HomeMy WebLinkAboutFiscal Year 2012 Single Audit Wannacomet Water
WANNACOMET WATER COMPANY
REPORT ON EXAMINATION OF
FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 2012 AND 2011
WANNACOMET WATER COMPANY
REPORT ON EXAMINATION OF FINANCIAL STATEMENTS
JUNE 30, 2012 AND 2011
TABLE OF CONTENTS
Page
Independent Auditors’ Report..........................................................................................................................................1
Management’s Discussion and Analysis.........................................................................................................................3
Financial Statements.......................................................................................................................................................9
Statement of Net Assets............................................................................................................................................10
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................................................................11
Statement of Cash Flows...........................................................................................................................................12
Notes to Financial Statements...................................................................................................................................13
Required Supplementary Information............................................................................................................................27
Retirement System Schedules...................................................................................................................................28
Retirement System Schedule of Funding Progress...............................................................................................29
Retirement System Schedule of Employer Contributions......................................................................................30
Other Postemployment Schedules ............................................................................................................................31
Other Postemployment Benefit Plan Funding Progress and Employer Contributions...........................................32
Other Postemployment Benefit Plan Actuarial Methods and Assumptions...........................................................33
Notes to Required Supplementary Information..........................................................................................................34
1
Independent Auditors’ Report
Board of Water Commissioners
Wannacomet Water Company
Nantucket, Massachusetts
We have audited the accompanying financial statements of the Wannacomet Water Company, an enterprise fund
of the Town of Nantucket, Massachusetts, as of and for the fiscal years ended June 30, 2012 and 2011, as listed
in the table of contents. These financial statements are the responsibility of the Wannacomet Water Company and
the Town of Nantucket, Massachusetts’ 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
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. 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 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.
These financial statements, as described in note 1, present only the Wannacomet Water Company and do not
purport to, and do not present fairly the financial position of the Town of Nantucket, Massachusetts, as of June 30,
2012 and 2011, and the changes in its financial position or, where applicable, its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United States of America.
In our opinion, based on our audit, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the Wannacomet Water Company of the Town of Nantucket,
Massachusetts, as of June 30, 2012 and 2011, and the respective changes in financial position and cash flows,
thereof for the fiscal years then ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2012 on
our consideration of the Town of Nantucket, Massachusetts’ internal control over financial reporting and our tests
of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. That
report was issued in conjunction with our audit of the Wannacomet Water Company, which is an enterprise fund
of the Town of Nantucket, Massachusetts. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, and required supplementary information, as listed in the table of contents, be presented
to supplement the financial statements. Such information, although not a part of the financial statements, is
2
required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the financial statements in an appropriate operational, economic, or historical context. We
have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about
the methods of preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
October 31, 2012
Wannacomet Water Company 3 Financial Statements
Management’s Discussion and Analysis
Wannacomet Water Company 4 Financial Statements
Management’s Discussion and Analysis
As management of the Wannacomet Water Company (the Water Company), we offer readers of these financial
statements this narrative overview and analysis of the Water Company’s financial activities for the fiscal years
ended June 30, 2012 and 2011. The Water Company complies with financial reporting requirements issued by the
Governmental Accounting Standards Board (GASB), and Management’s Discussion and Analysis are part of
these requirements. The GASB is the authoritative standards-setting body that provides guidance on the
preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP). The
Water Company’s performance is discussed and analyzed within the context of the accompanying financial
statements and disclosures following this section.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Wannacomet Water Company’s
financial statements. The financial statements include the Statement of Net Assets, the Statement of Revenue,
Expenses and Change in Fund Net Assets, the Statement of Cash Flows, and notes to the financial statements.
The Statement of Net Assets presents information on all assets and liabilities, with the difference between the
two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of
whether the Water Company’s financial position is improving or deteriorating.
The Statement of Revenues, Expenses and Changes in Fund Net Assets present information showing how
the Water Company’s net assets changed during the most recent fiscal years. All changes in net assets are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash
flows in future fiscal periods (e.g., uncollected fees and earned but unused vacation leave).
The Statement of Cashflows presents information showing the cash inflows and outflows for the Water
Company.
Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the financial statements.
Financial Highlights as of the Close of Fiscal 2012 and 2011
• The total of assets exceeded liabilities (i.e., net assets) by $15 million and $14.8 million respectively.
• Unrestricted net assets for Wannacomet Water fund totaled $1.7 million and $1.1 million respectively.
• Outstanding debt totaled $23.5 million and $21.9 million respectively.
Wannacomet Water Company 5 Financial Statements
Financial Analysis
The following chart provides a summary of the Water Company’s financial data for fiscal year 2012, with
comparative fiscal 2011 information:
2012 2011
Assets:
Current assets……………………………………………$ 6,988,237 $ 6,334,093
Capital assets, not being depreciated………………… 4,207,359 14,439,418
Capital assets, net of accumulated depreciation…… 28,738,575 17,683,225
Total assets………………………………………… 39,934,171 38,456,736
Liabilities:
Current liabilities (excluding debt)……………………… 932,893 1,282,774
Noncurrent liabilities (excluding debt)………………… 490,369 445,679
Current debt……………………………………………… 2,238,836 3,515,949
Noncurrent debt………………………………………… 21,265,000 18,405,000
Total liabilities……………………………………… 24,927,098 23,649,402
Net Assets:
Invested in capital assets net of related debt………… 13,312,567 13,718,662
Unrestricted……………………………………………… 1,694,506 1,088,672
Total net assets……………………………………$15,007,073 $14,807,334
Business-Type Activities
June 30, June 30,
2012 2011
Program revenues:
Charges for services……………………………………$ 3,700,432 $ 3,384,309
Operating grants and contributions…………………… 434,766 489,393
Total revenues……………………………………… 4,135,198 3,873,702
Expenses:
Depreciation……………………………………………… 791,001 691,779
Supply and pumping…………………………………… 256,741 212,898
Water treatment………………………………………… 51,731 35,527
Distribution……………………………………………… 127,822 130,100
Meter reading…………………………………………… 1,416 8,717
Maintenance……………………………………………… 95,070 214,565
Insurance………………………………………………… 72,855 52,179
Administrative and general……………………………… 1,309,612 1,198,063
Pension benefits………………………………………… 174,532 189,676
Interest expense………………………………………… 752,743 783,769
Employee benefits……………………………………… 40,970 53,726
Total expenses……………………………………… 3,674,493 3,570,999
Transfers…………………………………………………… (260,966) (90,647)
Change in net assets………………………………………$ 199,739 $ 212,056
Wannacomet Water Company 6 Financial Statements
There was a net increase of $199,700 in net assets related with the Wannacomet Water Company’s activities.
