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Fiscal Year 2010 Basic Financial Statements TOWN OF NANTUCKET, MASSACHUSETTS REPORT ON EXAMINATION OF BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED JUNE 30, 2010 TOWN OF NANTUCKET, MASSACHUSETTS REPORT ON EXAMINATION OF BASIC FINANCIAL STATEMENTS JUNE 30, 2010 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............................................................................................................................62 General Fund Budgetary Comparison Schedule.......................................................................................................63 Schedule of Revenues, Expenditures and Changes in Fund Balance – General Fund – Budget and Actual ......64 Retirement System Schedules...................................................................................................................................66 Retirement System Schedule of Funding Progress...............................................................................................67 Retirement System Schedule of Employer Contributions......................................................................................68 Other Postemployment Benefit Schedules................................................................................................................69 Other Postemployment Benefit Plan Schedule of Funding Progress and Employer Contributions.......................70 Other Postemployment Benefit Plan Actuarial Methods and Assumptions...........................................................71 Notes to Required Supplementary Information..........................................................................................................72 Nantucket County Component Unit Combining Statements .........................................................................................75 Nantucket County – Combining Balance Sheet.....................................................................................................77 Nantucket County – Combining Statement of Revenues, Expenditures, and Changes in Fund Balances...........78 Additional Information....................................................................................................................................................79 Nantucket Planning and Economic Development Commission – Schedule of Indirect Cost Rate........................80 Nantucket Planning and Economic Development Commission – Schedule of Public Support, Revenues and Expenditures by Grant............................................................................................................................................81 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, 2010, 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. Except as discussed in the following paragraph, 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. We were unable to obtain sufficient audit evidence to satisfy ourselves as to the accuracy of the amounts reported in several areas of the financial statements. The Town’s control activities for its accounting system did not completely reconcile cash, investments and interfund receivables and payables; nor did the Town have controls in place to ensure that all transactions were properly recorded. Consequently there was not sufficient audit evidence to support the activities and balances of all funds. In our opinion, based on our audit and the report of other auditors, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to examine evidence regarding the reconciliation of the balances and activity of the accounts and funds described in the paragraph above, 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, 2010, 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 February 28, 2011 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 2 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 statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. The Nantucket Planning and Economic Development Commission schedule of indirect cost rate and schedule of public support revenues and expenditures by grant, as listed in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. We have applied certain limited procedures to these schedules, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the additional information. However, we did not audit the information and express no opinion on it. 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 postemployment benefit plan schedule of funding progress and employer contributions and other postemployment 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. February 28, 2011 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, 2010. 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 2010 • The total of assets exceeded liabilities (i.e., net assets) by $177 million for governmental activities, and $122 million for business type activities. • Governmental funds reported combined ending fund balances of $36.6 million. • Unreserved fund balance for the general fund totaled $8.1 million. • Total governmental funds debt totaled $76.6 million, and total enterprise fund debt totaled $105.4 million. Town of Nantucket, Massachusetts 6 Basic Financial Statements Government-wide Financial Analysis The following chart provides a summary of Governmental activities financial data for fiscal year 2010, with comparative fiscal 2009 information. Governmental Activities Balance at Balance at June 30, June 30, 2010 2009 Assets: Current assets……………………………………………$ 55,523,388 $ 57,426,793 Noncurrent assets (excluding capital)………………… 307,708 398,828 Capital assets, not being depreciated………………… 193,836,195 180,467,349 Capital assets, net of accumulated depreciation…… 29,728,404 29,394,863 Total assets………………………………………… 279,395,695 267,687,833 Liabilities: Current liabilities (excluding debt)…………………… 9,243,223 7,225,372 Noncurrent liabilities (excluding debt)………………… 16,305,915 8,740,740 Current debt……………………………………………… 6,742,385 13,474,322 Noncurrent debt………………………………………… 70,031,218 64,739,985 Total liabilities………………………………………102,322,741 94,180,419 Net Assets: Capital assets net of related debt……………………… 171,102,098 156,034,000 Restricted………………………………………………… 13,294,995 14,401,121 Unrestricted……………………………………………… (7,324,139) 3,072,293 Total net assets……………………………………$ 177,072,954 $ 173,507,414 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 $177 million at the close of fiscal year 2010. The largest portion of the Town’s net assets, $171.1 million, 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, $13.5 million, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, which reported a deficit balance of $7.6 million, may be used to meet the government’s ongoing obligations to citizens and creditors. The increase in noncurrent liabilities is due to the recognition of an additional $7.7 million in other postemployment liabilities as the Town continues to amortize the total actuarially calculated unfunded liability. Town of Nantucket, Massachusetts 7 Basic Financial Statements Governmental Activities June 30, June 30, 2010 2009 Program revenues: Charges for services……………………………………$ 7,281,809 $ 5,868,336 Operating grants and contributions…………………… 5,090,233 5,795,452 Capital grants and contributions……………………… 1,230,625 1,270,878 General revenues: Real estate and personal property taxes…………… 60,231,952 57,438,797 Tax liens………………………………………………… 724,886 392,078 Motor vehicle and other excise taxes………………… 1,852,563 2,201,004 Hotel/motel tax………………………………………… 1,035,291 1,237,233 Penalties and interest on taxes……………………… 659,062 473,701 Community preservation fund surtax………………… 1,669,975 1,616,989 Payments in lieu of taxes……………………………… 11,846 7,296 Nonrestricted grants and contributions……………… 587,474 376,265 Unrestricted investment income……………………… 160,970 277,329 Gain on sale of capital assets………………………… 1,143,075 - Miscellaneous revenues……………………………… 777,392 843,523 Total revenues……………………………………… 