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Home My WebLink About2013 Town AuditTOWN OF GROTON Groton, New York FINANCIAL REPORT December 31, 2013 RECEIVED - FILED OFFi'CE OF THE TOWN CLERK 101 CONGER BLVD., GROTON, NY DATE ti E AM(FM) 101 TOWN CLERK TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Independent Auditor's Report .. - Financial Statements Balance Sheet - Regulatory Basis - Governmental Funds........................................................................ 3-3a Statement of Revenues, Expenditures, and Changes in Fund Balances - Regulatory Basis - Governmental Funds..................................................................... 4-4a Budgetary Comparison Schedule - Regulatory Basis - General Townwide Fund .................................... 5 Budgetary Comparison Schedule - Regulatory Basis - General Fund Parttown...................................... 6 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayTownwide Fund................................................................................................... 7 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayFund Parttown............................................................................................................................ 8 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - LightingDistrict Fund................................................................................................................................. 9 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - FireProtection District Fund..................................................................................................................... 10 Statement of Fiduciary Net Assets - Regulatory Basis - Fiduciary Funds ................................................ 11 Schedule of Noncurrent Assets and Liabilities........................................................................................... 12 Notes to Financial Statements.............................................................................................................. 13-23 John H. Dietershagen, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie Conley Jordan, C.P.A. Patrick S. Jordan, C.P.A. Duane R. Shoen, C.P.A. Lesley L. Horner, C.P.A. D. Leslie Spurgin, C.P.A. Frederick J. Ciaschi, C.P.A. To the Town Board Town of Groton Groton, New York Ciaschi . Dietershagen . Little • Mickelson & Company, LLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the Town of Groton, (the Town), which comprise the Town's basic financial statements as listed in the table of contents as of and for the year ended December 31, 2013, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the Office of the State of New York Comptroller as applied to governmental units. Management is also responsible for 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 error or fraud. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. CORTLAND -1 - ITHACA WATKINS GLEN 39 Church Street 401 East State Street - Suite 500 108 West Fourth Street Cortland, New York 13045 Ithaca, New York 14850 Watkins Glen, New York 14891 607-753-7439 607-272-4444 607-535-4443 fax 607-753-7874 fax 607-273-8372 fax 607-535-6220 www.cdlm.com Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 1, the financial statements are prepared by the Town, on the basis of the financial reporting provisions of the Office of Comptroller of the State of New York as applied to governmental units, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Office of Comptroller of the State of New York as applied to governmental units. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Town as of December 31, 2013, and the respective changes in financial position for the year then ended. Opinion on Requlatory Basis of Accounting In our opinion, the financial statements referred to above present fairly, in all material respects, the regulatory basis financial; position of each fund of the Town of Groton, as of December 31, 2013, and the regulatory basis revenues, expenses, and changes in fund balances for the year then ended, in accordance with the financial reporting provisions of the Office of Comptroller of the State of New York as applied to governmental units, as described in Note 1. 4,4, -4 IL r October 9, 2014 Ithaca, New York -2- TOWN OF GROTON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2013 ASSETS Assets: Cash and cash equivalents - Unrestricted Cash and cash equivalents - Restricted Investments - Unrestricted Investments - Restricted Loans receivable, net of allowance Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Other liabilities Unearned revenues Total Liabilities Fund Balances: Restricted Assigned Unassigned Total Fund Balances Total Liabilities and Fund Balances General General Townwide Parttown Fund Fund $ 4401043 $ 85,185 10,246 5,050 60,000 $ 510,289 $ 85,185 $ 7,214 $ 4,739 1$21 311 51036 80,135 131771 5,050 101246 2121526 45,000 2731746 35,135 4961518 80,135 $ 510,289 $ 85;185 See Independent Auditor's Report and Notes to Financial Statements -3- 691240 287347 336,364 448,769 1687234 785,133 1681234 $ 