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HomeMy WebLinkAboutFiscal Year 2009 Basic Financial Statements TOWN OF NANTUCKET, MASSACHUSETTS REPORT ON EXAMINATION OF BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2009 TOWN OF NANTUCKET, MASSACHUSETTS REPORT ON EXAMINATION OF BASIC FINANCIAL STATEMENTS JUNE 30, 2009 TABLE OF CONTENTS Page Independent Auditors’ Report..........................................................................................................................................1 Management’s Discussion and Analysis.........................................................................................................................3 Basic Financial Statements ...........................................................................................................................................13 Statement of Net Assets............................................................................................................................................14 Statement of Activities ...............................................................................................................................................16 Governmental Funds – Balance Sheet......................................................................................................................18 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Assets...19 Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances.............................20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities.....................................................................................................................21 Proprietary Funds – Statement of Net Assets ...........................................................................................................22 Proprietary Funds – Statement of Revenues, Expenses and Changes in Fund Net Assets.....................................24 Proprietary Funds – Statement of Cash Flows..........................................................................................................26 Fiduciary Funds – Statement of Fiduciary Net Assets...............................................................................................28 Fiduciary Funds – Statement of Changes in Fiduciary Net Assets ...........................................................................29 Notes to Basic Financial Statements.........................................................................................................................30 Required Supplementary Information............................................................................................................................61 Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual..........62 Retirement System Schedules...................................................................................................................................64 Retirement System Schedule of Funding Progress...............................................................................................65 Retirement System Schedule of Employer Contributions......................................................................................66 Other Post-Employment Benefit Schedules ..............................................................................................................67 Other Post-Employment Benefit Plan Schedule of Funding Progress and Employer Contributions.....................68 Other Post-Employment Benefit Plan Actuarial Methods and Assumptions..........................................................69 Notes to Required Supplementary Information..........................................................................................................70 Nantucket County Component Unit Combining Statements .........................................................................................73 Nantucket County – Combining Balance Sheet.....................................................................................................75 Nantucket County – Combining Statement of Revenues, Expenditures, and Changes in Fund Balances...........76 1 Independent Auditors’ Report To the Honorable Board of Selectmen Town of Nantucket, Massachusetts We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Nantucket, Massachusetts, as of and for the year ended June 30, 2009, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of Nantucket's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Nantucket Islands Land Bank discretely presented component unit. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Nantucket Islands Land Bank discretely presented component unit, is based on the report of the other auditor. 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 opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Nantucket, Massachusetts, as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year 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 January 5, 2010 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. 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. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The combining fund statements, as listed in the table of contents, are presented for the purpose of supplementary analysis and are not a required part of the financial statements of the Town of Nantucket, Massachusetts. Such supplementary information has been subjected to the auditing procedures applied in the audit of the financial 2 statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. Management’s discussion and analysis, located on the following pages, and the schedule of revenues, expenditures and changes in fund balance – general fund – budgetary basis, retirement system schedule of funding progress, retirement system schedule of employer contributions, other post-employment benefit plan schedule of funding progress and employer contributions and other post-employment benefit plan actuarial methods and assumptions located after the notes to the basic financial statements, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Wakefield, Massachusetts January 5, 2010 Town of Nantucket, Massachusetts 3 Management’s Discussion and Analysis Management’s Discussion and Analysis Town of Nantucket, Massachusetts 4 Basic Financial Statements Management’s Discussion and Analysis As management of the Town of Nantucket, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2009. The Town 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). External users of these financial statements, such as investors and rating agencies, rely on consistent reporting standards in order to compare the financial position of the Town of Nantucket with that of other governmental entities. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Town of Nantucket’s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances, in a manner similar to private-sector business. 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 financial position is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. 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 taxes and earned but unused sick leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include general government, public safety, education, public works, community preservation, human services, culture and recreation, claims and judgments and interest. The business-type activities include the activities of the sewer department, solid waste, airport, and the Siasconset and Wannacomet water departments. The government-wide financial statements include not only the Town of Nantucket itself (known as the primary government), but also the County of Nantucket (County) and the Nantucket Islands Land Bank (Land Bank), which are legally separate entities. The County is included because the elected Board of Selectmen serves also as County Commissioners. The Land Bank is included because a portion of the Town’s debt was incurred on behalf of the Land Bank, and the Town guarantees other debt incurred by the Land Bank. Financial information for these component units is reported separately within the governmental and proprietary fund statements respectively. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Fund accounting is used to ensure and Town of Nantucket, Massachusetts 5 Basic Financial Statements demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town of Nantucket adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund as required supplementary information to demonstrate compliance with this budget. Proprietary funds. The Town maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its sewer department, solid waste, airport, and the Siasconset and Wannacomet water departments’ activities and activities of the Nantucket Islands Land Bank component unit. Internal service funds are used by the Town to report the activity of self funded insurance programs, including health and workers’ compensation insurance. Governmental accounting principles allow self funded insurance programs to be reported in either the general fund or in an internal service fund. The insurance programs benefit both the governmental and business-type activities of the Town; however, the governmental activities include more employees and retirees than the business-type activities. For that reason, the internal service funds are included within the category of governmental activities in the government-wide financial statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Financial Highlights as of the close of Fiscal 2009 • The total of assets exceeded liabilities (i.e., net assets) by $174 million for governmental activities, and $117 million for business type activities. • Governmental funds reported combined ending fund balances of $34 million. • Unreserved fund balance for the general fund totaled $7.9 million. • Total governmental funds debt totaled $78.2 million, and total enterprise fund debt totaled $112.3 million. Town of Nantucket, Massachusetts 6 Basic Financial Statements Government-wide Financial Analysis The following chart provides a summary of Governmental activities financial data for fiscal year 2009, with comparative fiscal 2008 information. Governmental Activities Balance at Balance at June 30, June 30, 2009 2008 Assets: Current assets……………………………………………$ 57,426,793 $ 57,632,959 Noncurrent assets (excluding capital)………………… 398,828 499,024 Capital assets, not being depreciated………………… 180,467,349 175,330,456 Capital assets, net of accumulated depreciation…… 29,394,863 27,777,272 Total assets………………………………………… 267,687,833 261,239,711 Liabilities: Current liabilities (excluding debt)…………………… 7,225,372 6,579,717 Noncurrent liabilities (excluding debt)………………… 8,740,740 1,221,905 Current debt……………………………………………… 13,474,322 11,976,816 Noncurrent debt………………………………………… 64,739,985 65,196,354 Total liabilities………………………………………94,180,419 84,974,792 Net Assets: Capital assets net of related debt……………………… 156,034,000 158,769,791 Restricted………………………………………………… 14,401,121 13,803,760 Unrestricted……………………………………………… 3,072,293 3,691,368 Total net assets……………………………………$ 173,507,414 $ 176,264,919 As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. For governmental activities, assets exceeded liabilities by $174 million at the close of fiscal year 2009. The largest portion of the Town’s net assets, $156 million, (90%), reflects investment in capital assets (e.g., land, buildings, machinery, and equipment), less any outstanding debt which was borrowed in order to build or acquire those assets. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the net assets, $14.4 million (8%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $3 million (2%), may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the Town reports positive balances in all three categories of net assets. Noncurrent liabilities include an accrued liability for other post-employment benefits in the amount of $7.4 million. This is the result of the Town’s implementation of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions (OPEB). Current debt includes approximately $6.8 million of multi-purpose bond anticipation notes payable as well as $6.6 million of general obligation bonds due in fiscal year 2010. Town of Nantucket, Massachusetts 7 Basic Financial Statements Governmental Activities June 30, June 30, 2009 2008 Program revenues: Charges for services……………………………………$ 5,868,336 $ 7,408,010 Operating grants and contributions…………………… 5,795,452 5,462,762 Capital grants and contributions……………………… 1,270,878 1,991,891 General revenues: Real estate and personal property taxes……………… 57,438,797 55,285,952 Tax liens………………………………………………… 392,078 295,646 Motor vehicle and other excise taxes………………… 2,201,004 2,367,735 Hotel/motel tax…………………………………………… 1,237,233 1,343,140 Penalties and interest on taxes……………………… 473,701 410,785 Community preservation fund surtax………………… 1,616,989 1,535,337 Payments in lieu of taxes……………………………… 7,296 3,645 Nonrestricted grants and contributions……………… 376,265 469,868 Unrestricted investment income……………………… 277,329 634,539 Miscellaneous revenues……………………………… 843,523 579,775 Total revenues……………………………………… 77,798,881 77,789,085 Expenses: General government…………………………………… 8,835,601 6,832,016 Public safety……………………………………………… 14,346,976 10,691,407 Education………………………………………………… 27,861,059 27,607,296 Public works……………………………………………… 4,195,016 3,146,271 Community preservation……………………………… 1,895,017 2,105,908 Human services………………………………………… 9,699,805 7,473,662 Culture and recreation………………………………… 3,872,616 2,232,982 Interest…………………………………………………… 3,189,350 2,419,841 Total expenses…………………………………… 73,895,440 62,509,383 Transfers…………………………………………………… (6,660,946) (14,811,978) Change in net assets…………………………………… $ (2,757,505) $ 467,724 Governmental Activities Balance at Balance at Net June 30, June 30, Increase 2009 2008 (Decrease) Net Assets: Capital assets net of related debt………………………$ 156,034,000 $ 158,769,791 $ (2,735,791) Restricted………………………………………………… 14,401,121 13,803,760 597,361 Unrestricted……………………………………………… 3,072,293 3,691,368 (619,075) Total net assets……………………………………$ 173,507,414 $ 176,264,919 $ (2,757,505) Town of Nantucket, Massachusetts 8 Basic Financial Statements The primary governmental expenses totaled $74 million. Of that amount, $12.9 million was directly supported by program revenues consisting of charges for services, operating and capital grants and contributions. General revenues totaled $64.9 million, primarily coming from property taxes, motor vehicle excise, hotel/motel taxes, non- community preservation surtaxes, restricted state aid and other miscellaneous charges. Additionally, governmental activities reported capital contributions of $1.4 million to the sewer enterprise fund, and $5.3 million of transfers to business-type activities. The capital contribution is recorded for debt that is to be repaid with governmental funds which has been used to construct assets for the sewer enterprise fund. The $5.3 million in transfers to the solid waste enterprise fund consists of the Town’s initial budgeted transfer of $2,784,000 in taxes and general revenues to balance the solid waste budget; a mid-year decrease in anticipated solid waste revenue projections, which increased the subsidy by $1,465,605; a reserve fund transfer of $305,500; and $725,841 which represents the fiscal year 2008 certified retained earnings deficit. In total, governmental activities net assets decreased by approximately $3 million in Fiscal 2009. The key element of the decrease relates mainly to the implementation of GASB Statement No. 45 and the related expense accrual in the amount of $7.4 million. The Town experienced a 26% decrease in charges for services, a 57% decrease in capital grants, a 6% increase in operating grants and contributions and a 4% increase in real estate tax collections. Expenses increased in virtually all functional categories, except for community preservation, with the largest increase being in public safety. Town of Nantucket, Massachusetts 9 Basic Financial Statements The following chart provides a summary of Business-type activities financial data for fiscal year 2009, with comparative fiscal 2008 information. Business-Type Activities Balance at Balance at June 30, June 30, 2009 2008 Assets: Current assets……………………………………………$ 56,471,897 $ 44,675,721 Noncurrent assets (excluding capital)………………… 2,259,318 2,367,761 Capital assets, not being depreciated………………… 108,259,314 74,107,339 Capital assets, net of accumulated depreciation…… 72,862,056 76,145,691 Total assets………………………………………… 239,852,585 197,296,512 Liabilities: Current liabilities (excluding debt)…………………… 6,849,174 10,768,076 Noncurrent liabilities (excluding debt)………………… 3,570,066 327,726 Current debt……………………………………………… 37,143,451 12,710,329 Noncurrent debt………………………………………… 75,118,715 70,859,005 Total liabilities……………………………………… 122,681,406 94,665,136 Net Assets: Capital assets net of related debt……………………… 109,858,055 97,664,074 Unrestricted……………………………………………… 7,313,124 4,967,302 Total net assets…………………………………… 117,171,179 102,631,376 Program revenues: Charges for services…………………………………… 24,172,299 25,376,292 Operating grants and contributions…………………… 1,113,866 1,773,605 Capital grants and contributions……………………… 15,208,679 6,804,856 Total revenues……………………………………… 40,494,844 33,954,753 Expenses: Water…………………………………………………… 4,600,314 3,941,308 Sewer…………………………………………………… 5,527,480 4,416,855 Solid Waste……………………………………………… 10,575,310 8,988,076 Airport…………………………………………………… 11,912,883 13,717,716 Total expenses…………………………………… 32,615,987 31,063,955 Transfers and capital contributions…………………… 6,660,946 18,111,978 