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Home My WebLink About2015 Town AuditTOWN OF GROTON FINANCIAL REPORT December 31, 2015 MCI.. VED - MED OFMCE OF THE TOWN CLERK 101 CONGER BLVD., GROTON, NY CRATE /3 of 6 m AM-�� insero&co CLERK Certified Public Accountwits Business Advisons m = = = m m m m m = m m m = = m m m TOWN OF GR 0 TON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 ..................... 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 - Fire Protection District Fund...................................................................................................... 10 Statement of Fiduciary Net Assets - Regulatory Basis - Fiduciary Funds .................................. 11 Schedule of Noncurrent Assets and Liabilities............................................................................ 12 Notes to Financial Statements................................................................................................... 13-25 insero&co (certified Public Accountants I Business Advisors I INDEPENDENT AUDITOR'S REPORT To the Town Board Town of Groton Groton, New York Report on the Financial Statements We have audited the accompanying financial statements of the Town of Groton, (the Town), as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise 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 the financial reporting provisions of the Office of the State of New York Comptroller as applied to governmental units; 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 error or fraud. 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 audit opinions. 1 INSERO & CO. CPAs, LLP Rochester I Ithaca I Corning I Cortland I Watkins Glen 1 (800) 232-95471 www.inserocpa.com 1 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, 2015, and the respective changes in financial position for the year then ended. Opinion on Regulatory Basis of Accounting 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, 2015, and the respective changes in financial position and, where applicable, cash flows and budgetary results, 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. Prior Period Financial Statements The financial statements as of December 31, 2014, were audited by Ciaschi, Dietershagen, Little, Mickelson & Company, LLP, who merged with Insero & Co. CPAs, LLP as of January 1, 2016, and whose report dated October 6, 2015 expressed an unmodified opinion on those statements. Respectfully Submitted, Insero & Co. CPAs, LLP Certified Public Accountants Ithaca, New York September 8, 2016 2 TOWN OF GR 0 TON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2015 ASSETS Assets: Cash and cash equivalents - Unrestricted Cash and cash equivalents - Restricted Investments - Unrestricted Investments - Restricted State and Federal receivables 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 General General Townwide Parttown Fund Fund $ 2221959 $ 781021 10,286 60,000 5,988 41000 151000 $ 3039233 939021 $ 1806 $ 367 2,394 531 21,060 898 10,286 223,000 48,000 481887 44,123 2821173 92,123 $ 3039233 $ 939021 See Independent Auditor's Report and Notes to Financial Statements 3 3a Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 414,489 $ 219,210 $ 52,194 $ $ $ 986,873 28 7%073 8%387 501000 11000 224,198 40,862 224,198 40,862 5,988 31,257 501257 2!1304 2!1304 $ 688,715 $ 2509467 $ 52,194 $ - $ 1229239 $ 195099869 $ 89078 $ 175969 $ 405 $ $ 4002 $ 86,347 16,175 19,100 2,304 2,3304 24,253 17,969 405 - 431166 1071751 224,226 79,073 313,585 4409236 232,498 511789 9951523 93,010 664,462 232,498 51,789 - 7%073 1,402,118 $ 6889715 $ 2509467 $ 529194 $ - $ 1229239 $ 195099869 3a TOWN OF GR 0 TON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES REGULATORY BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 EXPENDITURES Current: General governmental support General General Public safety Townwide Parttown Public health Fund Fund REVENUES 69,954 Real property taxes $ 404,303 $ 133,460 Real property tax items 1036 49,417 Nonproperty tax items 41000 751333 Departmental income 2,376 11895 Intergovernmental charges 648,872 234,447 Use of money and property 19004 181 Licenses and permits 171263 7,319 Fines and forfeitures 25,382 - Sale of property and compensation for loss 31614 (15,529) Miscellaneous local sources 698 730 State sources 58,600 929123 Total Revenues 5271876 218,918 EXPENDITURES Current: General governmental support 372,362 250 Public safety 47,739 Public health 108,500 Transportation 69,954 Economic assistance and opportunity 131200 Culture and recreation 