854,373 $ 196,581 $ 360 50,222 50,222 50,582 $ -3a- Special Total Special Revenue Funds Highway Highway Lighting Fire Protection Townwide Parttown District District Fund Fund Fund Fund $ 4681009 $ 196,581 $ 50,582 $ $ 55,120 50,000 281,244 $ 854,373 $ 1967581 $ 50,582 $ -0- $ $ 55,390 $ 28,347 $ 360 $ $ 13,850 691240 287347 336,364 448,769 1687234 785,133 1681234 $ 854,373 $ 196,581 $ 360 50,222 50,222 50,582 $ -3a- Special Total Grant Governmental Fund Funds 837848 $ 1,324,248 65,366 110,000 281,244 21478 2,478 867326 $ 1,783,336 $ 96,050 15,682 5,036 21478 2,478 2,478 119,246 83,848 430,458 924,751 308,881 831848 1,664, 090 86, 326 $ 17783,336 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES REGULATORY BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2013 See Independent Auditor's Report and Notes to Financial Statements -4- General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 398,503 $ 1351474 Real property tax items 8,607 Nonproperty tax items 681099 Departmental income 27810 2,920 Intergovernmental charges Use of money and property 17507 328 Licenses and permits 167194 8,927 Fines and forfeitures 17,453 Sale of property and compensation for loss Miscellaneous local sources 3,123 1,570 State sources 751023 Total Revenues 5237220 217,318 EXPENDITURES Current: General governmental support 338,589 250 Public safety 44,250 Public health 101,000 Transportation 621832 Economic assistance and opportunity 137200 252 Culture and recreation 107595 58,837 Home and community services 17296 50,709 Employee benefits 1187045 17,246 Total Expenditures 5887807 228,294 Excess of (Expenditures) Revenues (65,587) (10,976) OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- Net Changes in Fund Balances (65,587) (10,976) Fund Balances, Beginning of Year 5627105 91,111 Fund Balances, End of Year $ 496,518 $ 80,135 See Independent Auditor's Report and Notes to Financial Statements -4- Special Revenue Funds Highway Highway Lighting Fire Protection Special Townwide Parttown District District Grant Fund Fund Fund Fund Fund $ 589,800 $ 249,250 $ 6,000 $ 196,107 $ 1371144 131,817 $ 7857133 $ 168,234 $ 76,511 27656 530 114 158,269 6687967 539,866 6,114 6127449 4621165 47017 1227997 46,611 735,446 508,776 4,017 (66,479) 31,090 2,097 -0- -0- -0- (66,479) 31,090 2,097 8517612 1371144 48,125 $ 7857133 $ 168,234 $ 50,222 $ -4a- 196,107 62 62 Total Governmental Funds $ 1,575,134 8,607 199,916 5,730 76,511 5,197 25,121 17,453 -0- 4,693 233,292 2,151, 654 338,839 196,107 240,357 101,000 1,141,463 13,452 69,432 52,005 304,899 196,107 -0- 212611447 -0- 62 (109, 793) -0- -0- -0- -0- 62 (109, 793) -0- 837786 11773,883 -0- $ 83,848 $ 1,664,090 TOWN OF GROTON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31. 2013 EXPENDITURES Current: General governmental support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenues and Other Financing Sources Appropriated Fund Balance Net Change in Fund Balance $ Fund Balance, Beginning of Year Fund Balance, End of Year Fay. (U nfay. ) Encumbrances Variance $ -0- 3,107 1,210 (1,500) (1,543) 2,194 (2,547) -0- 3,123 21,023 -0- 25,067 410,179 Original Final 2,526 59,643 Budget Budget Actual REVENUES 7,255 200 200 Real property taxes $ 398,503 $ 398,503 $ 398,503 $ Real property tax items 5,500 5,500 8,607 Departmental income 1,600 1,600 2,810 Intergovernmental charges 1,500 1,500 10,595 Use of money and property 3,050 3,050 1,507 Licenses and permits 14,000 14,000 16,194 Fines and forfeitures 20,000 20,000 17,453 Sale of property and compensation for loss 678,153 588,807 2,526 Miscellaneous local sources (180,000) (180,000) 3,123 State sources 54,000 54,000 75,023 Total Revenues 498.153 498,153 523,220 EXPENDITURES Current: General governmental support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenues and Other Financing Sources Appropriated Fund Balance Net Change in Fund Balance $ Fund Balance, Beginning of Year Fund Balance, End of Year Fay. (U nfay. ) Encumbrances Variance $ -0- 3,107 1,210 (1,500) (1,543) 2,194 (2,547) -0- 3,123 21,023 -0- 25,067 410,179 400,758 338,589 2,526 59,643 51,355 51,505 44,250 7,255 200 200 200 70,544 70,544 62,832 7,712 13,450 13,450 13,200 250 9,100 13,725 10,595 3,130 4,000 4,000 1,296 2,704 119,325 123,971 118,045 5,926 678,153 678,153 588,807 2,526 86,820 (180,000) (180,000) (65,587) (2,526) 111.887 -0- -0- -0- -0- -0- (180,000) (180,000) (65,587) $ (2,526) $ 111,887 180,000 180,000 -0- $ -0- 562,105 $ 496,518 See Independent Auditor's Report and Notes to Financial Statements -5- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2013 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 urrent:General governmental support Public health Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Total Expenditures Excess of (Expenditures) OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenues and Other Financing Sources 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 138,939 $ 138,939 $ 135,474 $ (3,465) 55,500 551500 68,099 12,599 1,300 1,300 2,920 1,620 500 500 328 (172) 5,050 5,050 8,927 3,877 (40, 000) 720 1,570 850 2017289 202,009 217,318 15,309 5,175 1,625 250 1,375 101,000 101,000 101,000 -0- 250 250 252 (2) 62,400 65,300 58,837 6,463 56,096 56,466 50,709 5,757 16,368 17,368 17,246 122 241,289 242,009 228,294 13,715 (40, 000) (40, 000) (10, 976) 29,024 -0- -0- -0- -0- (40,000) (40, 000) (10, 976) $ 29,024 40,000 40,000 -0- $ -0- 91,111 $ 80,135 See Independent Auditor's Report and Notes to Financial Statements -6- TOWN OF GROTON BUGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31. 