This relatively small increase is consistent with prior years.
Approximately $11 million in capital assets were transferred from construction in progress to infrastructure and the
Water Company began depreciating these assets during fiscal year 2012.
Noncurrent liabilities include an accrued liability for other postemployment benefits in the amount of $388,000 as
of June 30, 2012. The Water Company will continue to amortize this unfunded liability on an annual basis to the
extent that the net cost, including the amortization of the unfunded liability exceeds contributions.
This liability is based on an actuarially determined calculation of the cost of providing benefits, other than pension
costs, to retirees and their spouses. The Town of Nantucket obtained an updated actuarial valuation report for
fiscal year 2011 and 2012, which showed a significant decrease in the Town’s unfunded liability from prior
valuations. Correspondingly, the portion of the unfunded liability attributable to the Water Company also
decreased. The Water Company’s OPEB liability, based on the most recent actuarial valuation, increased by
approximately $61,000 in fiscal year 2011 and $60,000 in fiscal year 2012.
The Water Company transferred $261,000 to Capital Project Funds to fund a prior year deficit created by Water
Company related capital acquisitions.
Capital Asset and Debt Administration
Capital Assets
Wannacomet Water Company’s year end capital assets totaled $32.9 million which represents a net increase of
$823,000 from the prior year. Some of the Water Company’s larger projects were completed and transferred from
construction in progress to infrastructure during fiscal year 2012, including the Madaket Road water main project
and the North Pasture well/tank. Projects remaining in construction in progress as of June 30, 2012 include a
new meter system and the Washing Pond Road water tower. Depreciation of approximately $791,000 was
recorded in fiscal year 2012.
Long-term Debt
At the end of the fiscal years 2012 and 2011, the Wannacomet Water Company had total bonded debt
outstanding of $22.8 million and $19.6 million, respectively. Wannacomet Water issued long-term debt totaling
$4.45 million during fiscal year 2012 related to the Madaket Road water main, New Street tank rehabilitation,
administration building upgrades, and a meter system upgrade . This amount is fully supported by the revenue of
the Wannacomet Water Company, and does not rely upon a general fund subsidy.
2012 2011
Current portion of long-term…………$ 1,545,000 $ 1,235,000
Noncurrent portion of long-term…… 21,265,000 18,405,000
Total…………………………………$ 22,810,000 $ 19,640,000
Please refer to the notes to the financial statements for further discussion of the major capital assets and debt
activity.
Wannacomet Water Company 7 Financial Statements
Requests for Information
This financial report is designed to provide a general overview of the Wannacomet Water Company’s finances for
all those with an interest in the Water Company’s finances. Questions concerning any of the information provided
in this report or requests for additional financial information should be addressed to the Wannacomet Water
Company, 1 Milestone Road, Nantucket, Massachusetts 02554, or to the Finance Department of the Town of
Nantucket, 16 Broad Street, Nantucket, Massachusetts 02554.
Wannacomet Water Company 8 Financial Statements
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Wannacomet Water Company 9 Financial Statements
Financial Statements
2012 2011
ASSETS
CURRENT:
Cash and cash equivalents……………………………….$ 6,336,816 $ 5,714,243
Receivables, net of allowance for uncollectibles:
User fees………………………………………………… 521,398 503,468
Inventory…………………………………………………… 130,023 116,382
Total current assets………………………………… 6,988,237 6,334,093
NONCURRENT:
Capital assets, not being depreciated…………………… 4,207,359 14,439,418
Capital assets, net of accumulated depreciation………… 28,738,575 17,683,225
Total noncurrent assets…………………………… 32,945,934 32,122,643
TOTAL ASSETS………………………………………………… 39,934,171 38,456,736
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 56,875 389,384
Accrued liabilities…………………………………………… 7,773 16,586
Accrued payroll……………………………………………… 18,286 12,037
Accrued interest…………………………………………… 284,646 291,829
Due to other funds………………………………………… 539,665 543,570
Compensated absences…………………………………… 25,648 29,368
Notes payable……………………………………………… - 2,050,000
Bonds payable……………………………………………… 2,238,836 1,465,949
Total current liabilities……………………………… 3,171,729 4,798,723
NONCURRENT:
Compensated absences…………………………………… 102,593 117,471
Other postemployment benefit…………………………… 387,776 328,208
Bonds payable……………………………………………… 21,265,000 18,405,000
Total noncurrent liabilities………………………… 21,755,369 18,850,679
TOTAL LIABILITIES…………………………………………… 24,927,098 23,649,402
NET ASSETS
Invested in capital assets, net of related debt……………… 13,312,567 13,718,662
Unrestricted……………………………………………………… 1,694,506 1,088,672
TOTAL NET ASSETS…………………………………………$ 15,007,073 $ 14,807,334
See notes to financial statements.
JUNE 30, 2012 AND 2011
STATEMENT OF NET ASSETS
WANNACOMET WATER COMPANY
Wannacomet Water Company 10 Financial Statements
2012 2011
OPERATING REVENUES:
Sales of water……………………………………………… $ 3,671,207 $ 3,363,847
Connection fees……………………………………………… 29,225 20,462
Other………………………………………………………… 422,010 470,984
TOTAL OPERATING REVENUES …………………… 4,122,442 3,855,293
OPERATING EXPENSES:
Depreciation………………………………………………… 791,001 691,779
Supply and pumping………………………………………… 256,741 212,898
Water treatment……………………………………………… 51,731 35,527
Distribution…………………………………………………… 127,822 130,100
Meter reading………………………………………………… 1,416 8,717
Maintenance………………………………………………… 95,070 214,565
Insurance…………………………………………………… 72,855 52,179
Administrative and general………………………………… 1,309,612 1,288,710
Pension benefits…………………………………………… 174,532 189,676
Employee benefits…………………………………………… 40,970 53,726
TOTAL OPERATING EXPENSES…………………… 2,921,750 2,877,877
OPERATING INCOME (LOSS)………………………… 1,200,692 977,416
NONOPERATING REVENUES (EXPENSES):
Investment income………………………………………… 12,756 18,409
Interest expense…………………………………………… (752,743) (783,769)
TOTAL NONOPERATING
REVENUES (EXPENSES), NET…………………… (739,987) (765,360)
INCOME (LOSS) BEFORE TRANSFERS…………… 460,705 212,056
Transfers out…………………………………………………… (260,966) -
CHANGE IN NET ASSETS………………………………… 199,739 212,056
NET ASSETS AT BEGINNING OF YEAR…………………… 14,807,334 14,595,278
NET ASSETS AT END OF YEAR…………………………… $ 15,007,073 $ 14,807,334
See notes to financial statements.
