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Home My WebLink About2009 Town AuditITOWN OF GROTON ' Groton, New York FINANCIAL REPORT ' December 31, 2009 �j RECEIVED - FILED OFF'CE OF THE TOWN CLERK 101 CONGER BLVD., GROTON, NSP ZATE X17 a 0/ _, 'i 'M 7! 64 - ,...TOWN CLERK ' TOWN OF GROTON TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2009 IndependentAuditor's Report............................................................................................................................ 1-1a i r ---j Financial Statements Balance Sheet - Regulatory Basis - Governmental Funds........................................................................ 2-2a Statement of Revenues, Expenditures, and Changes in Fund Balances -Regulatory Basis - Governmental Funds....................................................................... 3-3a Budgetary Comparison Schedule - Regulatory Basis - General Townwide Fund .................................... 4 Budgetary Comparison Schedule - Regulatory Basis - General Fund Parttown...................................... 5 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - HighwayTownwide Fund................................................................................................... Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - 6 HighwayFund Parttown............................................................................................................................ 7 Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - LightingDistrict Fund................................................................................................................................. Budgetary Comparison Schedule - Regulatory Basis - Special Revenue Fund - 8 FireProtection District Fund..................................................................................................................... 9 Statement of Fiduciary Net Assets -Regulatory Basis - Fiduciary Funds .................................................. Schedule of Noncurrent Assets and Liabilities........................................................................................... 10 11 Notes to Financial Statements.............................................................................................................. 12-20 i r ---j 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. Supervisor and 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), as of and for the year ended December 31, 2009, as listed in the table of contents. These financial statements are the responsibility of the Town's management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described more fully in Note 1, the Town of Groton has prepared these financial statements using accounting practices in conformity with the requirements of the Office of Comptroller of the State of New York as applied to governmental units, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, the financial statements referred to above presented fairly, in all material respects, the cash and unencumbered cash balances of each fund of the Town of Groton, as of December 31, 2009, and their respective cash receipts and disbursements, and budgetary results for the year then ended, on the basis of accounting described in Note 1. This report is intended solely for the information and use of the Town Board and management of the Town of Groton and the Office of the State Comptroller of the State of New York and is not intended to be and should not be used by anyone other than these specified parties. � 4 August 27, 2010 Ithaca, New York ITHACA 401 East State Street — Suite 500 Ithaca, New York 14850 607-272-4444 fax 607-273-8372 www.cdlm.com WATKINS GLEN 108 West Fourth Street Watkins Glen, New York 14891 607-535-4443 fax 607-535-6220 CORTLAND 39 Church Street Cortland, New York 13045 607-753-7439 fax 607-753-7874 ITHACA 401 East State Street — Suite 500 Ithaca, New York 14850 607-272-4444 fax 607-273-8372 www.cdlm.com WATKINS GLEN 108 West Fourth Street Watkins Glen, New York 14891 607-535-4443 fax 607-535-6220 TOWN OF GROTON BALANCE SHEET - REGULATORY BASIS GOVERNMENTAL FUNDS DECEMBER 31, 2009 See Independent Auditor's Report and Notes to Financial Statements -2- General General Townwide Parttown Fund Fund ASSETS Assets: Cash and cash equivalents - Unrestricted $ 6901340 $ 87,575 Restricted cash and cash equivalents 105 Investments - Restricted 60,000 State and Federal receivables 820 Loans receivable, net of allowance Total Assets $ 751,265 $ 877575 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 19,802 $ 298 Accrued liabilities 1,324 163 Other liabilities 71875 Deferred revenues Total Liabilities 291001 461 Fund Balances: Fund Balances - Reserved: Encumbrances Capital Unemployment insurance 105 Total Reserved 