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Home My WebLink About2014 Town Audit' TOWN OF GROTON Groton, New York ' FINANCIAL REPORT December 31, 2014 ' R8C-a1VE0 - PI1L3D OFFICE OF THE TOWN CLERK 101 CONGER BLVD., GROTCIN, NY DATECAL' TIME al �``�L TOWN CLfiAX TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31. 2014 IndependentAuditor's Report............................................................................................................................ 1-2 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 .................................... Budgetary Comparison Schedule - Regulatory Basis - General Fund Parttown...................................... 5 6 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayTownwide Fund................................................................................................... Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - 7 HighwayFund Parttown............................................................................................................................ 8 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - LightingDistrict Fund................................................................................................................................. Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - 9 Fire Protection District Fund..................................................................................................................... 10 Statement of Fiduciary Net Assets - Regulatory Basis - Fiduciary Funds ................................................ 11 Schedule of Noncurrent Assets and Liabilities........................................................................................... 12 Notesto Financial Statements.............................................................................................................. 13-23 11 11 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, 2014, and the related notes to the financial statements. Manaqement'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 39 Church Street Cortland, New York 13045 607-753-7439 fax 607-753-7874 -1- ITHACA 401 East State Street — Suite 500 Ithaca, New York 14850 607-272-4444 fax 607-273-8372 www.cdlm.com WATKINS GLEN 2 North Franklin Street, Suite 330 Watkins Glen, New York 14891 607-535-4443 fax 607-535-6220 1 'Li 1 Basis for Adverse Opinion on U.S. Generally Accepted Accountinq 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 Accountinq 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, 2014, and the respective changes in financial position for the year then ended. Opinion on Regulatory Basis of Accountinq. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each fund of the Town of Groton, as of December 31, 2014, and the respective changes in financial position and, where applicable, cash flows and budgetary results, for the year then ended, on the regulatory basis of accounting and budget laws of New York State as described in Note 1. c October 6, 2015 Ithaca, New York Wa TOWN OF GROTON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2014 ASSETS Assets: Cash and cash equivalents - Unrestricted Cash and cash equivalents - Restricted Investments - Unrestricted Investments - Restricted Due from other governments 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 $ 3581263 $ 927473 10, 266 60, 000 41000 165000 $ 432,529 $ 108,473 $ 27, 537 $ 415 11823 406 29,360 821 10,266 2337000 457000 1597903 627652 4031169 107,652 $ 432, 529 $ 1085473 See Independent Auditor's Report and Notes to Financial Statements -3- 1 1 1 1 1 1 34, 878 $ 8551061 $ 2071178 $ 51,919 $ $ 827693 $ 3,349 $ 391 $ 13,185 95,878 3,349 391 385,412 3731771 2037829 511528 759,183 203,829 51,528 $ 855,061 $ 2071178 $ 515919 $ -3a- 54,878 27304 21304 -0- $ 81,304 $ 11736,464 $ $ 114, 385 15,414 -0- 21304 21304 0- 21304 132,103 79,000 474,678 907,128 222,555 -0- 79,000 1,604, 361 -0- $ 81, 304 $ 177361464 Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 4691649 $ 1727300 $ 51, 919 $ $ $ 1,144, 604 53, 323 797000 142, 589 605000 332,089 332,089 34, 878 $ 8551061 $ 2071178 $ 51,919 $ $ 827693 $ 3,349 $ 391 $ 13,185 95,878 3,349 391 385,412 3731771 2037829 511528 759,183 203,829 51,528 $ 855,061 $ 2071178 $ 515919 $ -3a- 54,878 27304 21304 -0- $ 81,304 $ 11736,464 $ $ 114, 385 15,414 -0- 21304 21304 0- 21304 132,103 79,000 474,678 907,128 222,555 -0- 79,000 1,604, 361 -0- $ 81, 304 $ 177361464 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES REGULATORY BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2014 