2013 See Independent Auditor's Report and Notes to Financial Statements -7- Fay. (Unfay.) Variance -0- 511 (1,844) -0- -0- (1,333) 35,151 6,703 41,854 40,521 M 40,521 Original Final Budget Budget Actual REVENUES Real property taxes $ 589,800 $ 589,800 $ 589,800 $ Intergovernmental charges 76,000 76,000 76,511 Use of money and property 4,500 47500 2,656 Sale of property and compensation for loss Miscellaneous local sources Total Revenues 670,300 670,300 668,967 EXPENDITURES Current: Transportation 6501600 6477600 612,449 Employee benefits 126,700 1297700 122,997 Total Expenditures 777,300 7777300 7351446 Excess of (Expenditures) (107,000) (107,000) (66,479) OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) -0- -0- -0- Excess of (Expenditures) and Other Financing (Uses) Over Revenues and Other Financing Sources (107,000) (107,000) (66,479) $ Appropriated Fund Balances 107,000 107,000 Appropriated Reserves Net Change in Fund Balance $ -0- $ -0- Fund Balance, Beginning of Year 851,612 Fund Balance, End of Year $ 785,133 See Independent Auditor's Report and Notes to Financial Statements -7- Fay. (Unfay.) Variance -0- 511 (1,844) -0- -0- (1,333) 35,151 6,703 41,854 40,521 M 40,521 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Real property taxes Nonproperty tax items Use of money and property State sources Total Revenues EXPENDITURES Current: Transportation Employee benefits Total Expenditures Excess of (Expenditures) Revenues OTHER FINANCING SOURCES (USESR Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenues and Other Financing Sources Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Budget Budget Actual Variance $ 249,250 $ 2491250 $ 249,250 $ -0- 93,000 93,000 131,817 38,817 17200 1,200 530 (670) 130,197 1581391 158,269 (122) 4731647 501,841 5397866 38,025 463,197 491,291 462,165 29,126 48,450 487550 46,611 17939 511,647 5397841 508,776 31,065 (38,000) (38,000) 31,090 69,090 -0- -0- -0- -0- (38,000) (38,000) 31,090 $ 69,090 38,000 38,000 $ -0- $ -0- 137,144 $ 168,234 See Independent Auditor's Report and Notes to Financial Statements -8- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Real property taxes Use of money and property Total Revenues EXPENDITURES Current: Transportation Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Bud Bud Budec,�t Actual $ 6,000 $ 6,000 $ 6,000 $ 114 6, 000 67000 61114 Fay. (Unfay.) Variance -0- 114 114 61000 67000 41017 17983 6,000 6,000 42017 11983 -0- -0- 2,097 2,097 -0- -0- -0- -0- -0- -0- 2,097 $ 21097 $ -0- $ -0- 2,097 48,125 $ 501222 See Independent Auditor's Report and Notes to Financial Statements -9- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUES Real property taxes Total Revenues EXPENDITURES Current: Public Safety Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USESI Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Bud Budget Actual Variance $ 1967107 $ 1967107 $ 1967107 $ -0- 1967107 1967107 1967107 -0- 1961107 1967107 1967107 -0- 196,107 196,107 1967107 -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- $ -0- -0- $ -0- -0- -0- -0- See Independent Auditor's Report and Notes to Financial Statements -10- TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31, 2013 Agency Funds ASSETS Total Assets $ -0- LIABILITIES Total Liabilities $ -0- See Independent Auditor's Report and Notes to Financial Statements -11 - TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2013 NONCURRENT GOVERNMENT ASSETS Land $ 563,000 Buildings 7307059 Machinery and equipment 21196,427 Total Noncurrent Government Assets $ 31,489,486 NONCURRENT GOVERNMENT LIABILITIES Compensated absences $ 117,684 Total Noncurrent Government Liabilities $ 117,684 See Independent Auditor's Report and Notes to Financial Statements -12- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 Note 1 - Summary of Significant Accountinq Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the requirements of the Office of the New York State Comptroller as applied to governmental units. The basis of accounting differs from generally accepted accounting principles primarily because the Town has not adopted Governmental Accounting Standards Board (GASB) Statement No. 34, "Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments" or GASB Statement No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions." The Governmental Accounting Standards Board is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The amount of these departures has not been determined. The Town's more significant accounting policies are described below. A. Financial Renortinq 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." 