105 -0- Fund Balances - Unreserved, Reported in: General Fund: Designated - Ensuing year's budget 150,000 35,000 Undesignated 5727159 52,114 Special Revenue Funds: Designated - Ensuing year's budget Undesignated Total Fund Balances 7227264 871114 Total Liabilities and Fund Balances $ 751,265 $ 871575 See Independent Auditor's Report and Notes to Financial Statements -2- $ 9815357 $ 1327749 $ 411274 $ $ 207844 $ 131418 $ 357 $ 73600 28,444 251,239 181,027 432,266 13,418 in 357 M 1201000 301000 400, 647 891331 40,917 952,913 1191331 401917 $ 9817357 $ 1321749 $ 411274 $ -2a- 820 41871 41871 -0- $ 85,798 $ 21080,018 $ $ 54,719 9,087 71875 41871 4,871 0- 45871 76,552 251,239 181,027 105 -0- -0- 432,371 185,000 624,273 1505000 805927 611,822 -0- 80,927 2,0031466 -0- $ 85798 $ 210801018 Special Revenue Funds Highway Highway Lighting Fire Protection Special Total Townwide Partown District District Grant Governmental Fund Fund Fund Fund Fund Funds $ 7501330 $ 132,749 $ 41,274 $ $ 80,927 $ 1,7837195 105 2317027 291,027 $ 9815357 $ 1327749 $ 411274 $ $ 207844 $ 131418 $ 357 $ 73600 28,444 251,239 181,027 432,266 13,418 in 357 M 1201000 301000 400, 647 891331 40,917 952,913 1191331 401917 $ 9817357 $ 1321749 $ 411274 $ -2a- 820 41871 41871 -0- $ 85,798 $ 21080,018 $ $ 54,719 9,087 71875 41871 4,871 0- 45871 76,552 251,239 181,027 105 -0- -0- 432,371 185,000 624,273 1505000 805927 611,822 -0- 80,927 2,0031466 -0- $ 85798 $ 210801018 TOWN OF GROTON STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - REGULATORY BASIS GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2009 See Independent Auditor's Report and Notes to Financial Statements -3- General General Townwide Parttown Fund Fund REVENUES Real property taxes $ 400,390 $ 1287111 Real property tax items 31788 Nonproperty tax items 427563 Departmental income 31024 11556 Intergovernmental charges 900 1,350 Use of money and property 77683 1,752 Licenses and permits 17,022 5,751 Fines and forfeitures 207283 Sale of property and compensation for loss 33 Miscellaneous local sources 121 State sources 631842 Federal sources 37691 Total Revenues 5201777 181,083 EXPENDITURES Current: General governmental support 3401588 150 Public safety 471702 Public health 91,000 Transportation 637859 Economic assistance and opportunity 13200 250 Culture and recreation 51485 497167 Home and community services 723 455317 Employee benefits 917917 11,025 Total Expenditures 563,474 196,909 Excess of (Expenditures) Revenues (42,697) (15,826) OTHER FINANCING SOURCES (USES) Total Other Financing (Uses) Sources -0- -0- Net Changes in Fund Balances (42,697) (15,826) Fund Balances, Beginning of Year 7641961 102,940 Fund Balances, End of Year $ 7221264 $ 877114 See Independent Auditor's Report and Notes to Financial Statements -3- Special Revenue Funds Highway Highway Lighting Fire Protection Special Townwide Partown District District Grant Fund Fund Fund Fund Fund $ 5581825 $ 2361249 $ 6, 000 $ 951000 $ 78,213 1,46' 174,774 91281 21835 261 164 18,820 388 762,088 492,160 891333 581,493 180,595 131,775 449,072 407,689 32,190 4391879 9,193 6,261 4,328 4,328 1,933 -0- -0- -0- 1801595 0-180,595 9,193 11933 772, 318 110,138 387984 $ 9521913 $ 1191331 $ 401917 $ -3a- 95,000 95, 000 95, 000 -0- 1,626 -0- 1)626 0-1,626 Total Governmental Funds $ 1,424,575 3,788 120,776 65042 1771024 211976 22,773 20,283 18,853 509 195,617 37691 210151907 3401738 1421702 911000 9681036 13,450 547652 46,040 224,465 11881,083 134,824 -0- -0- -0- -0- 1, 626 134,824 79,301 118687642 -0- $ 807927 $ 210031466 TOWN OF GROTON BUDETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31.. 2009 REVENUES Real property taxes Real property 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 Federal 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 Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Appropriated Fund Balance Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final 340,588 Fay. (Unfay.) Budget Budget Actual Variance 400,390 $ 400.390 $ 400,390 $ -0- 4,500 4,500 3,788 (712) 2,100 2,100 3,024 924 1,800 1,800 900 (900) 19,200 19,200 7,683 (11,517) 12,000 12,000 17,022 5,022 20,500 20.500 20.283 (217) (125, 000) (133, 541) 33 33 121 121 55,090 55;090 63;842 8,752 3,691 3,691 515.580 515:580 520.777 5,197 389,335 388,630 340,588 48,042 49,844 50,549 47,702 2,847 200 200 200 65;476 65,476 63;859 1,617 14;200 14,200 137200 1,000 8,350 8,350 5,485 2,865 4,000 4,000 723 37277 109.175 117,716 91,917 25,799 640;580 649,121 5631474 85;647 (125, 000) (133, 541) (42, 697) 90.844 -0- -0- (125,000) (133, 541) 125,000 133.541 $ -0- 8 -0- -0- -0- (42,697) $ 90.844 (42,697) 764,961 $ 722.264 See Independent Auditor's Report and Notes to Financial Statements BEAM 1 1 1 1 1 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS GENERAL FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31, 2009 See Independent Auditor's Report and Notes to Financial Statements -5- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 128,111 $ 128,111 $ 128,111 $ -0- Nonproperty tax items 38,000 38,000 42,563 4,563 Departmental income 1,400 1,400 1,556 156 Intergovernmental charges 850 1,350 1,350 -0- Use of money and property 2,500 2,501 1,752 (749) Licenses and permits 6,100 6,100 5,751 (349) Total Revenues 176,961 177,462 181,083 3,621 EXPENDITURES Current: General governmental support 4,150 871 150 721 Public health 91,000 91,000 91,000 -0- Economic assistance and opportunity 250 250 250 -0- Culture and recreation 53,000 56,504 49,167 7,337 Home and community services 52,361 52,637 45,317 7,320 Employee benefits 11,200 11,200 11,025 175 Total Expenditures 211,961 212,462 196,909 15,553 Excess of (Expenditures) (35,000) (35,000) (15,826) 19,174 OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (35,000) (35,000) (15,826) $ 19,174 Appropriated Fund Balances 35,000 35,000 Net Change in Fund Balance $ -0- $ -0- (15,826) Fund Balance, Beginning of Year 102,940 Fund Balance, End of Year $ 87,114 See Independent Auditor's Report and Notes to Financial Statements -5- TOWN OF GROTON BUGETARY COMPARSION SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY TOWNWIDE FUND FOR THE YEAR ENDED DECEMBER 31, 2009 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) Revenues OTHER FINANCING SOURCES (USESI Interfund transfers (out) Total Other Financing (Uses) Sources Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Appropriated Fund Balances Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Budget Budget Actual $ 5581825 $ 5581825 $ 5587825 $ 1741774 1741774 174,774 241999 241999 91281 181095 18, 820 388 7581598 7761693 7627088 6991348 101,250 8007598 (42,000) 844,443 101,250 945,693 (169, 000) 492,160 89,333 581,493 1801595 Fay. (U nfay. ) Variance -0- -0- (15,718) 725 388 (14,605) 352,283 11,917 364,200 3491595 (55,000) -0- (55,000) -0- -0- -0- (97,000) (169, 000) 180,595 $ 3497595 97,000 1697000 $ -0- $ -0- 1801595 772,318 $ 952,913 See Independent Auditor's Report and Notes to Financial Statements -6- 1 1 1 1 1 TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND HIGHWAY FUND PARTTOWN FOR THE YEAR ENDED DECEMBER 31. 2009 See Independent Auditor's Report and Notes to Financial Statements -7- Original Final Fay. (Unfay.) Budget Budget Actual Variance REVENUES Real property taxes $ 2367249 $ 2361249 $ 2361249 $ -0- Nonproperty tax items 757000 755000 787213 3,213 Use of money and property 5,000 57000 27835 (2,165) State sources 128,478 1281482 1317775 3,293 Total Revenues 4441727 4447731 4491072 41341 EXPENDITURES Current: Transportation 437,478 4401621 4071689 32,932 Employee benefits 321249 32,510 32,190 320 Total Expenditures 469727 473,131 4391879 33,252 Excess of (Expenditures) Revenues (25,000) (28,400) 97193 371593 OTHER FINANCING SOURCES (USES) Total Other Financing (Uses) Sources -0- -0- -0- -0- Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) (25,000) (28,400) 9,193 $ 37,593 Appropriated Fund Balances 257000 28,400 Net Change in Fund Balance $ -0- $ -0- 91193 Fund Balance, Beginning of Year 1107138 Fund Balance, End of Year $ 1195331 See Independent Auditor's Report and Notes to Financial Statements -7- TOWN OF GROTON BUDGETARY COMPARISON SCHEDULE - REGULATORY BASIS SPECIAL REVENUE FUND LIGHTING DISTRICT FUND FOR THE YEAR ENDED DECEMBER 31, 2009 REVENUES Real property taxes Use of money and property Total Revenues EXPENDITURES Current: Transportation Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Budget Budget Actual $ 61000 $ 6, 000 $ 6, 000 $ 261 61000 6,000 67261 Fay. (U nfay. ) Variance -0- 261 261 6,000 67000 4,328 17672 61000 67000 41328 11672 -0- -0- 1,933 11933 -0- -0- -0- -0- -0- -0- 17933 $ 13933 $ -0- $ -0- 1,933 381984 $ 40,917 See Independent Auditor's Report and Notes to Financial Statements -8- 1 f 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, 2009 REVENUES Real property taxes Total Revenues EXPENDITURES Current: Public Safety Total Expenditures Excess of Revenues OTHER FINANCING SOURCES (USES) Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Expenditures) and Other Financing (Uses) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year Original Final Fay. (Unfay.) Budget Budget Actual Variance $ 1827647 $ 951000 $ 957000 $ -0- 1827647 95,000 95,000 -0- 1821647 957000 957000 -0- 1821647 951000 951000 -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 -9- Total Assets Total Liabilities TOWN OF GROTON STATEMENT OF FIDUCIARY NET ASSETS - REGULATORY BASIS FIDUCIARY FUNDS DECEMBER 31. 2009 ASSETS LIABILITIES See Independent Auditor's Report and Notes to Financial Statements -10- Agency Funds $ -0- $ -0- 11 TOWN OF GROTON SCHEDULE OF NONCURRENT ASSETS AND LIABLITIES DECEMBER 31. 