributions from employers will be made at statutorily required rates,
actuarially determined. Based upon the assumptions, the Systems' fiduciary net
position was projected to be available to make all projected future benefit
payments of current plan members. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
-12-
Sensitivity of the Proportionate Share of the Net Pension Liability to the
Discount Rate Assumption.
The following tables present the Commission's proportionate share of the net
pension liability/(asset) calculated using the discount rate of 7.0%, as well as what
the Commission's proportionate share of the net pension liability would be if it
were calculated using a discount rate that is one percentage point lower (6.0%) or
one percent point higher (8.0%) than the current rate:
Current
1% Decrease Assumption 1% Increase
(6.0%) (7.0%) (8.0%)
Commission's
proportionate share of the
net pension (asset)/liability $ 1,238,530 $ 283,277 $ ( 519,204)
Pension Plan Fiduciary Net Position.
The components of the current -year net pension liabilities of the employers as of
March 31, 2019 were as follows:
Employers' total pension liability $ (189,803,429,000)
Fiduciary net position 182,718,124,000
Employers' net pension liability $ ( 7,085,305,000)
Ratio of Plan net position to the
employers' total pension asset/(liability) 96.27%
B. Long -Term Debt
The Commission borrows money through its municipal members to acquire land
or equipment or to construct buildings and improvements. This enables the cost of
these capital assets to be borne by the present and future users receiving the
benefit of the capital asset. The municipal members are jointly liable for
repayment of the corresponding serial bonds, whereas the Commission is
responsible for repayment of the debt based on the agreement of municipal
cooperation.
At December 31, 2019, the total principal indebtedness outstanding of the
Commission was $2,965,000.
The following is a summary of the Commission's outstanding long-term debt for
the year ending December 31, 2019:
Description
Joint Water
Improvement 4
Joint Water
Improvement 5
Total Serial Bonds
Date
Original
of Issue
Amount
10/5/2012
$ 2,600,000
6/12/2013 1,500,000
-13-
Date of
UR Final Maturity
2%-3%
3%-3.25%
9/15/2032
Outstanding
12/31/2019
$ 1,825,000
6/1/2033 1,140,000
$ 2,965,000
Interest on long-term debt paid during the year was:
Interest paid $ 85,688
Less interest accrued - prior year ( 17,567)
Plus interest accrued - current year 16,718
$ 84,839
Long-term liability balances and activity for the year are summarized below:
Serial bonds
Other post -employment
benefits
Net pension liability
Compensated absences
Total long-term liabilities
Serial Bonds
Beginning
Balance Additions
$ 3,150,000
2,908,142
122,040
54,363
$ 6,234,545
161,238
8,465
$ 169,703
Ending
Reductions Balance
$ ( 185,000)
( 105,344)
$ ( 290,344)
$ 2,965,000
2,802,798
283,278
62,828
$ 6,113,904
Activity for compensated absences is shown net due to the impracticability of
determining these amounts separately. Payments of compensated absences are
dependent upon future factors therefore, the timing of such payments cannot be
determined. Compensated absences are reflected as a long-term liability in the
Statement of Net Position.
The following is a summary of the maturity of long-term indebtedness:
Total Serial Bonds
Total Long -Term Debt
Year
2020
2021
2022
2023
2024
2025-2033
NOTE 5 - USE OF ESTIMATES
Principal
$ 190,000
190,000
195,000
205,000
210,000
1,975,000
2,965,000
$ 2,965,000
Interest
$ 81,287
76,787
72,287
67,456
62,281
278,631
638,729
$ 638,729
Total
$ 271,287
266,787
267,287
272,456
272,281
2,253,631
3,603,729
$ 3,603,729
Management uses estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.
NOTE 6 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description.
The Commission administers a single -employer defined benefit healthcare plan ("the
Retiree Health Plan"), through the payroll of the Town of Ithaca. The plan provides
lifetime healthcare insurance for eligible retirees and their spouses through the
-14-
Commission's group health insurance plan, which covers both active and retired
members. The Commission pays a portion of retiree's premiums for healthcare
insurance based on the number of years of service to the Commission at the time of
retirement.
In addition, retiring employees can convert unused sick time to offset portions of
healthcare premiums that are the retiree's responsibility. The Commission tracks the
accumulated balances and makes premium payments on behalf of the retirees until the
balances are exhausted.
The Retiree Health Plan does not issue a publicly available financial report.
