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Home My WebLink About2016 Town AuditTOWN OF GROTON Groton, New York FINANCIAL REPORT December 31,2016 RE --1-'E &, FILED Office of the Town Clerk 101 Conger Boulevard, Groton, NY Date 2017 Time �•� AM Aa. ,M► . April L. Scheffler, RMC, Groton Town Clerk insero&co Certified Public Accountants I Business Ad`risors I I I I I I I I I I I I I I I I I I I TOWN OF GR 0 TON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Independent Auditor's Report............................................................................................................ 1-2 Financial Statements Balance Sheet - Governmental Funds.......................................................................................... 3-3a Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds....................................................................................... 4-4a Budgetary Comparison Schedule - General Townwide Fund ..................................................... 5 Budgetary Comparison Schedule - General Fund Parttown........................................................ 6 Budgetary Comparison Schedule - Special Revenue Fund - HighwayTownwide Fund.......................................................................................................... 7 Budgetary Comparison Schedule - Special Revenue Fund - HighwayFund Parttown............................................................................................................. 8 Budgetary Comparison Schedule - Special Revenue Fund - LightingDistrict Fund................................................................................................................ 9 Budgetary Comparison Schedule - Special Revenue Fund - Fire Protection District Fund...................................................................................................... 10 Statement of Fiduciary Net Assets - Fiduciary Funds................................................................. 11 Schedule of Noncurrent Assets and Liabilities............................................................................ 12 Notes to Financial Statements................................................................................................... 13-25 insero &-ow. Certified Public Accountants 1 Busincss AdNISors INDEPENDENT AUDITOR'S REPORT To the Town Board Town of Groton Groton, New York 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, 2016, 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. 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. 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 Town'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 Town'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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion. 1 INSERO & CO. CPAs, LLP Basis for Adverse Opinion on the Financial Statements as a Whole 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. Adverse Opinion In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on the Financial Statements as a Whole" paragraph, the financial statements referred to above do not present fairly the financial position of the Town of Groton, as of December 31, 2016, 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. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York October 10, 2017 2 TOWN OF GR 0 TON BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2016 ASSETS Cash and cash equivalents - Unrestricted Cash and cash equivalents - Restricted Investments - Unrestricted Investments - Restricted Other receivables, net Due from other governments Loans receivable, net of allowance Total Assets LIABILITIES AND FUND BALANCES Liabilities Accounts payable Accrued liabilities Unearned revenues Total Liabilities Fund Balances Restricted Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances See Independent Auditor's Report and Notes to Financial Statements 3 General General Townwide Parttown Fund Fund $ 639564 $ 63,884 140,600 3,574 10,000 $ 2079738 $ 739884 $ 205248 $ 160 11>915 1,066 22,163 19226 140,600 1615265 4900 (1161,290) 225858 1859575 725658 $ 2079738 $ 739884 20,053 7499693 $ 3839271 $ $ 469048 $ 6,784 $ 19,029 65,077 6,784 279,897 4041719 3769487 684,616 376,487 $ 7499693 $ 383,271 $ 3,574 30,053 285,837 285,837 539097 $ - $ 3669090 $ 19833,773 420 $ $ $ 73,660 22,010 285,837 285,837 420 - 285,837 381,507 52,677 52,677 53,097 $ 3a 809253 5001750 1,044,948 (93,432) 80,253 1,452,266 $ 3669090 $ 198339773 Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 339,503 $ 363,218 $ 53,097 $ $ $ 883,266 55,136 80,253 275,989 130,293 130,293 224,761 2241761 20,053 7499693 $ 3839271 $ $ 469048 $ 6,784 $ 19,029 65,077 6,784 279,897 4041719 3769487 684,616 376,487 $ 7499693 $ 383,271 $ 3,574 30,053 285,837 285,837 539097 $ - $ 3669090 $ 19833,773 420 $ $ $ 73,660 22,010 285,837 285,837 420 - 285,837 381,507 52,677 52,677 53,097 $ 3a 809253 5001750 