82,457,153 77,798,881 Expenses: General government…………………………………… 8,544,044 8,835,601 Public safety……………………………………………… 14,684,244 14,346,976 Education………………………………………………… 30,380,350 27,861,059 Public works……………………………………………… 4,514,082 4,195,016 Community preservation……………………………… 1,775,756 1,895,017 Human services………………………………………… 9,714,459 9,699,805 Culture and recreation………………………………… 3,392,381 3,872,616 Interest…………………………………………………… 2,351,987 3,189,350 Total expenses…………………………………… 75,357,303 73,895,440 Transfers…………………………………………………… (3,534,310) (6,660,946) Change in net assets……………………………………$ 3,565,540 $ (2,757,505) Governmental Activities Balance at Balance at Net June 30, June 30, Increase 2010 2009 (Decrease) Net Assets: Capital assets net of related debt………………………$ 171,102,098 $ 156,034,000 $ 15,068,098 Restricted………………………………………………… 13,294,995 14,401,121 (1,106,126) Unrestricted……………………………………………… (7,324,139) 3,072,293 (10,396,432) Total net assets……………………………………$ 177,072,954 $ 173,507,414 $ 3,565,540 Town of Nantucket, Massachusetts 8 Basic Financial Statements The primary governmental expenses totaled $75.4 million. Of that amount, $13.6 million was directly supported by program revenues consisting of charges for services, operating and capital grants and contributions. General revenues totaled $69 million, primarily coming from property taxes, motor vehicle excise, hotel/motel taxes, non- community preservation surtaxes, restricted state aid and other miscellaneous charges. The Town received a gain on sale of capital assets in fiscal year 2010 as the result of the sale of land that was previously in Tax Title and the sale of other various property easements. Additionally, governmental activities reported a return of capital contributions of $1.2 million from the sewer enterprise fund and reported net transfers totaling $4.7 million to business-type activities. The return of capital contribution represents residual funds that were originally borrowed through debt that is to be repaid with governmental funds which were intended to be used to construct assets for the sewer enterprise fund. In total, governmental activities net assets increased by approximately $3.6 million in fiscal year 2010. Key components in this increase include the difference between the retirement of long-term debt ($6.6 million) which is raised in the general fund and the depreciation expense recorded on capital assets ($2.6 million); The recognition of the amortization of the Town’s liability for Other Postemployment Benefits ($7.7 million), the recognition of $1.2 million in capital grants for public safety and community preservation, and a positive result of budgetary operations. Town of Nantucket, Massachusetts 9 Basic Financial Statements The following chart provides a summary of Business-type activities financial data for fiscal year 2010, with comparative fiscal 2009 information. Business-Type Activities Balance at Balance at June 30, June 30, 2010 2009 Assets: Current assets……………………………………………$ 39,714,627 $ 56,471,897 Noncurrent assets (excluding capital)………………… 2,142,039 2,259,318 Capital assets, not being depreciated………………… 46,781,752 108,259,314 Capital assets, net of accumulated depreciation…… 146,938,606 72,862,056 Total assets………………………………………… 235,577,024 239,852,585 Liabilities: Current liabilities (excluding debt)…………………… 5,258,877 6,849,174 Noncurrent liabilities (excluding debt)………………… 4,768,276 3,570,066 Current debt……………………………………………… 29,722,169 37,143,451 Noncurrent debt………………………………………… 75,661,578 75,118,715 Total liabilities……………………………………… 115,410,900 122,681,406 Net Assets: Capital assets net of related debt……………………… 114,762,981 109,858,055 Unrestricted……………………………………………… 7,264,425 7,313,124 Total net assets…………………………………… 122,027,406 117,171,179 Program revenues: Charges for services…………………………………… 24,820,469 24,172,299 Operating grants and contributions…………………… 776,060 1,113,866 Capital grants and contributions……………………… 7,057,702 15,208,679 Total revenues……………………………………… 32,654,231 40,494,844 Expenses: Water…………………………………………………… 4,184,604 4,600,314 Sewer…………………………………………………… 5,491,001 5,527,480 Solid Waste……………………………………………… 8,114,794 10,575,310 Airport…………………………………………………… 13,541,915 11,912,883 Total expenses…………………………………… 31,332,314 32,615,987 Transfers and capital contributions…………………… 3,534,310 6,660,946 Change in net assets……………………………………$ 4,856,227 $ 14,539,803 Town of Nantucket, Massachusetts 10 Basic Financial Statements There was a net increase of $4.9 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 2010 2009 (Decrease) Net Assets: Siasconset Water……………………………………… $ 4,279,820 $ 4,072,117 $ 207,703 Wannacomet Water Company………………………… 14,595,278 14,494,563 100,715 Nantucket Memorial Airport…………………………… 48,229,498 44,942,215 3,287,283 Sewer Enterprise Fund………………………………… 47,322,885 45,687,206 1,635,679 Solid Waste Enterprise Fund………………………… 7,599,925 7,975,078 (375,153) Total net assets……………………………………$ 122,027,406 $ 117,171,179 $4,856,227 The most significant factor in this change is a $3.3 million increase in net assets for Nantucket Memorial Airport which includes $7.2 million in capital grants for ongoing construction projects. The Sewer enterprise fund reported a $1.6 million increase in net assets. The Solid Waste enterprise fund reported a $375,000 decrease in net assets. The Siasconset Water Company enterprise fund reported a $207,000 increase in net assets. At the end of the current fiscal year, the Town reports $122 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 $36.6 million, of which $13.5 million is reported in the general fund, $6.3 million is reported in the Town capital projects fund and $16.9 million is reported as nonmajor governmental funds. The general fund is the Town’s chief operating fund. At the end of fiscal 2010, unreserved fund balance of the general fund totaled $10.1 million, while total fund balance totaled $13.5 million. During fiscal year 2010, total general fund balance showed an increase of $2.7 million, and the unreserved, undesignated fund balance increased by $3 million. The increase was the result of positive budgetary results, the receipt of unbudgeted bond premiums and proceeds from the sale of capital assets from properties previously acquired through tax title, and from transfers in from closed capital projects to be used toward fiscal year 2011 articles. Town of Nantucket, Massachusetts 11 Basic Financial Statements 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 13% of total general fund expenditures and transfers out, while total fund balance represents 18% of that same amount. $2.5 million of the unreserved fund balance was designated at year end to support the 2011 budget. An additional $3 million was reserved for carry-over appropriations and encumbrances. The Town Capital Projects major fund is used to account for major capital acquisitions, primarily financed through long-term borrowing. This fund recognized $13.1 million in bond proceeds in fiscal year 2010 for stormwater drainage and a new police station. The majority of the $11.8 million in expenditures relate to the construction of the new police station. The ending balance in this fund at June 30th totaled $5.6 million. The Town also maintains a community preservation fund, classified within the non-major governmental funds which had a year end fund balance of $6.4 million. 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 2010, the Town earned and accrued a year end receivable for state matching community preservation funds, of approximately $494,000. 