49774 49,417 Home and community services 15,409 56,209 Employee benefits 139,434 209071 Total Expenditures 648,872 234,447 Excess of (Expenditures) Revenues (120,996) (15,529) OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) - - Net Changes in Fund Balances (120,996) (15,529) Fund Balances, Beginning of Year 403,169 1071652 Fund Balances, End of Year $ 2829173 $ 929123 See Independent Auditor's Report and Notes to Financial Statements 4 372,612 2111058 258,797 108,500 8035,377 499,945 5,046 1,3789322 13,200 54,191 204,242 2611860 130,810 589094 348,409 9341187 5589039 51,046 211,058 204,242 2,7951,891 (94,721) 2809 261 - 73 (2021,243) (94,721) 281669 261 - 73 (202,243) 759,183 2039829 5111528 - 79,000 11,604,361 $ 6649462 $ 2329498 $ 519789 $ - $ 799073 $ 194029118 4a Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Parttown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 5949100 $ 257,900 $ 5,200 $ 211,058 $ $ 1,606,021 10,636 151,228 2309561 4,271 2051816 2051,816 204 503 107 73 39952 24,582 25,382 37,466 41,080 1,428 177,077 204,242 439,919 839,466 5869708 5,307 2119058 204,315 295931,648 372,612 2111058 258,797 108,500 8035,377 499,945 5,046 1,3789322 13,200 54,191 204,242 2611860 130,810 589094 348,409 9341187 5589039 51,046 211,058 204,242 2,7951,891 (94,721) 2809 261 - 73 (2021,243) (94,721) 281669 261 - 73 (202,243) 759,183 2039829 5111528 - 79,000 11,604,361 $ 6649462 $ 2329498 $ 519789 $ - $ 799073 $ 194029118 4a i 1 1 1 1 1 1 TOWN OF GR 0 TON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Fund Balance, Beginning of Year 403,169 Fund Balance, End of Year $ 282,173 See Independent Auditor's Report and Notes to Financial Statements Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 4061289 $ 406,289 $ 4041303 $ (11986) Real property tax items 9,300 99300 1036 1,336 Nonproperty tax items 4,000 400 400 - Departmental income 11600 100 21376 776 Intergovernmental charges 11500 1,500 (1,500) Use of money and property 1,250 1,250 1,004 (246) Licenses and permits 141000 1400 171,263 31,263 Fines and forfeitures 18,700 18,700 25,382 61682 Sale of property and compensation for loss 3,614 3,614 Miscellaneous local sources 698 698 State sources 5900 61,550 58,600 (2,950) Total Revenues 515,639 518,189 527,876 91687 EXPENDITURES Current: General governmental support 446,939 4461759 372,362 74,397 Public safety 52,325 54,475 47,739 61736 Public health 200 200 200 Transportation 74,300 7400 691954 4,646 Economic assistance and opportunity 13,450 139450 13,200 250 Culture and recreation 9,325 9,605 41774 45831 Home and community services 400 400 1,409 2,591 Employee benefits 148,100 1489100 139,434 81666 Total Expenditures 748,639 751,189 648,872 102,317 Excess of (Expenditures) (2331,000) (233,000) (120,996) $ 112,004 Appropriated Fund Balance 233,000 2331000 Net Change in Fund Balance $ - $ - Fund Balance, Beginning of Year 403,169 Fund Balance, End of Year $ 282,173 See Independent Auditor's Report and Notes to Financial Statements 1 1 1 1 1 1 1 1 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2015 EXPENDITURES Current: General governmental support Original Public health Budget REVENUES 250 Real property taxes $ 133,460 $ Nonproperty tax items 609500 Departmental income 19900 Use of money and property 300 Licenses and permits 613P050 Miscellaneous local sources 700 Total Revenues 202,910 EXPENDITURES Current: General governmental support 5,250 Public health 1085500 Economic assistance and opportunity 250 Culture and recreation 53,850 Home and community services 59,560 Employee benefits 209500 Total Expenditures 247,910 Excess of (Expenditures) (45,000) Appropriated Fund Balances 45,000 Net Change in Fund Balance $ - $ Fund Balance, Beginning of Year Fund Balance, End of Year Final Budget 133,460 $ 60,500 1,900 300 6,050 700 202,910 1,040 108,500 250 54,550 63,070 20,500 247,910 (45,000) See Independent Auditor's Report and Notes to Financial Statements 6 Actual 133,460 $ 75,333 1,895 181 7,319 730 218,918 250 108,500 49,417 56,209 20,071 234,447 (15,529) $ 107,652 92,123 Fay. (Unfay.) Variance 14,833 (5) (119) 1,269 30 16,008 /'c 250 5,133 6,861 429 13,463 29,471 1 1 1 1 1 1 1 1 1 1 1 1 1 1 TO HW OF GROTON BUDGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2015 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) 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 Fay. (Unfay.) Budget Budget Actual Encumbrances Variance 594,100 $ 594,100 $ 594,100 $ $ - 205,816 2051816 205,816 - 2,300 2,300 2,084 (216) 37,466 37,466 802,216 802,216 839,466 - 37,250 