1,044,948 (93,432) 80,253 1,452,266 $ 3669090 $ 198339773 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2016 See Independent Auditor's Report and Notes to Financial Statements 4 General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 4049391 $ 1385145 Real property tax items 115153 Nonproperty tax items 779288 Departmental income 15947 25137 Intergovernmental charges Use of money and property 19014 257 Licenses and permits 155637 99899 Fines and forfeitures 25,590 Sale of property and compensation for loss 26 Miscellaneous local sources 823 650 State sources 651172 Total Revenues 525,753 2285376 EXPENDITURES Current General governmental support 3685023 250 Public safety 315132 Public health 1289500 Transportation 68,046 Economic assistance and opportunity 95100 250 Culture and recreation 85534 481,377 Home and community services 15355 525976 Employee benefits 1361161 175488 Total Expenditures 6229351 247,841 Excess of (Expenditures) Revenues (96,598) (19,465) Net Changes in Fund Balances (965598) (199465) Fund Balances, Beginning of Year 2825173 92,123 Fund Balances, End of Year $ 185,575 $ 729658 See Independent Auditor's Report and Notes to Financial Statements 4 1 1 1 1 1 1 1 1 1 1 1 1 1 4a Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 597,100 $ 258,800 $ 5,400 $ 117,500 $ $ 19521,336 11,153 147,515 22403 1,100 5,184 2161724 216,724 2,000 651 109 80 4,111 25,536 25,590 263 289 1,473 181,511 1959758 4429441 81607 5889477 5,509 117,500 196,938 29478,640 368,273 117,500 1481632 128,500 6729182 383,494 4,621 1,128,343 9,350 56,911 195,758 250,089 1231751 60,994 3381,394 7959933 444,488 4,621 117,500 1951758 2,428,492 20,154 143,989 888 - 1,180 50,148 20,154 143,989 888 - 11180 50,148 6641462 232498 511789 - 791,073 14021118 $ 6849616 $ 376,487 $ 52,677 $ - $ 80,253 $ 1,452,266 4a TOWN OF GR 0 TON BUDETARY COMPARISON SCHEDULE -REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES Real property taxes Real property tax items Nonproperty tax items Departmental income Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State sources Total Revenues EXPENDITURES Current General governmental support Public safety Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Budget 404,391 $ 7,800 4,000 1,600 1,250 14,000 18,500 56,000 507,541 443,004 36,550 75,612 9,350 10,525 2,400 133,100 710,541 (203,000) Final 3681023 Budget Actual 404,391 $ 404,391 $ 700 11,153 4,000 8,534 100 11947 1,250 1,014 1400 159637 18,500 25,590 26 823 565000 659172 5071541 5259753 4351736 3681023 36,550 311132 751612 681046 9,350 9,100 10,525 8,534 2400 19355 140,368 136,161 710,541 622,351 (203,000) (96,598) $ 223,000 203,000 282,173 $ 185,575 See Independent Auditor's Report and Notes to Financial Statements 5 Fay. (Unfay.) Variance 3,353 (4,000) 347 (236) 1,637 7,090 26 823 9,172 18,212 67,713 5,418 7,566 250 1,991 1,045 4,207 88,190 106,402 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES Real property taxes Nonproperty tax items Departmental income Use of money and property Licenses and permits Miscellaneous local sources Total Revenues EXPENDITURES Current General governmental support Public health Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final 250 Fay. (Unfay.) Budget Budget Actual Variance $ 1389145 $ 1389145 $ 1389145 $ - 65,500 659500 779288 11,788 1,900 1,900 2,137 237 200 200 257 57 61050 6,050 99899 39849 700 700 650 (50) 2129495 2125495 228,376 159881 51,250 51,250 250 59000 1289500 128,500 1289500 - 250 250 250 -0- 50,300 50,300 481,377 19923 589020 589020 52,976 5,044 18,175 18,175 17,488 687 2609495 2609495 247,841 12,654 (489000) (481,000) (199465) $ 289535 489000 489000 E.1 See Independent Auditor's Report and Notes to Financial Statements 6 92,123 72,658 TO UN OF GROTON BUDGETARY COMPARSION SCHEDULE SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES Real property taxes Intergovernmental charges Use of money and property Sale of property and compensation for loss Total Revenues EXPENDITURES Current Transportation Employee benefits Total Expenditures Excess of (Expenditures) Revenues OTHER FINANCING SOURCES (USES) Interfund transfers in Interfund transfers (out) Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final 6729182 Budget Budget Actual $ 597,100 $ 5973,100 $ 597,100 $ 2165,724 2161,724 216,724 19800 11800 23000 2173,449 (609000) 263 8151,624 815,624 8169087 Fay. (Unfay.) Variance 200 263 463 796,724 8661,019 6729182 1931-837 1463,900 1461,900 123,751 231,149 943,624 190129919 7959933 2169986 (1283,000) (1973,295) 20,154 2173,449 (609000) (5,000) 59000 (60,000) (59000) - 59000 (1889000) (202,295) 20,154 $ 2229449 1885,000 2023,295 See Independent Auditor's Report and Notes to Financial Statements 7 664,462 $ 684,616 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2016 See Independent Auditor's Report and Notes to Financial Statements 8 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 258,800 $ 2581800 $ 258,800 $ - Nonproperty tax items 12000 1209000 147,515 271515 Use of money and property 500 500 651 151 State sources 158,391 187,685 181,511 (6,174) Total Revenues 5379691 5661985 588,477 21,492 EXPENDITURES Current Transportation 521,391 55005 383,494 167,191 Employee benefits 61,300 61,300 60,994 306 Total Expenditures 582,691 611,985 4449488 167,497 Excess of (Expenditures) Revenue (45,000) (45,000) 143,989 $ 1889989 Appropriated Fund Balances 45,000 459000 Net Change in Fund Balance Fund Balance, Beginning of Year 232,498 Fund Balance, End of Year $ 3769487 See Independent Auditor's Report and Notes to Financial Statements 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 REVENUES Real property taxes $ Use of money and property Total Revenues EXPENDITURES Current Transportation Total Expenditures Excess of Revenue Net Change in Fund Balance $ Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Budget Budget Actual Variance 5,400 $ 5,400 $ 5,400 $ - 109 109 5,400 59400 5,509 109 51,400 59400 4,621 779 5,400 59400 4,621 779 - - 888 $ 888 - $ - 888 See Independent Auditor's Report and Notes to Financial Statements 9 51,789 $ 52,677 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2016 See Independent Auditor's Report and Notes to Financial Statements 10 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 1179500 $ 117,500 $ 1179500 $ - Total Revenues 1179500 117,500 1179500 - EXPENDITURES Current Public Safety 117,500 117,500 117,500 - Total Expenditures 117,500 1171,500 1179500 - Excess of Revenue - - - $ - Net Change in Fund Balance $ - $ - - Fund Balance, Beginning of Year Fund Balance, no of Year $ - See Independent Auditor's Report and Notes to Financial Statements 10 TOWN OF GR 0 TON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31, 2016 ASSETS Total Assets LIABILITIES Total Liabilities Agency Funds See Independent Auditor's Report and Notes to Financial Statements 11 TOWN OF GR 0 TON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2016 NONCURRENT GOVERNMENT ASSETS Land Buildings Machinery and equipment Total Noncurrent Government Assets DEFERRED OUTFLOWS OF RESOURCES Pensions Total Deferred Outflows of Resources NONCURRENT GOVERNMENT LIABILITIES Compensated absences Net pension liability Total Noncurrent Government Liabilities $ 563,000 730,059 2,477,359 $ 397709418 $ 347,202 $ 347,202 $ 110,987 354,346 $ 465,333 DEFERRED INFLOWS OF RESOURCES Pensions $ 42,088 Total Deferred Inflows of Resources $ 42,088 See Independent Auditor's Report and Notes to Financial Statements 12 I TOWN OF GR 0 TON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 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 the state of New York, and are not intended to be a complete presentation in accordance with accounting principles generally accepted in the United States (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 long-term debt and 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 the State of New York (the State), was established in 1817. The Town is governed by Town Law, general municipal laws of the state and various local laws. The Town Board is the legislative body responsible for overall operations. The Town Supervisor serves as Chief Executive Officer and Chief Fiscal Officer. The following basic services are provided: fire protection, highway and street maintenance, recreation, public improvements, planning and zoning and general administration. All governmental activities and functions performed for the Town are its direct responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial reporting entity consists of the following, as defined by GASB Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39, "Determining Whether Certain Organizations are Component Units." • 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. 13 LJ 1 TOWN OF GR 0 TON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 I� Note 1 Summary of Significant Accounting Policies - Continued Financial Reporting Entity - Continued The decision to include a potential component unit in the reporting entity is based on the criteria set forth in GASB Statement No. 14, as amended by GASB Statement No. 39, including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, there were no component units to include in the Town reporting entity. 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. 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: • General Funds - (Parttown and Townwide - (Outside Village)) are the principal operating funds and include all operations not required to be recorded in other funds. Some functions are required to be financed by taxpayers outside the village; therefore, a town with a village must 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 - (Parttown and Townwide - (Outside Village)) were established pursuant to Highway Law, Section 141, and are used to account for revenues and expenditures for highway purposes. Highway Law, Section 277, requires expenditures for repairs and improvements outside the village be financed by the area outside the village. Therefore, a town with a village must maintain two Highway Funds. 