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 $78.7 million. Changes during the year consisted largely of allocations between and among departments. The net decrease from changes to the appropriation budget totaled $466,000. Total actual revenue was higher than estimated revenue by $494,000. At year end, outstanding purchase orders and carry-over appropriations and articles totaled approximately $3.1 million, which is reserved in fund balance at year end. The total of actual expenditures and the amounts reserved for future expenditures was lower than the final budget by approximately $2.1 million, a positive variance. The significant functional areas where expenditures and carry-forwards were lower than the available appropriation were Public Safety and Employee Benefits. Actual transfers in exceeded amounts budgeted due to amounts transferred in from capital project funds to fund fiscal year 2011 appropriations. These amounts have been included in reserve for subsequent year expenditures on the balance sheet. Capital Asset and Debt Administration Capital Assets 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, 2010, totals $224 million in the governmental funds, and $194 million in the enterprise funds (net of accumulated depreciation). This investment in capital assets includes land, buildings, land improvements, equipment, vehicles and infrastructure. Town of Nantucket, Massachusetts 12 Basic Financial Statements Current year fixed asset additions totaled $16.3 million for governmental activities, and $17.4 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 $181.6 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, $25 million is in short term notes and the remaining $157 million is outstanding long term debt. The governmental fund portion of the outstanding debt is $76.6 million. The enterprise funds’ portion of the outstanding debt is $105 million. Governmental Enterprise Funds Funds Total Short-term………………………………$- $ 24,916,500 $ 24,916,500 Current portion of long-term………… 6,706,444 4,465,974 11,172,418 Noncurrent portion of long-term…… 69,909,850 75,661,578 145,571,428 Total…………………………………$ 76,616,294 $ 105,044,052 $ 181,660,346 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 In fiscal 2010, total assessed value of taxable property in the Town decreased by $756 million or 3.6%. Tax limitation laws in Massachusetts are primarily limits on tax revenue which consist of the prior year’s levy base, plus 2.5%, plus revenue from new growth, plus any voter approved increases. The allowable increases to the levy base for 2010 were $1,263,904 (2.5%) and $683,501 for new growth (1.3%). The allowable tax levy was further increased by debt payments on voter authorized borrowing. The tax limitation laws protect municipalities from fluctuations in real estate values, whether those values are increasing or decreasing, by forcing the tax rate to move in the opposite direction. In a declining real estate market, tax rates increase to raise the allowable revenue. The residential rate for 2010 was $3.01 per $1,000 of assessed value. The average residential assessed value was $1.8 million in 2010, a 4% decrease from 2009. The 2010 Annual and Special Town Meetings approved a fiscal year 2011 total budget of $103 million, including a total general fund budget of $70.8 million. The residential tax rate for 2011 is $3.58 per $1,000 of assessed value. Total assessed value of taxable property decreased by $2.9 billion, or 14% in fiscal 2011. The average residential assessed value is $1.5 million in 2011, a 15% decrease from 2010. 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………………………………………………………… $ 41,259,958 $ 32,629,893 $ 73,889,851 Restricted cash and cash equivalents……………………………………...……… - - - Investments…………………………………………………………………………… 3,312,744 - 3,312,744 Investments, restricted……………………………………………………………… - - - Receivables, net of allowance for uncollectibles: Real estate and personal property taxes……………………………………… 4,070,802 - 4,070,802 Tax and trash liens………………………………………………………………… 2,340,976 - 2,340,976 Motor vehicle and other excise taxes…………………………………………… 202,208 - 202,208 User fees…………………………………………………………………………… 8,820 2,179,022 2,187,842 Departmental and other…………………………………………………………… 644,690 - 644,690 Special assessments……………………………………………………………… 25,171 97,962 123,133 Intergovernmental………………………………………………………………… 2,672,434 3,486,199 6,158,633 Deferred loss on refunding…………..……………………………………………… 91,120 - 91,120 Inventory……………………………………………………………………………… - 405,043 405,043 Working capital deposit……………………………………………………………… 1,784,300 - 1,784,300 Other assets…………………………………………………………………………… 10,500 5,273 15,773 Prepaid expenses…………………………………………………………………… 10,900 - 10,900 Internal balances……………………………………………………………………… (911,235) 911,235 - NONCURRENT: Restricted assets: Cash and cash equivalents……………….……………………………………… - - - Cash surrender value of life insurance………………………………………… - - - Receivables, net of allowance for uncollectibles: Intergovernmental………………………………………………………………… - 2,142,039 2,142,039 Deferred loss on refunding…………………………………………………………… 307,708 - 307,708 Capital assets, not being depreciated……………………...……………………… 193,836,195 46,781,752 240,617,947 Capital assets, net of accumulated depreciation………………………………… 29,728,404 146,938,606 176,667,010 TOTAL ASSETS………………………………………………………………………… 279,395,695 237,438,306 516,834,001 LIABILITIES CURRENT: Warrants payable……………………………………………………………………… 2,914,672 3,165,004 6,079,676 Accrued liabilities……………………………………………………………………… - 10,996 10,996 Accrued payroll……………………………………………………………………… 2,913,645 174,738 3,088,383 Health claims payable………………………………………………………………… 783,083 - 783,083 Accrued interest……………………………………………………………………… 1,025,863 1,153,352 2,179,215 Payroll withholdings…………………………………………………………………… 70,804 - 70,804 Security deposits……………………………………………………………………… - 348,998 348,998 Abandoned property………………………………………………………………… 510,220 - 510,220 Other liabilities………………………………………………………………………… 536,273 295,855 832,128 Compensated absences……………………………………………………………… 312,013 109,934 421,947 Workers' compensation……………………………………………………………… 176,650 - 176,650 Bonds and notes payable…………………………………………………………… 6,742,385 29,722,169 36,464,554 NONCURRENT: Landfill closure………………………………………………………………………… - 2,578,403 2,578,403 Compensated absences……………………………………………………………… 1,248,054 439,736 1,687,790 Other postemployment benefits…………………………………………………… 15,057,861 1,750,137 16,807,998 Bonds and notes payable…………………………………………………………… 70,031,218 75,661,578 145,692,796 TOTAL LIABILITIES……………………………………………………………………… 102,322,741 115,410,900 217,733,641 NET ASSETS Invested in capital assets, net of related debt………………………………………… 171,102,098 114,762,981 285,865,079 Restricted for: Debt service………………………………………………………...………………… - - - Permanent funds: Expendable……….……………………………………………………………… 213,687 - 213,687 Nonexpendable…………………………………………………………………… 308,153 - 308,153 Other purposes……………………………………………………………………… 12,773,155 - 12,773,155 Unrestricted………………………………………………………………………………… (7,324,139) 7,264,425 (59,714) TOTAL NET ASSETS……………………………………………………………………$ 177,072,954 $ 122,027,406 $ 299,100,360 See notes to basic financial statements. STATEMENT OF NET ASSETS JUNE 30, 2010 Town of Nantucket, Massachusetts 14 Basic Financial Statements County Land Bank Total $ 2,297,582 $ 10,184,142 $ 12,481,724 - 207,477 207,477 - - - - 1,144,798 1,144,798 - - - - - - - - - - - - 6,059 122,739 128,798 - - - 116,663 - 116,663 - - - - 132,680 132,680 - - - 50,871 152,500 203,371 - 316,692 316,692 - - - - 3,871,255 3,871,255 - 581,185 581,185 - - - - - - 28,458 213,815,625 213,844,083 86,598 17,183,330 17,269,928 2,586,231 247,712,423 250,298,654 18,224 271,232 289,456 - 362,383 362,383 7,647 - 7,647 - - - - - - 387,231 - 387,231 - - - - - - 155,298 - 155,298 - - - - - - - 3,945,000 3,945,000 - - - - - - 50,939 348,900 399,839 - 26,502,617 26,502,617 619,339 31,430,132 32,049,471 115,056 200,703,838 200,818,894 - 4,078,732 4,078,732 - - - - - - - - - 1,851,836 11,499,721 13,351,557 $ 1,966,892 $ 216,282,291 $ 218,249,183 Component Units Town of Nantucket, Massachusetts 15 Basic Financial Statements STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2010 Operating Capital Charges for Grants and Grants and Net (Expense) Functions/Programs Expenses Services Contributions Contributions Revenue Primary Government: Governmental Activities: General government………………………$ 8,544,044 $ 1,358,150 $ 565,081 $ - $ (6,620,813) Public safety……………………………… 14,684,244 1,418,330 561,192 700,000 (12,004,722) Education………………………………… 30,380,350 498,985 3,386,509 - (26,494,856) Public works……………………………… 4,514,082 55,092 17,000 7,937 (4,434,053) Community preservation………………… 1,775,756 - - 522,688 (1,253,068) Human services………………………… 9,714,459 3,661,973 32,184 - (6,020,302) Culture and recreation…………………… 3,392,381 289,279 528,267 - (2,574,835) Interest…………………………………… 2,351,987 - - - (2,351,987) Total Governmental Activities………… 75,357,303 7,281,809 5,090,233 1,230,625 (61,754,636) Business-Type Activities: Water……………………………………… 4,184,604 4,262,470 196,892 - 274,758 Sewer……………………………………… 5,491,001 7,995,582 390,961 - 2,895,542 Solid waste………………………………… 8,114,794 2,817,880 - 227 (5,296,687) Airport……………………………………… 13,541,915 9,744,537 188,207 7,057,475 3,448,304 Total Business-Type Activities………… 31,332,314 24,820,469 776,060 7,057,702 1,321,917 Total Primary Government……………$ 106,689,617 $ 32,102,278 $ 5,866,293 $ 8,288,327 $(60,432,719) Component Units: County……………………………………… 2,774,660 1,006,774 320,375 5,400 (1,442,111) Land Bank………………………………… 5,954,130 13,367,905 6,816,761 - 14,230,536 Total Component Units………………. $ 8,728,790 $ 14,374,679 $ 7,137,136 $ 5,400 $12,788,425 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…… $(61,754,636) $1,321,917 $(60,432,719) $(1,442,111) $14,230,536 $12,788,425 General revenues: Real estate and personal property taxes, net of tax refunds payable…………………… 60,231,952 - 60,231,952 - - - Tax liens………………………………………… 724,886 - 724,886 - - - Motor vehicle and other excise taxes………… 1,852,563 - 1,852,563 - - - Hotel/motel tax………………………………… 1,035,291 - 1,035,291 - - - Penalties and interest on taxes……………… 659,062 - 659,062 - - Community Preservation Fund surcharges… 1,669,975 - 1,669,975 - - - Payments in lieu of taxes……………………… 11,846 - 11,846 - - Grants and contributions not restricted to specific programs……………………………… 587,474 - 587,474 - - - Unrestricted investment income……………… 160,970 - 160,970 - - - Gain on sale of capital assets………………… 1,143,075 - 1,143,075 - - - Miscellaneous…………………………………… 777,392 - 777,392 3,926 - 3,926 Capital transfers…………………………………… 1,193,690 (1,193,690) - - - - Transfers, net……………………………………… (4,728,000) 4,728,000 - - - - Total general revenues and transfers…………… 65,320,176 3,534,310 68,854,486 3,926 - 3,926 Change in net assets………………………… 3,565,540 4,856,227 8,421,767 (1,438,185) 14,230,536 12,792,351 Net Assets: Beginning of year………………………………… 173,507,414 117,171,179 290,678,593 3,405,077 202,051,755 205,456,832 End of year……………………………………… $ 177,072,954 $ 122,027,406 $ 299,100,360 $ 1,966,892 $ 216,282,291 $ 218,249,183 (Concluded) Primary Government Component Units STATEMENT OF ACTIVITIES (Continued) FISCAL YEAR ENDED JUNE 30, 2010 Town of Nantucket, Massachusetts 17 Basic Financial Statements Component Nonmajor Total Unit - Town Governmental Governmental Nantucket ASSETS General Capital Projects Funds Funds County Cash and cash equivalents…………………………………$ 18,745,820 $ 7,410,532 $ 13,737,164 $ 39,893,516 $ 2,297,582 Investments…………………………………………………… - - 3,099,019 3,099,019 - Receivables, net of uncollectibles: Real estate and personal property taxes……………… 3,958,088 - 112,714 4,070,802 - Tax liens ……………………….………………………… 2,309,148 - 31,828 2,340,976 - Motor vehicle and other excise taxes………………… 202,208 - - 202,208 - User fees………………………………………………… 8,820 - - 8,820 - Departmental and other………………………………… 503,015 - 141,675 644,690 6,059 Special assessments…………………………………… -- 25,171 25,171 - Intergovernmental………………………………………… 91,062 684,142 1,897,230 2,672,434 116,663 Due from other funds………………………………………… 285,115 - - 285,115 245,373 Other assets………………………………………………… - - - - 50,871 Prepaid expenses…………………………………………… 10,900 - - 10,900 - TOTAL ASSETS………………………………………………$ 26,114,176 $ 8,094,674 $ 19,044,801 $ 53,253,651 $ 2,716,548 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable…………………………………………$ 629,574 $ 1,826,281 $ 453,754 $ 2,909,609 $ 18,224 Accrued payroll…………………………………………… 2,823,068 - 90,577 2,913,645 7,647 Payroll withholdings……………………………………… 70,804 - - 70,804 387,231 Abandoned property……………………………………… 510,220 - - 510,220 - Other liabilities…………………………………………… 450,215 - 86,058 536,273 155,298 Deferred revenues……………………………………… 5,993,953 - 1,535,850 7,529,803 - Due to other funds……………………………………… 2,142,726 - - 2,142,726 245,373 TOTAL LIABILITIES………………………………………… 12,620,560 1,826,281 2,166,239 16,613,080 813,773 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations…… 3,136,435 - 4,574 3,141,009 2,275 Debt service………………………………………...… 250,000 - - 250,000 - Perpetual permanent funds………………………… - - 308,153 308,153 - Unreserved: Designated for subsequent year's expenditures… 2,471,550 - - 2,471,550 - Undesignated, reported in: General fund……………………………………… 7,635,631 - - 7,635,631 265,194 Special revenue funds…………………………… - - 16,352,148 16,352,148 1,635,306 Capital projects funds…………………………… - 6,268,393 - 6,268,393 - Permanent funds………………………………… - - 213,687 213,687 - TOTAL FUND BALANCES………………………………… 13,493,616 6,268,393 16,878,562 36,640,571 1,902,775 TOTAL LIABILITIES AND FUND BALANCES……………$ 26,114,176 $ 8,094,674 $ 19,044,801 $ 53,253,651 $ 2,716,548 See notes to basic financial statements. JUNE 30, 2010 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, 2010 Total governmental fund balances……………………………………………………………………… $ 36,640,571 Capital assets (net) used in governmental activities are not financial resources and, therefore, are not reported in the funds…………………………………………………… 223,564,599 Accounts receivable are not available to pay for current-period expenditures and, therefore, are deferred in the funds………………………………………… 7,529,803 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………………………………… 3,533,197 In the statement of activities, interest is accrued on outstanding long-term debt, whereas in governmental funds interest is not reported until due……………………………… (1,025,863) Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds Bonds payable…………………………………………………………………………………… (76,773,603) Workers' compensation………………………………………………………………………… (176,650) Compensated absences………………………………………………………………………… (1,560,067) Other postemployment benefits………………………………………………………………… (15,057,861) Net effect of reporting long-term liabilities………………………………………………(93,568,181) 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…………………………………… 398,828 Net assets of governmental activities…………………………………………………………………… $ 177,072,954 See notes to basic financial statements. Town of Nantucket, Massachusetts 19 Basic Financial Statements Component Nonmajor Total Unit - Town Governmental Governmental Nantucket General Capital Projects Funds Funds County REVENUES: Real estate and personal property taxes, net of tax refunds……………………………………………………………$ 59,483,417 $ - $ - $ 59,483,417 $ - Tax liens………………………………………………………………………… 285,995 - - 285,995 - Motor vehicle and other excise taxes………………………………………… 1,724,857 - 32,535 1,757,392 - Hotel/motel tax…………………………………………………………………… 1,035,291 - - 1,035,291 - Charges for services…………………………………………………………… 4,755,568 - 592,495 5,348,063 - Community Preservation surcharges………………………………………… - - 1,669,975 1,669,975 - Penalties and interest on taxes………………………………………………… 654,572 - 4,490 659,062 - Payments in lieu of taxes……………………………………………………… 11,846 - - 11,846 - Licenses and permits…………………………………………………………… 932,004 - - 932,004 - Fines and forfeitures…………………………………………………………… 248,231 - - 248,231 - Intergovernmental……………………………………………………………… 3,961,045 - 2,985,237 6,946,282 105,400 Departmental and other………………………………………………………… 193,922 - 186,212 380,134 1,168,289 Contributions…………………………………………………………………… - - 83,320 83,320 13,100 Investment income……………………………………………………………… 101,859 - 176,580 278,439 14,326 Miscellaneous…………………………………………………………………… 58,278 - 2,036,194 2,094,472 3,926 TOTAL