FISCAL YEAR ENDED JUNE 30, 2012 AND 2011
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
WANNACOMET WATER COMPANY
Wannacomet Water Company 11 Financial Statements
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users……………………………………………………………$ 4,104,512 $ 4,084,311
Payments to vendors…………………………………………………………………………… (1,061,711) (686,527)
Payments to employees………………………………………………………………………… (1,335,812) (1,346,985)
Payments for interfund services used………………………………………………………… (40,970) (53,726)
NET CASH FROM OPERATING ACTIVITIES………………………………………………… 1,666,019 1,997,073
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out…………………………………………………………………………………… (260,966) (90,647)
Advances to other funds………………………………………………………………………… (3,905) 756,530
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES………………………………… (264,871) 665,883
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes…………………………………………… 6,960,000 2,050,000
Acquisition and construction of capital assets……………………………………………… (1,614,292) (3,387,629)
Principal payments on bonds and notes……………………………………………………… (5,840,000) (1,380,000)
Interest expense………………………………………………………………………………… (297,039) (807,575)
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES…………………… (791,331) (3,525,204)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income……………………………………………………………………………… 12,756 18,409
NET CASH FROM INVESTING ACTIVITIES…………………………………………………… 12,756 18,409
NET CHANGE IN CASH AND CASH EQUIVALENTS………………………………………… 622,573 (843,839)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR……………………………… 5,714,243 6,558,082
CASH AND CASH EQUIVALENTS AT END OF YEAR…………………………………………$ 6,336,816 $ 5,714,243
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)…………………………………………………………………………$ 1,200,692 $ 1,068,063
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation………………………………………………………………………………… 791,001 691,779
User fees………………………………………………………………………………… (17,930) 229,018
Inventory…………………………………………………………………………………… (13,641) (16,417)
Other assets……………………………………………………………………………… - 5,273
Warrants payable………………………………………………………………………… (332,509) (21,900)
Accrued liabilities………………………………………………………………………… (8,813) 5,590
Accrued payroll…………………………………………………………………………… 6,249 (18,059)
Accrued compensated absences……………………………………………………… (18,598) (7,480)
Other postemployment benefit………………………………………………………… 59,568 61,206
Total adjustments…………………………………………………………………… 465,327 929,010
NET CASH FROM OPERATING ACTIVITIES………………………………………………… $ 1,666,019 $ 1,997,073
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:
Bond premium amortization……………………………………………………………………$ (12,830) $ (12,830)
See notes to financial statements.
FISCAL YEAR ENDED JUNE 30, 2012 AND 2011
STATEMENT OF CASH FLOWS
WANNACOMET WATER COMPANY
Wannacomet Water Company 12 Financial Statements
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 13 Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Notes to Financial Statements
The accompanying financial statements present the Wannacomet Water Company (the Water Company) an
enterprise fund of the Town of Nantucket, Massachusetts. These statements are not intended to and do not
present fairly the financial position of the Town of Nantucket, Massachusetts. These statements have been
prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing
governmental accounting and financial reporting principles. The significant accounting policies are described
herein.
A. Reporting Entity
The Wannacomet Water Company is an enterprise fund of the Town of Nantucket. Its operation is governed by
the Board of Water Commissioners.
The Water Company sells water to customers within its service area through its wholly-owned distribution system.
The Water Company was formerly a private corporation whose assets, primarily the water distribution system,
were purchased by the Town of Nantucket in 1998. Under the provisions of the agreement, the Town agreed to
accept and abide by certain operating practices of the former enterprise, particularly in the area of employee
contracts and benefits. Water Company employees are not covered by the Town’s personnel by-laws.
B. Measurement Focus. Basis of Accounting and Financial Statement Presentation
The Wannacomet Water Company’s financial statements reported using the flow of economic resources
measurement focus and the accrual basis of accounting. Under this method, revenues are recognized when
earned and expenditures are recorded when the liabilities are incurred.
The operation of the Water Company is accounted for as an enterprise fund, which is a proprietary fund type.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with the
proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
C. Cash and Investments
Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with
an original maturity of three months or less from the date of acquisition. Investments are carried at fair value.
D. Accounts Receivable
The recognition of revenue related to accounts receivable reported are reported under the accrual basis of
accounting.
User Fees
User Fees for Wannacomet Water Company are levied monthly based on individual meter readings and average
bills.
All water fees are subject to penalties and interest if they are not paid by the respective due date. Unbilled water
fees at year-end are accrued and are recorded as revenue in the current period.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 14 Financial Statements
E. Inventories
Inventories of the Wannacomet Water Company are priced at the lower of cost or market, with cost being
determined on the first-in, first-out method basis. Expendable supplies and small tools are not inventoried but
rather expensed when purchased.
F. Restricted Assets
Certain assets of the Wannacomet Water Company are classified as restricted because their use is restricted by
contract covenants.
G. Capital Assets
Capital assets, which include land, land improvements, buildings, machinery and equipment, and infrastructure
(e.g., water mains, hydrants, meter services, and similar items), are reported in the statements. Capital assets are
recorded at historical cost or at estimated historical cost when actual historical cost could not be determined.
Donated capital assets are recorded at the estimated fair market value at the date of donation. Construction
period interest is capitalized on constructed capital assets.
All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or
construction, respectively, with expected useful lives of greater than one year.
Capital assets (excluding land) are depreciated on a straight-line basis. The estimated useful lives of capital
assets are as follows:
Estimated
Useful
Life
(in years)
Vehicles………………………………………… 5
Furniture, fixtures, computer equipment……… 5-10
Machinery and equipment……………………… 10-15
Water infrastructure…………………………… 40-70
Buildings and improvements…………………… 33-50
Capital Asset Type
The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset
lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized.
H. Net Assets
Net assets reported as “invested in capital assets, net of related debt” includes capital assets, net of accumulated
depreciation, less the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of
capital related debt are not considered to be capital assets. Net assets are reported as restricted when amounts
are not available for appropriation or are legally restricted by outside parties for a specific future use.