Employees Covered by Benefit Terms.
At December 31, 2019 the following employees were covered by the benefit terms:
Inactive employees and beneficiaries
Active employees
Total
Funding Policy.
6
20
26
The Commission contributes a portion of the retiree's healthcare premium according to
the schedule. For employees whose most recent date of hire is prior to 1/1/2015, the
following percentages apply:
Years of Commission
Service Contribution
30 and over 75.0%
25-29 50.0%
15-24 35.0%
5-14 20.0%
less than 5 0.0%
For employees who were hired on or after 1/1/2015, the following percentages apply:
Years of
Service
30 and over
25-29
10-24
The OPEB Liability.
Commission
Contribution
50.0%
35.0%
20.0%
The Commission's total OPEB Liability of $2,802,798 was measured as of January 1,
2019 and was determined by an actuarial valuation as of January 1, 2018.
-15-
Actuarial Methods and Assumptions.
The actuarial valuation used the following actuarial assumptions:
Actuarial cost method
Salary increase
Discount rate
Rate of inflation
Premium trend
Entry Age Normal
4.0%
4.10%
2.5%
6.5% for 2020, 6.2% in 2021, with
subsequent reductions and an
ultimate rate of 3.94% in 2078
The discount rate used was Bond Buyer Weekly 20 -Bond index.
Mortality rates were based on the sex -distinct RPH-2014 Mortality Tables for
employees and healthy annuitants, adjusted backward to 2006 with scale MP -2014, and
then adjusted for mortality improvements with scale MP -2017 mortality improvement
scale on a fully generational basis. This assumption was based on a review of published
mortality tables and the demographics of the Plan.
Changes in the total OPEB Liability.
Service cost
Interest
Changes of benefit terms
Differences between expected and actual experience
Changes of assumptions or other inputs
Benefit payments
Net change in total OPEB Liability
Total OPEB Liability - Beginning of year
Total OPEB Liability - End of year
$ 162,446
104,259
( 292,446)
( 79,603)
( 105,344)
2,908,142
$ 2,802,798
Changes of assumptions and other inputs reflect the effects of changes in the discount
rate each period. The discount rate in effect at the current measurement date is 4.1%.
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate.
The following presents the total OPEB liability of the Commission, as well as what the
total OPEB liability would be if it were calculated using a discount rate that is 1
percentage point lower (2.44%) or 1 percentage point higher (4.44%) than the current
discount rate:
1% Decrease Current 1% Increase
(2.44%) (4.1%) (4.44%)
Total OPEB Liability $ 3,277,317 $ 2,802,798 $ 2,418,394
-16-
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend
Rates.
The following presents the total OPEB liability of the Commission, as well as what the
Commission's total OPEB liability would be if it were calculated using healthcare cost
trend rates that are 1 percentage point lower (5.5-2.94%) or 1 percentage point higher
(7.5-4.94%) than the current healthcare cost trend rate:
Current Trend
1% Decrease Rates 1% Increase
Total OPEB Liability $ 2,337,438 $ 2,802,798 $ 3,401,010
OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB.
For the year ended December 31, 2019, the Commission recognized OPEB expense of
$249,097. At December 31 ,2019, the Commission reported deferred outflows and
inflow of resources related to OPEB from the following sources:
Differences between expected and
actual experience
Changes of assumptions or other inputs
Contributions made after measurement date
(including implicit subsidy)
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
113,429 256,027
82,320 -
$ 195,749 $ 256,027
The Commission's balances of deferred outflows and inflows of resources related to
other postemployment benefits will be recognized in OPEB expense as follows:
2020
$ ( 17,608)
2021
( 17,608)
2022
( 17,608)
2023
( 17,608)
2024
( 17,608)
Thereafter
( 54,558)
$ (142,598)
NOTE 8 - SUBSEQUENT EVENTS
Subsequent events were evaluated through August 6, 2020, which is the date the
financial statements were available to be issued. In March 2020, the World Health
Organization declared the outbreak of a novel coronavirus (COVID -19) as a pandemic,
which continues to spread throughout the United States. Due to the nature of the
Commission operations, the impact of Covid-19 on its operations was minimal. As an
essential utility, the Commission did not shut down and was able to continue
production and distribution of water with just a few modifications to regular work
-17-
schedules. Department managers modified schedules to ensure continuous operation
while keeping employees safe and reducing the number of people on-site each day.