812,816 1,029,851 803,377 691,295 157,179 152,400 152,400 1301,810 21,590 965,216 1,182,251 934,187 69,295 178,769 (163,000) (380,035) (94,721) (699295) 216,019 217,035 (217,035) (60,000) (5,000) 5,000 (60,000) 212,035 - - (212,035) (223,000) (168,000) (94,721) $ (699295) $ 39984 223,000 168,000 See Independent Auditor's Report and Notes to Financial Statements 7 759,183 $ 664,462 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE -REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2015 See Independent Auditor's Report and Notes to Financial Statements 8 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 2571900 $ 257,900 $ 257,900 $ - Nonproperty tax items 11000 110,000 151,228 41,228 Use of money and property 500 500 503 3 State sources 158,391 1771238 177,077 (161) Total Revenues 526,791 545,638 586,708 41,070 EXPENDITURES Current: Transportation 513,391 5329088 4991945 32,143 Employee benefits 581400 589550 58,094 456 Total Expenditures 571,791 5901)638 558,039 32,599 Excess of (Expenditures) Revenue (45,000) (451,000) 28,669 $ 73,669 Appropriated Fund Balances 45,000 45,000 Net Change in Fund Balance Fund Balance, Beginning of Year 2031829 Fund Balance, End of Year $ 2329498 See Independent Auditor's Report and Notes to Financial Statements 8 TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE -REGULATORY BASIS SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2015 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 5,200 $ 5,200 $ 5,200 $ - 107 107 59200 5,200 5,307 107 5,200 5,200 5,046 154 51200 5,200 5,046 154 - - 261 $ 261 - $ - 261 51,528 $ 51,789 See Independent Auditor's Report and Notes to Financial Statements z TOWN OF GR 0 TON BUDGETARY COMPARISON SCHEDULE -REGULATORY BASIS SPECIAL REVENUE FUND FIRE PROTECTION DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2015 See Independent Auditor's Report and Notes to Financial Statements 10 Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 2111058 $ 2111,058 $ 2111058 $ - Total Revenues 2111,058 211,058 2119058 - EXPENDITURES Current: Public Safety 2111058 211,058 211,058 - Total Expenditures 2111058 2111058 211,058 - Excess of Revenue - - - $ - Net Change in Fund Balance $ - $ - - Fund Balance, Beginning of Year Fund Balance, End of Year $ - See Independent Auditor's Report and Notes to Financial Statements 10 TO WW OF GR 0 TON ' STATEMENT OF FIDUCIARY NET ASSETS -REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31, 2015 ASSETS Total Assets LIABILITIES Total Liabilities See Independent Auditor's Report and Notes to Financial Statements 11 L Agency Funds C TOWN OF GR 0 TON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31, 2015 NONCURRENT GOVERNMENT ASSETS Land $ 5639000 Buildings 730,059 Machinery and equipment 2,379,259 Total Noncurrent Government Assets $ 396729318 NONCURRENT GOVERNMENT LIABILITIES Compensated absences $ 110,987 Total Noncurrent Government Liabilities $ 1109987 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, 2015 Note I Summary of Significant Accounting 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," or GASB Statement No. 68, "Accounting and Financial Reporting for 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. 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." 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. 13 i Note I TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 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. • 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: o 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. 14 TOWN OF GROTON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Cl f Note 1 Summary of Significant Accounting Policies - Continued Governmental Funds - Continued o Special District Funds The Special District Funds (Lighting and Fire Protection Districts) have been established by the Town to record transactions for operations and maintenance of these activities. o Special Grant Fund The Special Grant Fund has been 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 specific proprietary or fiduciary funds. a government not accounted for through 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 I Note 1 1 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 5, a tentative budget is submitted by the budget officer for the fiscal year commencing the following January 1. The tentative budget includes proposed expenditures and means of financing for all funds. • After public hearings are conducted to obtain taxpayer comments, no later than November 201, the Town Board adopts the budget. • All modifications of the budget must be approved by the Town Board. • Appropriations lapse at year end. 16 Note 1 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 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. 