Change in net assets…………………………………… $ 14,539,803 $ 21,002,776 Town of Nantucket, Massachusetts 10 Basic Financial Statements There was a net increase of $14.5 million in net assets reported in connection with the Town’s business-type activities (enterprise funds). The changes by fund are listed in the following table: Business-Type Activities Balance at Balance at Net June 30, June 30, Increase 2009 2008 (Decrease) Net Assets: Siasconset Water……………………………………… $ 4,072,117 $ 4,017,461 $ 54,656 Wannacomet Water Company………………………… 14,494,563 14,063,649 430,914 Nantucket Memorial Airport…………………………… 44,942,215 30,242,477 14,699,738 Sewer Enterprise Fund………………………………… 45,687,206 44,380,438 1,306,768 Solid Waste Enterprise Fund………………………… 7,975,078 9,927,351 (1,952,273) Total net assets……………………………………$ 117,171,179 $ 102,631,376 $14,539,803 The most significant factor in this change is a $14 million increase in net assets for Nantucket Memorial Airport which consisted mostly of state and federal capital grants for construction projects, including a new airport terminal. The decrease in the Solid Waste Enterprise Fund was mainly due to a decrease in tipping fees. At the end of the current fiscal year, the Town reports $117 million in net assets for its combined business-type activities. Financial Analysis of the Government’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, governmental funds reported combined ending fund balances of $34.2 million, of which $10.8 million is general fund, and $23.4 million is nonmajor governmental funds. The general fund is the chief operating fund. At the end of fiscal 2009, unreserved fund balance of the general fund totaled $7.8 million, while total fund balance totaled $10.8 million. As a measure of the general fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 10.8% of total general fund expenditures and transfers out, while total fund balance represents 14.8% of that same amount. $3.2 million of the unreserved fund balance was designated at year end to support the 2010 budget. An additional $2.9 million was reserved for carry-over appropriations and encumbrances. While total fund balance showed a modest increase, the unreserved, undesignated fund balance decreased by $2.5 million during the fiscal year, mainly due to increases in designations for future budgets. Town of Nantucket, Massachusetts 11 Basic Financial Statements The Town also maintains a community preservation fund, classified within the non-major governmental funds which had a year end fund balance of $5.9 million. Of this amount, $4.5 million is designated for ongoing projects, by previous Annual Town Meeting votes. This fund is attributable to the Town’s acceptance of the Community Preservation Act, which allows the Town to impose a surcharge on property taxes and to receive state funds for specified uses related to the acquisition, creation, preservation and support of open space, historic resources, land for recreation use and community housing. In fiscal year 2009, the Town earned and accrued a year end receivable for state matching community preservation funds, of approximately $675,000. General Fund Budgetary Highlights The General fund budget consists of those appropriations voted at Annual Town Meeting, carryover encumbrances and appropriations from the previous year, amounts charged by the Commonwealth and deducted from state revenues, and amounts required to be raised as a result of any deficits. The Town’s budget may be changed by action of Town Meeting or, in the last two months of the fiscal year, by vote of the Board of Selectmen and the Finance Committee, with statutory limitation as to amount. The original appropriation budget and the carryover encumbrances and appropriations totaled $75.8 million. Changes during the year consisted largely of allocations between and among departments. The net decrease from changes to the appropriation budget totaled $826,000, which was a combination of $1.4 million in budget reductions and $726,000 in new appropriations. Total actual revenue was lower than estimated revenue by $372,000. At year end, outstanding purchase orders and carry-over appropriations and articles totaled approximately $2.9 million, which is reserved in fund balance at year end. The total of actual expenditures and these amounts reserved for future expenditures was lower than the final budget by approximately $1.6 million, a positive variance. The net of actual revenue and expense, compared to budgeted amounts, was a positive variance of $1.2 million. Capital Asset and Debt Administration In conjunction with the annual operating budget, the Town annually prepares a capital budget for the upcoming fiscal year and a Capital Improvement Plan (CIP) that is used as a guide for future capital expenditures. The Town’s investment in capital assets for its governmental and business-type activities as of June 30, 2009, totals $210 million in the governmental funds, and $181 million in the enterprise funds (net of accumulated depreciation). This investment in capital assets includes land, buildings, land improvements, equipment, vehicles and infrastructure. Current year fixed asset additions totaled $9.2 million for governmental activities, and $35.1 million for business- type activities. Long-term and short-term Debt At the end of the current fiscal year, the Town of Nantucket had total bonded debt outstanding of $190.5 million. The entire amount is classified as general obligation debt and is backed by the full faith and credit of the Town. Of this amount, $39.8 million is in short term notes and the remaining $150.7 is outstanding long term debt. The governmental fund portion of the outstanding debt is $78.2 million. The enterprise funds’ portion of the outstanding debt is $112.3 million. Town of Nantucket, Massachusetts 12 Basic Financial Statements Governmental Enterprise Funds Funds Total Short term………………………………$ 6,889,510 $ 32,888,725 $ 39,778,235 Current portion of long term………… 6,584,812 4,254,726 10,839,538 Noncurrent portion of long term…… 64,739,985 75,118,715 139,858,700 Total…………………………………$ 78,214,307 $ 112,262,166 $ 190,476,473 Please refer to the notes to the financial statements for further discussion of the major capital and debt activity. Economic Factors and Next Year’s Budgets and Rates The Town’s tax base continued to grow in fiscal 2009. Taxable property increased by $195 million (.9%) in 2009. New growth provided additional tax revenue of $1 million in 2009 or 2.1% of the prior year’s levy base. The average residential assessed value was $1.9 million in 2009. The residential tax rate for 2009 was $2.76 per $1,000 of assessed value. The 2009 Annual and Special Town Meetings approved a fiscal year 2010 total budget of $109.5 million, including a total general fund budget of $75.9 million. The projected residential tax rate for 2010 is $2.86 per $1,000 of assessed value. Requests for Information This financial report is designed to provide a general overview of the Town of Nantucket’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, 16 Broad Street, Nantucket, Massachusetts 02554. Town of Nantucket, Massachusetts 13 Basic Financial Statements Basic Financial Statements Primary Government Governmental Business-type Activities Activities Total ASSETS CURRENT: Cash and cash equivalents………………………………………………………… $ 41,548,797 $ 41,539,300 $ 83,088,097 Restricted cash and cash equivalents……………………………………...……… - - - Investments…………………………………………………………………………… 2,831,276 - 2,831,276 Investments, restricted……………………………………………………………… - - - Receivables, net of allowance for uncollectibles: Real estate and personal property taxes……………………………………… 3,672,256 - 3,672,256 Tax and trash liens………………………………………………………………… 1,902,085 - 1,902,085 Motor vehicle and other excise taxes…………………………………………… 166,017 - 166,017 User fees…………………………………………………………………………… 2,946 2,136,967 2,139,913 Departmental and other………………………………………………………… 924,032 - 924,032 Special assessments……………………………………………………………… 25,171 - 25,171 Intergovernmental………………………………………………………………… 4,048,966 12,829,755 16,878,721 Deferred loss on refunding…………..……………………………………………… 100,196 - 100,196 Inventory……………………………………………………………………………… - 557,426 557,426 Working capital deposit……………………………………………………………… 1,602,600 - 1,602,600 Other assets…………………………………………………………………………… - - - Prepaid expenses…………………………………………………………………… 10,900 - 10,900 Internal balances……………………………………………………………………… 591,551 (591,551) - NONCURRENT: Restricted assets: Cash and cash equivalents……………….……………………………………… - - - Cash surrender value of life insurance………………………………………… - - - Receivables, net of allowance for uncollectibles: Intergovernmental………………………………………………………………… - 2,259,318 2,259,318 Deferred loss on refunding…………………………………………………………… 398,828 - 398,828 Capital assets, not being depreciated……………………...……………………… 180,467,349 108,259,314 288,726,663 Capital assets, net of accumulated depreciation………………………………… 29,394,863 72,862,056 102,256,919 TOTAL ASSETS………………………………………………………………………… 267,687,833 239,852,585 507,540,418 LIABILITIES CURRENT: Warrants payable……………………………………………………………………… 1,205,467 5,046,050 6,251,517 Accrued liabilities……………………………………………………………………… - 9,609 9,609 Accrued payroll……………………………………………………………………… 2,708,469 157,677 2,866,146 Health claims payable………………………………………………………………… 721,784 - 721,784 Accrued interest……………………………………………………………………… 991,622 1,142,272 2,133,894 Payroll withholdings…………………………………………………………………… 42,877 - 42,877 Security deposits……………………………………………………………………… - 336,330 336,330 Abandoned property………………………………………………………………… 22,094 - 22,094 Other liabilities………………………………………………………………………… 1,104,829 53,750 1,158,579 Compensated absences……………………………………………………………… 295,564 103,486 399,050 Workers' compensation……………………………………………………………… 93,146 - 93,146 Unamortized premium on bonds and notes payable……………………………… 39,520 - 39,520 Bonds and notes payable…………………………………………………………… 13,474,322 37,143,451 50,617,773 NONCURRENT: Landfill closure………………………………………………………………………… - 2,428,000 2,428,000 Compensated absences……………………………………………………………… 1,182,257 413,940 1,596,197 Unamortized premium on bonds and notes payable……………………………… 157,309 - 157,309 Other post-employment benefits…………………………………………………… 7,401,174 728,126 8,129,300 Bonds and notes payable…………………………………………………………… 64,739,985 75,118,715 139,858,700 TOTAL LIABILITIES……………………………………………………………………… 94,180,419 122,681,406 216,861,825 NET ASSETS Invested in capital assets, net of related debt………………………………………… 156,034,000 109,858,055 265,892,055 Restricted for: Debt service………………………………………………………...………………… - - - Permanent funds: Expendable……….……………………………………………………………… 226,570 - 226,570 Nonexpendable…………………………………………………………………… 308,153 - 308,153 Other purposes……………………………………………………………………… 13,866,398 - 13,866,398 Unrestricted………………………………………………………………………………… 3,072,293 7,313,124 10,385,417 TOTAL NET ASSETS……………………………………………………………………$ 173,507,414 $ 117,171,179 $ 290,678,593 See notes to basic financial statements. STATEMENT OF NET ASSETS JUNE 30, 2009 Town of Nantucket, Massachusetts 14 Basic Financial Statements County Land Bank Total $ 3,570,395 $ 9,653,251 $ 13,223,646 - 206,570 206,570 - - - - 1,118,379 1,118,379 - - - - - - - - - - - - 45,507 130,253 175,760 - - - 1,580 - 1,580 - - - - 115,479 115,479 - - - - 42,500 42,500 - 341,681 341,681 - - - - 3,660,474 3,660,474 - 535,492 535,492 - - - - - - 28,458 203,012,641 203,041,099 394,868 16,827,230 17,222,098 4,040,808 235,643,950 239,684,758 92,375 200,292 292,667 - 307,604 307,604 9,282 - 9,282 - - - - - - 383,604 - 383,604 - - - - - - 37,337 - 37,337 - - - - - - - - - - 3,975,000 3,975,000 - - - - - - - - - 81,699 348,900 430,599 - 28,760,399 28,760,399 604,297 33,592,195 34,196,492 423,326 187,146,972 187,570,298 - 3,867,044 3,867,044 - - - - - - - - - 3,013,185 11,037,739 14,050,924 $ 3,436,511 $ 202,051,755 $ 205,488,266 Component Units Town of Nantucket, Massachusetts 15 Basic Financial Statements STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2009 Operating Capital Charges for Grants and Grants and Net (Expense) Functions/Programs Expenses Services Contributions Contributions Revenue Primary Government: Governmental Activities: General government…………………… $ 8,835,601 $ 211,203 $ 602,752 $ - $ (8,021,646) Public safety……………………………… 14,346,976 1,633,813 695,037 - (12,018,126) Education………………………………… 27,861,059 515,790 3,994,507 - (23,350,762) Public works……………………………… 4,195,016 66,298 1,200 596,187 (3,531,331) Community preservation………………… 1,895,017 - - 674,691 (1,220,326) Human services………………………… 9,699,805 3,120,051 32,079 - (6,547,675) Culture and recreation…………………… 3,872,616 321,181 469,877 - (3,081,558) Interest…………………………………… 3,189,350 - - - (3,189,350) Total Governmental Activities………… 73,895,440 5,868,336 5,795,452 1,270,878 (60,960,774) Business-Type Activities: Water……………………………………… 4,600,314 4,714,969 370,915 - 485,570 Sewer……………………………………… 5,527,480 4,911,035 543,213 - (73,232) Solid waste………………………………… 10,575,310 3,282,734 58,406 951 (7,233,219) Airport……………………………………… 11,912,883 11,263,561 141,332 15,207,728 14,699,738 Total Business-Type Activities………… 32,615,987 24,172,299 1,113,866 15,208,679 7,878,857 Total Primary Government……………$ 106,511,427 $ 30,040,635 $ 6,909,318 $ 16,479,557 $(53,081,917) Component Units: County……………………………………… 2,201,665 957,093 572,942 - (671,630) Land Bank………………………………… 6,009,300 11,530,788 445,493 - 5,966,981 Total Component Units………………. $ 8,210,965 $ 12,487,881 $ 1,018,435 $ - $5,295,351 See notes to basic financial statements.(Continued) Program Revenues Town of Nantucket, Massachusetts 16 Basic Financial Statements Governmental Business-Type Activities Activities Total County Land Bank Total Changes in net assets: Net (expense) revenue from previous page…… $(60,960,774) $7,878,857 $(53,081,917) $(671,630) $5,966,981 $5,295,351 General revenues: Real estate and personal property taxes, net of tax refunds payable…………………… 57,438,797 - 57,438,797 - - - Tax liens………………………………………… 392,078 - 392,078 - - - Motor vehicle and other excise taxes………… 2,201,004 - 2,201,004 - - - Hotel/motel tax………………………………… 1,237,233 - 1,237,233 - - - Penalties and interest on taxes……………… 473,701 - 473,701 - - - Community Preservation Fund surcharges… 1,616,989 - 1,616,989 - - - Payments in lieu of taxes……………………… 7,296 - 7,296 - - - Grants and contributions not restricted to specific programs……………………………… 376,265 - 376,265 - - - Unrestricted investment income……………… 277,329 - 277,329 - - - Miscellaneous…………………………………… 843,523 - 843,523 - - - Capital transfers…………………………………… (1,380,000) 1,380,000 - - - - Transfers, net……………………………………… (5,280,946) 5,280,946 - - - - Total general revenues and transfers…………… 58,203,269 6,660,946 64,864,215 - - - Change in net assets………………………… (2,757,505) 14,539,803 11,782,298 (671,630) 5,966,981 5,295,351 Net Assets: Beginning of year………………………………… 176,264,919 102,631,376 278,896,295 4,108,141 196,084,774 200,192,915 End of year……………………………………… $ 173,507,414 $ 117,171,179 $ 290,678,593 $ 3,436,511 $ 202,051,755 $ 205,488,266 (Concluded) Primary Government Component Units STATEMENT OF ACTIVITIES (Continued) FISCAL YEAR ENDED JUNE 30, 2009 Town of Nantucket, Massachusetts 17 Basic Financial Statements Component Nonmajor Total Unit - Governmental Governmental Nantucket ASSETS General Funds Funds County Cash and cash equivalents…………………………………$ 14,103,352 $ 25,045,237 $ 39,148,589 $ 3,570,395 Investments…………………………………………………… - 2,662,443 2,662,443 - Receivables, net of uncollectibles: Real estate and personal property taxes……………… 3,582,663 89,593 3,672,256 - Tax liens ……………………….………………………… 1,879,981 22,104 1,902,085 - Motor vehicle and other excise taxes…………………… 166,017 - 166,017 - User fees…………………………………………………… 2,946 - 2,946 - Departmental and other………………………………… 427,304 100,618 527,922 45,507 Special assessments…………………………………… - 25,171 25,171 - Intergovernmental………………………………………… 159,176 3,889,790 4,048,966 1,580 Due from other funds………………………………………… 1,090,184 19,852 1,110,036 645,929 Other assets…………………………………………………… - - - - Prepaid expenses…………………………………………… 10,900 - 10,900 - TOTAL ASSETS………………………………………………$ 21,422,523 $ 31,854,808 $ 53,277,331 $ 4,263,411 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable…………………………………………$ 762,927 $ 436,449 $ 1,199,376 $ 92,375 Accrued payroll…………………………………………… 2,618,749 89,720 2,708,469 9,282 Accrued interest on short-term debt…………………… 35,189 - 35,189 - Payroll withholdings……………………………………… 42,877 - 42,877 383,604 Abandoned property……………………………………… 22,094 - 22,094 - Other liabilities…………………………………………… 1,096,633 8,196 1,104,829 37,337 Deferred revenues………………………………………… 4,650,413 1,004,296 5,654,709 - Due to other funds………………………………………… 1,409,574 - 1,409,574 645,929 Notes payable…………………………………………… - 6,889,510 6,889,510 - TOTAL LIABILITIES………………………………………… 10,638,456 8,428,171 19,066,627 1,168,527 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations…… 2,906,103 3,969 2,910,072 75,740 Perpetual permanent funds………………………… - 308,153 308,153 - Unreserved: Designated for subsequent year's expenditures…… 3,236,873 - 3,236,873 - Undesignated, reported in: General fund……………………………………… 4,641,091 - 4,641,091 399,173 Special revenue funds…………………………… - 17,302,157 17,302,157 2,619,971 Capital projects funds…………………………… - 5,585,788 5,585,788 - Permanent funds………………………………… - 226,570 226,570 - TOTAL FUND BALANCES………………………………… 10,784,067 23,426,637 34,210,704 3,094,884 TOTAL LIABILITIES AND FUND BALANCES……………$ 21,422,523 $ 31,854,808 $ 53,277,331 $ 4,263,411 See notes to basic financial statements. JUNE 30, 2009 GOVERNMENTAL FUNDS BALANCE SHEET Town of Nantucket, Massachusetts 18 Basic Financial Statements RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS JUNE 30, 2009 Total governmental fund balances……………………………………………………………………… $ 34,210,704 Capital assets (net) used in governmental activities are not financial resources and, therefore, are not reported in the funds…………………………………………………… 209,862,212 Accounts receivable are not available to pay for current-period expenditures and, therefore, are deferred in the funds………………………………………… 5,654,709 Internal service funds are used by management to account for retirees' health insurance and workers' compensation activities. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets……………………………… 4,730,965 In the statement of activities, interest is accrued on outstanding long-term debt, whereas in governmental funds interest is not reported until due……………………………… (956,433) Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds Bonds payable…………………………………………………………………………………… (71,324,797) Unamortized premiums on bonds and notes………………………………………………… (196,829) Workers' compensation………………………………………………………………………… (93,146) Compensated absences………………………………………………………………………… (1,477,821) Other post-employment benefits……………………………………………………………… (7,401,174) Net effect of reporting long-term liabilities……………………………………………… (80,493,767) In the statement of activities, deferred losses are reported for refundings of debt, which are amortized over the shorter of the remaining life of the refunding bonds or refunded bonds. In governmental funds, defeasances of debt are expensed when the refunding bonds are issued…………………………………… 499,024 Net assets of governmental activities………………………………………………………………… $ 173,507,414 See notes to basic financial statements. Town of Nantucket, Massachusetts 19 Basic Financial Statements Component Nonmajor Total Unit - Governmental Governmental Nantucket General Funds Funds County REVENUES: Real estate and personal property taxes, net of tax refunds……………………………………………………………$ 56,719,726 $ - $ 56,719,726 $ - Tax liens………………………………………………………………………… 227,632 - 227,632 - Motor vehicle and other excise taxes………………………………………… 2,210,996 - 2,210,996 - Hotel/motel tax………………………………………………………………… 1,237,233 - 1,237,233 - Charges for services…………………………………………………………… 4,771,647 513,925 5,285,572 - Community Preservation surcharges………………………………………… - 1,616,989 1,616,989 - Penalties and interest on taxes……………………………………………… 469,719 3,982 473,701 - Payments in lieu of taxes……………………………………………………… 7,296 - 7,296 - Licenses and permits…………………………………………………………… 919,644 - 919,644 - Fines and forfeitures…………………………………………………………… 240,648 - 240,648 - Intergovernmental……………………………………………………………… 4,054,249 3,012,739 7,066,988 100,000 Departmental and other………………………………………………………… 232,970 389,231 622,201 1,417,885 Contributions…………………………………………………………………… - 96,821 96,821 - Investment income……………………………………………………………… 205,782 234,677 440,459 26,880 Miscellaneous…………………………………………………………………… 864,416 2,190,934 3,055,350 - TOTAL REVENUES…………………………………………………… 72,161,958 8,059,298 80,221,256 1,544,765 EXPENDITURES: Current: County administration……………………………………………………… - - - 300,223 Registry of Deeds…………………………………………………………… - - - 303,217 Sheriff's department………………………………………………………… - - - 896,411 Special projects……………………………………………………………… - - - 65,910 General government………………………………………………………… 4,750,523 1,839,795 6,590,318 375 Public safety………………………………………………………………… 8,427,484 570,050 8,997,534 13,835 Education…………………………………………………………………… 21,309,772 2,758,855 24,068,627 - Public works………………………………………………………………… 2,400,913 5,630,723 8,031,636 - Community preservation…………………………………………………… - 1,895,017 1,895,017 - Human services……………………………………………………………… 5,882,311 35,163 5,917,474 - Culture and recreation……………………………………………………… 1,717,131 518,900 2,236,031 - Pension benefits…………………………………………………………… 5,445,915 - 5,445,915 73,159 Employee benefits…………………………………………………………… 6,697,224 - 6,697,224 - Claims and judgments……………………………………………………… - - - 237,533 State and county charges……………………………………………………… 449,457 - 449,457 - Debt service: Principal……………………………………………………………………… 6,338,863 - 6,338,863 - Interest……………………………………………………………………… 2,952,425 - 2,952,425 - TOTAL EXPENDITURES……………………………………………… 66,372,018 13,248,503 79,620,521 1,890,663 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES……………………………………………………………… 5,789,940 (5,189,205) 600,735 (345,898) OTHER FINANCING SOURCES (USES): Proceeds from bonds and notes……………………………………………… 1,380,000 4,610,490 5,990,490 - Transfers in……………………………………………………………………… 610,000 735,000 1,345,000 1,183,799 Transfers out…………………………………………………………………… (6,227,946) (610,000) (6,837,946) (1,183,799) Capital transfer………………………………………………………………… (1,380,000) - (1,380,000) - TOTAL OTHER FINANCING SOURCES (USES)…………………… (5,617,946) 4,735,490 (882,456) - NET CHANGE IN FUND BALANCES…………………………………………… 171,994 (453,715) (281,721) (345,898) FUND BALANCES AT BEGINNING OF YEAR………………………………… 10,612,073 23,880,352 34,492,425 3,440,782 FUND BALANCES AT END OF YEAR………………………………………… $ 10,784,067 $ 23,426,637 $ 34,210,704 $ 3,094,884 See notes to basic financial statements. GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2009 Town of Nantucket, Massachusetts 20 Basic Financial Statements RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2009 Net change in fund balances - total governmental funds…………………………………………………… $ (281,721) Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay………………………………………………………………………………………… 9,254,440 Depreciation expense………………………………………………………………………………… (2,499,956) Net effect of reporting capital assets………………………………………………………… 6,754,484 Revenues in the Statement of Activities that do not provide current financial resources are fully deferred in the Statement of Revenues, Expenditures and Changes in Fund Balances. Therefore, the recognition of revenue for various types of accounts receivable (i.e., real estate and personal property, motor vehicle excise, etc.) differ between the two statements. This amount represents the net change in deferred revenue…………………………………………………………………… 424,914 The issuance of long-term debt (e.g., bonds and leases) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Proceeds from bonds and notes…………………………………………………………………… (5,990,490) Debt service principal payments…………………………………………………………………… 6,338,863 Net effect of reporting long-term debt……………………………………………………… 348,373 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Net change in compensated absences accrual…………………………………………………… (196,477) Net change in accrued interest on long-term debt………………………………………………… (170,792) Net change in workers' compensation……………………………………………………………… 1,190 Amortization of deferred charge on refunding……………………………………………………… (109,209) Amortization of premiums on bonds and notes payable………………………………………… 43,076 Other post-employment benefits…………………………………………………………………. (7,401,174) Net effect of recording long-term liabilities and amortizing deferred losses…………… (7,833,386) Internal service funds are used by management to account for health insurance and workers' compensation activities. The net activity of internal service funds is reported with Governmental Activities…………… (2,170,169) Change in net assets of governmental activities……………………………………………………………… $ (2,757,505) See notes to basic financial statements. Town of Nantucket, Massachusetts 21 Basic Financial Statements Nantucket Siasconset Memorial Water Sewer Solid Waste Airport ASSETS CURRENT: Cash and cash equivalents………………………………. $ 5,640,761 $ 262,326 $ 945,951 $ 23,450,717 Restricted cash and cash equivalents…………………… - - - - Investments………………………………………………… - - - - Investments, designated…………………………………… - - - - Receivables, net of allowance for uncollectibles: Land Bank accounts…………………………………… - - - - Insurance reimbursements…………………………… - - - - User fees………………………………………………… 36,758 570,845 565,583 453,819 Intergovernmental……………………………………… - 8,936,940 - 3,892,815 Inventory……………………………………………………… - - - 457,607 Working capital deposit…………………………………… - - - - Land deposits…………………………………………….… - - - - Due from other funds……………………………………… 8,826 138,685 88,320 - Total current assets………………………………… 5,686,345 9,908,796 1,599,854 28,254,958 NONCURRENT: Receivables, net of allowance for uncollectibles: Intergovernmental……………………………………… - 2,259,318 - - Restricted cash and cash equivalents…………………… - - - - Cash surrender value of life insurance…………………… - - - - Capital assets, not being depreciated…………………… 5,542,583 59,541,168 2,651,406 31,168,222 Capital assets, net of accumulated depreciation………… 2,409,103 26,626,991 7,851,666 17,996,901 Total noncurrent assets…………………………… 7,951,686 88,427,477 10,503,072 49,165,123 TOTAL ASSETS………………………………………………… 13,638,031 98,336,273 12,102,926 77,420,081 LIABILITIES CURRENT: Warrants payable…………………………………………… 117,082 175,309 571,700 2,503,479 Accrued liabilities…………………………………………… - - - - Accrued payroll……………………………………………… 3,072 21,525 1,879 106,010 Health claims payable……………………………………… - - - - Security deposits…………………………………………… - - - 336,330 Accrued interest…………………………………………… 110,424 637,576 13,186 87,458 Other liabilities……………………………………………… - - - 53,750 Due to other funds………………………………………… 17,225 305,997 124,011 226,889 Compensated absences…………………………………… 4,634 9,020 - 57,320 Notes payable……………………………………………… 1,400,000 4,126,000 - 25,562,725 Bonds payable……………………………………………… 423,000 1,776,726 110,000 730,000 Total current liabilities……………………………… 2,075,437 7,052,153 820,776 29,663,961 NONCURRENT: Landfill closure……………………………………………… - - 2,428,000 - Compensated absences…………………………………… 18,536 36,078 - 229,279 Notes payable……………………………………………… - - - - Other post-employment benefits………………………… 36,941 82,121 14,072 464,626 Bonds payable……………………………………………… 7,435,000 45,478,715 865,000 2,120,000 Total noncurrent liabilities………………………… 7,490,477 45,596,914 3,307,072 2,813,905 TOTAL LIABILITIES…………………………………………… 9,565,914 52,649,067 4,127,848 32,477,866 NET ASSETS Invested in capital assets, net of related debt……………… 3,699,200 45,982,976 10,143,072 34,295,707 Restricted………………………………………………………… Restricted………………………………………………………… - - - - Reserved for appropriation………………………………… - - - - Reserved for appropriation deficit………………………… - - - - Designated for specific purposes………………………… - - - - Unrestricted: Undesignated……………………………………………… 372,917 (295,770) (2,167,994) 10,646,508 TOTAL NET ASSETS………………………………………… $ 4,072,117 $ 45,687,206 $ 7,975,078 $ 44,942,215 See notes to basic financial statements. Business-type Activities - Enterprise Funds PROPRIETARY FUNDS STATEMENT OF NET ASSETS JUNE 30, 2009 Town of Nantucket, Massachusetts 22 Basic Financial Statements Component Unit Governmental Wannacomet Total Activities - Water Business-Type Internal Service Nantucket Islands Company Activities Fund Land Bank $ 11,239,545 $ 41,539,300 $ 2,400,208 $ 9,653,251 - - - 206,570 - - 168,833 - - - - 1,118,379 - - - 130,253 - - 396,110 - 509,962 2,136,967 - - - 12,829,755 - - 99,819 557,426 - 115,479 - - 1,602,600 - - - - 42,500 418 236,249 891,089 341,681 11,849,744 57,299,697 5,458,840 11,608,113 - 2,259,318 - - - - - 3,660,474 - - - 535,492 9,355,935 108,259,314 - 203,012,641 17,977,395 72,862,056 - 16,827,230 27,333,330 183,380,688 - 224,035,837 39,183,074 240,680,385 5,458,840 235,643,950 1,678,480 5,046,050 6,091 200,292 9,609 9,609 - 307,604 25,191 157,677 - - - - 721,784 - - 336,330 - - 293,628 1,142,272 - - - 53,750 - - 153,678 827,800 - - 32,512 103,486 - - 1,800,000 32,888,725 - 3,975,000 1,215,000 4,254,726 - - 5,208,098 44,820,425 727,875 4,482,896 - 2,428,000 - - 130,047 413,940 - - - - - 28,760,399 130,366 728,126 - 348,900 19,220,000 75,118,715 - - 19,480,413 78,688,781 - 29,109,299 24,688,511 123,509,206 727,875 33,592,195 15,737,100 109,858,055 - 187,146,972 - - - 3,867,044 - - - - - - - - - (1,242,537) 7,313,124 4,730,965 11,037,739 $ 14,494,563 $ 117,171,179 $ 4,730,965 $ 202,051,755 Town of Nantucket, Massachusetts 23 Basic Financial Statements Siasconset Nantucket Water Memorial Company Sewer Solid Waste Airport OPERATING REVENUES: Lease and rental income………………………………… $ - $ - $ - $ - Fee revenue………………………………………………… - - - - Charges for services……………………………………… 627,328 4,913,018 3,282,734 10,999,153 Utility liens…………………………………………………… - - 52,423 - Intergovernmental………………………………………… - 538,342 - - Other………………………………………………………… - - - - Contributions……………………………………………… - - - - TOTAL OPERATING REVENUES …………………… 627,328 5,451,360 3,335,157 10,999,153 OPERATING EXPENSES: Cost of services and administration……………………… 352,865 2,830,152 9,959,054 8,800,253 Depreciation………………………………………………… 48,415 1,520,548 505,920 1,513,167 Other………………………………………………………… - - 48,065 - Employee benefits………………………………………… 39,592 87,296 17,814 1,303,480 TOTAL OPERATING EXPENSES…………………… 440,872 4,437,996 10,530,853 11,616,900 OPERATING INCOME (LOSS)……………………… 186,456 1,013,364 (7,195,696) (617,747) NONOPERATING REVENUES (EXPENSES): Investment income………………………………………… 5,179 2,888 6,934 152,895 Interest expense…………………………………………… (136,979) (1,769,172) (44,457) (295,983) Intergovernmental capital grants………………………… - - - 15,460,573 Debt service - principal…………………………………… - 679,688 - - TOTAL NONOPERATING REVENUES (EXPENSES), NET…………………… (131,800) (1,086,596) (37,523) 15,317,485 INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS………………… 54,656 (73,232) (7,233,219) 14,699,738 CAPITAL CONTRIBUTIONS………………………………… - 1,380,000 - - TRANSFERS IN……………………………………………… - - 5,280,946 - CHANGE IN NET ASSETS……………………………… 54,656 1,306,768 (1,952,273) 14,699,738 NET ASSETS AT BEGINNING OF YEAR………………… 4,017,461 44,380,438 9,927,351 30,242,477 NET ASSETS AT END OF YEAR…………………………… $ 4,072,117 $ 45,687,206 $ 7,975,078 $ 44,942,215 See notes to basic financial statements. Business-type Activities - Enterprise Funds PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FISCAL YEAR ENDED JUNE 30, 2009 Town of Nantucket, Massachusetts 24 Basic Financial Statements Component Unit Governmental Wannacomet Total Activities - Water Business-Type Internal Service Nantucket Islands Company Activities Fund Land Bank $- $ - $ - $ 195,467 - - - 11,289,172 4,087,641 23,909,874 - - - 52,423 - - - 538,342 - - 206,663 206,663 - 46,149 - - 7,419,199 - 4,294,304 24,707,302 7,419,199 11,530,788 2,333,748 24,276,072 - 4,553,586 710,027 4,298,077 - - - 48,065 - - 149,109 1,597,291 9,812,879 - 3,192,884 30,219,505 9,812,879 4,553,586 1,101,420 (5,512,203) (2,393,680) 6,977,202 159,073 326,969 11,511 445,493 (775,136) (3,021,727) - (1,455,714) - 15,460,573 - - - 679,688 - - (670,506) 13,391,060 11,511 (1,010,221) 430,914 7,878,857 (2,382,169) 5,966,981 - 1,380,000 - - - 5,280,946 212,000 - 430,914 14,539,803 (2,170,169) 5,966,981 14,063,649 102,631,376 6,901,134 196,084,774 $ 14,494,563 $ 117,171,179 $ 4,730,965 $ 202,051,755 Town of Nantucket, Massachusetts 25 Basic Financial Statements Siasconset Nantucket Water Memorial Company Sewer Solid Waste Airport CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users……………………………………………………………$ 620,510 $ 4,485,467 $ 3,322,153 $ 10,887,136 Employer and employee contributions to fund………………………………………………… - - - - Receipts from other governments……………………………………………………………… - 538,342 - - Receipts from other operating revenues……………………………………………………… - - - - Payments to vendors…………………………………………………………………………… (211,191) (2,073,637) (7,463,422) (5,058,638) Payments to employees………………………………………………………………………… (122,372) (674,901) (65,596) (3,367,916) Payments for interfund services used………………………………………………………… (39,592) (87,296) (17,814) (1,303,480) NET CASH FROM OPERATING ACTIVITIES…………………………………………………… 247,355 2,187,975 (4,224,679) 1,157,102 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in……………………………………………………………………………………… - - 5,280,946 - Advances (to) from other funds………………………………………………………………… (1,093,008) 2,984,019 34,224 182,761 NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………………………… (1,093,008) 2,984,019 5,315,170 182,761 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds and notes……………………………………………… 7,773,000 120,000 - 16,850,000 Capital grants……………………………………………………………………………………… - 13,100,349 - 13,688,985 Acquisition and construction of capital assets………………………………………………… (1,052,780) (17,196,174) - (17,772,321) Net change in land deposits…………………………………………………………………… - - - - Principal payments on bonds and notes……………………………………………………… (180,000) (1,071,641) (110,000) (732,312) Interest expense………………………………………………………………………………… (58,685) (1,827,679) (41,474) (314,707) NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……………………… 6,481,535 (6,875,145) (151,474) 11,719,645 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments………………………………………………………………………… - - - - Life insurance premiums………………………………………………………………………… - - - - Investment income……………………………………………………………………………… 5,179 2,888 6,934 152,895 NET CASH FROM INVESTING ACTIVITIES…………………………………………………… 5,179 2,888 6,934 152,895 NET CHANGE IN CASH AND CASH EQUIVALENTS………………………………………… 5,641,061 (1,700,263) 945,951 13,212,403 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR……………………………… (300) 1,962,589 - 10,238,314 CASH AND CASH EQUIVALENTS AT END OF YEAR…………………………………………$ 5,640,761 $ 262,326 $ 945,951 $ 23,450,717 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES: Operating income (loss)…………………………………………………………………………$ 186,456 $ 1,013,364 $ (7,195,696) $ (617,747) Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation…………………………………………………………………………………… 48,415 1,520,548 505,920 1,513,167 Changes in assets and liabilities: Water and sewer liens…………………………………………………………………… - - - - Insurance reimbursements……………………..