REVENUES……………………………………………………… 73,446,885 - 7,767,038 81,213,923 1,305,041 EXPENDITURES: Current: County administration……………………………………………………… - - - - 1,045,532 Registry of Deeds…………………………………………………………… - - - - 347,998 Sheriff's department………………………………………………………… - - - - 931,921 Special projects……………………………………………………………… - - - - 163,547 General government………………………………………………………… 5,837,165 141,982 286,562 6,265,709 531 Public safety………………………………………………………………… 7,947,949 10,956,886 2,566,007 21,470,842 7,621 Education…………………………………………………………………… 22,834,458 28,810 2,789,908 25,653,176 - Public works………………………………………………………………… 2,264,682 658,128 58,820 2,981,630 - Community preservation…………………………………………………… - - 1,775,756 1,775,756 - Human services……………………………………………………………… 5,793,062 - 52,062 5,845,124 - Culture and recreation……………………………………………………… 1,656,195 - 656,613 2,312,808 - Pension benefits……………………………………………………………… 5,245,834 - - 5,245,834 - Employee benefits…………………………………………………………… 7,452,901 - - 7,452,901 - State and county charges……………………………………………………… 458,657 - - 458,657 - Debt service: Principal……………………………………………………………………… 7,777,340 - 1,163 7,778,503 - Interest………………………………………………………………………… 2,500,352 - 667 2,501,019 - TOTAL EXPENDITURES……………………………………………… 69,768,595 11,785,806 8,187,558 89,741,959 2,497,150 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES………………………………………………………………… 3,678,290 (11,785,806) (420,520) (8,528,036) (1,192,109) OTHER FINANCING SOURCES (USES): Proceeds from bonds and notes……………………………………………… - 13,070,000 - 13,070,000 - Premium from issuance of bonds……………………………………………… 279,138 - - 279,138 - Sale of capital assets…………………………………………………………… 801,000 - 342,075 1,143,075 - Transfers in……………………………………………………………………… 2,344,027 5,897 465,284 2,815,208 1,419,045 Transfers out…………………………………………………………………… (5,586,596) (607,486) (1,349,126) (7,543,208) (1,419,045) Capital transfer…………………………………………………………………… 1,193,690 - 1,193,690 - TOTAL OTHER FINANCING SOURCES (USES)…………………… (968,741) 12,468,411 (541,767) 10,957,903 - NET CHANGE IN FUND BALANCES…………………………………………… 2,709,549 682,605 (962,287) 2,429,867 (1,192,109) FUND BALANCES AT BEGINNING OF YEAR………………………………… 10,784,067 5,585,788 17,840,849 34,210,704 3,094,884 FUND BALANCES AT END OF YEAR……………………………………………$ 13,493,616 $ 6,268,393 $ 16,878,562 $ 36,640,571 $ 1,902,775 See notes to basic financial statements. GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2010 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, 2010 Net change in fund balances - total governmental funds…………………………………………………… $ 2,429,867 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…………………………………………………………………………………………… 16,261,458 Depreciation expense………………………………………………………………………………… (2,559,071) Net effect of reporting capital assets………………………………………………………… 13,702,387 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…………………………………………………………………… 1,875,094 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…………………………………………………………………… (13,070,000) Debt service principal payments…………………………………………………………………… 7,778,503 Net effect of reporting long-term debt………………………………………………………… (5,291,497) 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…………………………………………………… (82,246) Net change in accrued interest on long-term debt………………………………………………… (69,430) Net change in workers' compensation……………………………………………………………… (83,504) Amortization of deferred charge on refunding……………………………………………………… (100,196) Amortization of premiums on bonds and notes payable………………………………………… 39,520 Other postemployment benefits……………………………………………………………………… (7,656,687) Net effect of recording long-term liabilities and amortizing deferred losses……………… (7,952,543) 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…………… (1,197,768) Change in net assets of governmental activities……………………………………………………………… $ 3,565,540 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……………………………….$ 2,164,479 $ 3,546,225 $ 1,059,371 $ 19,301,736 Restricted cash and cash equivalents…………………… - - - - Investments………………………………………………… - - - - Investments, designated…………………………………… - - - - Receivables, net of allowance for uncollectibles: Land Bank accounts…………………………………… - - - - User fees………………………………………………… 9,664 748,770 514,172 173,930 Sewer privilege fees…………………………………… - 97,962 - - Intergovernmental……………………………………… - 922,783 - 2,563,416 Inventory…………………………………………………… - - - 305,078 Working capital deposit…………………………………… - - - - Other assets………………………………………………… - - - - Land deposits…………………………………………….… - - - - Due from other funds……………………………………… 167,199 153,488 6,330 705,492 Total current assets………………………………… 2,341,342 5,469,228 1,579,873 23,049,652 NONCURRENT: Receivables, net of allowance for uncollectibles: Intergovernmental……………………………………… - 2,142,039 - - Sewer privilege fees…………………………………… - 1,861,282 - - Restricted cash and cash equivalents…………………… - - - - Cash surrender value of life insurance…………………… - - - - Capital assets, not being depreciated…………………… 8,753,248 13,960,225 2,651,406 9,382,257 Capital assets, net of accumulated depreciation………… 2,365,511 72,494,212 7,357,760 47,328,946 Total noncurrent assets…………………………… 11,118,759 90,457,758 10,009,166 56,711,203 TOTAL ASSETS………………………………………………… 13,460,101 95,926,986 11,589,039 79,760,855 LIABILITIES CURRENT: Warrants payable…………………………………………… 38,153 121,718 498,112 2,095,737 Accrued liabilities…………………………………………… - - - - Accrued payroll……………………………………………… 3,137 21,156 1,951 118,398 Health claims payable……………………………………… - - - - Security deposits…………………………………………… - - - 348,998 Accrued interest…………………………………………… 121,915 569,484 11,180 147,968 Other liabilities……………………………………………… - - - 295,855 Landfill closure……………………………………………… - - - - Due to other funds………………………………………… 17,225 305,999 - 11,010 Compensated absences…………………………………… - 12,962 - 66,108 Notes payable……………………………………………… - - - 24,916,500 Bonds payable……………………………………………… 605,916 1,785,974 110,000 680,000 Total current liabilities……………………………… 786,346 2,817,293 621,243 28,680,574 NONCURRENT: Landfill closure……………………………………………… - - 2,578,403 - Compensated absences…………………………………… - 51,848 - 264,433 Notes payable……………………………………………… - - - - Other postemployment benefits…………………………… 68,935 233,382 34,468 1,146,350 Bonds payable……………………………………………… 8,325,000 45,501,578 755,000 1,440,000 Total noncurrent liabilities………………………… 8,393,935 45,786,808 3,367,871 2,850,783 TOTAL LIABILITIES…………………………………………… 9,180,281 48,604,101 3,989,114 31,531,357 NET ASSETS Invested in capital assets, net of related debt……………… 2,847,415 42,658,197 9,724,166 47,962,783 Restricted………………………………………………………… - - - - Unrestricted: Undesignated……………………………………………… 1,432,405 4,664,688 (2,124,241) 266,715 TOTAL NET ASSETS………………………………………… $ 4,279,820 $ 47,322,885 $ 7,599,925 $ 48,229,498 See notes to basic financial statements. Business-type Activities - Enterprise Funds PROPRIETARY FUNDS STATEMENT OF NET ASSETS JUNE 30, 2010 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 $ 6,558,082 $ 32,629,893 $ 1,366,442 $ 10,184,142 - - - 207,477 - - 213,725 - - - - 1,144,798 - - - 122,739 732,486 2,179,022 - - - 97,962 - - - 3,486,199 - - 99,965 405,043 - 132,680 - - 1,784,300 - 5,273 5,273 10,500 - - - - 152,500 307,853 1,340,362 946,376 316,692 7,703,659 40,143,754 4,321,343 12,261,028 - 2,142,039 - - - 1,861,282 - - - - - 3,871,255 - - - 581,185 12,034,616 46,781,752 - 213,815,625 17,392,177 146,938,606 - 17,183,330 29,426,793 197,723,679 - 235,451,395 37,130,452 237,867,433 4,321,343 247,712,423 411,284 3,165,004 5,063 271,232 10,996 10,996 - 362,383 30,096 174,738 - - - - 783,083 - - 348,998 - - 302,805 1,153,352 - - - 295,855 - - - - - - 94,893 429,127 - - 30,864 109,934 - - - 24,916,500 - 3,945,000 1,623,779 4,805,669 - - 2,504,717 35,410,173 788,146 4,578,615 - 2,578,403 - - 123,455 439,736 - - - - - 26,502,617 267,002 1,750,137 - 348,900 19,640,000 75,661,578 - - 20,030,457 80,429,854 - 26,851,517 22,535,174 115,840,027 788,146 31,430,132 11,570,419 114,762,981 - 200,703,838 - - - 4,078,732 3,024,859 7,264,425 3,533,197 11,499,721 $ 14,595,278 $ 122,027,406 $ 3,533,197 $ 216,282,291 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……………………………………… 732,573 5,063,458 2,811,549 9,612,444 Intergovernmental………………………………………… - 385,030 - - Other………………………………………………………… - - - - Contributions……………………………………………… - - - - TOTAL OPERATING REVENUES …………………… 732,573 5,448,488 2,811,549 9,612,444 OPERATING EXPENSES: Cost of services and administration……………………… 204,487 2,166,288 7,562,845 9,735,740 Depreciation………………………………………………… 43,827 1,706,317 493,906 1,859,907 Employee benefits………………………………………… 13,331 181,867 23,973 1,464,838 TOTAL OPERATING EXPENSES…………………… 261,645 4,054,472 8,080,724 13,060,485 OPERATING INCOME (LOSS)……………………… 470,928 1,394,016 (5,269,175) (3,448,041) NONOPERATING REVENUES (EXPENSES): Investment income………………………………………… 23,186 67,799 6,558 132,093 Interest expense…………………………………………… (340,862) (1,436,529) (34,070) (481,430) Intergovernmental capital grants………………………… - - - 7,245,682 TOTAL NONOPERATING REVENUES (EXPENSES), NET…………………… (317,676) (1,368,730) (27,512) 6,896,345 INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS………………… 153,252 25,286 (5,296,687) 3,448,304 Return of capital contributions……………………………… - (1,193,690) - - Capital contributions-privilege fees………………………… - 2,870,256 - - Transfers in…….……………………………………………… 70,873 3,200,000 4,979,471 997 Transfers out…………………………………………………… (16,422) (3,266,173) (57,937) (162,018) CHANGE IN NET ASSETS……………………………… 207,703 1,635,679 (375,153) 3,287,283 NET ASSETS AT BEGINNING OF YEAR………………… 4,072,117 45,687,206 7,975,078 44,942,215 NET ASSETS AT END OF YEAR…………………………… $ 4,279,820 $ 47,322,885 $ 7,599,925 $ 48,229,498 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, 2010 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 $- $ - $- $182,453 - - - 13,138,613 3,529,897 21,749,921 - - - 385,030 - - 135,639 135,639 225,785 34,314 - - 10,402,707 6,554,127 3,665,536 22,270,590 10,628,492 19,909,507 1,926,200 21,595,560 - 4,819,141 699,894 4,803,851 - - 129,323 1,813,332 11,833,536 - 2,755,417 28,212,743 11,833,536 4,819,141 910,119 (5,942,153) (1,205,044) 15,090,366 38,067 267,703 7,276 275,159 (826,680) (3,119,571) - (1,134,989) - 7,245,682 - - (788,613) 4,393,814 7,276 (859,830) 121,506 (1,548,339) (1,197,768) 14,230,536 - (1,193,690) - - - 2,870,256 - - 64,074 8,315,415 - - (84,865) (3,587,415) - - 100,715 4,856,227 (1,197,768) 14,230,536 14,494,563 117,171,179 4,730,965 202,051,755 $ 14,595,278 $ 122,027,406 $ 3,533,197 $ 216,282,291 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……………………………………………………………$ 759,667 $ 4,885,533 $ 2,862,960 $ 9,892,333 Employer and employee contributions to fund………………………………………………… - - - - Receipts from other governments……………………………………………………………… - 385,030 - - Receipts from other operating revenues……………………………………………………… - - - - Payments to vendors…………………………………………………………………………… (144,518) (1,263,400) (7,392,795) (4,603,183) Payments to employees………………………………………………………………………… (130,009) (785,875) (72,767) (3,870,357) Payments for interfund services used………………………………………………………… (13,331) (181,867) (23,973) (1,464,838) NET CASH FROM OPERATING ACTIVITIES…………………………………………………… 471,809 3,039,421 (4,626,575) (46,045) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in……………………………………………………………………………………… 70,873 3,200,000 4,979,471 997 Transfers out……………………………………………………………………………………… (16,422) (3,266,173) (57,937) (162,018) Advances (to) from other funds………………………………………………………………… (158,373) (14,801) (42,021) (921,371) NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………………………… (103,922) (80,974) 4,879,513 (1,082,392) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds and notes……………………………………………… - - - - Premium from the issuance of bonds and notes……………………………………………… 95,916 - - - Capital grants……………………………………………………………………………………… - 6,937,746 - 8,575,081 Sewer privilege fees……………………………………………………………………………… - 911,012 - - Acquisition and construction of capital assets………………………………………………… (3,210,900) (1,992,595) - (9,930,573) Net change in land deposits…………………………………………………………………… - - - - Principal payments on bonds and notes……………………………………………………… (423,000) (4,093,889) (110,000) (1,376,225) Interest expense………………………………………………………………………………… (329,371) (1,504,621) (36,076) (420,920) NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……………………… (3,867,355) 257,653 (146,076) (3,152,637) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments………………………………………………………………………… - - - - Investment income……………………………………………………………………………… 23,186 67,799 6,558 132,093 NET CASH FROM INVESTING ACTIVITIES…………………………………………………… 23,186 67,799 6,558 132,093 NET CHANGE IN CASH AND CASH EQUIVALENTS………………………………………… (3,476,282) 3,283,899 113,420 (4,148,981) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR……………………………… 5,640,761 262,326 945,951 23,450,717 CASH AND CASH EQUIVALENTS AT END OF YEAR…………………………………………$ 2,164,479 $ 3,546,225 $ 1,059,371 $ 19,301,736 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES: Operating income (loss)…………………………………………………………………………$ 470,928 $ 1,394,016 $ (5,269,175) $ (3,448,041) Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation…………………………………………………………………………………… 43,827 1,706,317 493,906 1,859,907 Loss on disposal of capital assets………………………………………………………… - - - - Changes in assets and liabilities: Insurance reimbursements……………………..………………………………………… - - - - User fees…………………………………………………………………………………… 27,094 (177,925) 51,411 279,889 Accounts receivable………………………………………………………………….…… - - - - Intergovernmental………………………………………………………………………… - - - - Inventory…………………………………………………………………………………… - - - 152,529 Working capital deposit…………………………………………………………………… - - - - Other assets……………………………………………………………………………… - - - - Prepaid expenses………………………………………………………………………… - - - - Warrants payable………………………………………………………………………… (78,929) (53,591) (73,588) 116,844 Accrued liabilities………………………………………………………………………… - - - - Security deposits………………………………...………………………………………… - - - 12,668 Accrued payroll…………………………………………………………………………… 65 (369) 72 12,388 Health claims payable…………………………………………………………………… - - - - Landfill closure…………………………………………………………………………… - - 150,403 - Other liabilities…………………………………………………………………………… - - - 242,105 Accrued compensated absences……………………………………………………… (23,170) 19,712 - 43,942 Other Postemployment Benefit………………………………………………………… 31,994 151,261 20,396 681,724 Total adjustments……………………………………………………………………… 881 1,645,405 642,600 3,401,996 NET CASH FROM OPERATING ACTIVITIES……………………………………………………$ 471,809 $ 3,039,421 $ (4,626,575) $ (46,045) See notes to basic financial statements. PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2010 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 $ 3,443,012 $ 21,843,505 $ - $ 17,650,170 - - 10,849,616 - - 385,030 - - - - 225,785 6,770,894 (540,174) (13,944,070) (12,016,264) (6,401,018) (1,324,021) (6,183,029) - (1,643,873) (129,323) (1,813,332) - - 1,449,494 288,104 (940,863) 16,376,173 64,074 8,315,415 - - (84,865) (3,587,415) - - (366,221) (1,502,787) (55,287) - (387,012) 3,225,213 (55,287) - - - - - 243,779 339,695 - - - 15,512,827 - - - 911,012 - - (3,993,288) (19,127,356) - (12,323,355) - - - (110,000) (1,215,000) (7,218,114) - (2,287,782) (817,503) (3,108,491) - (1,134,989) (5,782,012) (12,690,427) - (15,856,126) - - (44,892) (26,208) 38,067 267,703 7,276 275,159 38,067 267,703 (37,616) 248,951 (4,681,463) (8,909,407) (1,033,766) 768,998 11,239,545 41,539,300 2,400,208 9,653,251 $ 6,558,082 $ 32,629,893 $ 1,366,442 $ 10,422,249 $ 910,119 $ (5,942,153) $ (1,205,044) $ 15,090,366 699,894 4,803,851 - 1,001,872 - - - 177,101 - - 396,110 (19,485) (222,524) (42,055) - - - - - 7,514 - - - - (146) 152,383 - (17,201) - - (181,700) - (5,273) (5,273) (10,500) - - - - 10,287 (67,264) (156,528) (1,028) - 1,387 1,387 - 125,719 - 12,668 - - 4,905 17,061 - - - - 61,299 - - 150,403 - - - 242,105 - - (8,240) 32,244 - - 136,636 1,022,011 - - 539,375 6,230,257 