14 TOWN OF GR 0 TON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 r�I 1 Note 1 Summary of Significant Accounting Policies - Continued Governmental Funds - Continued o Special District Funds - (Lighting and Fire Protection Districts) Established by the Town to record transactions for operations and maintenance of these activities. o Special Grant Fund - Established by the Town to account for Community Development Block Grants. Fiduciary Fund Types Fiduciary Fund Types are used to account for assets held by the local government in a trustee or custodial capacity. The Town reports the following Fiduciary Fund: • Agency Fund The Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian or agent. Supplemental Schedules Supplemental schedules are used to establish accounting control and accountability for noncurrent governmental assets and noncurrent governmental liabilities. The two schedules are not "funds." They are concerned only with the measurement of financial position and not results of operations. Noncurrent Government Assets Accounts established for capital assets of a government not accounted for through specific proprietary or fiduciary funds. Noncurrent Government Liabilities Accounts established to account for the unmatured general long-term debt and liabilities of a government which is not recorded as a liability under another fund. 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. 15 Note 1 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Summary of Significant Accounting Policies - Continued Basis of Accounting/Measurement Focus - Continued Modified Accrual Basis - All Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues accrued include real property taxes, state and federal aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred. The cost of capital assets is recognized as an expenditure when the asset is received. Exceptions to this general rule are 1) pension costs, 2) expenditures for prepaid expenses and inventory -type items are recognized at the time of purchase, 3) principal and interest on indebtedness are not recognized as an expenditure until due, and 4) compensated absences, such as vacation and sick leave, which vests or accumulates are charged as an expenditure when paid. Supplemental Schedules - Noncurrent government assets are recorded at actual or estimated cost or, in the case of gifts or contributions, at fair market value at the time received. No provision for depreciation is made. Noncurrent government liabilities are recorded at par value of the principal amount. No liability is recorded for interest payable to maturity. 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 51 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. 16 LJ TOWN OF GR 0 TON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 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 the state. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. An annual legal budget is not adopted for the Special Grant Fund, which is one of the Special Revenue Funds. Budgetary controls for the Special Grant Fund are established in accordance with the applicable grant agreements, which cover a period other than the Town's fiscal year. 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. Noncurrent Government Assets - General Fixed assets purchased for general governmental purposes are recorded as expenditures in the Governmental Funds and are capitalized at cost in the noncurrent government assets account group. Contributed fixed assets are recorded at fair market value at the date of contributions. Fixed assets consisting of certain infrastructure type improvements other than buildings; including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized. Such assets normally are immovable and of value only to the Town. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest been capitalized on general fixed assets that are construction in progress. Vacation, Sick Leave, and Compensatory Absences Employees of the Town are granted vacation and sick leave in varying amounts. In the event of termination or 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. 