2009 NONCURRENT GOVERNMENT ASSETS Land $ 563.000 Buildings 730;059 Machinery and equipment 1,974,608 Total Noncurrent Government Assets $ 3.267,667 NONCURRENT GOVERNMENT LIABILITIES Compensated absences $ 82,394 Total Noncurrent Government Liabilities $ 82,394 See Independent Auditor's Report and Notes to Financial Statements - 11 - TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. 2009 Note 1 - Summary of Significant Accountinq Policies The financial statements of the Town of Groton (the Town) have been prepared in conformity with the requirements of the Office of the Comptroller of the State of New York 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, "Account 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 Entitv The Town, which is located in the County of Tompkins in the State of New York, was established in 1817. The Town is governed by Town Law, general municipal laws of the State of New York 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. -12- The following basic services are provided: fire protection, highways 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 Governmental Accounting Standards Board (GASB) Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39, "Determining Whether Certain Organizations are Component Units." a. The primary government, which is the Town; b. Organizations for which the primary government is financially accountable, and; c. 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. -12- 11 The 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) Hiqhwav Funds The Highway Funds (Parttown and Town - 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 for these activities. c) Special Grant Fund The Special Grant Fund has been established for by the Town to account for Community Development Block Grants. b. 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- i. Trust and Aqencv Fund The Trust and Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian, or agent. -13- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 The Town records its transactions in the fund types described below: 1. Fund Cateqories a. Governmental Fund Tvpes The Governmental Fund Types are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources, and the related liabilities are accounted for through Governmental Fund types. The measurement focus of the Governmental Fund types is based upon determination of financial position and changes in financial position. The following are the Town's Governmental Fund Types: i. General Funds The General Funds (Parttown and Town - 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 keep two General Funds. ii. Special Revenue Funds The 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) Hiqhwav Funds The Highway Funds (Parttown and Town - 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 for these activities. c) Special Grant Fund The Special Grant Fund has been established for by the Town to account for Community Development Block Grants. b. 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- i. Trust and Aqencv Fund The Trust and Agency Fund is used to account for money and/or property received and held in the capacity of trustee, custodian, or agent. -13- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 c. Account Groups Account groups are used to establish accounting control and accountability for noncurrent governmental assets and noncurrent governmental liabilities. The two account groups are not "funds." They are concerned only with the measurement of financial position, and not results of operations. i. Noncurrent Government Asset Group The noncurrent government asset group accounts for land, buildings, improvements other than buildings, and equipment utilized for general governmental purposes. ii. Noncurrent Government Liabilitv Group The noncurrent government liability group accounts for all noncurrent liabilities of the Town. C. Basis of Accountinq/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenditures or expenses. Modified Accrual Basis - All Governmental Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues accrued include real property taxes, state and federal aid, sales tax, and icertain user charges. If expenditures are the prime factor for determining eligibility, revenues from federal and state grants are accrued when the expenditure is made. Expenditures are recorded when incurred. The cost of capital assets is recognized as an expenditure when the asset is received. Exceptions to this general rule are 1) pension costs, 2) expenditures for prepaid expenses and inventory -type items are recognized at the time of purchase, 3) principal and interest on indebtedness are not recognized as an expenditure until due, and 4) compensated absences, such as vacation and sick leave, which vests or accumulates, are charged as an expenditure when paid. Account Groups - Noncurrent government assets are recorded at actual or estimated cost or, in the case of gifts or contributions, at fair market value at the time received. No provision for depreciation is made. Noncurrent government liabilities are recorded at par value of the principal amount. No liability is recorded for interest payable to maturity. D. 