See Independent Auditor's Report and Notes to Financial Statements -4- General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 4037002 $ 138,760 Real property tax items 93994 Nonproperty tax items 87000 94,036 Departmental income 2,395 27462 Intergovernmental charges Use of money and property 11220 264 Licenses and permits 157139 67291 Fines and forfeitures 20,490 Sale of property and compensation for loss 261 Miscellaneous local sources 33424 14,943 State sources 641218 Total Revenues 528,143 256,756 EXPENDITURES Current: General governmental support 3507061 250 Public safety 45,707 Public health 1067000 Transportation 65,367 Economic assistance and opportunity 13,200 Culture and recreation 67213 517462 Home and community services 762 517897 Employee benefits 1401182 197630 Total Expenditures 6217492 2297239 Excess of (Expenditures) Revenues (93,349) 277517 OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) -0- -0- Net Changes in Fund Balances (93,349) 27,517 Fund Balances, Beginning of Year 496,518 80,135 Fund Balances, End of Year $ 403,169 $ 1077652 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 $ 593, 918 $ 254,350 $ 51600 $ 1105000 $ $ 51,528 $ 158772 18C 148,432 2,406 515 104 612 4,689 28,000 173,308 7497445 614,945 53704 646, 065 523, 546 41398 1291330 551804 775,395 579,350 43398 (25, 950) 353595 11306 -0- -0- -0- (25,950) 35,595 17306 785,133 168,234 50,222 $ 7597183 $ 203,829 $ 51,528 $ - 4a - 110, 000 242 Total Governmental Funds $ 115053630 9,994 260,808 5,037 148,432 4,571 21,430 20,490 261 51,056 237,526 2,265,235 350,311 110,000 155,707 1061000 1,239,376 13,200 57,675 51090 577749 3447946 110,000 51090 233241964 -0- (4,848) (59, 729) -0- -0- -0- -0- (4,848) (59,729) -0- 83,848 1,664,090 -0- $ 79,000 $ 1,604,361 i 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2014 REVENUES Real property taxes Real property tax items Nonproperty tax items Departmental income Intergovernmental charges 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 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 Revenue and Other Financing Sources Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final 350,061 Budget Budget Actual $ 403,002 $ 403,002 $ 403,002 $ 6,700 6,700 9,994 8,000 1,600 1,600 2,395 1,500 1,500 13,450 2,050 2,050 1,220 14,000 14,000 15,139 20,000 20,000 20,490 4,000 4,000 261 3,238 3,424 59,000 59,000 64,218 507,852 507,852 528,143 Fay. (Unfay.) Encumbrances Variance $ -0- 3,294 8,000 795 (1,500) (830) 1,139 490 261 3,424 5,218 -0- 20,291 429,472 421,372 350,061 2,526 68,785 51,070 51,820 45,707 6,113 200 200 200 72,410 72,410 65,367 7,043 13,450 13,450 13,200 250 9,325 9,325 6,213 3,112 4,000 4,000 762 3,238 137,925 145,275 140,182 5,093 717,852 717,852 621,492 2,526 93,834 (210,000) (210,000) (93,349) (2,526) 114,125 -0- -0- -0- -0- -0- (210,000) (210,000) (93,349) $ (2,526) $ 114,125 210,000 210,000 -0- $ -0- 496,518 $ 403,169 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, 2014 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) Revenue OTHER FINANCING SOURCES (USES1 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 250 Fay. (Unfay.) Budget Budget Actual Variance $ 138,760 $ 138,760 $ 138,760 $ -0- 60,500 60,500 94,036 33,536 1,500 1,500 2,462 962 400 400 264 (136) 6,050 6,050 6,291 241 700 700 14,943 14,243 207,910 207,910 256,756 48,846 5,000 3,500 250 3,250 106,000 106,000 106,000 -0- 250 250 250 65,100 65,600 51,462 14,138 56,660 57,660 51,897 5,763 19,900 19,900 19,630 270 252,910 252,910 229,239 23,671 (45,000) (45,000) 27,517 72,517 -0- -0- -0- -0- (45,000) (45,000) 27,517 $ 72,517 45,000 45,000 $ -0- $ -0- 80,135 $ 107,652 See Independent Auditor's Report and Notes to Financial Statements -6- 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2014 REVENUES Real property taxes Intergovernmental charges Use of money and property Sale of property and compensation for loss Miscellaneous local sources Total Revenues EXPENDITURES Current: Transportation Employee benefits Total Expenditures Excess of (Expenditures) OTHER FINANCING SOURCES (USES1 Total Other Financing Sources (Uses) Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources Appropriated Fund Balances Appropriated Reserves Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final 646,065 Budget Budget Actual $ 593,918 $ 593,918 $ 593,918 $ 148,432 148,432 148,432 3,250 3,250 2,406 126,050 -0- 4,689 745,600 745,600 749,445 Fay. (U nfay. ) Variance -0- -0- (844) -0- 4,689 3,845 748,900 748,900 646,065 102,835 148,700 148,700 129,330 