264,181 1,285,807 $ 1,449,494 $ 288,104 $ (940,863) $ 16,376,173 Town of Nantucket, Massachusetts 27 Basic Financial Statements FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET ASSETS JUNE 30, 2010 Private Purpose Agency Trust Funds Funds ASSETS Cash and cash equivalents……………………………………$ 477,043 $ 671,373 Investments…………………………………………………… 2,030,391 - TOTAL ASSETS…………………………………………………… 2,507,434 671,373 LIABILITIES Warrants payable……………………………………………… 22,235 700 Liabilities due depositors……………………………………… - 670,673 TOTAL LIABILITIES……………………………………………… 22,235 671,373 NET ASSETS Held in trust for other purposes………………………………$ 2,485,199 $- See notes to basic financial statements. Town of Nantucket, Massachusetts 28 Basic Financial Statements FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FISCAL YEAR ENDED JUNE 30, 2010 Private Purpose Trust Funds ADDITIONS: Contributions: Private donations………………………………………………………………………………$ 7,400 Net investment income (loss): Interest………………………………………………………………………………………… 99,878 TOTAL ADDITIONS……………………………………………………………………… 107,278 DEDUCTIONS: General government………………………………………………………………………… 6,400 Educational scholarships…………………………………………………………………… 29,198 Human services……………………………………………………………………………… 13,385 TOTAL DEDUCTIONS…………………………………………………………………… 48,983 CHANGE IN NET ASSETS……………………………………………………………… 58,295 NET ASSETS AT BEGINNING OF YEAR…………………………………………………… 2,426,904 NET ASSETS AT END OF YEAR………………………………………………………………$ 2,485,199 See notes to basic financial statements. Town of Nantucket, Massachusetts 29 Basic Financial Statements Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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 02554. 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 02554. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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, 2010 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 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 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 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, 2010 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, 2010 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, 2010 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 User Fees Water User Fees for Siasconset Water are levied monthly based on individual meter readings. Water User Fees for Wannacomet Water Company are levied monthly based on individual meter readings and average bills. All water fees are subject to penalties and interest if they are not paid by the respective due date. Unbilled water fees at year-end are accrued and are recorded as revenue in the current period. Sewer User Fees Sewer User 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 User Fees The outstanding receivable for Landfill User Fees is comprised of annual commercial fees assessed to restaurants and inns and monthly tipping fees charged to private haulers. Airport User Fees The outstanding receivable for Airport User Fees is comprised primarily of fuel sales. Sewer Privilege Fees Sewer privilege fees consist of betterments assessed to homeowners in relation to upgrades to the Surfside Wastewater Treatment Plant. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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, 2010 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, 2010 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, 2010 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, 2010, 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. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 40 Basic Financial Statements R. Total Column Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. 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 $69,557,334 and the bank balance totaled $69,964,515. Of the bank balance, $1,250,000 was covered by the Federal Depositors Insurance Company, $2,273,916 was covered by the Depositors Insurance Fund and $66,440,599 was collateralized. Component Unit-County At fiscal year-end, the carrying amount of deposits of Nantucket County totaled $2,297,582 and the bank balance totaled $2,476,605. Of the bank balance, $597,208 was covered by Federal Depository Insurance and the remaining $1,879,397 was fully collateralized. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 41 Basic Financial Statements 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. At fiscal year-end, the carrying amount of deposits of the Nantucket Islands Land Bank totaled $14,262,874, of which $14,012,874 was exposed to custodial credit risk. The Land Bank, as part of a Land purchase in previous years, is required to maintain a reserve fund to cover the purchase of Life Insurance to be used to pay off the note at the time of the sellers death. These reserve funds are included in restricted cash and cash equivalents in the accompanying financial statements. Investments As of June 30, 2010, the Town of Nantucket had the following investments: Primary Government Under 1-5 6-10 Fair Value 1 Year Years Years Investment Type: Debt Securities: Federal Home Loan Bank…………………………………$ 452,750 $ - $ - $ 452,750 Federal Home Loan Mortgage Corporation...................1,033,628 - 807,252 226,376 Federal National Mortgage Association.........................595,877 229,781 366,096 - Federal Home Loan Mortgage Corporation Gold.......... 419,674 414,564 5,110 - United States Treasury Note......................................... 2,841,207 205,089 2,077,474 558,644 Repurchase Agreements………………………………… 3,727,959 3,727,959 - - Total Debt Securities..................................................... 9,071,095 $ 4,577,393 $ 3,255,932 $ 1,237,770 Other Investments: MMDT…………………………………………………………1,752,975 Total Investments.......................................................... $ 10,824,070 Maturity Component Unit-County The County did not have any investments as of June 30, 2010. Component Unit-Nantucket Islands Land Bank At June 30, 2010, the Land Bank’s investments of $1,144,798 represent 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 2007A and Series 2009A bonds outstanding as of June 30, 2010. In addition, the Land Bank is prohibited from acquiring Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 42 Basic Financial Statements additional real estate at any time that an amount equal to one year’s debt service in the reserve fund is not on deposit. 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 addressing 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 $452,750 in Federal Home Loan Bank, $1,033,628 in Federal Home Loan Mortgage Corporation, $595,877 in Federal National Mortgage Association $419,674 in Federal Home Loan Mortgage Corporation Gold, and $2,841,207 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 which is invested in U.S. Treasury Notes. 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, 2010 in debt securities, $2,501,929 are rated AAA. Investments in U.S. Treasury notes are not considered to have credit risk. 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 Greater than 5 percent of the primary government’s investments are in the following securities: Percentage of Issuer Federal Home Loan Mortgage Corporation.................... 10% United States Treasury Note.......................................... 26% Repurchase Agreements……………………………………34% MMDT…………………………………………………………16% Total Investments Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 43 Basic Financial Statements NOTE 3 – RECEIVABLES At June 30, 2010, 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…………… $ 4,363,751 $ (292,949) $ 4,070,802 Tax liens ……………………….