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 January 1 to May 31 by the Town. The County of Tompkins subsequently enforces uncollected real property taxes. The County pays an amount representing uncollected real property taxes transmitted to the County for enforcement to the Town no later than May 31. -14- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 E. Budqets and Budaetary 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 the proposed 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 of New York. 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. 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 of Groton. 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. G. 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. -15- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31. 2009 H. Vacation and 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 800 hours, which is payable upon termination or retirement. The value of unused employee sick leave at year end has been recorded in noncurrent government liability account group. Payment of sick leave recorded in the noncurrent government liability account group is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes that 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 noncurrent government liability account group for amounts to be paid from future financial resources. Note 2 - Detail Notes on All Funds A. Assets 1. Cash and Investments The Town's investment policies are governed by New York 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 New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by Federal Deposit Insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies, 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. The underlying securities must be obligations of the Federal government. Underlying securities must have a market value of at least 105 percent 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; New York State statutes govern the Town's investment policies, as discussed previously in these notes. Governmental Accounting Standards Board 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. -16- The balance of loans receivable represents two loans in the amounts of $86,417 and $4,871. The smaller loan was made in 2007. The Town did not receive any loan payments on the larger loan during the year ended 2006. A principal payment of $647 and an interest - only payment of $2,900 were made on the loan in 2007 and 2008, respectively. No principal payments were made in 2009. In 2004 the Town Board authorized the Town Attorney to commence foreclosure proceedings with respect to the larger loan. The Town is currently collecting on a judgment in the amount of $99,856 with respect to the larger loan, however, the balance has been deemed uncollectible. -17- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 The Town's aggregate bank balances of $2,088,345 are either insured or collateralized with securities held by the pledging financial institution in the Town's name. The Town chooses to disclose its investments by specifically identifying each. The Town's investment policy for these investments is also governed by New York State statutes, in addition to the Town's written policy. Investments are stated at fair value, and are categorized as either: 1. Insured or registered, or investments held by the Town or by the Town's agent in the Town's name, or 2. Uninsured and unregistered, with investments held by the financial institution's trust department in the Town's name, or 3. Uninsured and unregistered, with investments held by the financial institution or its trust department, but not in the Town's name. At December 31, 2009 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 $ 1107000 (6 month) (1) Certificate of Deposit Highway - Townwide Fund $ 181,027 $ 1811027 (6 month) (1) The Town does not typically purchase investments for a long enough duration to cause it to believe that 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, 2009 consisted of the following, which are stated at net realizable value. Description Amount Special Grant Fund Rehabilitation loans $ 911288 Special Grant Fund Allowance for uncollectible loans (86,417) Special Grant Fund Rehabilitation loans $ 41871 The balance of loans receivable represents two loans in the amounts of $86,417 and $4,871. The smaller loan was made in 2007. The Town did not receive any loan payments on the larger loan during the year ended 2006. A principal payment of $647 and an interest - only payment of $2,900 were made on the loan in 2007 and 2008, respectively. No principal payments were made in 2009. In 2004 the Town Board authorized the Town Attorney to commence foreclosure proceedings with respect to the larger loan. The Town is currently collecting on a judgment in the amount of $99,856 with respect to the larger loan, however, the balance has been deemed uncollectible. -17- TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31. 