………………………………………… - - - - User fees…………………………………………………………………………………… (6,818) (427,551) (13,004) (112,017) Sewer fees………………………………………………………………………………… - - - Solid waste fees…………………………………………………………………………… - - - Sale of fuel and additives (net of discounts)…………………………………………… - - - - Accounts receivable………………………………………………………………….…… - - - - Loans……………………………………………………………………………………… - - - - Intergovernmental………………………………………………………………………… - - - - Inventory…………………………………………………………………………………… - - - 191,504 Working capital deposit…………………………………………………………………… - - - - Prepaid expenses………………………………………………………………………… - - - 19,876 Warrants payable………………………………………………………………………… (15,287) (11,249) 35,646 (440,008) Accrued liabilities………………………………………………………………………… - - - - Security deposits………………………………...………………………………………… - - - 27,233 Accrued payroll…………………………………………………………………………… (340) 6,770 383 20,952 Health claims payable…………………………………………………………………… - - - - Landfill closure…………………………………………………………………………… - - 2,428,000 - Other liabilities…………………………………………………………………………… - - - 2,450 Accrued compensated absences……………………………………………………… (2,012) 3,972 - 87,066 Other Post-Employment Benefit………………………………………………………… 36,941 82,121 14,072 464,626 Total adjustments……………………………………………………………………… 60,899 1,174,611 2,971,017 1,774,849 NET CASH FROM OPERATING ACTIVITIES……………………………………………………$ 247,355 $ 2,187,975 $ (4,224,679) $ 1,157,102 See notes to basic financial statements. PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities - Enterprise Funds Town of Nantucket, Massachusetts 26 Basic Financial Statements Component Unit Governmental Wannacomet Total Activities Water Business-Type Internal Service Nantucket Islands Company Activities Fund Land Bank $ 4,219,370 $ 23,534,636 $ - $ 15,780,422 - - 7,130,844 - - 538,342 - - - - - 241,616 (1,140,591) (15,947,479) (9,920,972) (6,493,513) (1,088,117) (5,318,902) - (1,690,352) (149,109) (1,597,291) - - 1,841,553 1,209,306 (2,790,128) 7,838,173 - 5,280,946 212,000 - (936,930) 1,171,066 (340,260) - (936,930) 6,452,012 (128,260) - 4,615,000 29,358,000 - - - 26,789,334 - - (2,836,957) (38,858,232) - (6,999,129) - - - (40,000) (1,255,000) (3,348,953) - (1,227,338) (742,430) (2,984,975) - (1,224,246) (219,387) 10,955,174 - (9,490,713) - - (8,101) (1,332,713) - - - (26,208) 159,073 326,969 11,511 445,493 159,073 326,969 3,410 (913,428) 844,309 18,943,461 (2,914,978) (2,565,968) 10,395,236 22,595,839 5,315,186 12,219,219 $ 11,239,545 $ 41,539,300 $ 2,400,208 $ 9,653,251 $ 1,101,420 $ (5,512,203) $ (2,393,680) $ 6,977,203 710,027 4,298,077 - 904,597 - - - - - - (299,720) (15,453) (74,934) (634,324) - - - - - - - - - - - - - - - - - (21,390) - - - - - - - 15,696 207,200 - (4,986) - - (111,700) - - 19,876 - 12,592 37,029 (393,869) 3,607 - 294 294 - (14,390) - 27,233 - - 5,274 33,039 - - - - 11,365 - - 2,428,000 - - (93,378) (90,928) - - 9,759 98,785 - - 130,366 728,126 - - 740,133 6,721,509 (396,448) 860,970 $ 1,841,553 $ 1,209,306 $ (2,790,128) $ 7,838,173 Town of Nantucket, Massachusetts 27 Basic Financial Statements FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET ASSETS JUNE 30, 2009 Private Purpose Agency Trust Funds Funds ASSETS Cash and cash equivalents……………………………………$ 669,202 $ 739,302 Investments…………………………………………………… 1,757,702 - TOTAL ASSETS…………………………………………………… 2,426,904 739,302 LIABILITIES Warrants payable……………………………………………… - 60,724 Liabilities due depositors……………………………………… - 678,578 TOTAL LIABILITIES……………………………………………… - 739,302 NET ASSETS Held in trust for other purposes………………………………$ 2,426,904 $ - See notes to basic financial statements. Town of Nantucket, Massachusetts 28 Basic Financial Statements FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FISCAL YEAR ENDED JUNE 30, 2009 Private Purpose Trust Funds ADDITIONS: Contributions: Private donations………………………………………………………………………………$ 7,661 Net investment income (loss): Interest………………………………………………………………………………………… 144,600 TOTAL ADDITIONS……………………………………………………………………… 152,261 DEDUCTIONS: General government………………………………………………………………………… 6,300 Educational scholarships…………………………………………………………………… 92,399 TOTAL DEDUCTIONS…………………………………………………………………… 98,699 CHANGE IN NET ASSETS……………………………………………………………… 53,562 NET ASSETS AT BEGINNING OF YEAR…………………………………………………… 2,373,342 NET ASSETS AT END OF YEAR………………………………………………………………$ 2,426,904 See notes to basic financial statements. Town of Nantucket, Massachusetts 29 Basic Financial Statements Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 30 Basic Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to Basic Financial Statements The accompanying basic financial statements of the Town of Nantucket, Massachusetts (the Town) 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 Town is a municipal corporation that is governed by an elected five member Board of Selectmen. For financial reporting purposes, the Town has included all funds, organizations, agencies, boards, commissions and institutions. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete. As required by GAAP, these basic financial statements present the Town (the primary government) and its component units. Two entities have been included as component units in the reporting entity, because of the significance of their operational and/or financial relationships with the Town. Discretely Presented Component units – Discretely presented component units are entities that are legally separate from the Town, but for which the Town is financially accountable, or whose relationship with the Town is such that exclusion would cause the Town’s financial statements to be misleading or incomplete. These component units are reported in separate columns to emphasize that they are legally separate from the Town. In the Governmental Funds: (1) The County of Nantucket (County) has the same geographical boundaries as the Town of Nantucket, and the Town’s selectmen serve ex officio as the County Commissioners. The principal services provided by the County are the Registry of Deeds and the Sheriff’s Office. In the Enterprise Funds: (1) The Nantucket Islands Land Bank (Land Bank) was created by Chapter 669 of the Acts of 1983 of the Commonwealth of Massachusetts to acquire and manage open space and resource protection within Nantucket County. The Land Bank is administered by the Nantucket Islands Land Bank Commission comprised of five elected members. Availability of Financial Information for Component Units and Certain Town Enterprise Funds The Nantucket Islands Land Bank issues separate audited financial statements. A copy of the complete financial statements can be obtained by contacting them at 22 Broad Street, Nantucket, MA 02554. Nantucket Memorial Airport issues separate audited financial statements. A copy of the complete financial statements can be obtained by contacting them at 14 Airport Road, Nantucket, MA 025541. The Wannacomet Water Company issues separate audited financial statements. A copy of the complete financial statements can be obtained by contacting them at 1 Milestone Road, Nantucket, MA 025541. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 31 Basic Financial Statements B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements (i.e., statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government and its component units. Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which are supported primarily by user fees and charges. Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and displayed in a single column. Major Fund Criteria Major funds must be reported if the following criteria are met: • If the total assets, liabilities, revenues, or expenditures/expenses of an individual governmental or enterprise fund are at least 10 percent of the corresponding element (assets, liabilities, etc.) for all funds of that category or type (total governmental or total enterprise funds), and • If the total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding element for all governmental and enterprise funds combined. Additionally, any other governmental or enterprise fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. Internal service funds and fiduciary funds are reported by fund type. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-Wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Real estate and personal property taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The statement of activities demonstrates the degree to which the direct expenses of a particular function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include the following: • Charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. • Grants and contributions that are restricted to meeting the operational requirements of a particular function or segment. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 32 Basic Financial Statements • Grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not identifiable as program revenues are reported as general revenues. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. However, the effect of interfund services provided and used between functions is not eliminated as the elimination of these charges would distort the direct costs and program revenues reported for the functions affected. Fund Financial Statements Governmental fund financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., measurable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and, claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. Real estate and personal property tax revenues are considered available if they are collected within 60 days after fiscal year-end. Investment income is susceptible to accrual. Other receipts and tax revenues become measurable and available when the cash is received and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other grant requirements are met. The following major governmental funds are reported: The General Fund is the primary operating fund. It is used to account for all financial resources, except those that are required to be accounted for in another fund. The nonmajor governmental funds consist of other special revenue, capital projects and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements. The following describes the general use of these fund types: The Special Revenue Fund is used to account for the proceeds of specific revenue sources (other than permanent funds or capital projects funds) that are restricted by law or administrative action to expenditures for specified purposes. The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by enterprise and trust funds). The Permanent Fund is used to account for financial resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 33 Basic Financial Statements Proprietary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. 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. The following major proprietary funds and component unit are reported: The Siasconset Water enterprise fund is used to account for the Town’s water distribution activities within its service area. The Sewer enterprise fund is used to account for the Town’s sewer activities. The Solid Waste enterprise fund is used to account for the Town’s landfill activities. The Nantucket Memorial Airport enterprise fund is used to account for the operations of the Town’s airport. The Wannacomet Water Company enterprise fund is used to account for the Town’s water distribution activities within its service area. The internal service fund is used to account for the financing of services provided by one department to other departments or governmental units. This fund is used to account for risk financing activities related to health insurance and workers’ compensation. The Nantucket Islands Land Bank component unit is used to account for the activity of the Nantucket Islands Land Bank. Fiduciary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for others that cannot be used to support the governmental programs. The following fiduciary fund types are reported: The private-purpose trust fund is used to account for trust arrangements, other than those properly reported in the pension trust fund or permanent fund, under which principal and investment income exclusively benefit individuals, private organizations, or other governments. The agency fund is used to account for assets held in a purely custodial capacity. Government-Wide and Fund Financial Statements For enterprise fund accounting, all applicable Financial Accounting Standards Board (FASB) pronouncements issued on or prior to November 30, 1989, are applied, unless those pronouncements conflict with or contradict GASB pronouncements. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 34 Basic Financial Statements D. Cash and Investments Government-Wide and Fund Financial Statements 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. E. Accounts Receivable Government-Wide and Fund Financial Statements The recognition of revenue related to accounts receivable reported in the government-wide financial statements and the proprietary funds and fiduciary funds financial statements are reported under the accrual basis of accounting. The recognition of revenue related to accounts receivable reported in the governmental funds financial statements are reported under the modified accrual basis of accounting. Real Estate, Personal Property Taxes and Tax Liens Real estate and personal property taxes are levied and based on values assessed on January 1st of every year. Assessed values are established by the Board of Assessor’s for 100% of the estimated fair market value. Taxes are due on November 1st and May 1st and are subject to penalties and interest if they are not paid by the respective due date. Real estate and personal property taxes levied are recorded as receivables in the fiscal year of the levy. The Town has the legal authority to impose real estate tax liens on delinquent properties. Liens are recorded as receivables in the fiscal year they are imposed. Real estate receivables which have been secured via the tax lien process are considered 100% collectible. Accordingly, an allowance for uncollectibles is not reported. An allowance of uncollectibles for other real estate receivables is estimated based on historical trends and specific account analysis. Personal property taxes cannot be secured through the lien process. The allowance of uncollectibles is estimated based on historical trends and specific account analysis. Motor Vehicle and Other Excise Taxes Motor vehicle excise taxes are assessed annually for each vehicle registered and are recorded as receivables in the fiscal year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and the fair values of those vehicles. The tax calculation is the fair value of the vehicle multiplied by $25 per $1,000 of value. Boat excise taxes are assessed annually for each boat registered and are recorded as receivables in the fiscal year of the levy. The Commonwealth is responsible for reporting the number of boats registered and the fair value of those boats. The tax calculation is the fair value of the boat multiplied by $10 per $1,000 of value. The allowance for uncollectibles is estimated based on historical trends and specific account analysis. Departmental and Other Departmental and other receivables consist primarily of police and fire details and are recorded as receivables in the fiscal year accrued. The allowance of uncollectibles is estimated based on historical trends and specific account analysis. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 35 Basic Financial Statements Special Assessments Special Assessments consist of betterments assessed to residents of Golf View Drive in relation to the Town’s Septic Loan Betterment program. The allowance of uncollectibles is estimated based on historical trends and specific account analysis. Intergovernmental Various federal and state grants for operating and capital purposes are applied for and received annually. For non-expenditure driven grants, receivables are recorded as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants, receivables are recorded when the qualifying expenditures are incurred and all other grant requirements are met. These receivables are considered 100% collectible and therefore do not report an allowance for uncollectibles. Water Fees Water Fees for Siasconset Water are levied monthly based on individual meter readings. Water 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. Sewer Fees Sewer Fees are levied monthly based on individual meter readings and average bills and are subject to penalties and interest if they are not paid by the respective due date. Unbilled user fees at year-end are accrued and are recorded as revenue in the current period. The Town has the ability to issue Water and Sewer liens for delinquent fees which are included as a lien on the property owner’s tax bill. Water and Sewer charges and liens are recorded as receivables in the fiscal year of the levy. Allowances for uncollectible water and sewer fees are estimated based on historical trends and specific account analysis. Landfill Fees The outstanding receivable for Landfill Fees is comprised of annual commercial fees assessed to restaurants and inns and monthly tipping fees charged to private haulers. Airport Fees The outstanding receivable for Airport Fees is comprised primarily of fuel sales. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 36 Basic Financial Statements F. Inventories Government-Wide and Fund Financial Statements Inventories of the Nantucket Memorial Airport and 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. All other inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the government-wide and fund financial statements, and therefore are not reported. G. Restricted Assets Government-Wide and Fund Financial Statements Certain assets of the enterprise funds and component units are classified as restricted because their use is restricted by contract covenants. H. Capital Assets Government-Wide and Proprietary Fund Financial Statements Capital assets, which include land, construction in progress, land improvements, plant, buildings, vehicles, machinery and equipment, furniture, fixtures and company equipment, and infrastructure (e.g., roads, water mains, sewer mains, and similar items), are reported in the applicable governmental or business-type activity column of the government-wide financial statements, and the proprietary fund financial 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. Except for the capital assets of the governmental activities column in the government-wide financial statements, 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 Office equipment……………………………… 5-10 Shop equipment………………………………… 10-15 Runway improvements………………………… 20 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. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 37 Basic Financial Statements Governmental Fund Financial Statements Capital asset costs are recorded as expenditures in the acquiring fund in the fiscal year of the purchase. I. Interfund Receivables and Payables During the course of its operations, transactions occur between and within individual funds that may result in amounts owed between funds. Government-Wide Financial Statements Transactions of a buyer/seller nature between and within governmental funds and internal service funds are eliminated from the governmental activities in the statement of net assets. Any residual balances outstanding between the governmental activities and business-type activities are reported in the statement of net assets as “internal balances”. Fund Financial Statements Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund statements. Receivables and payables resulting from these transactions are classified as “Due from other funds” or “Due to other funds” on the balance sheet. J. Interfund Transfers During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out. Government-Wide Financial Statements Transfers between and within governmental funds and fiduciary funds are eliminated from the governmental activities in the statement of activities. Any residual balances outstanding between the governmental activities and business-type activities are reported in the statement of activities as “Transfers, net”. Fund Financial Statements Transfers between and within funds are not eliminated from the individual fund statements and are reported as transfers in and transfers out. K. Deferred Revenue Deferred revenue at the governmental fund financial statement level represents billed receivables that do not meet the available criterion in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Deferred revenue is recognized as revenue in the conversion to the government-wide (full accrual) financial statements Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 38 Basic Financial Statements L. Net Assets and Fund Equity Government-Wide Financial Statements (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. Outstanding debt relating to future reimbursements from the Massachusetts Water Pollution Abatement Trust is not considered to be capital related debt. 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. Net assets have been “restricted for” the following: “Permanent funds - expendable” represents amounts held in trust for which the expenditures are restricted by various trust agreements. “Permanent funds - nonexpendable” represents amounts held in trust for which only investment earnings may be expended. “Other purposes” represents restrictions placed on assets from outside parties. Fund Financial Statements (Fund Balances) Fund balances are reserved for amounts that are not available for appropriation or are legally restricted by outside parties for a specific future use. Designations of fund balance represent tentative management plans that are subject to change. Fund balances have been “reserved for” the following: “Encumbrances and continuing appropriations” represents amounts obligated under purchase orders, contracts and other commitments for expenditures that are being carried over to the ensuing fiscal year. “Perpetual permanent funds” represents amounts held in trust for which only investment earnings may be expended. Fund balances have been “designated for” the following: “Subsequent year’s expenditures” represents amounts appropriated for the fiscal year 2010 operating budget. M. Long-term debt Government-Wide and Proprietary Fund Financial Statements Long-term debt is reported as liabilities in the government-wide and proprietary fund 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 Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 39 Basic Financial Statements Governmental Fund Financial Statements The face amount of governmental funds long-term debt is reported as other financing sources. Bond premiums and discounts, as well as issuance costs, are recognized in the current period. Bond premiums are reported as other financing sources and bond discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual bond proceeds received, are reported as general government expenditures. N. Investment Income Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by Massachusetts General Law (MGL). O. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Government-Wide and Proprietary Fund Financial Statements Vested or accumulated sick leave are reported as liabilities and expensed as incurred. Governmental Fund Financial Statements Vested or accumulated sick leave, which will be liquidated with expendable available financial resources, are reported as expenditures and fund liabilities. P. Individual Fund Deficits At June 30, 2009, there are several individual fund deficits within the special revenue funds and capital project funds, which are classified as non-major governmental funds in the fund financial statements. These deficits will be funded through available funds and grants during fiscal year 2010. Q. Use of Estimates Government-Wide and Fund Financial Statements The preparation of basic 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 basic financial statements and the reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. R. Total Column Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 40 Basic Financial Statements Fund Financial Statements The total column on the fund financial statements is presented only to facilitate financial analysis. Data in this column is not the equivalent of consolidated financial information. NOTE 2 – CASH AND INVESTMENTS A cash and investment pool is maintained that is available for use by all funds. Each fund type's portion of this pool is displayed on the balance sheet as "Cash and cash equivalents". The deposits and investments of the trust funds are held separately from those of other funds. 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 Treasurer may also invest trust funds in securities, other than mortgages or collateral loans, which are legal for the investment of funds of savings banks under the laws of the Commonwealth. 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. The Town participates in MMDT, which maintains a cash portfolio and a short-term bond fund with combined average maturities of approximately 3 months. Custodial Credit Risk – Deposits In the case of deposits, this is the risk that in the event of a bank failure, the Town of Nantucket’s deposits may not be returned to it. The Town, including the primary government and Nantucket County and Nantucket Islands Land Bank component units, does not have a deposit policy for custodial credit risk. Primary Government At fiscal year-end, the carrying amount of deposits of the primary government totaled $79,892,205 and the bank balance totaled $84,826,545. Of the bank balance, $1,144,388 was covered by the Federal Depositors Insurance Company (“FDIC”), $1,633,813 was covered by Depositors Insurance Fund (DIF), $72,654,910 was collateralized and $9,393,434 was exposed to custodial credit risk because it was uninsured and uncollateralized. Component Unit-County At fiscal year-end, the carrying amount of deposits of Nantucket County totaled $3,570,395 and the bank balance totaled $3,702,986. Of the bank balance, $579,151 was covered by Federal Depository Insurance and the remainder of $3,123,835 was collateralized, therefore the County did not have funds that were exposed to custodial credit risk because of being uninsured or uncollateralized. Component Unit-Nantucket Islands Land Bank The Land Bank considers securities purchased within six months of their date of maturity to be cash equivalents. The Land Bank holds a substantial amount of cash in time certificates of deposit and Federal treasury obligations. Cash and equivalents are insured by the Federal Depositors Insurance Company (“FDIC”), Depositors Insurance Fund (“DIF”) and the full faith pledge of the Commonwealth of Massachusetts. From time to time, the Land Bank’s cash balances fluctuate and can exceed the Federally insured limit of $250,000. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 41 Basic Financial Statements At fiscal year-end, the carrying amount of deposits of the Nantucket Islands Land Bank totaled $13,520,295, of which $13,270,295 was exposed to custodial credit risk. The Land Bank, as part of a Land purchase in previous years, is required to maintain a reserve fund to cover the purchase of Life Insurance to be used to pay off the note at the time of the sellers death. These reserve funds are included in restricted cash and cash equivalents in the accompanying financial statements. Investments As of June 30, 2009, the Town of Nantucket had the following investments: Primary Government Under 1-5 6-10 Fair Value 1 Year Years Years Investment Type Debt Securities: Federal Home Loan Bank…………………………………$ 582,860 $ 154,172 $ - $ 428,688 Federal Home Loan Mortgage Corporation................... 965,781 - 643,812 321,969 Federal National Mortgage Association........................ 560,882 238,007 215,000 107,875 Federal Home Loan Mortgage Corporation Gold.......... 7,892 - 7,892 - United States Treasury Note......................................... 2,471,563 203,828 1,189,931 1,077,804 Repurchase Agreements………………………………… 2,859,080 2,859,080 - - Total Debt Securities..................................................... 7,448,058 $ 3,455,087 $ 2,056,635 $ 1,936,336 Other Investments: MMDT………………………………………………………… 1,745,316 Total Investments.......................................................... $ 9,193,374 Maturity Component Unit-County The County did not have any investments as of June 30, 2009. Component Unit-Nantucket Islands Land Bank At June 30, 2009, the Land Bank’s investments of $1,118,379, represents certificates of deposits that are insured by the FDIC and Depositors Insurance Fund. The investments are stated at the fair market value, are unrated in terms of credit risk quality ratings, and all mature in less than 1 year. The Land Bank has entered into an agreement with the Town of Nantucket, which requires the Land Bank to establish a working capital reserve fund, the balance of this fund is reported as designated investments. This fund, along with the pledge of the Town of Nantucket of its full faith and credit, secures the Series 98E, Series 2007A and Series 2009A bonds outstanding as of June 30, 2009. In addition, the Land Bank is prohibited from acquiring additional real estate at any time that an amount equal to one year’s debt service in the reserve fund is not on deposit. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 42 Basic Financial Statements Custodial Credit Risk – Investments For an investment, this is the risk that, in the event of a failure by the counterparty, the Town will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. The Town, including the primary government and Nantucket County component unit, does not have an investment policy for custodial credit risk. The Land Bank currently follows investment policies largely defined by the Commonwealth of Massachusetts, as well as internal Land Bank investment policies. Primary Government The investments of $582,860 in Federal Home Loan Bank, $965,781 in Federal Home Loan Mortgage Corporation, $560,882 in Federal National Mortgage Association $7,892 in Federal Home Loan Mortgage Corporation Gold, and $2,471,563 in U.S. Treasury Notes are subject to custodial credit risk exposure because the related securities are uninsured, unregistered, and held by the counterparty. The repurchase agreement consists of an overnight sweep agreement. Interest Rate Risk The Town, including the primary government and Nantucket County and Nantucket Islands Land Bank component units, 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 Town, including the primary government and Nantucket County component unit has not adopted a formal policy related to Credit Risk. Of the Town’s investments at June 30, 2009, $4,581,086 is rated AAA and $7,892 is unrated. Concentration of Credit Risk The Town, including the primary government and Nantucket County and Nantucket Islands Land Bank component units, places no limit on the amount the government may invest in any one issuer. Primary Government More than 5 percent of the primary government’s investments are in the following securities: Percentage of Issuer Federal Home Loan Mortgage Corporation.................... 11% United States Treasury Note.......................................... 27% Repurchase Agreements…………………………………… 31% MMDT………………………………………………………… 19% Total Investments Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 43 Basic Financial Statements NOTE 3 – RECEIVABLES At June 30, 2009, receivables for the individual major, non-major governmental funds and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Allowance Gross for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes…………… $ 3,945,856 $ (273,600) $ 3,672,256 Tax liens ……………………….……………………… 1,902,085 - 1,902,085 Excise taxes…………………………………………… 824,641 (658,624) 166,017 User fees………………………………………………… 2,946 - 2,946 Departmental and other……………………………… 1,334,180 (410,148) 924,032 Special assessments…………………………………… 25,171 - 25,171 Intergovernmental……………………………………… 4,048,966 - 4,048,966 Total……………………………………………………$ 12,083,845 $ (1,342,372) $ 10,741,473 At June 30, 2009, receivables for the enterprise funds consist of the following: Allowance Gross for Net Amount Uncollectibles Amount Receivables: Water fees………………………………………………$ 546,720 $ - $ 546,720 Sewer fees……………………………………………… 570,845 - 570,845 Solid waste fees………………………………………… 680,385 (114,802) 565,583 Airport fees……………………………………………… 453,819 - 453,819 Intergovernmental……………………………………… 15,089,073 - 15,089,073 Total………………………………………………………$ 17,340,842 $ (114,802) $ 17,226,040 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Nonmajor General Governmental Fund Funds Total Receivable: Real estate and personal property taxes…………… $ 2,174,165 $ 89,593 $ 2,263,758 Tax liens………………….……………………………… 1,879,981 22,104 1,902,085 Motor vehicle and other excise taxes………………… 166,017 - 166,017 User fees………………………………………………… 2,946 - 2,946 Departmental and other……………………………… 427,304 100,618 527,922 Special assessments…………………………………… - 25,171 25,171 Intergovernmental……………………………………… - 766,810 766,810 Total………………………………………………………$ 4,650,413 $ 1,004,296 $ 5,654,709 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 44 Basic Financial Statements NOTE 4 – CAPITAL ASSETS Capital asset activity for the primary government for the fiscal year ended June 30, 2009, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land…………………………………………………………$ 171,176,126 $ - $ - $ 171,176,126 Construction in progress………………………………… 4,154,330 7,916,559 (2,779,666) 9,291,223 - - Total capital assets not being depreciated………… 175,330,456 7,916,559 (2,779,666) 180,467,349 Capital assets being depreciated: Vehicles…………………………………………………… 8,335,734 315,936 (28,000) 8,623,670 Buildings…………………………………………………… 31,531,194 2,349,685 - 33,880,879 Machinery and equipment………………………………… 7,667,798 217,182 (32,042) 7,852,938 Infrastructure……………………………………………… 23,592,312 1,234,744 - 24,827,056 Total capital assets being depreciated……………… 71,127,038 4,117,547 (60,042) 75,184,543 Less accumulated depreciation for: Vehicles…………………………………………………… (5,362,015) (729,478) 28,000 (6,063,493) Buildings.…………………………………………………… (15,337,863) (727,375) - (16,065,238) Machinery and equipment………………………………… (6,828,492) (281,058) 32,042 (7,077,508) Infrastructure.