19,370 897,600 897,600 775,395 122,205 (152, 000) (152, 000) (25, 950) 126,050 -0- -0- -0- -0- 0-(152,000) (152,000) (152, 000) (25, 950) $ 126,050 152,000 152,000 $ -0- $ -0- 785,133 $ 759,183 See Independent Auditor's Report and Notes to Financial Statements -7- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2014 See Independent Auditor's Report and Notes to Financial Statements -8- Original Final Fay. (Unfay.) Budeco Budget Actual Variance REVENUES Real property taxes $ 254,350 $ 254,350 $ 254,350 $ -0- Nonproperty tax items 105,000 105,000 158,772 53,772 Use of money and property 1,000 1,000 515 (485) Miscellaneous local sources 28,000 28,000 State sources 158,391 173,430 173,308 (122) Total Revenues 518,741 533,780 614,945 81,165 EXPENDITURES Current: Transportation 505,891 520,580 523,546 (2,966) Employee benefits 55,850 56,200 55,804 396 Total Expenditures 561,741 5761780 579,350 (2,570) Excess of (Expenditures) Revenue (43,000) (43,000) 35,595 78,595 OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of (Expenditures) and Other Financing (Uses) Over Revenue and Other Financing Sources (43,000) (43,000) 35,595 $ 78,595 Appropriated Fund Balances 43,000 43,000 Net Change in Fund Balance $ -0- $ -0- Fund Balance, Beginning of Year 168,234 Fund Balance, End of Year $ 203,829 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, 2014 REVENUES Real property taxes Use of money and property Total Revenues EXPENDITURES Current: Transportation Total Expenditures Excess of Revenue OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenue 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 Actual $ 51600 $ 5,600 $ 5,600 $ 104 5,600 5,600 51704 Fay. (Unfay.) Variance -0- 104 104 5,600 5,600 4,398 1,202 51600 51600 4,398 1,202 -0- -0- 1,306 1,306 -0- -0- -0- -0- -0- -0- 11306 $ 1,306 $ -0- $ -0- 1,306 50,222 $ 51,528 See Independent Auditor's Report and Notes to Financial Statements -9- 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2014 REVENUES Real property taxes Total Revenues EXPENDITURES Current: Public Safety Total Expenditures Excess of Revenue OTHER FINANCING SOURCES (USESI Total Other Financing Sources (Uses) Excess of Revenue 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.) Budget Budget Actual Variance $ 1101000 $ 1101000 $ 110,000 $ -0- 110,000 1101000 1101000 -0- 1101000 110,000 1101000 -0- 110, 000 110, 000 110,000 -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- Total Assets Total Liabilities 1 1 1 1 1 1 TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31, 2014 ASSETS LIABILITIES See Independent Auditor's Report and Notes to Financial Statements -11- Agency Funds 1 1 1 1 1 1 1 1 f TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2014 NONCURRENT GOVERNMENT ASSETS Land $ 563,000 Buildings 7305059 Machinery and equipment 2,2351548 Total Noncurrent Government Assets $ 3,528,607 NONCURRENT GOVERNMENT LIABILITIES Compensated absences $ 104,539 Total Noncurrent Government Liabilities $ 104,539 See Independent Auditor's Report and Notes to Financial Statements -12- 1 1 1 LJ TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 Note 1 - Summary of Siqnificant 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 Reportinq 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- C' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 The Town records its transactions in the fund types described below: 1. Fund Cateqories a. Governmental Fund Types The Governmental Fund types are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Fund types. The measurement focus of the Governmental Fund types is based upon determination of financial position and changes in financial position. The following are the Town's Governmental Fund types: 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) Highway 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. Aqencv Fund The Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian or agent. -14- i'� 1 1 Ll i1 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 c. 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. 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. 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. 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- F1 L ] F Ll U TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 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- i TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 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 960 hours which is payable upon termination or retirement. The value of unused employee sick leave at year-end is recorded in the Schedule of Noncurrent Government Liabilities. Payment of sick leave recorded in the Schedule of Noncurrent 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. I. 