I. Long-term debt
Long-term debt is reported as liabilities in the statement of net assets. Material bond premiums and discounts are
deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported
net of the applicable bond premium or discount.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 15 Financial Statements
J. Advertising
The Water Company’s policy is to expense advertising costs the first time the advertising takes place. Advertising
expense for the years ended June 30, 2012 and 2011 were $16,704 and $9,933 respectively.
K. Compensated Absences
Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements,
state laws and executive policies.
Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial
resources, are reported as expenditures and fund liabilities.
L. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and
liabilities at the date of the financial statements and the reported amounts of the revenues and expenses during
the fiscal year. Actual results could vary from estimates that were used.
NOTE 2 – CASH AND INVESTMENTS
Cash of the Wannacomet Water Company is in control of the Town Treasurer as required by state law.
Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates
of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment
Pool (the Pool).
The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts
Municipal Depository Trust (MMDT), which was established by the Treasurer of the Commonwealth who serves
as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares.
Custodial Credit Risk – Deposits
The Town Treasurer, at times, commingles other Town cash accounts with those specifically related to the
Wannacomet Water Company. The Water Company portion of these funds is reported on the Statement of Net
Assets as cash and cash equivalents.
In the case of deposits, this is the risk that in the event of a bank failure, the Wannacomet Water Company’s
deposits may not be returned to it. The Wannacomet Water Company does not have a deposit policy for
custodial credit risk.
At fiscal year-end June 30, 2012 and 2011, the carrying amount of deposits totaled $5,204,259 and $4,135,483
and the bank balance totaled $5,292,258 and $4,132,110 respectively. Of the bank balance, $281,919 and
$282,824 were covered by the Federal Depositors Insurance Company (“FDIC”), $5,010,339 and $3,849,286
were collateralized, therefore Wannacomet Water Company did not have funds that were exposed to custodial
credit risk because of being uninsured or uncollateralized.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 16 Financial Statements
Investments
As of June 30, 2012, the Wannacomet Water Company had the following investments:
Maturity
Under
Fair Value 1 Year
Investment Type:
Repurchase Agreements……………………………………$269,772 $ 269,772
Other Investments:
MMDT………………………………………………………… 862,785
Total Investments........................................................... $ 1,132,557
As of June 30, 2011, the Wannacomet Water Company had the following investments:
Maturity
Under
Fair Value 1 Year
Investment Type:
Repurchase Agreements……………………………………$ 718,346 $ 718,346
Other Investments:
MMDT………………………………………………………… 860,414
Total Investments........................................................... $ 1,578,760
The Wannacomet Water Company participates in MMDT. Investments in MMDT are unrated.
Custodial Credit Risk – Investments
For an investment, this is the risk that, in the event of a failure by the counterparty, the Water Company will not be
able to recover the value of its investments or collateral security that are in the possession of an outside party.
The Water Company does not have an investment policy for custodial credit risk.
The repurchase agreement consists of an overnight sweep agreement which is invested in U.S. Treasury Notes.
Interest Rate Risk
The Water Company does not have a formal investment policy that limits investment maturities as a means of
managing its exposure to fair value losses arising from increasing interest rates.
Credit Risk
The Water Company has not adopted a formal policy related to Credit Risk.
Concentration of Credit Risk
There are no limits on the amount the Water Company may invest in any one issuer.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 17 Financial Statements
100% of the Water Company’s investments in fiscal year 2012 were in MMDT and repurchase agreements.
NOTE 3 – RECEIVABLES
At June 30, 2012 and 2011, receivables for the Water Company consist of the following:
2012 Receivables:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
Charges for services……………………………………$ 531,398 $ (10,000) $ 521,398
2011 Receivables:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
Charges for services……………………………………$ 513,468 $ (10,000) $ 503,468
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the Wannacomet Water Company for the fiscal year ended June 30, 2012, was as
follows:
2011 2012
Beginning Ending
Balance Increases Decreases Balance
Capital assets not being depreciated:
Land………………………………………………………… $ 3,000,000 $ - $ - $ 3,000,000
Construction in progress…………………………………… 11,439,418 895,196 (11,127,255) 1,207,359
Total capital assets not being depreciated………… 14,439,418 895,196 (11,127,255) 4,207,359
Capital assets being depreciated:
Infrastructure………………………………………………… 22,297,657 11,846,351 - 34,144,008
Buildings……………………………………………………… 1,768,585 - - 1,768,585
Vehicles……………………………………………………… 267,997 - - 267,997
Machinery and equipment………………………………… 335,933 - - 335,933
Furniture, fixtures and computer equipment……………… 423,795 - - 423,795
Total capital assets being depreciated……………… 25,093,967 11,846,351 - 36,940,318
Less accumulated depreciation………………………………… (7,410,742) (791,001) - (8,201,743)
Total capital assets being depreciated, net…………………… 17,683,225 11,055,350 - 28,738,575
Total business-type activities, capital assets…………………$ 32,122,643 $ 11,950,546 $ (11,127,255) $ 32,945,934
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 18 Financial Statements
Capital asset activity for the Wannacomet Water Company for the fiscal year ended June 30, 2011, was as
follows:
2010 2011
Beginning Ending
Balance Increases Decreases Balance
Capital assets not being depreciated:
Land………………………………………………………… $ 3,000,000 $ - $ - $ 3,000,000
Construction in progress…………………………………… 9,034,528 3,341,365 (936,475) 11,439,418
Total capital assets not being depreciated………… 12,034,528 3,341,365 (936,475) 14,439,418
Capital assets being depreciated:
Infrastructure………………………………………………… 22,240,283 57,374 - 22,297,657
Buildings……………………………………………………… 846,186 922,399 - 1,768,585
Vehicles……………………………………………………… 267,997 - - 267,997
Machinery and equipment………………………………… 332,967 2,966 - 335,933
Furniture, fixtures and computer equipment……………… 423,795 - - 423,795
Total capital assets being depreciated……………… 24,111,228 982,739 - 25,093,967
Less accumulated depreciation………………………………… (6,718,963) (691,779) - (7,410,742)
Total capital assets being depreciated, net…………………… 17,392,265 290,960 - 17,683,225
Total business-type activities, capital assets…………………$ 29,426,793 $ 3,632,325 $ (936,475) $ 32,122,643
NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables and payables at June 30, 2012 are summarized as follows:
Siasconset Sewer
Water Enterprise
Company Fund Total
Wannacomet Water Company………… $ 78,021 $ 461,644 $ 539,665
Due From:
Due to:
Interfund receivables and payables at June 30, 2011 are summarized as follows:
Siasconset Sewer
General Water Enterprise
Fund Company Fund Total
Wannacomet Water Company………… $ 90,647 $ 71,715 $ 381,208 $ 543,570
Due From:
Due to:
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 19 Financial Statements
Interfund transfers for the fiscal year ended June 30, 2012 are summarized as follows:
Transfers In:
Capital Project
Fund
Wannacomet Water Company………$ 260,996 (1)
(1) Transfer to Capital Projects Fund to fund prior year deficit.