1. The primary government, which is the Town; 2. Organizations for which the primary government is financially accountable, and, 3. Other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The decision to include a potential component unit in the reporting entity is based on the criteria set forth in GASB Statement No. 14, as amended by GASB 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. B. Fund Accountinq The Town uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self -balancing set of accounts. -13- ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 The Town records its transactions in the fund types described below: 1. Fund Cateqories a. Governmental Fund Tvpes The Governmental Fund types are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Fund types. The measurement focus of the Governmental Fund types is based upon determination of financial position and changes in financial position. The following are the Town's Governmental Fund types: i. General Funds The 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. ii. Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources legally restricted to expenditure for specified purposes. The following Special Revenue Funds are utilized: a) Highwav Funds The 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. b) Special District Funds The Special District Funds (Lighting and Fire Protection District) have been established by the Town to record transactions for operations and maintenance of these activities. c) Special Grant Fund The Special Grant Fund has been established by the Town to account for Community Development Block Grants. b. Fiduciary Fund Tvpes Fiduciary Fund Types are used to account for assets held by the local government in a trustee or custodial capacity. The Town reports the following Fiduciary Fund- i. Trust and Aaencv Fund The Trust and Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian or agent. -14- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 c. Account Groups Account groups are used to establish accounting control and accountability for noncurrent governmental assets and noncurrent governmental liabilities. The two account groups are not "funds." They are concerned only with the measurement of financial position and not results of operations. i. Noncurrent Government Asset Group The noncurrent government asset group accounts for land, buildings, improvements other than buildings and equipment utilized for general governmental purposes. ii. Noncurrent Government Liabilitv Group The noncurrent government liability group accounts for all noncurrent liabilities of the Town. C. Basis of Accountinq/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - All Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues 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. Account Groups - 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. D. Propertv Taxes Town real property taxes are levied annually on January 1, and become a lien on that date. Taxes are collected during the period 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. -15- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 E. Budqets and Budqetary Accountinq 1. Budqet Policies a. No later than October 5, a tentative budget is submitted by the budget officer for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the Town Board adopts the budget. c. All modifications of the budget must be approved by the Town Board. d. Appropriations lapse at year-end. 2. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the Governmental Funds. Encumbrances are reported as reservations of fund balances, as they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. Budqetary Basis of Accountinq Budgets are adopted annually on a basis consistent with requirements of the State. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. An annual legal budget is not adopted for the Special Grant Fund, which is one of the Special Revenue Funds. Budgetary controls for the Special Grant Fund are established in accordance with the applicable grant agreements, which cover a period other than the Town's fiscal year. F. 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. G. 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. -16- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 H. 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 upon retirement, an employee is not entitled to payment for accumulated vacation time. However, sick leave can be accrued up to 840 hours which is payable upon termination or retirement. The value of unused employee sick leave at year-end is recorded in noncurrent government liability account group. Payment of sick leave recorded in the noncurrent government liability account group is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes 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. I. Fund Balance Classifications In accordance with the regulatory basis of accounting, The Town follows GASB Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions." Statement No. 54 changes the terminology and classification of fund balance to reflect spending constraints on resources, rather than availability for appropriation. This approach is intended to provide users more consistent and understandable information about a fund's net resources. Constraints are broken into five classifications: nonspendable, restricted, 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. -17- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 At December 31, 2013 the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category General - Townwide and Certificate of Deposit Highway - Townwide Funds $ 110,000 $ 1101000 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 2811244$ 281,244 (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. 