……………………………………………… (15,821,396) (762,045) - (16,583,441) Total accumulated depreciation…………………… (43,349,766) (2,499,956) 60,042 (45,789,680) Total capital assets being depreciated, net………………… 27,777,272 1,617,591 - 29,394,863 Total governmental activities capital assets, net……………$ 203,107,728 $ 9,534,150 $ (2,779,666) $ 209,862,212 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 45 Basic Financial Statements The capital asset totals for the business-type activities at June 30, 2009 were as follows: Beginning Ending Balance Increases Decreases Balance Business-type activities Capital assets not being depreciated: Land…………………………………………………………$ 17,142,428 $ - $ - $ 17,142,428 Construction in progress………………………………… 56,964,911 34,517,850 (365,875) 91,116,886 Total capital assets not being depreciated………… 74,107,339 34,517,850 (365,875) 108,259,314 Capital assets being depreciated: Land improvements……………………………………… 24,554,895 - - 24,554,895 Plant………………………………………………………… 15,606,580 - - 15,606,580 Infrastructure……………………………………………… 37,683,138 465,745 (18,882) 38,130,001 Buildings…………………………………………………… 20,024,892 181,670 - 20,206,562 Vehicles…………………………………………………… 4,368,417 143,691 - 4,512,108 Machinery and equipment………………………………… 18,092,544 1,776 - 18,094,320 Furniture, fixtures and computer equipment…………… 474,076 124,345 - 598,421 Total capital assets being depreciated……………… 120,804,542 917,227 (18,882) 121,702,887 Less accumulated depreciation……………………………… (44,658,851) (4,200,862) 18,882 (48,840,831) Total capital assets being depreciated, net………………… 76,145,691 (3,283,635) - 72,862,056 Total business-type activities, capital assets…………………$ 150,253,030 $ 31,234,215 $ (365,875) $ 181,121,370 Capital asset activity for the Nantucket County and Nantucket Islands Land Bank component units for the fiscal year ended June 30, 2009 was as follows: Beginning Ending Balance Increases Decreases Balance Nantucket Islands Land Bank Component Unit Capital assets not being depreciated: Land…………………………………………………………$ 195,732,972 $ 7,279,669 $ - $ 203,012,641 Capital assets being depreciated: Buildings, improvements and equipment……………… 17,921,078 2,719,460 - 20,640,538 Less accumulated depreciation………………………… (2,996,574) (816,734) - (3,813,308) Total capital assets being depreciated, net………………… 14,924,504 1,902,726 - 16,827,230 Total Nantucket Islands Land Bank Component Unit, capital assets…………………………………………………$ 210,657,476 $ 9,182,395 $ - $ 219,839,871 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 46 Basic Financial Statements Beginning Ending Balance Increases Decreases Balance Nantucket County Component Unit Capital assets not being depreciated: Land…………………………………………………………$ 28,458 $ - $ - $ 28,458 Capital assets being depreciated: Vehicles…………………………………………………… 277,183 - - 277,183 Equipment………………………………………………… 1,415,434 - - 1,415,434 Total capital assets being depreciated……………… 1,692,617 - - 1,692,617 Less accumulated depreciation for: Vehicles…………………………………………………… (202,353) (31,840) - (234,193) Equipment………………………………………………… (866,093) (197,463) - (1,063,556) Total accumulated depreciation…………………… (1,068,446) (229,303) - (1,297,749) Total capital assets being depreciated, net………………… 624,171 (229,303) - 394,868 Total County Component Unit capital assets…………………$ 652,629 $ (229,303) $ - $ 423,326 Depreciation expense was charged to functions/programs as follows: Governmental Activities: General government……………………………………………………………… $ 50,657 Public safety………………………………………………………………………… 672,328 Education…………………………………………………………………………… 681,631 Public works………………………………………………………………………… 949,584 Human services…………………………………………………………………… 5,764 Culture and recreation……………………………………………………………… 139,992 Total depreciation expense - governmental activities……………………………… $ 2,499,956 Business-Type Activities: Water………………………………………………..…………………………………$ 661,227 Sewer……………………………………….………………………………………… 1,520,548 Solid waste……………………………………….…………………………………… 505,920 Airport……………………………………….………………………………………… 1,513,167 Total depreciation expense - business-type activities………………………………$ 4,200,862 Nantucket County Component Unit: Registry of Deeds……………………………………………………………………$ 43,032 Sheriff's Department………………………………………………………………… 186,271 Total depreciation expense - component unit activities………………………………$ 229,303 Nantucket Islands Land Bank Component Unit: Land Bank……………………………………………………………………………$ 816,734 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 47 Basic Financial Statements NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund receivables and payables at June 30, 2009 are summarized as follows: Nonmajor Siasconset Sewer Solid Waste Wannacomet General Governmental Water Enterprise Enterprise Water Internal Service Fund Funds Company Fund Fund Company Fund Total General Fund………………………$ 465,182 $ 19,852 $ - $ - $ 88,320 $ 418 $ 835,802 $ 1,409,574 Siasconset Water Company……… - - - - - - 17,225 17,225 Sewer Enterprise Fund…………… 285,112 - - - - - 20,885 305,997 Solid Waste Enterprise Fund…… 124,011 - - - - - - 124,011 Nantucket Memorial Airport……… 215,879 - - - - - 11,010 226,889 Wannacomet Water Company…… - - 8,826 138,685 - - 6,167 153,678 Total……………………………$ 1,090,184 $ 19,852 $ 8,826 $ 138,685 $ 88,320 $ 418 $ 891,089 $ 2,237,374 Due To: Due From: Interfund transfers for the fiscal year ended June 30, 2009, are summarized as follows: Nonmajor Solid Waste General Governmental Enterprise Internal Service Fund Funds Fund Fund Total General Fund…………………………$- $ 735,000 $ 5,280,946 $ 212,000 $ 6,227,946 Nonmajor Governmental Funds…… 610,000 - - - 610,000 Total……………………………………$ 610,000 $ 735,000 $ 5,280,946 $ 212,000 $ 6,837,946 (1) (2) (3) (4) (1) Transfers to the General Fund from the Ferry Embarcation Fund ($180,000), Ambulance Reserve Fund ($380,000), and the Waterways Improvement Fund ($50.000). (2) General Fund appropriation to the Stabilization Fund ($500,000), and to School Revolving Funds ($235,000). (3) General Fund subsidy to Solid Waste Enterprise Fund, including prior year Solid Waste Enterprise Fund deficit. (4) General Fund appropriation for Workers' Compensation Insurance. Transfers In: Transfers Out: Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 48 Basic Financial Statements 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 or tax anticipation notes (RANS or TANS). • 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. Interest expenditures and expenses for short-term borrowings are accounted for in the general fund and enterprise funds, respectively. Details related to the short-term debt activity for the fiscal year ended June 30, 2009, are as follows: Balance at Balance at Rate June 30, Renewed/ Retired/ June 30, Type Purpose (%) Due Date 2008 Issued Redeemed 2009 Governmental Funds BAN Stormwater Drainage Improvements………… 2.00 02/27/09 $ 5,500,000 $ - $ 5,500,000 $ - BAN Stormwater Drainage Improvements………… 2.00 03/30/09 - 4,610,490 4,610,490 - BAN Stormwater Drainage Improvements………… 1.75 02/26/10 - 889,510 - 889,510 BAN Police Station Construction…………………… 1.50 02/26/10 - 6,000,000 - 6,000,000 Total Governmental Funds.………………………………………………… 5,500,000 11,500,000 10,110,490 6,889,510 Enterprise Fund BAN Airport……………………………………………… 2.25 02/27/09 8,712,725 - 8,712,725 - BAN Airport……………………………………………… 1.75 02/26/10 - 8,712,725 - 8,712,725 BAN Airport Construction……………………………… 1.50 02/26/10 - 6,850,000 - 6,850,000 BAN Airport Construction……………………………… 1.50 02/26/10 - 4,000,000 - 4,000,000 BAN Airport Construction……………………………… 1.50 02/26/10 - 3,000,000 - 3,000,000 BAN Ariport Runway Design………………………… 1.50 02/26/10 - 2,000,000 - 2,000,000 BAN Airport Remodeling……………………………… 1.50 02/26/10 - 500,000 - 500,000 BAN Airport Departmental Equipment ……………… 1.50 02/26/10 - 500,000 - 500,000 BAN MWPAT…………………………………………… 1.22 12/31/10 - 4,006,000 - 4,006,000 BAN Sewer Equipment………………………………… 1.50 02/26/10 - 120,000 - 120,000 BAN Water……………………………………………… 1.50 02/26/10 - 1,800,000 - 1,800,000 BAN Water……………………………………………… 1.50 02/26/10 - 1,400,000 - 1,400,000 Total Enterprise Fund………………………………………………………… 8,712,725 32,888,725 8,712,725 32,888,725 Total…………………………………………………………………………$ 14,212,725 $ 44,388,725 $ 18,823,215 $ 39,778,235 NOTE 7 – LONG-TERM DEBT Under the provisions of Chapter 44, Section 10, Municipal Law authorizes indebtedness up to a limit of 5% of the 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". Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 49 Basic Financial Statements Details related to the outstanding indebtedness at June 30, 2009, and the debt service requirements are as follows: Bonds and Notes Payable Schedule – Governmental Funds Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2008 Issued Redeemed 2009 Advanced refunding of 91 landfill…………………………4.75 - 6.00 $ 3,162,732 $ - $ 725,455 $ 2,437,277 Advanced refunding of 91 sewer………………………… 4.75 - 6.00 1,967,181 - 450,818 1,516,363 Advanced refunding of 91 school…………………………4.75 - 6.00 336,818 - 336,818 - Advanced refunding of 91 school…………………………4.75 - 6.00 403,269 - 196,909 206,360 Land acquisition………………………………………………4.00 - 4.90 190,000 - 20,000 170,000 MWPAT Title V Loan - 97-1148……………………………- 13,918 - 1,162 12,756 Recreational facility…………………………………………2.25 - 5.00 440,000 - 40,000 400,000 School remodeling………………………………………… 2.25 - 5.00 1,865,000 - 120,000 1,745,000 School remodeling………………………………………… 2.50 - 4.25 120,000 - 10,000 110,000 Land acquisition………………………………………………2.50 - 4.10 13,880,000 - 595,000 13,285,000 Road, sidewalk and bikepath………………………………2.50 - 3.00 220,000 - 110,000 110,000 Recreational facility…………………………………………2.50 - 4.00 275,000 - 25,000 250,000 Planning………………………………………………………2.50 - 3.00 50,000 - 25,000 25,000 Public wharf………………………………………………… 2.50 - 4.00 75,000 - 15,000 60,000 Assessors map………………………………………………2.50 - 4.00 35,000 - 5,000 30,000 Fire departmental equipment………………………………2.50 - 3.00 15,000 - 10,000 5,000 Departmental equipment……………………………………2.50 - 3.00 380,000 - 190,000 190,000 Computer hardware…………………………………………2.50 - 4.00 385,000 - 55,000 330,000 Remodeling………………………………………………… 2.50 - 4.13 465,000 - 30,000 435,000 Road and drainage………………………………………… 2.50 - 3.00 210,000 - 105,000 105,000 Bulkhead………………………………………………………2.50 - 4.00 80,000 - 15,000 65,000 Public wharf………………………………………………… 2.50 - 4.00 50,000 - 10,000 40,000 School remodeling………………………………………… 3.75 - 5.00 630,000 - 35,000 595,000 Planning………………………………………………………3.75 - 4.00 300,000 - 100,000 200,000 Outdoor recreational facility…………………………………3.75 - 5.00 495,000 - 40,000 455,000 Fire departmental equipment………………………………3.75 - 4.00 210,000 - 70,000 140,000 Bath house construction……………………………………3.75 - 5.00 220,000 - 15,000 205,000 Public works equipment……………………………………3.75 - 4.00 70,000 - 25,000 45,000 Land acquisition………………………………………………3.75 - 5.00 275,000 - 20,000 255,000 Advance refunding of 97 land bonds………………………3.75 - 5.00 17,705,000 - 1,475,000 16,230,000 Childrens beach ramp………………………………………3.00 - 5.00 200,000 - 15,000 185,000 Public safety communications………………………………3.00 - 5.00 3,000,000 - 335,000 2,665,000 Bikepath………………………………………………………3.00 - 5.00 650,000 - 50,000 600,000 Fairgrounds road……………………………………………3.00 - 5.00 1,375,000 - 345,000 1,030,000 Fire engine……………………………………………………3.00 - 5.00 450,000 - 90,000 360,000 Washington street building…………………………………3.00 - 5.00 200,000 - 10,000 190,000 Sidewalk design………………………………………………3.00 - 5.00 25,000 - 5,000 20,000 South Shore Road bike path………………………………3.00 - 5.00 425,600 - 30,600 395,000 Nobadeer Farm Road bike path……………………………3.00 - 5.00 100,000 - 10,000 90,000 Study of proposed bulk fuel facility…………………………3.00 - 5.00 250,000 - 50,000 200,000 NES building improvements……………………………… 3.00 - 5.00 600,000 - 35,000 565,000 CPS building improvements……………………………… 3.00 - 5.00 740,000 - 45,000 695,000 NHS building improvements……………………………… 3.00 - 5.00 1,590,000 - 90,000 1,500,000 MWPAT ………………………………………………………2.00 - 2.414 16,093,652 4,610,490 227,101 20,477,041 New School Playing Fields…………………………………3.00 - 5.00 1,200,000 - 80,000 1,120,000 School Bus Lanes and Parking Lot Improvements………3.00 - 5.00 250,000 - 50,000 200,000 Surfside wastewater design…………………………………4.125 - 1,380,000 - 1,380,000 Total Governmental Bonds Payable………………………$ 71,673,170 $ 5,990,490 $ 6,338,863 $ 71,324,797 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 50 Basic Financial Statements Debt service requirements for principal and interest for Governmental bonds payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2010………………$ 6,584,812 $ 2,395,651 $ 8,980,463 2011……………… 6,061,641 2,150,591 8,212,232 2012……………… 6,055,399 1,912,846 7,968,245 2013……………… 4,679,473 1,699,738 6,379,211 2014……………… 4,548,870 1,531,689 6,080,559 2015……………… 4,633,599 1,353,429 5,987,028 2016……………… 4,638,641 1,179,592 5,818,233 2017……………… 4,734,054 1,005,258 5,739,312 2018……………… 4,264,819 840,454 5,105,273 2019……………… 2,335,948 725,588 3,061,536 2020……………… 2,312,447 649,250 2,961,697 2021……………… 2,303,176 571,543 2,874,719 2022……………… 2,285,443 494,060 2,779,503 2023……………… 2,243,106 416,254 2,659,360 2024……………… 2,151,176 339,090 2,490,266 2025……………… 1,114,661 287,091 1,401,752 2026……………… 1,103,572 256,965 1,360,537 2027……………… 1,001,032 228,914 1,229,946 2028……………… 944,573 202,364 1,146,937 2029……………… 876,745 178,567 1,055,312 2030……………… 614,623 160,547 775,170 2031……………… 628,799 144,947 773,746 2032……………… 643,320 129,002 772,322 2033……………… 658,197 112,703 770,900 2034……………… 673,437 96,040 769,477 2035……………… 689,049 79,004 768,053 2036……………… 705,043 61,587 766,630 2037……………… 721,428 43,780 765,208 2038……………… 738,214 25,572 763,786 2039……………… 34,500 15,654 50,154 2040……………… 34,500 14,231 48,731 2041……………… 34,500 12,808 47,308 2042……………… 34,500 11,385 45,885 2043……………… 34,500 9,962 44,462 2044……………… 34,500 8,539 43,039 2045……………… 34,500 7,116 41,616 2046……………… 34,500 5,693 40,193 2047……………… 34,500 4,269 38,769 2048……………… 34,500 2,846 37,346 2049……………… 34,500 1,423 35,923 Total………………$ 71,324,797 $ 19,366,042 $ 90,690,839 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 51 Basic Financial Statements Bonds and Notes Payable Schedule – Enterprise Funds Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2008 Issued Redeemed 2009 Sewer…………………………………………………………4.00 - 5.00 $ 570,000 $ - $ 40,000 $ 530,000 MWPAT - 94-10………………………………………………Various 132,797 - 15,995 116,802 MWPAT CW-01-40…………………………………………2.00 - 5.50 1,577,990 - 78,285 1,499,705 Sewer…………………………………………………………2.25 - 5.00 960,000 - 60,000 900,000 MWPAT Sewer 98-143………………………………………4.50 - 5.25 717,304 - 46,163 671,141 MWPAT Sewer 98-144………………………………………4.50 - 5.25 160,842 - 9,993 150,849 MWPAT Sewer 98-145………………………………………4.50 - 5.25 178,104 - 10,725 167,379 MWPAT CW-02-50-A………………………………………Various 4,840,739 - 276,158 4,564,581 Sewer department…………………………………………. 3.75 - 4.00 40,000 - 10,000 30,000 MWPAT CW-02-50…………………………………………Various 3,876,814 - 141,610 3,735,204 MWPAT CW-05-21…………………………………………2.414 29,459,250 - 625,588 28,833,662 Stormwater planning…………………………………………3.75 - 4.00 30,000 - 10,000 20,000 Cleaning equipment…………………………………………3.00 - 5.00 165,000 - 45,000 120,000 Sewer construction………………………………………… 3.00 - 5.00 250,000 - 15,000 235,000 Sewer…………………………………………………………3.00 - 5.00 870,000 - 45,000 825,000 Waste Water Treatment Facility……………………………3.00 - 5.00 398,013 - 147,213 250,800 Sewer departmental equipment……………………………3.00 - 5.00 150,000 - 30,000 120,000 Sewer…………………………………………………………3.00 - 5.00 1,435,075 - 75,075 1,360,000 MWPAT CW 04-20…………………………………………2.00 3,837,370 - 712,052 3,125,318 Airport land acquisition………………………………………4.00 - 4.25 285,000 - 95,000 190,000 Airport…………………………………………………………2.25 - 5.00 230,000 - 40,000 190,000 Airport deparrtment equipment……………………………2.50 - 3.00 60,000 - 30,000 30,000 Airport improvement…………………………………………2.50 - 4.00 1,165,000 - 195,000 970,000 Airport improvement…………………………………………3.75 - 5.00 170,000 - 25,000 145,000 Airport equipment……………………………………………3.75 - 4.00 150,000 - 50,000 100,000 Airport equipment……………………………………………3.00 - 5.00 440,812 - 115,812 325,000 Airport improvements and protection………………………3.00 - 5.00 676,500 - 76,500 600,000 Airport equipment……………………………………………3.00 - 5.00 230,000 - 60,000 170,000 Airport equipment refurbishment………………………… 3.00 - 5.00 175,000 - 45,000 130,000 Water projects……………………………………………… 4.00 - 5.00 745,000 - 60,000 685,000 Water meters…………………………………………………4.00 - 4.25 450,000 - 150,000 300,000 Current refunding of December 1991 water………………2.25 - 5.00 150,000 - 150,000 - Water…………………………………………………………2.50 - 4.13 425,000 - 25,000 400,000 Water…………………………………………………………2.50 - 4.13 425,000 - 25,000 400,000 Land acquisition………………………………………………2.50 - 4.13 2,550,000 - 150,000 2,400,000 Water…………………………………………………………3.75 - 5.00 2,795,000 - 110,000 2,685,000 Water…………………………………………………………3.75 - 5.00 625,000 - 65,000 560,000 Water…………………………………………………………3.75 - 5.00 470,000 - 15,000 455,000 Garage and maintenance facility………………………… 3.75 - 5.00 840,000 - 30,000 810,000 Rehab and administration building…………………………3.00 - 5.00 750,000 - 40,000 710,000 Source well and pump………………………………………3.00 - 5.00 1,300,000 - 65,000 1,235,000 Water storage tank………………………………………… 3.00 - 5.00 5,000,000 - 250,000 4,750,000 Water mains…………………………………………………3.00 - 5.00 1,250,000 - 65,000 1,185,000 Water system distribution improvements…………………3.00 - 5.00 1,000,000 - 50,000 950,000 Water mains…….