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. 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- I' I� L _1. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 • 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. J. Leqallv 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. 1J, -18- L� F D TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 • 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 - Detail Notes on All Funds A. Assets 1. 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 FDIC -insured commercial banks or trust companies located within the State. The Supervisor is authorized to use demand accounts and certificates of deposit for operating purposes. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements and obligations of the State or its localities. Collateral is required for demand and time deposits, and certificates of deposit not covered by FDIC. 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 $1,691,564, 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: a. Insured or registered, or investments held by the Town or by the Town's agent in the Town's name, or b. Uninsured and unregistered, with investments held by the financial institution's trust department in the Town's name, or c. Uninsured and unregistered, with investments held by the financial institution or its trust department, but not in the Town's name. -19- 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. Unearned revenues represent loans receivable in the Special Grant Fund. TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 At December 31, 2014 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 $ 1105000 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 282,089 $ 282,089 (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, 2014 consisted of the following, which is stated at net realizable value: Description Amount Special Grant Fund Rehabilitation loans $ 2,304 Special Grant Fund Allowance for uncollectible loans -0- Total Rehabilitation loans $ 2,304 The balance of loans receivable represents a loan with an original amount of $8,147. The loan was made in 2007; principal payments of $174 were made during 2014. 3. Noncurrent Government Assets (Fixed Assets) Changes in fixed assets for fiscal year ended December 31, 2014 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 $ $ $ 563,000 Buildings 7301059 730,059 Machinery and equipment 211963427 39,121 2,2351548 Total $ 3,4897486 $ 39,121 $ -0- $ 3,528,607 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. Unearned revenues represent loans receivable in the Special Grant Fund. -20- 71 L -J TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 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 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. 2. 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: P, `l -21- ERS 2014 $ 1441804 2013 121,714 2012 93,473 The Town's contributions made to the System were equal to 100% of the contributions required for each year. P, `l -21- ' TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 1 1 1 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 $3,520 were recognized for post retirement health care. E. Noncurrent Government Liabilities The Town has compensated absences outstanding as of December 31, 2014 in the amount of $104,539. Compensated absences represent the value earned and unused portion of accumulated sick leave. F. Fund Balance Detail At December 31, 2014, 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 $ 10)266$ $ $ 233,000 $ $ 233,000 General Parttown 451000 45,000 Highway Townwide 3851412 2237000 1501771 3739771 Highway Parttown 45, 000 158,829 203,829 Lighting District Fire Protection District Special Grant Totals $ 79,000 10,266 $ 3851412 $ 79,000 $ 511528 51, 528 -0- -0- 546)000 $ 361,128 $ 907,128 -22- 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, 2014 are as follows: Beginning Interest Released/ Ending Reserved Fund Balance Balance Additions Earned Appropriated Balance Unemployment insurance reserve $ 10,246$ $ 20$ $ 10,266 Capital reserve 336,364 481000 13048 385,412 Total Reserved Fund Balance $ 346,610 $ 48,000$ 17068 $ -0-$ 395,678 -22- i TOWN OF GROTON ' NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2014 1 1 1 1 Note 3 - Commitments and Continqencies 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-