While the Commission experienced a decrease in water consumption from its biggest
users, it also saw an increase in usage from residential accounts. Revenues through
May of 2020 were comparable to the same period in 2019.
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOS
For the Year Ended December 31,
Service cost
Interest
Changes of benefit terms
Differences between expected and actual experience
Changes of assumptions or other inputs
Benefit payments
Net change in total OPEB Liability
Total OPEB Liability - Beginning of year
Total OPEB Liability - End of year
Covered payroll over measurement period
Total OPEB liability as a percentage of covered payroll
Notes to schedule:
2019
$ 162,446
104,259
( 292,446)
( 79,603)
( 105,344)
2,908,142
$ 202,798
$ 1,199,029
234%
Changes of Assumptions. Changes of assumptions and other inputs reflect the effects of
changes in the discount rate each period. The discount rate in effect at the current measurement
date is 4.1%.
-19-
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
SCHEDULE OF THE COMMISSION'S PROPORTIONATE SHARE OF THE NET
PENSION LIABILITY
For the Year Ended December 31,
Proportion of the net pension liability (asset)
Proportionate share of the net pension liability (asset)
Covered payroll
Proportionate share of the net pension liability (asset)
as a percentage of its covered payroll
Plan fiduciary net position as a percentage
of the total pension liability (asset)
See accountant's report on supplementary information.
-20-
2019 2018
0.003998%
$ 283,278
$ 1,199,029
23.63%
96.3%
0.003781%
$ 122,040
$ 1,076,861
11.33%
98.2%
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
SCHEDULE OF THE COMMISSION'S PENSION CONTRIBUTIONS
For the Years Ended December 31,
2019 2018
Contractually required contribution
Contributions in relation to the contractually
required contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered payroll
See accountant's report on supplementary information.
-21-
$ 148,864
148,864
$ 1,199,029
12.42%
$ 142,944
142,944
$ 1,076,861
13.27%
SOUTHERN CAYUGA LAKE INTERMUNICIPAL WATER COMMISSION
OPERATING EXPENSES — NATURAL CLASSIFICATION
For the Year Ended December 31, 2019
Personal services
$ 1,231,138
Overtime/administrative
66,106
Employee benefits
450,114
Pension expense
189,406
OPEB
249,097
Equipment
373,276
Clothing, boots
7,209
Tools/equipment parts
17,234
Maintenance, Bolton Point systems
148,826
Maintenance, town and village systems
67,749
Meters
47,853
Phone/telemeter
20,322
Electric power
292,022
Natural gas
7,136
Gasoline and oil
20,730
Auditor/attorney fees
14,673
Consultants
10,972
Treatment supplies
75,988
Lab supplies
31,355
Office supplies
2,542
Printing/postage
13,418
Equipment maintenance
37,656
Custodial services/buildings and grounds
40,681
Travel/schools
12,257
Advertising
328
Dues and publications
2,645
Data processing
42,773
Insurance
49,969
Miscellaneous
5,081
Mapping
5,688
Safety program
5,119
Depreciation
538,098
TOTAL OPERATING EXPENSES
$ 4,077,461
See accountant's report on supplementary information.
-22-
INDEPENDENT AUDITOR'S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON
AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
WI,i ♦ 0 i
V, 1 164 i � •
CERTIFIED PUBLIC ACCOUNTANTS
BUSINESS CONSULTANTS
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Board of Commissioners
Southern Cayuga Lake Intermunicipal Water Commission
Ithaca, New York 14850
We have audited, in accordance with the auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the financial statements of the
Southern Cayuga Lake Intermunicipal Water Commission, as of and for the year ended December
31, 2019, and the related notes to the financial statements, which collectively comprise the
Commission's basic financial statements, and have issued our report thereon dated August 6, 2020.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the
Commission's internal control over financial reporting (internal control) to determine the audit
procedures that are appropriate under circumstances for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the Commission's internal control. Accordingly, we do not express an opinion on the
effectiveness of the Commission's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be material weaknesses or significant
deficiencies. Given these limitations, during our audit we did not identify any deficiencies in
internal control that we consider to be material weaknesses. However, material weaknesses may
exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Commission's financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
410 East Upland Road
Ithaca, New York 14850
607-272-5550 / 607-273-6357 (Fax)
www.swcllp.com
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
a4z(J4 �t a - Orzo
Sciarabba Walker & Co., LLP
Ithaca, New York
August 6, 2020
-25-