2. Loans Receivable Loans receivable at December 31, 2013 consisted of the following, which are stated at net realizable value: Description Amount Special Grant Fund Rehabilitation loans $ 2,478 Special Grant Fund Allowance for uncollectible loans -0- Total Rehabilitation loans $ 2,478 The balance of loans receivable represents a loan with an original amount of $8,147. The loan was made in 2007; no principal payments were made during 2013. 3. Noncurrent Government Assets (Fixed Assets) The changes in fixed assets for the fiscal year ended December 31, 2013 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 $ $ $ 563,000 Buildings 730,059 730,059 Machinery and equipment 2,1637014 401022 6,609 2,196,427 Total $ 31456,073 $ 40,022$ 6,609 $ 3,489,486 B. Liabilities Accounts payable consists of amounts owed by the Town for various goods and services. Accrued liabilities represent payroll expense accrued at year-end. Deferred revenues represent loans receivable in the Special Grant Fund. -20- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 C. Pension Plans 1. 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 offers a wide range of plans and benefits, which are related to years of service and final average salary, vesting of retirement benefits, death and disability. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of its funds. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. 2. Fundinq Policv The System is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Under the authority of the New York State Retirement and Social Security Law, the Comptroller shall certify annually the rates expressed as proportions or payroll or 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 Town's contributions made to the System were equal to 100% of the contributions required for each year. The required contributions for the current year and two preceding years were: ERS 2013 $ 121,714 2012 937473 2011 63,048 On July 30, 2004, Chapter 260 of the Laws of 2004 of the State of New York was enacted which allows local employers to bond or amortize a portion of their retirement bill for up to ten years in accordance with a specified schedule. This law requires participating employers to make payments on a current basis, while bonding or amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 2005 through 2007. On August 11, 2010, New York State established the Employer Contribution Stabilization Program, which provides participating local government employers an option to amortize the eligible portion of their annual required contributions to the New York State and Local Retirement System. The Town has opted not to amortize under either law. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 D. 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 four retirees who meet those eligibility requirements. The Town pays 25% of the total premium of the Town for medical insurance for retirees until age 65. If retirees attain insurance through a plan not established by the Town, the Town will pay up to $110 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 $5,280 were recognized for post retirement health care. E. Noncurrent Government Liabilities The Town has compensated absences outstanding as of December 31, 2013 in the amount of $117,684. Compensated absences represent the value earned and unused portion of accumulated sick leave. F. Fund Balance Detail At December 31, 2013, restricted and assigned fund balance was as follows: Restricted Assigned Appropriated Unemployment for Next Insurance Capital Fund Year's Fund Total Reserve Reserve Balance Budget Balance Assigned Funds General Townwide $ 107246 $ $ $ 210,000 $ 2,526 $ 2101000 General Parttown 451000 45,000 Highway Townwide 336,364 2007000 248,769 448,769 Highway Parttown 431000 125,234 168,234 Lighting District 50,222 50,222 Fire Protection District -0- Special Grant 831848 -0- Totals $ 10,246 $ 3367364 $ 83,848 $ 498,000 $ 426,751 $ 924,751 G. 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, 2013 are as follows.- Beginning ollows:Beginning Interest Released/ Ending Reserved Fund Balance Balance Additions Earned Appropriated Balance Unemployment insurance reserve $ 10,224$ $ 22 $ $ 10,246 Capital reserve 280,402 55,000 962 336,364 Total Reserved Fund Balance $ 290,626 $ 55,000 $ 984 $ -0- $ 346,610 -22- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2013 Note 3 - Commitments and Contingencies A. Risk Financinq and Related Insurance 1. 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. -23-