Transfers Out:
Interfund transfers for the fiscal year ended June 30, 2011 are summarized as follows:
Transfers In:
General
Fund
Wannacomet Water Company………$ 90,647 (1)
(1) Transfer of indirect costs to the Town's General Fund.
Transfers Out:
NOTE 6 – SHORT-TERM FINANCING
Short-term debt may be authorized and issued to fund the following:
• Current operating costs prior to the collection of revenues through issuance of revenue anticipation notes
(RANS).
• Capital project costs and other approved expenditures incurred prior to obtaining permanent financing
through issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS).
Short-term loans are general obligations and carry maturity dates that are limited by statute.
Details related to the short-term debt activity for the fiscal year ended June 30, 2012, are as follows:
Balance at Balance at
Rate June 30, Renewed/ Retired/ June 30,
Type Purpose (%) Due Date 2011 Issued Redeemed 2012
BAN Bond Anticipation Note…………………… 1.50 02/24/12 $ 1,200,000 $- $ 1,200,000 $-
BAN Bond Anticipation Note…………………… 1.50 02/24/12 850,000 - 850,000 -
BAN Bond Anticipation Note…………………… 1.00 06/08/12 - 2,050,000 2,050,000 -
Total………………………………………………………………………$ 2,050,000 $ 2,050,000 $ 4,100,000 $ -
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 20 Financial Statements
Details related to the short-term debt activity for the fiscal year ended June 30, 2011, are as follows:
Balance at Balance at
Rate June 30, Renewed/ Retired/ June 30,
Type Purpose (%) Due Date 2010 Issued Redeemed 2011
BAN Bond Anticipation Note…………………… 1.50 02/24/12 $ - $ 1,200,000 $ - $ 1,200,000
BAN Bond Anticipation Note…………………… 1.50 02/24/12 - 850,000 - 850,000
Total………………………………………………………………………$- $ 2,050,000 $ - $ 2,050,000
NOTE 7 – LONG-TERM DEBT
Under the provisions of Chapter 44, Section 10, Municipal Law authorizes the Town of Nantucket indebtedness
up to a limit of 5% of the Town’s equalized valuation. Debt issued in accordance with this section of the law is
designated as being "inside the debt limit". In addition, however, debt may be authorized in excess of that limit for
specific purposes. Such debt, when issued, is designated as being "outside the debt limit".
Details related to the Water Company’s outstanding indebtedness at June 30, 2012, and the debt service
requirements are as follows:
Original Interest Outstanding Outstanding
Maturities Loan Rate at June 30, at June 30,
Project Through Amount (%) 2011 Issued Redeemed 2012
Municipal Purpose Bonds 2001………………………… 2021 $ 1,168,000 4.00 - 5.00 $ 565,000 $ - $ 565,000 $ -
Municipal Purpose Bonds 2005………………………… 2024 4,000,000 2.50 - 4.13 2,800,000 - 200,000 2,600,000
Municipal Purpose Bonds 2008………………………… 2030 9,400,000 3.00 - 5.00 7,975,000 - 475,000 7,500,000
Municipal Purpose Bonds 2009………………………… 2029 2,815,000 3.00 - 5.00 2,600,000 - 110,000 2,490,000
Municipal Purpose Bonds 2010………………………… 2030 1,800,000 2.50 - 4.00 1,660,000 - 140,000 1,520,000
Municipal Purpose Bonds 2012………………………… 2032 4,450,000 2.00 - 5.00 - 4,450,000 - 4,450,000
Municipal Purpose Refunding Bonds of 2012………… 2021 460,000 2.00 - 5.00 - 460,000 - 460,000
Total Bonds Payable………………………………………………………………...………………………………… 19,640,000 4,910,000 1,740,000 22,810,000
Unamortized Premiums on Bonds and Notes………………………………………………………………………… 230,949 475,717 12,830 693,836
Total………………………………………………………………………………………………………………………$ 19,870,949 $ 5,385,717 $ 1,752,830 $ 23,503,836
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 21 Financial Statements
Debt service requirements for principal and interest for Water Company bonds payable in future fiscal years as of
June 30, 2012 are as follows:
Fiscal Year Principal Interest Total
2013………………$ 1,545,000 $ 888,980 $ 2,433,980
2014……………… 1,545,000 844,588 2,389,588
2015……………… 1,560,000 783,315 2,343,315
2016……………… 1,590,000 727,790 2,317,790
2017……………… 1,515,000 670,722 2,185,722
2018……………… 1,495,000 612,785 2,107,785
2019……………… 1,510,000 552,858 2,062,858
2020……………… 1,430,000 491,602 1,921,602
2021……………… 1,480,000 432,358 1,912,358
2022……………… 1,330,000 373,467 1,703,467
2023……………… 1,320,000 318,859 1,638,859
2024……………… 1,345,000 263,316 1,608,316
2025……………… 1,360,000 206,107 1,566,107
2026……………… 1,165,000 152,925 1,317,925
2027……………… 855,000 111,818 966,818
2028……………… 830,000 77,632 907,632
2029……………… 405,000 43,907 448,907
2030……………… 210,000 15,301 225,301
2031……………… 160,000 8,101 168,101
2032……………… 160,000 2,710 162,710
Total………………$ 22,810,000 $ 7,579,141 $ 30,389,141
Details related to the outstanding indebtedness at June 30, 2011, and the debt service requirements are as
follows:
Original Interest Outstanding Outstanding
Maturities Loan Rate at June 30, at June 30,
Project Through Amount (%) 2010 Issued Redeemed 2011
Municipal Purpose Bonds 2001………………………… 2021 $ 1,168,000 4.00 - 5.00 $ 625,000 $ - $ 60,000 $ 565,000
Municipal Purpose Bonds 2005………………………… 2024 4,000,000 2.50 - 4.13 3,000,000 - 200,000 2,800,000
Municipal Purpose Bonds 2006………………………… 2025 5,150,000 3.75 - 5.00 4,285,000 - 245,000 4,040,000
Municipal Purpose Bonds 2008………………………… 2030 9,400,000 3.00 - 5.00 8,450,000 - 475,000 7,975,000
Municipal Purpose Bonds 2009………………………… 2029 2,815,000 3.00 - 5.00 2,710,000 - 110,000 2,600,000
Municipal Purpose Bonds 2010………………………… 2030 1,800,000 2.50 - 4.00 1,800,000 - 140,000 1,660,000
Total Bonds Payable…………………………………………………………………………………………………… 28,783,000 - 20,872,010 19,640,000
Unamortized Premiums on Bonds and Notes………………………………………………………………………… 243,779 - 12,830 230,949
Total………………………………………………………………………………………………………………………$ 29,026,779 $ - $ 20,884,840 $ 19,870,949
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 22 Financial Statements
Debt service requirements for principal and interest for Water Company bonds and notes payable in future fiscal
years as of June 30, 2011 are as follows:
Fiscal Year Principal Interest Total
2012………………$ 1,235,000 $ 776,682 $ 2,011,682
2013……………… 1,255,000 733,492 1,988,492