2009 3. Noncurrent Government Assets (Fixed Assets) The changes in fixed assets for the fiscal year ended December 31, 2009 are as follows: Balance Balance Beginning End of of Year Additions Deletions Year Land $ 563,000 $ $ $ 563,000 Buildings 730,059 730,059 Machinery and equipment 1,999,178 5,611 30,181 1,974,608 Total $ 3,292,237 $ 5,611 $ 30,181 $ 3,267,667 B. Liabilities Accounts payable consists of amounts owed by the town for various goods and services. Accrued liabilities represents payroll expense accrued at year end. Deferred revenues represent loans receivable in the Special Grant Fund, C. Fund Equity -Reserves Purpose Amount General - Townwide Fund Unemployment insurance reserve $ 105 Highway - Townwide Fund Encumbrances 251,239 Highway - Townwide Fund Capital 181,027 Total $ 432,371 D, 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. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of its funds. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. 2. Fundinq Policy The System is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. -18- 1 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31. 2009 The Town is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2009 $ 44,535 2008 54,660 2007 54,017 The Town's contributions made to the System were equal to 100% of the contributions required for each year. Since 1989, the System's billings have been based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years ended March 31; 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17 year period, with an 8.75% interest factor added. Local governments were given the option to prepay this liability. The Town has paid this liability in full, On May 14, 2003, Chapter 49 of the Laws of 2003 of the State of New York was enacted which made the following changes to the System: • Requires minimum contributions by employers of 4.5% of payroll every year. including years in which the investment performance would make a lower contribution possible. • Changes the cycle of annual billing such that the contribution for a given fiscal year will be based on the value of the pension fund on the prior April 1 St (e.g. billings due February 2009 would be based on the pension value as of March 31, 2008). • Allows one-time financing of State fiscal year 2004-2005 pension cost by permitting local governments to bond, over five years, any required contribution in excess of 7% of estimated salaries or to amortize required contributions in excess of 7% over a five year period. [Superseded by Chapter 260 of the Laws of 2004. See below.] On July 30, 2004, Chapter 260 of the Laws of 2004 of the State of New York was enacted that allows local employers to bond or amortize a portion of their retirement bill for up to ten years in accordance with the following schedule: • For State fiscal year (SFY) 2004-05, the amount in excess of 7% of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the bonding/amortization was instituted. • For SFY 2005-06, the amount in excess of 9.5% of employees' covered pensionable salaries. • For SFY 2006-07, the amount in excess of 10.5% of employees' covered pensionable salaries. This law requires participating employers to make payments on a current basis, while bonding or amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 2005 through 2007. The Town has opted not to amortize. -19- 1 TOWN OF GROTON NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2009 E. 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. If the retirees attain insurance through a plan not established by the Town, the Town will pay up to $110 to each retiree to apply toward the retirees' premium cost. The post -employment benefit expenses are recognized as the costs are incurred. During the fiscal year, expenses of $3,147 were recognized for post -employment health care. F. Noncurrent Government Liabilities 1. Compensated Absences The Town has compensated absences outstanding as of December 31, 2009 in the amount of $82,394. Compensated absences represents the value earned and unused portion of accumulated sick leave. 1"I