17 I TOWN OF GR 0 TON ' NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 on or after at least 20 years of full time service and who are enrolled in the Plan at the time of retirement. During the year, $2,640 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 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Note 1 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 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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. Events Subsequent to Report Date The Town has evaluated events and transactions for potential recognition or disclosure through September 8, 2016, the date the financial statements were available to be issued. No events were identified which require disclosure or recognition in the financial statements. 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 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. 20 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Note 2 Cash and Investments - Continued 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 $1,432,468, 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: • Insured or registered, or investments held by the Town or by the Town's agent in the Town's name, or • Uninsured and unregistered, with investments held by the financial institution's trust department in the Town's name, or • 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, 2015 Note 2 Cash and Investments - Continued At December 31, 2015 the Town had the following investments: Carrying Amount Type of Cost Fair Value Investment Category Certificate of General - Townwide and Deposit Highway - Townwide Funds $ 110,000 $ 110,000 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 224,198 $ 224,198 (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. Note 3 Loans Receivable Loans receivable at December 31, 2015 consisted of the following, which is stated at net realizable value: Description Amount Special Grant Fund Rehabilitation loans $ 2,304 Total loans $ 29304 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 2015. Note 4 Noncurrent Government Assets (Fixed Assets) Changes in fixed assets for fiscal year ended December 31, 2015 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 2,2359548 2211204 (77,493) 29379,259 Total $ 395289607 $ 221,204 $ (77,493) $ 396729318 22 ['I TOWN OF GR O TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 Note 5 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. 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 2015 $ 144,036 2014 144,804 2013 121,714 The Town's contributions made to the System were equal to 100% of the contributions required for each year. 23 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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 $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 $2,640 were recognized for post retirement health care. Note 8 Compensated Absences The Town has compensated absences outstanding as of December 31, 2015 in the amount of $110,987. Compensated absences represent the value earned and unused portion of accumulated sick leave. Note 9 Fund Balance Detail Total Reserved Fund Balance $ 395.)678$ 1119698$ 20 $ (272,884) $ 2349512 24 At December 31, 2015, restricted and assigned fund balance was as follows: Restricted Assigned Unemployment Appropriated Insurance Capital Fund Total for Next Fund Total Reserve Reserve Balance Restricted Year's Budget Balance Assigned Funds General Townwide $ 101286 $ $ $ 10,286 $ 2231000 $ $ 223,000 General Parttown 48,000 4800 Highway Townwide 2249226 2245146 1881000 252,236 440,236 Highway Parttown 451000 187,498 2325498 Lighting District 51,789 511789 Fire Protection District Special Grant 79,073 Totals $ 10,286 $ 2249226 $ 79,073 $ 313,505 $ 5049000 $ 4919523 $ 995,523 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, 2015 are as follows: Beginning Interest Released/ Ending Reserved Fund Balance Balance Additions Earned Appropriated Balance Unemployment insurance reserve $ 10,266 $ $ 20 $ $ 101,286 Capital reserve 385,412 111,698 (2721,884) 224,226 Total Reserved Fund Balance $ 395.)678$ 1119698$ 20 $ (272,884) $ 2349512 24 11 1 1 1 1 TOWN OF GR 0 TON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 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. 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