2014……………… 1,255,000 690,292 1,945,292
2015……………… 1,270,000 634,918 1,904,918
2016……………… 1,300,000 587,131 1,887,131
2017……………… 1,225,000 541,223 1,766,223
2018……………… 1,205,000 497,856 1,702,856
2019……………… 1,220,000 452,483 1,672,483
2020……………… 1,140,000 404,002 1,544,002
2021……………… 1,195,000 357,408 1,552,408
2022……………… 1,130,000 309,267 1,439,267
2023……………… 1,160,000 263,659 1,423,659
2024……………… 1,185,000 216,116 1,401,116
2025……………… 1,200,000 166,907 1,366,907
2026……………… 1,005,000 120,125 1,125,125
2027……………… 695,000 83,818 778,818
2028……………… 670,000 54,432 724,432
2029……………… 245,000 25,606 270,606
2030……………… 50,000 2,000 52,000
Total………………$ 19,640,000 $ 6,917,417 $ 26,557,417
At June 30, 2012, the Water Company had the following authorized and unissued debt:
Purpose Amount
Wannacomet Water Company……………………………$ 1,100,000
At June 30, 2011, the Water Company had the following authorized and unissued debt:
Purpose Amount
Wannacomet Water Company……………………………$ 250,000
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 23 Financial Statements
Changes in Long-term Liabilities
During the fiscal year ended June 30, 2012, the following changes occurred in long-term liabilities:
Balance at Balance at
June 30, June 30, Current
2011 Additions Reductions 2012 Portion
Long-Term Bonds and Notes……………$ 19,640,000 $ 4,910,000 $ (1,740,000) $ 22,810,000 $ 1,545,000
Compensated Absences………………… 146,839 10,770 (29,368) 128,241 25,648
Other Postemployment Benefits……… 327,400 100,920 (40,544) 387,776 -
Total Long Term Liabilities………………$ 20,114,239 $ 5,021,690 $ (1,809,912) $ 23,326,017 $ 1,570,648
During the fiscal year ended June 30, 2011, the following changes occurred in long-term liabilities:
Balance at Balance at
June 30, June 30, Current
2010 Additions Reductions 2011 Portion
Long-Term Bonds and Notes……………$ 21,020,000 $ - $ (1,380,000) $ 19,640,000 $ 1,235,000
Compensated Absences………………… 154,319 23,384 (30,864) 146,839 29,368
Other Postemployment Benefits……… 267,002 94,257 (33,859) 327,400 -
Total Long Term Liabilities………………$ 21,441,321 $ 117,641 $ (1,444,723) $ 20,114,239 $ 1,264,368
NOTE 8 – RISK FINANCING
The Wannacomet Water Company is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial
insurance. The amount of claim settlements has not exceeded insurance coverage in any of the previous four
fiscal years.
The Town of Nantucket is self-insured for its health insurance and workers’ compensation activities, the
Wannacomet Water Company is included in the Town insurance plan. The Wannacomet Water Company pays
the Town’s health insurance fund for its proportionate share of coverage.
NOTE 9 – PENSION PLAN
Plan Description - The Wannacomet Water Company contributes to the Barnstable County Contributory
Retirement System (the System), a cost-sharing multiple-employer defined benefit pension plan administered by
the Barnstable County Retirement Board. Substantially all employees of the Water Company are members of the
System.
The System provides retirement, disability and death benefits to plan members and beneficiaries. Chapter 32 of
the MGL assigns authority to establish and amend benefit provisions of the plan. Cost-of-living adjustments
granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth’s state law
during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of-living
adjustments granted after 1997 must be approved by the Barnstable County Retirement Board and are borne by
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 24 Financial Statements
the System. The System issues a publicly available, unaudited, financial report in accordance with guidelines
established by the Commonwealth of Massachusetts’ Public Employee Retirement Administration Commission
(PERAC). That report may be obtained by contacting the System located at 99 Willow Street, Yarmouthport,
Massachusetts, 02675.
Funding Policy - Plan members are required to contribute to the System at rates ranging from 5% to 11% of
annual covered compensation. The Water Company is required to pay into the System their share of the system-
wide actuarial determined contribution that is apportioned among the employers based on active current payroll.
Administrative expenses are funded through investment earnings. Chapter 32 of the MGL governs the
contributions of plan members and the Water Company. The Water Company’s contributions to the System for
the fiscal year ended June 30, 2012, 2011 and 2010 totaled $174,532 $189,676, and $173,899, respectively,
which equaled its required contributions for each fiscal year.
The schedule of funding progress, presented as required supplementary information, following the notes to the
financial statements, presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule
of employer contributions, presented as required supplementary information, following the notes to the financial
statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing
plan as a whole, of which the Water Company is one participating employer, as well as the Water Company’s
proportionate share of the plan’s annual contributions. This information is designed to be helpful for
understanding the scale of the information presented relative to the Water Company.
NOTE 10 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description – The Town of Nantucket administers a single-employer defined benefit healthcare plan (the
plan), in which the Water Company participates. The plan provides lifetime healthcare for eligible retirees and
their spouses through the Town’s health insurance plan, which covers both active and retired members, including
the Town’s school teachers. Chapter 32B of the MGL assigns authority to establish and amend benefit provisions
of the plan. Benefit provisions are negotiated between the Water Company and the unions representing the
Water Company employees and are renegotiated each bargaining period. The plan does not issue a publicly
available financial report.