……………………………………………3.00 - 5.00 100,000 - 5,000 95,000 Water tank……………………………………………………3.00 - 5.00 - 2,815,000 - 2,815,000 Water meter……………………………………………3.75 - 5.00 1,585,000 - 170,000 1,415,000 Water…………………………………………………………3.75 - 5.00 80,000 - 10,000 70,000 Water tank……………………………………………………3.00 - 5.00 - 3,900,000 - 3,900,000 Water tank……………………………………………………3.00 - 5.00 - 2,473,000 - 2,473,000 Solid waste facility……………………………………………2.50 - 4.13 85,000 - 5,000 80,000 Landfill cell……………………………………………………3.00 - 5.00 650,000 - 35,000 615,000 Material recovery facility……………………………………3.00 - 5.00 350,000 - 70,000 280,000 Total Enterprise Bonds Payable………………………… $ 74,856,610 $ 9,188,000 $ 4,671,169 $ 79,373,441 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 52 Basic Financial Statements Debt service requirements for principal and interest for enterprise fund bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2010………………$ 4,254,726 $ 2,704,813 $ 6,959,539 2011……………… 4,284,593 2,538,564 6,823,157 2012……………… 4,019,193 2,391,910 6,411,103 2013……………… 3,846,666 2,252,849 6,099,515 2014……………… 3,795,782 2,099,149 5,894,931 2015……………… 3,649,668 1,944,555 5,594,223 2016……………… 3,713,225 1,805,826 5,519,051 2017……………… 3,429,324 1,678,665 5,107,989 2018……………… 3,390,019 1,564,502 4,954,521 2019……………… 3,450,615 1,452,134 4,902,749 2020……………… 3,519,818 1,309,731 4,829,549 2021……………… 3,632,114 1,182,163 4,814,277 2022……………… 3,476,636 1,056,189 4,532,825 2023……………… 3,569,282 926,209 4,495,491 2024……………… 3,521,744 795,908 4,317,652 2025……………… 3,408,579 668,206 4,076,785 2026……………… 2,731,310 558,881 3,290,191 2027……………… 2,470,348 471,540 2,941,888 2028……………… 2,281,242 391,390 2,672,632 2029……………… 1,744,262 312,285 2,056,547 2030……………… 1,126,122 256,396 1,382,518 2031……………… 1,153,638 228,880 1,382,518 2032……………… 1,181,827 200,691 1,382,518 2033……………… 1,210,705 171,813 1,382,518 2034……………… 1,240,289 142,230 1,382,519 2035……………… 1,270,595 111,924 1,382,519 2036……………… 1,301,642 80,877 1,382,519 2037……………… 1,333,447 49,071 1,382,518 2038……………… 1,366,030 16,488 1,382,518 Total………………$ 79,373,441 $ 29,363,839 $ 108,737,280 The Town is scheduled to be subsidized by the Massachusetts Water Pollution Abatement Trust (MWPAT) on a periodic basis for principal in the amount of $2,367,761 and interest costs of $3,235,231. Thus, net MWPAT loan repayments, including interest, are scheduled to be $57,622,245. The principal subsidies are guaranteed and therefore a $2,367,761 intergovernmental receivable has been reported in the enterprise fund financial statements. Since the Town is legally obligated for the total amount of the debt, such amounts have been reported in the accompanying basic financial statements. The fiscal year 2009 principal and interest subsidies totaled approximately $101,000 and $410,000, respectively. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 53 Basic Financial Statements Bonds and Notes Payable Schedule – Land Bank Component Unit Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2008 Issued Redeemed 2009 Land Bank Bonds and Notes Payable……………………6.063 $ 6,317,390 $ 3,000,000 $ 4,617,390 $ 4,700,000 Land Bank Bonds and Notes Payable……………………4.00 - 5.50 24,336,755 13,175,000 9,476,356 28,035,399 Total Land Bank Component Unit Bonds Payable……… $ 30,654,145 $ 16,175,000 $ 14,093,746 $ 32,735,399 Debt service requirements for principal and interest for Land Bank bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2010………………$ 3,987,782 $ 1,017,953 $ 5,005,735 2011……………… 2,257,782 938,962 3,196,744 2012……………… 2,317,782 884,359 3,202,141 2013……………… 2,372,782 824,988 3,197,770 2014……………… 1,672,782 745,249 2,418,031 2015-2019……… 9,283,090 2,840,361 12,123,451 2020-2024……… 6,603,909 1,390,420 7,994,329 2025-2029……… 4,239,490 355,271 4,594,761 Total………………$ 32,735,399 $ 8,997,563 $ 41,732,962 The Land Bank’s notes payable are with various entities and bear interest at 6.063%. The notes payable balance is amortized over periods of one to sixteen years. Bonds payable is comprised of the 1998 Series E Refunding Bonds dated July 15, 1998, bear interest at rates ranging from 4.25% to 5.25% and mature serially from July 1, 2001 through July 1, 2019. The 2008 Series A Bonds dated December 4, 2007 bear interest at rates ranging from 4% to 5.5% and mature serially from December 1, 2008 through December 1, 2027. The bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. On March 13, 2009, the Land Bank issued $13,175,000 in 2009 Series A Bonds with an average interest rate of 2.95%, maturing serially from December 1, 2009 through December 1, 2027, to advance refund $8,420,000 of outstanding 1998 Series E refunding bonds with an interest rate ranging from 4.5% to 5.25%. The advanced refunding resulted in an economic gain (difference between the present value of the old and new debt service payments) of approximately $1.14 million. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 54 Basic Financial Statements The Town is subject to various debt limits by statute and may issue additional general obligation debt under the normal debt limit. At June 30, 2009, the Town had the following authorized and unissued debt: General Government Purpose Amount Bikepaths……………………………………………………$ 599,250 Public Safety Facility……………………………... ………7,300,000 Sewer………………………………………………………451,976 Total General Government………………………………$8,351,226 Enterprise Purpose Amount Sewer………………………………………………………$ 35,307,259 Solid Waste…………………………………………………1,683,000 Nantucket Memorial Airport………………………………22,718,600 Wannacomet Water Company………………………… 250,000 Total Enterprise……………….……………………………$59,958,859 Land Bank Component Unit Purpose Amount Land Bank …………………………………………………$1,118,379 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 55 Basic Financial Statements Changes in Long-term Liabilities During the fiscal year ended June 30, 2009, the following changes occurred in long-term liabilities: Balance at Balance at June 30, June 30, Current 2008 Additions Reductions 2009 Portion GOVERNMENTAL ACTIVITIES: Long-Term Bonds and Notes………… $ 71,673,170 $ 5,990,490 $ (6,338,863) $ 71,324,797 $ 6,584,812 Compensated Absences……………… 1,281,344 452,746 (256,269) 1,477,821 295,564 Workers' Compensation………………… 94,336 93,176 (94,366) 93,146 93,146 Other Post-employment Benefits……… - 9,685,253 (2,284,079) 7,401,174 - Total Governmental Funds…………… $ 73,048,850 $ 16,221,665 $ (8,973,577) $ 80,296,938 $ 6,973,522 BUSINESS-TYPE ACTIVITIES: Long-Term Bonds and Notes………… $ 74,856,610 $ 9,188,000 $ (4,671,169) $ 79,373,441 $ 4,254,726 Compensated Absences……………… 409,657 198,684 (90,915) 517,426 103,486 Other Post-employment Benefits……… - 952,534 (224,408) 728,126 - Landfill Closure………………………… - 2,428,000 - 2,428,000 - Total Business-type Funds…………… $ 75,266,267 $ 12,767,218 $ (4,986,492) $ 83,046,993 $ 4,358,212 LAND BANK COMPONENT UNIT: Long-Term Bonds and Notes………… $ 30,654,145 $ 16,175,000 $ (14,093,746) $ 32,735,399 $ 3,975,000 Other Post-employment Benefits……… - 456,574 (107,674) 348,900 - COUNTY COMPONENT UNIT: Other Post-employment Benefits……… - 106,912 (25,213) 81,699 - Total Component Unit Funds………… $ 30,654,145 $ 16,738,486 $ (14,226,633) $ 33,165,998 $ 3,975,000 Total………………………………………$ 178,969,262 $ 45,727,369 $ (28,186,702) $ 196,509,929 $ 15,306,734 The governmental activities long-term liabilities are generally liquidated by the general fund. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 56 Basic Financial Statements NOTE 8 – RISK FINANCING The Town 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 three fiscal years. The Town is self-insured for its health insurance and workers’ compensation activities. These activities are accounted for in the internal service fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. (a) Health Insurance The estimate of Incurred But Not Reported (IBNR) claims is based on history. At June 30, 2009, the amount of the liability for health insurance claims totaled $721,784. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2007, are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-End Fiscal Year 2008…………$ 672,278 $ 8,198,903 $ (8,160,762) $ 710,419 Fiscal Year 2009………… 710,419 9,102,460 (9,091,095) 721,784 (b) Workers’ Compensation Workers’ compensation claims are administered by a third party administrator and are funded on a pay- as-you-go basis from a trust fund for workers compensation. Annual appropriations are made to add to the trust fund. The estimated future workers’ compensation liability is based on history and injury type. At June 30, 2009, the amount of the liability for workers’ compensation claims totaled $93,146. This liability is the Town’s best estimate based on available information. Changes in the reported liability since July 1, 2007, are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-End Fiscal Year 2008………..$ 144,674 $ 312,975 $ (363,313) $ 94,336 Fiscal Year 2009……….. 94,336 102,296 (103,486) 93,146 NOTE 9 – PENSION PLAN Plan Description - The Town and the County contribute to the Barnstable County Retirement Association (the System), a cost-sharing multiple-employer defined benefit pension plan administered by the Barnstable County Retirement Board. Substantially all employees of both the Town and County are members of the System, except for public school teachers and certain administrators who are members of the Massachusetts Teachers Retirement System, to which the Town does not contribute. Pension benefits and administrative expenses paid Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 57 Basic Financial Statements by the Teachers Retirement Board are the legal responsibility of the Commonwealth. The amount of these on- behalf payments totaled approximately $1,802,000 for the fiscal year ended June 30, 2009, and, accordingly, are reported in the general fund as intergovernmental revenues and pension expenditures. 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 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 Town and County are required to pay into the System their share of the system-wide actuarially 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 Town. The Town’s contributions to the System for the fiscal year ended June 30, 2007, 2008 and 2009 totaled $3,058,753, $3,346,353, and $3,643,915 respectively, which equaled its required contributions for each fiscal year. The County’s contribution to the System for the fiscal years ended June 30, 2007, 2008 and 2009 were $128,612, $138,012 and $145,083 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 basic 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 basic financial statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Town is one participating employer, as well as the Town’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 Town. NOTE 10 – POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS Fiscal year 2010 is the initial year that the Town has implemented GASB Statement 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions (GASB 45). As allowed by GASB 45, the Town has established the net Other Post-Employment Benefits (OPEB) obligation at zero at the beginning of the transition year and has applied the measurement and recognition requirements of GASB 45 on a prospective basis plan. Chapter 32B of the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are negotiated between the Town and the unions representing Town employees and are renegotiated each bargaining period. The Retiree Health Plan does not issue a publicly available financial report. Funding Policy – Contribution requirements are also negotiated between the Town and union representatives. The required contribution is based on a pay-as-you-go financing requirement. The Town contributes between 80 and 90 percent of the cost of current-year premiums for eligible retired plan members and their spouses. Plan members receiving benefits contribute the remaining 10 to 20 percent of their premium costs. For fiscal year 2009, the Town contributed $2,534,000 to the plan, and member contributions totaled $506,800. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 58 Basic Financial Statements Annual OPEB Cost and Net OPEB Obligation – The Town’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the Town’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town’s net OPEB obligation are summarized in the following table: Normal cost………………………………………………………$ 2,551,000 Amortization of unfunded actuarial accrued liability………… 8,194,000 Annual OPEB cost (expense)……………………………… 10,745,000 Contributions made……………………………………………… (2,534,000) Increase in net OPEB obligation……………………………… 8,211,000 Net OPEB obligation - beginning of year……………………… - Net OPEB obligation - end of year…………………………… $ 8,211,000 The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2009 was as follows: Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/2009 $ 10,745,000 24% $ 8,211,000 Funded Status and Funding Progress – The funded status of the Plan as of the most recent actuarial valuation date, June 30, 2007, is as follows: Actuarial Actuarial Accrued Unfunded Actuarial Value of Liability (AAL) AAL Funded Valuation Assets Projected Unit Credit (UAAL) Ratio Date (A) (B) (B-A) (A/B) 7/1/2007 $ - $ 104,980,000 $ 104,980,000 0% 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. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 59 Basic Financial Statements 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 June 30, 2007, actuarial valuation, actuarial liabilities were determined using the projected unit credit cost method. The actuarial assumptions included a 4.00% investment return assumption, calculated based on the funded level of the plan at the valuation date. The UAAL is being amortized over a 30 year period. The remaining amortization period at June 30, 2009 is 29 years. NOTE 11 – LANDFILL CLOSURE State and Federal laws and regulations require the Town to construct a final capping system on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. The landfill operates under an Administrative Consent Order (ACO) with the Department of Environmental Protection. The ACO was amended in fiscal 2009 to allow for landfill mining over a five year period. Landfill mining will reduce the footprint of the unlined area that will eventually be capped and closed. The landfill maintains three cells with closure dates currently estimated to be fiscal 2013, 2014 and 2026. The Town has reflected a $2,428,000 closure liability at June 30, 2009, as an obligation of the solid waste enterprise fund. This amount is based upon estimates of what it would cost to perform all closure costs and post-closure care. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. NOTE 12 – COMMITMENTS   Construction Contracts:   The Town has a contract with Carlin Contracting for the Surfside Waste Water Treatment Facility upgrade and expansion. At year end, the open contract totaled approximately $750,000. The Town has a contract with Skanska USA Building, Inc. for construction of the new airport terminal. At year end, the open contract totaled approximately $2,350,000. The Town has various contracts with Earth Tech that include air terminal design and expansion, wastewater and drainage infrastructure evaluation and mapping, upgrades to and expansion of the Surfside Waste Water Treatment Facility. At year end, open contracts totaled approximately $2,650,000. The Town has contracts with C. C. Construction for sewer pipe and stormwater drainage construction. At year end, open contracts totaled approximately $550,000. The Town has contracts with Edwards & Kelcey, Inc. for airport engineering projects, and terminal design. At year end, open contracts totaled approximately $55,043,000. The Town has contracts with CB & I Inc. for tow storage tanks located in Sconset storage tank and North Pasture tank. At year end, the open contracts totaled approximately $7,200,000. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 60 Basic Financial Statements The Town has a contract the Lawrence Lynch for Backus Lane Playing Fields. At year end, the open contract totaled approximately $400,000. NOTE 13 – CONTINGENCIES The Town participates in a number of federal award programs. Although the grant programs have been audited in accordance with the provisions of the Single Audit Act Amendments of 1996 through June 30, 2009, these programs are still subject to financial and compliance audits. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although it is expected such amounts, if any, to be immaterial. 