17 I TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note I Summary of Significant Accounting Policies - Continued Vacation, Sick Leave, and Compensatory Absences - Continued 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 Government Liabilities is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes sufficient resources will be made available for the payments of sick leave when such payment becomes due. Further, the Town recognizes a liability for vesting sick leave and other compensated absences with similar characteristics and additional salary related payments as employees earn benefits to the extent it is probable that the Town will compensate the employees for the benefits through cash payments (which may be conditioned on the employees' termination or retirement), rather than being taken as absences due to illness or other contingencies. The liability for compensated absences is calculated at rates in effect as of the Balance Sheet date and is recorded in the Governmental Funds if funded from current financial resources and the noncurrent government liability account group for amounts to be paid from future financial resources. Post Employment Benefits The Town provides post-retirement health care benefits to all employees who retire with at least 20 years of full time service and who are enrolled in the Plan at the time of retirement. During the year, $4,070 was paid on behalf of two retirees. Fund Balance Classifications In accordance with the accounting principles prescribed by the New York State Office of the State Comptroller, the Town classifies governmental fund balances 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. 18 I TOWN OF GROTON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note I Summary of Significant Accounting Policies - Continued Fund Balance Classifications - Continued Constraints are broken into five classifications: nonspendable, restricted, committed, 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. • Committed - Consists of amounts subject to a purpose constraint imposed by formal action of the government's highest level of decision-making authority, the Town Board, prior to the end of the fiscal year, which requires the same level of formal action to remove said constraint. • 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 Fund, 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. 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 non -spendable fund balance, restricted fund balance, committed fund balance, assigned fund balance, and then unassigned fund balance. 19 I TOWN OF GROTON 1 NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note I Summary of Significant Accounting Policies - Continued 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 the State of New York. 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 Highway Townwide Fund. 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 the State or its localities. 20 I TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note 2 Cash and Investments - Continued Collateral is required for demand and time deposits, and 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 the state, its municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the State. Underlying securities must be obligations of the federal government and must have a market value of at least 105% of the cost of the repurchase agreement. Custodial credit risk is the risk that in the event of a bank failure, the Town's deposits may not be returned to it. While the Town does not have a specific policy for custodial credit risk, the State statutes govern the Town's investment policies, as discussed previously in these notes. 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 $1,522,884, including certificates of deposit, are either insured or collateralized with securities held by the pledging financial institution in the Town's name. The Town chooses to disclose investments by specifically identifying each. The Town's investment policy for these investments is also governed by State statutes, in addition to the Town's written policy. Investments are stated at fair value and are categorized as either: 1. Insured or registered, or investments held by the Town or by the Town's agent in the Town's name, or 2. Uninsured and unregistered, with investments held by the financial institution's trust department in the Town's name, or 3. Uninsured and unregistered, with investments held by the financial institution or its trust department, but not in the Town's name. 21 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note 2 Cash and Investments - Continued At December 31, 2016 the Town had the following investments: Note 3 rl Cost General - Townwide and Highway - Townwide Funds $ 130,293 $ Carrying Amount Type of Fair Value Investment Category Certificate of Deposit 1301293 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 2249761 $ 224,761 (6 month) (1) The Town does not typically purchase investments for a long enough duration to cause it to believe it is exposed to any material interest rate risk. The Town does not typically purchase investments denominated in a foreign currency and is not exposed to foreign currency risk. Loans Receivable Loans receivable at December 31, 2016 consisted of the following, which are stated at net realizable value: Description Amount Special Grant Fund 2007 Rehabilitation loans $ 1,281 Special Grant Fund 2014 Rehabilitation loans 284,556 Total $ 2859837 The balance of loans receivable of the 2014 rehabilitation loans represents loans with an original principal of $327,850. Principal payments were received during 2016, resulting in a loans receivable balance of $284,556 at December 31, 2016. The balance of loans receivable of the 2007 rehabilitation loans represents a loan with an original amount of $8,147. Principal payments were received during 2016, resulting in a loans receivable balance of $1,281 at December 31, 2016. 