Funding Policy – Contribution requirements are also negotiated between the Water Company and union
representatives. The required contribution is based on a pay-as-you-go financing requirement. The Water
Company contributes 80% of the cost of current-year premiums for eligible retired plan members and their
spouses. Plan members receiving benefits contribute the remaining 20% of their premium costs. For fiscal year
2012, the Water Company contributed approximately $41,000 to the plan.
Annual OPEB Cost and Net OPEB Obligation – The Water Company’s annual other postemployment benefit
(OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount
actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 25 Financial Statements
Annual Required Contribution………………………………… $ 95,712
Interest on net OPEB obligation……………………………… 16,400
Adjustment to the ARC………………………………………… (12,000)
Annual OPEB cost (expense)……………………………… 100,112
Contributions made……………………………………………… (40,544)
Increase in net OPEB obligation……………………………… 59,568
Net OPEB obligation - beginning of year……………………… 328,208
Net OPEB obligation - end of year…………………………… $ 387,776
The Water Company’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation for fiscal year 2012 was as follows:
Fiscal Year Annual Annual OPEB Net OPEB
Ended OPEB Cost Cost Contributed Obligation
6/30/2012 $ 100,112 40% $ 387,776
6/30/2011 96,415 42% 328,208
6/30/2010 177,769 23% 267,002
Funded Status and Funding Progress – As of July 1, 2010, the most recent actuarial valuation date, the actuarial
accrued liability for benefits totaled approximately $1,312,813, all of which was unfunded.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques that
are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
In the July 1, 2010, actuarial valuation, actuarial liabilities were determined using the projected unit credit cost
method. The actuarial assumptions included a 5% investment return assumption, which is based on the expected
yield on the assets of the Water Company, calculated based on the funded level of the plan at the valuation date,
and an annual medical/drug cost trend rate of 10% decreasing by .75% for 6 years and by .50% for 1 year to an
ultimate level of 5% per year. The UAAL is being amortized over a 30 year period, with amortization payments
increasing at 4.50% per year. The remaining amortization period at June 30, 2012 is 26 years.
Notes to Financial Statements Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 26 Financial Statements
NOTE 11 – COMMITMENTS
As of June 30, 2012 the Wannacomet Water Company has various contracts open for the North Pasture Water
Tank and various other maintenance and rehabilitation projects totaling approximately $1.5 million
NOTE 12 – CONTINGENCIES
Various legal actions and claims are pending. Litigation is subject to many uncertainties, and the outcome of
individual litigated matters is not always predictable. Although the amount of liability, if any, at June 30, 2012 and
2011, cannot be ascertained, management believes any resulting liability should not materially affect the Water
Company’s financial position at June 30, 2012 and 2011.
NOTE 13 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS
During fiscal year 2012, the Water Company has implemented the following GASB pronouncements:
• GASB Statement #62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-
November 30, 1989 FASB and AICPA Pronouncements. The implementation of this pronouncement did
not impact the financial statements.
• GASB Statement #64, Derivative Instruments: Application of Hedge Accounting Termination Provisions,
an amendment of GASB Statement No. 53. The implementation of this pronouncement did not impact the
financial statements.
Future Implementation of GASB Pronouncements:
• The GASB issued Statement #60, Accounting and Financial Reporting for Service Concession
Arrangements, which is required to be implemented in fiscal year 2013.
• The GASB issued Statement #61, The Financial Reporting Entity: Omnibus, which is required to be
implemented in fiscal year 2013.
• The GASB issued Statement #63, Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position, which is required to be implemented in fiscal year 2013.
• The GASB issued Statement #65, Items Previously Reported as Assets and Liabilities, which is required
to be implemented in fiscal year 2013.
• The GASB issued Statement #66, Technical Corrections – 2012, an amendment of GASB Statements
No. 10 and No. 62, which is required to be implemented in fiscal year 2013.
• The GASB issued Statement #67, Financial Reporting for Pension Plans – an amendment of GASB
Statement No. 25, which is required to be implemented in fiscal year 2014.
• The GASB issued Statement #68, Accounting and Financial Reporting for Pensions – an amendment of
GASB Statement No. 27, which is required to be implemented in fiscal year 2015.
Management is currently assessing the impact that the implementation of these pronouncements will have on the
basic financial statements.
Wannacomet Water Company 27 Financial Statements
Required Supplementary Information
Wannacomet Water Company 28 Required Supplementary Information
Retirement System
Schedules of Funding Progress and
Employer Contributions
The Retirement System Schedule of Funding Progress presents multiyear trend information about whether the
actuarial value of planned assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
The Retirement System Schedule of Employer Contributions presents multiyear trend information for required and
actual contributions relating to the cost-sharing plan as a whole, of which the Wannacomet Water Company is
one participating employer, as well as the Water Company’s proportionate share of the plan’s annual
contributions.
Retirement System Schedules
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
1/1/2011 $ 651,063,981 $ 1,173,483,848 $ 522,419,867 55.5% $ 239,437,303 218.2%
1/1/2010 554,876,554 1,030,210,321 475,333,767 53.9% 234,374,075 202.8%
1/1/2009 520,089,855 966,564,614 446,474,759 53.8% 249,971,296 178.6%
1/1/2007 517,396,087 825,863,068 308,466,981 62.6% 226,391,633 136.3%
1/2/2006 465,637,984 765,747,723 300,109,739 60.8% 215,474,180 139.3%
1/1/2004 378,317,300 647,655,411 269,338,111 58.4% 190,614,004 141.3%
1/1/2002 362,911,896 553,531,966 190,620,070 65.6% 173,610,557 109.8%
1/1/2000 300,396,700 462,462,500 162,065,800 65.0% 152,293,100 106.4%
1/1/1998 235,247,660 404,215,695 168,968,035 58.2% 121,161,677 139.5%
1/1/1996 157,044,089 276,107,221 119,063,132 56.9% 108,456,079 109.8%
1/1/1993 97,194,645 226,430,792 129,236,147 42.9% 97,074,725 133.1%
The Water Company's share of the UAAL, as of January 1, 2011, is approximately .40%.
See notes to required supplementary information.
BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM
SCHEDULE OF FUNDING PROGRESS
Wannacomet Water Company 29 Required Supplementary Information
(B/A)
Plan Year Annual (A) (B) Water Company's
Ended Required Actual Percentage Actual Percentage of System Wide
December 31 Contributions Contributions Contributed Contributions Actual Contributions
2011 $ 43,807,158 $ 43,807,158 100% $ 174,532 0.40%
2010 41,327,508 41,327,508 100% 189,676 0.46%
2009 36,943,817 36,943,817 100% 173,899 0.47%
2008 34,360,912 34,360,912 100% 146,052 0.43%
2007 32,038,146 32,038,146 100% 118,681 0.37%
2006 31,044,132 31,044,132 100% 115,903 0.37%
2005 27,846,430 27,846,430 100% 109,122 0.39%
The Company's Actual Contributions equaled 100% of its Required Contributions for each year presented.
See notes to required supplementary information.
BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER CONTRIBUTIONS
System Wide Wannacomet Water Company
Wannacomet Water Company 30 Required Supplementary Information
Wannacomet Water Company 31 Required Supplementary Information
Other Postemployment Benefits Plan
Schedules
The Schedule of Funding progress compares, over time, the actuarial accrued liability for benefits with the
actuarial value of accumulated plan assets.
The Schedule of Employer Contributions presents multiyear trend information for required and actual
contributions relating to the plan.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.
Other Postemployment Schedules
SCHEDULE OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability (AAL) AAL Funded Covered of Covered
Valuation Assets Projected Unit Credit (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
7/1/2010 $ - $ 1,316,054 $ 1,316,054 0% $ N/A N/A
7/1/2009 - 2,032,106 2,032,106 0% N/A N/A
7/1/2007 - 823,700 823,700 0% N/A N/A
Annual Actual
Year Required Contributions Percentage
Ended Contribution Made Contributed
6/30/2012 $ 95,712 $ 40,544 42%
6/30/2011 96,415 35,209 37%
6/30/2010 177,769 41,133 23%
6/30/2009 170,657 40,291 24%
OTHER POSTEMPLOYMENT BENEFIT PLAN
Schedule of Funding Progress
Schedule of Employer Contributions
Wannacomet Water Company 32 Required Supplementary Information
ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Methods:
Valuation date…………………………………………… July 1, 2010
Actuarial cost method…………………………………… Projected Unit Credit Cost Method
Amortization method……………………………………… Amortization payments increasing at 4.50%
Remaining amortization period………………………… 30 years, open
Actuarial Assumptions:
Investment rate of return………………………………… 5.00%, pay-as-you-go scenario
Medical/drug cost trend rate…………………………… 10% decreasing by .75% for 6 years and by .50%
for 1 year to an ultimate level of 5% per year.
Plan Membership, Town Wide:
Current retirees, beneficiaries, and dependents……… 213
Current active members………………………………… 474
Total 687
See notes to required supplementary information.
OTHER POSTEMPLOYMENT BENEFIT PLAN
Wannacomet Water Company 33 Required Supplementary Information
Notes to Required Supplementary Information Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 34 Required Supplementary Information
NOTE A – PENSION PLAN
Notes to Required Supplementary Information
The Wannacomet Water Company contributes to the Barnstable County Contributory Retirement System
(“Retirement System”), a cost-sharing, multiple-employer defined benefit pension plan (“Plan”) administered by
the Barnstable County Retirement Board. The Retirement System provides retirement, disability, and death
benefits to members and beneficiaries. Chapter 32 of the MGL assigns authority to establish and amend benefit
provisions of the Plan. Plan members are required to contribute to the Retirement System at rates ranging from
5% to 11% of annual covered compensation. The Water Company is required to pay into the Retirement System
its share of the systemwide actuarially determined contribution which is apportioned among the employers based
on active covered payroll.
The schedule of funding progress, presented as required supplementary information, following the notes to the
financial statements, presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule
of employer contributions, presented as required supplementary information, following the notes to the financial
statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing
plan as a whole, of which the Water Company is one participating employer, as well as the Water Company’s
proportionate share of the plans annual contributions. This information is designed to be helpful for
understanding the scale of the information presented relative to the Water Company.
The following actuarial methods and assumptions were used in the Retirement System’s most recent actuarial
valuation:
Actuarial Methods and Assumptions:
Valuation Date…………………………………………………January 1, 2010
Actuarial Cost Method…………………………………………Entry Age Normal Cost Method
Amortization Method…………………………………………Increasing at 4.0% per year after fiscal 2015.
Early Retirement Incentives and remaining
unfunded liability
Asset Valuation Method………………………………………5-year smoothing of investment returns greater (less)
than expected.
Actuarial Assumptions:
Investment rate of return……………………………………8.00%
Projected salary increases…………………………………Varies by length of service with ultimate rates of
4.75% and 5.25% for Groups 1 and 4, respectively
Cost of living adjustments………………………………… 3.0% for the first $12,000 of retirement income,
increasing to $13,000 in fiscal 2012.
Plan Membership:
Retired participants and beneficiaries receiving benefits…………………………………… 2,422
Terminated participants entitled to a return of their employee contributions……………… 649
Terminated participants with a vested right to a deferred or immediate benefit………… 123
Active participants……………………………………………………………………………… 4,786
Total……………………………………………………………………………………………… 7,980
Remaining Amortization Period………………………………28 years from July 1, 2010 for 2002 and 2003
Notes to Required Supplementary Information Fiscal Years Ended June 30, 2012 and 2011
Wannacomet Water Company 35 Required Supplementary Information
NOTE B – OTHER POSTEMPLOYMENT BENEFITS
The Wannacomet Water Company participates in the Town’s healthcare plan. The Town administers a single-
employer defined benefit healthcare plan (“the Retiree Health plan”). The plan provides lifetime healthcare for
eligible retirees and their spouses through the Town’s health insurance plan, which covers both active and retired
members, including teachers.
The Water Company currently finances its other postemployment benefits (OPEB) on a pay-as-you-go basis. As
a result, the funded ratio (actual value of assets expressed as a percentage of the actuarial accrued liability) is
0%. In accordance with Governmental Accounting Standards, the Water Company has recorded its OPEB cost
equal to the actuarial determined annual required contribution (ARC) which includes the normal cost of providing
benefits for the year and a component for the amortization of the total unfunded actuarial accrued liability of the
plan.
The Schedule of Funding Progress presents multiyear trend information which compares, over time, the actuarial
accrued liability for benefits with the actuarial value of accumulated plan assets
Projections of benefits for financial reporting purposes are based on the substantive plan and included the types
of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques that
are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.