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, 2009, cannot be ascertained, management believes any resulting liability should not materially affect the financial position at June 30, 2009. NOTE 14 – SUBSEQUENT EVENT In accordance with Chapter 61 of the acts of 2009, An Act Transferring County Sheriffs to the Commonwealth, as of January 1, 2010, the office of the Nantucket County Sheriff will be transferred to the Commonwealth. With this transfer, all functions, duties and responsibilities of the Sheriff’s office will be transferred to the Commonwealth, and the Sheriff will become an employee of the Commonwealth. As a result, all valid liabilities and debts of the Sheriff’s office, which are in force on the effective date of the act, will become obligations of the Commonwealth as of that date. Additionally, all assets of the Sheriff’s Office will be transferred to the Commonwealth. NOTE 15 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS During fiscal year 2009, the Town has implemented the following GASB pronouncements: The GASB issued Statement #45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, which is required to be implemented in Fiscal 2010. This pronouncement required additional disclosure and it impacted the basic financial statements The GASB issued Statement #55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. This standard did not impact the basic financial statements. The GASB issued Statement #56, Codification of Accounting and Reporting Guidance Contained in the AICPA Statements on Auditing Standards. The standards in this statement incorporate certain accounting and financial reporting guidance included in the Statements on Auditing Standards of the AICPA into the state and local governmental accounting and financial reporting standards. This pronouncement did not impact the basic financial statements. Future Implementation of GASB Pronouncements The GASB issued Statement #54, Fund Balance Reporting and Governmental Fund Type Definitions, which is required to be implemented in fiscal year 2011. The implementation of this GASB will impact the Town’s financial statements, as it changes fund balance components into Nonspendable; Restricted; Committed; Assigned; and Unassigned. Town of Nantucket, Massachusetts 61 Required Supplementary Information Required Supplementary Information Amounts Current Year Carried forward Initial Original Final From Prior Year Budget Budget Budget REVENUES: Real estate and personal property taxes, net of tax refunds……………………………………………$- $ 57,755,914 $ 57,755,914 $ 57,755,914 Tax liens………………………………………………………… - - - - Motor vehicle and other excise taxes………………………… - 2,022,000 2,022,000 2,022,000 Hotel/motel tax…………………………………………………… - 1,280,000 1,280,000 1,280,000 Charges for services…………………………………………… - 4,737,887 4,737,887 4,737,887 Penalties and interest on taxes………………………………… - 410,000 410,000 410,000 Payments in lieu of taxes……………………………………… - 3,000 3,000 3,000 Licenses and permits…………………………………………… - 772,000 772,000 772,000 Fines and forfeitures…………………………………………… - 270,000 270,000 270,000 Intergovernmental……………………………………………… - 1,874,055 1,874,055 1,722,813 Departmental and other………………………………………… - 190,000 190,000 190,000 Investment income……………………………………………… - 550,000 550,000 550,000 Miscellaneous…………………………………………………… - 640,000 640,000 640,000 TOTAL REVENUES………………………………………… - 70,504,856 70,504,856 70,353,614 EXPENDITURES: Current: General government………………………………………… 1,201,397 5,779,164 6,980,561 6,510,078 Public safety………………………………………………… 327,117 8,883,550 9,210,667 9,073,193 Education…………………………………………………… 98,401 22,124,000 22,222,401 21,952,909 Public works………………………………………………… 319,588 3,452,600 3,772,188 3,211,537 Human services……………………………………………… 189,900 5,502,900 5,692,800 6,186,290 Culture and recreation……………………………………… 5,750 1,604,250 1,610,000 1,774,687 Employee benefits…………………………………………… 370 9,243,000 9,243,370 6,633,165 State and county charges……………………………………… - 4,093,976 4,093,976 4,095,676 Debt service: Principal……………………………………………………… - 6,401,600 6,401,600 6,347,398 Interest………………………………………………………… - 2,849,300 2,849,300 2,973,502 TOTAL EXPENDITURES…………………………………… 2,142,523 69,934,340 72,076,863 68,758,435 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES………………………………………………… (2,142,523) 570,516 (1,572,007) 1,595,179 OTHER FINANCING SOURCES (USES): Transfers in……………………………………………………… - 610,000 610,000 610,000 Transfers out…………………………………………………… - (3,736,000) (3,736,000) (6,227,946) TOTAL OTHER FINANCING SOURCES (USES)……… - (3,126,000) (3,126,000) (5,617,946) NET CHANGE IN FUND BALANCE……………………………… (2,142,523) (2,555,484) (4,698,007) (4,022,767) BUDGETARY FUND BALANCE, Beginning of year…………… 10,050,100 10,050,100 10,050,100 10,050,100 BUDGETARY FUND BALANCE, End of year……………………$ 7,907,577 $ 7,494,616 $ 5,352,093 $ 6,027,333 See notes to required supplementary information. Budgeted Amounts GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2009 Town of Nantucket, Massachusetts 62 Required Supplementary Information Actual Amounts Variance Budgetary Carried Forward To Final Amounts To Next Year Budget $ 56,295,800 $ - $ (1,460,114) 227,632 - 227,632 2,210,996 - 188,996 1,282,435 - 2,435 4,771,647 - 33,760 469,719 - 59,719 7,296 - 4,296 919,644 - 147,644 240,648 - (29,352) 2,252,249 - 529,436 232,970 - 42,970 205,782 - (344,218) 864,416 - 224,416 69,981,234 - (372,380) 4,694,010 1,279,311 536,757 8,437,196 392,809 243,188 21,305,657 572,910 74,342 2,405,712 419,567 386,258 5,882,311 209,017 94,962 1,720,754 15,384 38,549 6,457,047 17,105 159,013 4,093,372 - 2,304 6,338,863 - 8,535 2,954,975 - 18,527 64,289,897 2,906,103 1,562,435 5,691,337 (2,906,103) 1,190,055 610,000 - - (6,227,946) - - (5,617,946) - - 73,391 (2,906,103) 1,190,055 10,050,100 - - $ 10,123,491 $ (2,906,103) $ 1,190,055 Town of Nantucket, Massachusetts 63 Required Supplementary Information Town of Nantucket, Massachusetts 64 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 Town is one participating employer, as well as the Town’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) 1/1/1993 $ 97,194,645 $ 226,430,792 $ 129,236,147 42.9% $ 97,074,725 133.1% 1/1/1996 157,044,089 276,107,221 119,063,132 56.9% 108,456,079 109.8% 1/1/1998 235,247,660 404,215,695 168,968,035 58.2% 121,161,677 139.5% 1/1/2000 300,396,700 462,462,500 162,065,800 65.0% 152,293,100 106.4% 1/1/2002 362,911,896 553,531,966 190,620,070 65.6% 173,610,557 109.8% 1/1/2004 378,317,300 647,655,411 269,338,111 58.4% 190,614,004 141.3% 1/2/2006 465,637,984 765,747,723 300,109,739 60.8% 215,474,180 139.3% 1/1/2007 517,396,087 825,863,068 308,466,981 62.6% 226,391,633 136.3% The Town's share of the UAAL, as of January 1, 2007, is approximately 8.9%. See notes to required supplementary information. Barnstable County Contributory Retirement System Schedule of Funding Progress Town of Nantucket, Massachusetts 65 Required Supplementary Information (B/A) Plan Year Annual (A) (B) Town's Percentage Ended Required Actual Percentage Actual of System Wide December 31 Contributions Contributions Contributed Contributions Actual Contributions 2005 $ 27,846,430 $ 27,846,430 100% $ 2,629,487 9.44% 2006 31,044,132 31,044,132 100% 2,761,460 8.90% 2007 34,360,912 34,360,912 100% 3,346,353 9.74% 2008 39,899,322 39,899,322 100% 3,643,915 9.13% (B/A) Plan Year Annual (A) (B) County's Percentage Ended Required Actual Percentage Actual of System Wide December 31 Contributions Contributions Contributed Contributions Actual Contributions 2005 $ 27,846,430 $ 27,846,430 100% $ 112,420 0.40% 2006 31,044,132 31,044,132 100% 128,612 0.41% 2007 34,360,912 34,360,912 100% 138,012 0.40% 2008 39,899,322 39,899,322 100% 145,083 0.36% The Town and County's Actual Contributions equaled 100% of their Required Contributions for each year presented. See notes to required supplementary information. County of Nantucket System Wide County of Nantucket Barnstable County Contributory Retirement System Schedule of Employer Contributions System Wide Town of Nantucket Town of Nantucket Town of Nantucket, Massachusetts 66 Required Supplementary Information Town of Nantucket, Massachusetts 67 Required Supplementary Information Other Post-Employment 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 Other Post-employment Benefit Plan 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 Post-Employment Benefit 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) 7/1/2007 $ - $ 104,980,000 $ 104,980,000 0% $ N/A N/A Annual Actual Year Required Contributions Percentage Ended Contribution Made Contributed 6/30/2009 $ 10,745,000 $ 2,534,000 24% The Town implemented GASB Statement No. 45 for the fiscal year ended June 30, 2009. Information for prior years is not available. See notes to required supplementary information. OTHER POST-EMPLOYMENT BENEFIT PLAN JUNE 30, 2009 Schedule of Funding Progress Scheduule of Employer Contributions Town of Nantucket, Massachusetts 68 Required Supplementary Information ACTUARIAL METHODS AND ASSUMPTIONS Actuarial Methods: Valuation date………………………………………… July 1, 2007 Actuarial cost method………………………………… Projected Unit Credit Cost Method Amortization method………………………………… Amortization payments increasing at 4.50% Remaining amortization period……………………… 30 years as of July 1, 2008, closed Actuarial Assumptions: Investment rate of return…………………………… 4.00%, pay-as-you-go scenario Medical/drug cost trend rate………………………… 5-9% Plan Membership: Current retirees, beneficiaries, and dependents… 196 Current active members……………………………… 580 Total……………………………………………………776 See notes to required supplementary information. OTHER POST-EMPLOYMENT BENEFIT PLAN FISCAL YEAR ENDED JUNE 30, 2009 Town of Nantucket, Massachusetts 69 Required Supplementary Information Notes to Required Supplementary Information Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 70 Required Supplementary Information NOTE A – BUDGETARY BASIS OF ACCOUNTING Notes to Required Supplementary Information 1. Budgetary Information Municipal Law requires the adoption of a balanced budget. An annual budget is prepared by Town Administration, reviewed and forwarded by the Board of Selectmen, reviewed and recommended by the Finance Committee to Annual Town Meeting for adoption by positive vote. Increases or decreases to the originally adopted budget require approval at a Special Town Meeting. Transfers between and within departments subsequent to the approval of the annual budget typically require approval at a Special Town Meeting or in certain circumstances by vote of the Finance Committee and Board of Selectmen, as outlined in Massachusetts General Law. The majority of appropriations are non-continuing, which lapse at the end of each fiscal year. Others are continuing appropriations for which the governing body has authorized that an unspent balance from a prior fiscal year be carried forward and made available for spending in the current fiscal year. These carry forwards are included as part of the subsequent fiscal year’s original budget. Generally, expenditures may not exceed the legal level of spending (salaries, expenses and capital) authorized for an appropriation account. However, the payment of debt service is statutorily required, regardless of whether such amounts are appropriated. Additionally, expenditures for disasters, natural or otherwise, and final claims and judgments may exceed the level of spending authorized by two-thirds majority vote of the Committee. An annual budget is adopted for the general fund in conformity with the guidelines described above. The Town’s original fiscal year 2009 budget includes $73,670,340 in appropriations and other amounts to be raised and $2,142,523 in amounts carried forward from the previous fiscal year. During fiscal year 2009, the Town’s budget decreased by $826,483 mainly due to a combination of $1.4 million in budget reductions and a vote to transfer available funds of $725,841 to the Solid Waste Enterprise Fund. The Town Accountant’s Office has the responsibility to ensure that budgetary control is maintained. Budgetary control is exercised through the accounting system. 2. Budgetary - GAAP Reconciliation For budgetary financial reporting purposes, the Uniform Municipal Accounting System basis of accounting (established by the Commonwealth) is followed, which differs from the GAAP basis of accounting. A reconciliation of budgetary-basis to GAAP-basis results for the general fund for the fiscal year ended June 30, 2009, is presented below: Net change in fund balance - budgetary basis…………………$ 75,801 Basis of accounting differences: Recognition of revenue based on available criteria………… 378,724 Accrued expenditures…………………………………………… (780,659) Accrued payroll…………………….…………………………… 500,538 Recognition of revenue for on-behalf payments……………… 1,802,000 Recognition of expenditures for on-behalf payments………… (1,802,000) Net change in fund balance - GAAP basis………………………$ 174,404 Notes to Required Supplementary Information Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 71 Required Supplementary Information 3. Appropriation Deficits During fiscal year 2009, none of the Town’s general fund expenditures exceeded budgeted appropriations. NOTE B – PENSION PLAN The Town and the County contribute to the Barnstable County Retirement Association (“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 Town and County are 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 basic financial statements, presented 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 basic financial statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Town is one participating employer, as well as the Town’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 Town. The following actuarial methods and assumptions were used in the Retirement System’s most recent actuarial valuation: Notes to Required Supplementary Information Fiscal Year Ended June 30, 2009 Town of Nantucket, Massachusetts 72 Required Supplementary Information Actuarial Methods and Assumptions: Valuation Date…………………………………………………January 1, 2007 Actuarial Cost Method…………………………………………Entry Age Normal Cost Method Amortization Method…………………………………………Increasing at 4.50% per year Incentive, 21 years from July 1, 2007 for 2002 and 2003 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……………………………………8.25% Projected salary increases…………………………………5.00% Cost of living adjustments………………………………… 3.0% for the first $12,000 of retirement income Plan Membership: Retired participants and beneficiaries receiving benefits……………………………………… 2,267 Terminated participants entitled to a return of their employee contributions………………… 670 Terminated participants with a vested right to a deferred or immediate benefit……………… 117 Active participants…………………………………………………………………………………… 5,314 Total…………………………………………………………………………………………………… 8,368 Remaining Amortization Period………………………………1 year from July 1, 2007 for 1992 Early NOTE C – OTHER POST-EMPLOYMENT BENEFITS 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 Town currently finances its other post-employment 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 Town 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 multi-year trend information which compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets. Since this is the Town’s initial year of implementation of GASB Statement 45, information for prior years is not available. 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. Town of Nantucket, Massachusetts 73 Other Supplementary Information Nantucket County Component Unit Combining Statements Town of Nantucket, Massachusetts 74 Other Supplementary Information Nantucket County Component Unit Combining Statements County General Fund – primary operating fund for Nantucket County. It is used to account for all financial resources, except those that are required to be accounted for in another fund. County Deeds Excise Special Revenue Fund – accounts for the deeds excise tax revenue that is returned to the County each year. County Administration – accounts for the 15% of deeds excise tax revenue that is required to be designated for County Administration. Sheriff’s Department – accounts for the 75% of deeds excise tax revenue that is required to be designated for the County Sheriff’s Department. Registry of Deeds – accounts for the 10% of deeds excise tax revenue that is required to be designated for the Registry of Deeds. County Other Special Revenue Funds – accounts for the proceeds of specific revenue sources that are restricted by law or administrative action to expenditures for specified purposes. This fund is comprised of the sheriff funds, state and federal grants, Cape Cod license plate fund, escrow funds and gift funds. Total General County Sheriff's Registry Other Special Nantucket ASSETS Fund Administration Department of Deeds Revenue Funds County Cash and cash equivalents…………………………………$ 1,291,767 $ 220 $ 1,172,122 $ 425,607 $ 680,679 $ 3,570,395 Receivables, net of uncollectibles: Departmental and other………………………………… 45,507 - - - - 45,507 Intergovernmental……………………………………… - - - - 1,580 1,580 Due from other funds……………………………………… 141,777 105,609 220 398,323 - 645,929 TOTAL ASSETS…………………………………………… $ 1,479,051 $ 105,829 $ 1,172,342 $ 823,930 $ 682,259 $ 4,263,411 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable…………………………………………$ 19,215 $ - $ 40,000 $ 33,160 $ - $ 92,375 Accrued payroll…………………………………………… 8,742 - 540 - - 9,282 Payroll withholdings……………………………………… 383,604 - - - - 383,604 Other liabilities…………………………………………… 34,918 - - - 2,419 37,337 Due to other funds……………………………………… 564,266 - 80,215 - 1,448 645,929 TOTAL LIABILITIES………………………………………… 1,010,745 - 120,755 33,160 3,867 1,168,527 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations…… 69,133 - - - 6,607 75,740 Unreserved: Undesignated, reported in: General fund……………………………………… 399,173 - - - - 399,173 Special revenue funds…………………………… - 105,829 1,051,587 790,770 671,785 2,619,971 TOTAL FUND BALANCES………………………………… 468,306 105,829 1,051,587 790,770 678,392 3,094,884 TOTAL LIABILITIES AND FUND BALANCES……………$ 1,479,051 $ 105,829 $ 1,172,342 $ 823,930 $ 682,259 $ 4,263,411 Deeds Excise Special Revenue Fund NANTUCKET COUNTY COMBINING BALANCE SHEET JUNE 30, 2009 Town of Nantucket, Massachusetts 75 Other Supplementary Information Total General County Sheriff's Registry Other Special Nantucket Fund Administration Department of Deeds Revenue Funds County REVENUES: Intergovernmental………………………………………$ 100,000 $ - $ - $ - $ - $ 100,000 Departmental and other……………………………… 327,871 139,590 697,955 93,061 159,408 1,417,885 Investment income…………………………………… (2,235) 185 23,657 2,645 2,628 26,880 TOTAL REVENUES…………………………… 425,636 139,775 721,612 95,706 162,036 1,544,765 EXPENDITURES: Current: County administration……………………………… 300,223 - - - - 300,223 Registry of Deeds………………………………… 281,582 - - 17,231 4,404 303,217 Sheriff's Department……………………………… 703,125 - 194,286 - - 897,411 Special Projects…………………………………… - - - - 65,910 65,910 General government……………………………… 375 - - - - 375 Public safety………………………………………… 12,835 - - - 12,835 Pension benefits…………………………………… - - 40,000 33,159 - 73,159 Claims and judgements…………………………… 237,533 - - - - 237,533 TOTAL EXPENDITURES……………………… 1,535,673 - 234,286 50,390 70,314 1,890,663 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES………………… (1,110,037) 139,775 487,326 45,316 91,722 (345,898) OTHER FINANCING SOURCES (USES): Transfers in…………………………………………… 1,183,799 - - - - 1,183,799 Transfers out…………………………………………… - (443,935) (646,756) (93,108) - (1,183,799) TOTAL OTHER FINANCING SOURCES (US 1,183,799 (443,935) (646,756) (93,108) - - NET CHANGE IN FUND BALANCES…………………… 73,762 (304,160) (159,430) (47,792) 91,722 (345,898) FUND BALANCES AT BEGINNING OF YEAR………… 394,544 409,989 1,211,017 838,562 586,670 3,440,782 FUND BALANCES AT END OF YEAR…………………$ 468,306 $ 105,829 $ 1,051,587 $ 790,770 $ 678,392 $ 3,094,884 FISCAL YEAR ENDED JUNE 30, 2009 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NANTUCKET COUNTY Deeds Excise Special Revenue Fund Town of Nantucket Massachusetts 76 Other Supplementary Information