22 1 1 Note 4 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Noncurrent Government Assets (Fixed Assets) Changes in fixed assets for fiscal year ended December 31, 2016 are as follows: Land Buildings Machinery and equipment Total Balance Balance Beginning End of of Year Additions Deletions Year $ 563,000 $ $ $ 5639000 730,059 730,059 25379,259 98,280 2,4779539 $ 396729318 $ 989280$ $ 397709598 Note S Liabilities Accounts payable consists of amounts owed by the Town for various goods and services. Accrued liabilities represent payroll expense accrued at year-end. Unearned revenues represent loans receivable in the Special Grant Fund. Note 6 Pension Plans Plan Description The Town participates in the New York State and Local Employees' Retirement System (ERS). This is a cost-sharing multiple -employer defined benefit retirement system. 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. 23 1 I Note 6 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Pension Plans - Continued 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. 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 2016 $ 1191997 2015 144,036 2014 1441804 The Town's contributions made to the System were equal to 100% of the contributions required for each year. Note 7 Other Postemployment Benefits The Town provides postretirement healthcare benefits to all employees who retire upon or after attaining at least 20 years of full time service and who are enrolled in the Plan at the time of retirement. Currently, there are two retirees who meet those eligibility requirements. The Town pays 25% 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 $185 per month to each retiree to apply toward retirees' premium cost. Post -employment benefit expenses are recognized as costs are incurred. During the fiscal year, expenses of $4,070 were recognized for post retirement health care. Note 8 Compensated Absences The Town has compensated absences outstanding as of December 31, 2016 in the amount of $114,243. Compensated absences represents the value of the earned and unused portion of accumulated sick leave. 24 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Note 9 Fund Balance Detail At December 31, 2016, restricted and assigned fund balance was as follows: Funds General Townwide $ General Parttown Highway Townwide Highway Parttown Lighting District Fire Protection District Special Grant Totals $ 801253 801253 109307 $ 4109190 $ 80,253 $ 500,750 $ 507,200 $ 5379748 $ 11,0449948 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, 2016 are as follows: Beginning Interest Released/ Ending Reserved Fund Balance Balance Additions Earned Appropriated Balance Unemployment insurance reserve $ 109286 $ $ 21 $ $ 101307 Capital reserve 2249226 1851964 4109190 Total $ 2349512 $ 1859964 $ 21 $ - $ 4209497 Note 10 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 omissions; 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. 25 Restricted Assigned Unemployment Appropriated Insurance Capital Fund Total for Next Fund Total Reserve Reserve Balance Restricted Year's Budget Balance Assigned 10,307 $ 1301293 $ $ 1409600 $ 1601000 $ 19265 $ 1611265 491800 4900 279,897 279,897 250,000 154,719 4041719 471400 3299087 3769487 521677 52,677 801253 801253 109307 $ 4109190 $ 80,253 $ 500,750 $ 507,200 $ 5379748 $ 11,0449948 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, 2016 are as follows: Beginning Interest Released/ Ending Reserved Fund Balance Balance Additions Earned Appropriated Balance Unemployment insurance reserve $ 109286 $ $ 21 $ $ 101307 Capital reserve 2249226 1851964 4109190 Total $ 2349512 $ 1859964 $ 21 $ - $ 4209497 Note 10 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 omissions; 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. 25 What Does It Mean to Have a Higher Standard? We believe the greatest successes are not born from a single event. They are the result of hard work, planning, tenacity, passion and focus. They grow without compromising - heralding honor, respect and admiration through the business world and throughout the community. They set a higher standard for all. It is this standard that we bring to every client and every aspect of their business. Through our partnership and leadership we aim to help these clients continue to achieve great successes that can be measured in more than just dollars. insero&c..o,c Certified Public Accountants I Bl.tsiness Advisors