……………………… 2,340,976 - 2,340,976 Excise taxes…………………………………………… 822,502 (620,294) 202,208 User fees………………………………………………… 8,820 - 8,820 Departmental and other………………………………… 736,501 (91,811) 644,690 Special assessments…………………………………… 25,171 - 25,171 Intergovernmental……………………………………… 2,672,434 - 2,672,434 Total……………………………………………………$ 10,970,155 $ (1,005,054) $ 9,965,101 At June 30, 2010, receivables for the enterprise funds consist of the following: Allowance Gross for Net Amount Uncollectibles Amount Receivables: Water fees………………………………………………$ 742,150 $ - $ 742,150 Sewer fees……………………………………………… 748,770 - 748,770 Solid waste fees………………………………………… 681,414 (167,242) 514,172 Airport fees……………………………………………… 173,930 - 173,930 Intergovernmental……………………………………… 5,628,238 - 5,628,238 Total………………………………………………………$ 7,974,502 $ (167,242) $ 7,807,260 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…………… $ 2,970,762 $ 77,191 $ 3,047,953 Tax liens………………….……………………………… 2,309,148 31,828 2,340,976 Motor vehicle and other excise taxes………………… 202,208 - 202,208 User fees…………………………………………………8,820 - 8,820 Departmental and other………………………………… 503,015 141,675 644,690 Special assessments…………………………………… - 25,171 25,171 Intergovernmental……………………………………… - 1,259,985 1,259,985 Total………………………………………………………$ 5,993,953 $ 1,535,850 $ 7,529,803 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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, 2010, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land……………………………………………………… $ 171,176,126 $ - $ (35,038) $ 171,141,088 Construction in progress………………………………… 9,291,223 15,183,006 (1,779,122) 22,695,107 Total capital assets not being depreciated……… 180,467,349 15,183,006 (1,814,160) 193,836,195 Capital assets being depreciated: Vehicles…………………………………………………… 8,623,670 633,185 (475,520) 8,781,335 Buildings…………………………………………………… 33,880,879 347,329 - 34,228,208 Machinery and equipment……………………………… 7,852,938 468,851 - 8,321,789 Infrastructure……………………………………………… 24,827,056 1,443,247 - 26,270,303 Total capital assets being depreciated…………… 75,184,543 2,892,612 (475,520) 77,601,635 Less accumulated depreciation for: Vehicles…………………………………………………… (6,063,493) (688,033) 475,520 (6,276,006) Buildings.………………………………………………… (16,065,238) (827,608) - (16,892,846) Machinery and equipment……………………………… (7,077,508) (233,778) - (7,311,286) Infrastructure.……………………………………………… (16,583,441) (809,652) - (17,393,093) Total accumulated depreciation…………………… (45,789,680) (2,559,071) 475,520 (47,873,231) Total capital assets being depreciated, net………………… 29,394,863 333,541 - 29,728,404 Total governmental activities capital assets, net……………$ 209,862,212 $ 15,516,547 $ (1,814,160) $ 223,564,599 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 45 Basic Financial Statements The capital asset totals for the business-type activities at June 30, 2010 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………………………………… 91,116,886 16,950,858 (78,428,420) 29,639,324 Total capital assets not being depreciated……… 108,259,314 16,950,858 (78,428,420) 46,781,752 Capital assets being depreciated: Land improvements……………………………………… 24,554,895 465,309 - 25,020,204 Plant……………………………………………………… 15,606,580 46,123,870 - 61,730,450 Infrastructure……………………………………………… 38,130,001 1,517,935 (1,656) 39,646,280 Buildings…………………………………………………… 20,206,562 30,215,417 - 50,421,979 Vehicles…………………………………………………… 4,512,108 128,766 (23,148) 4,617,726 Machinery and equipment……………………………… 18,094,320 415,992 - 18,510,312 Furniture, fixtures and computer equipment…………… 598,421 13,113 - 611,534 Total capital assets being depreciated…………… 121,702,887 78,880,402 (24,804) 200,558,485 Less accumulated depreciation……………………………… (48,840,831) (4,803,852) 24,804 (53,619,879) Total capital assets being depreciated, net………………… 72,862,056 74,076,550 - 146,938,606 Total business-type activities, capital assets………………$ 181,121,370 $ 91,027,408 $ (78,428,420) $ 193,720,358 Capital asset activity for the Nantucket County and Nantucket Islands Land Bank component units for the fiscal year ended June 30, 2010 was as follows: Beginning Ending Balance Increases Decreases Balance Nantucket Islands Land Bank Component Unit Capital assets not being depreciated: Land……………………………………………………… $ 203,012,641 $ 10,802,984 $ - $ 213,815,625 Capital assets being depreciated: Buildings, improvements and equipment……………… 20,640,538 1,520,371 (194,086) 21,966,823 Less accumulated depreciation………………………… (3,813,308) (987,170) 16,985 (4,783,493) Total capital assets being depreciated, net………………… 16,827,230 533,201 (177,101) 17,183,330 Total Nantucket Islands Land Bank Component Unit, capital assets………………………………………………$ 219,839,871 $ 11,336,185 $ (177,101) $ 230,998,955 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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 33,025 (310,208) - Equipment………………………………………………… 1,415,434 - (1,043,484) 371,950 Total capital assets being depreciated…………… 1,692,617 33,025 (1,353,692) 371,950 Less accumulated depreciation for: Vehicles…………………………………………………… (234,193) (19,223) 253,416 - Equipment………………………………………………… (1,063,556) (61,290) 839,494 (285,352) Total accumulated depreciation…………………… (1,297,749) (80,513) 1,092,910 (285,352) Total capital assets being depreciated, net………………… 394,868 (47,488) (260,782) 86,598 Total County Component Unit capital assets………………$ 423,326 $ (47,488) $ (260,782) $ 115,056 Depreciation expense was charged to functions/programs as follows: Governmental Activities: General government………………………………………………………………$ 43,485 Public safety………………………………………………………………………… 661,645 Education…………………………………………………………………………… 705,605 Public works………………………………………………………………………… 987,184 Human services…………………………………………………………………… 5,764 Culture and recreation…………………………………………………………… 155,388 Total depreciation expense - governmental activities………………………………$ 2,559,071 Business-Type Activities: Water………………………………………………..………………………………$ 743,721 Sewer……………………………………….……………………………………… 1,706,317 Solid waste……………………………………….………………………………… 493,906 Airport……………………………………….……………………………………… 1,859,908 Total depreciation expense - business-type activities………………………………$ 4,803,852 Nantucket County Component Unit: Registry of Deeds……………………………………………………………………$ 41,589 Sheriff's Department……………………………………………………………… 38,924 Total depreciation expense - component unit activities……………………………$ 80,513 Nantucket Islands Land Bank Component Unit: Land Bank……………………………………………………………………………$ 987,170 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 47 Basic Financial Statements NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund receivables and payables at June 30, 2010 are summarized as follows: Siasconset Sewer Solid Waste Nantucket Wannacomet General Water Enterprise Enterprise Memorial Water Internal Fund Company Fund Fund Airport Company Service Total General Fund……………………$- $ 166,789 $ 65,172 $ 6,330 $ 705,492 $ 307,853 $ 891,090 $ 2,142,726 Siasconset Water Company…… - - - - - - 17,225 17,225 Sewer Enterprise Fund………… 285,115 - - - - - 20,884 305,999 Nantucket Memorial Airport…… - - - - - - 11,010 11,010 Wannacomet Water Company… - 410 88,316 - - - 6,167 94,893 Total…………………………$ 285,115 $ 167,199 $ 153,488 $ 6,330 $ 705,492 $ 307,853 $ 946,376 $ 2,571,853 Due To: Due From: Interfund transfers for the fiscal year ended June 30, 2010, are summarized as follows: Nonmajor Siasconset Wannacomet Sewer Nantucket Solid Waste General Capital Governmental Water Water Enterprise Memorial Enterprise Fund Projects Funds Company Company Fund Airport Fund Total General Fund…………………………$- $ 5,897 $ 465,284 $ 70,873 $ 64,074 $ - $ 997 $ 4,979,471 $ 5,586,596 (1) Capital Projects……………….……… 607,486 - - - - - - - 607,486 (2) Nonmajor Governmental Funds…… 1,349,126 - - - - - - - 1,349,126 (3) Siasconset Water Company……… 16,422 - - - - - - - 16,422 (4) Wannacomet Water Company…… 84,865 - - - - - - - 84,865 (4) Nantucket Memorial Airport……...… 162,018 - - - - - - - 162,018 (4) Sewer Enterprise Fund……………… 66,173 - - - - 3,200,000 - - 3,266,173 (4) Solid Waste Enterprise Fund……… 57,937 - - - - - - - 57,937 (4) Total………………………………… $ 2,344,027 $ 5,897 $ 465,284 $ 70,873 $ 64,074 3,200,000 $ 997 $ 4,979,471 $ 11,130,623 Transfers In: Transfers Out: (1) Appropriations from the General Fund for the overspending of articles, annual funding to the Community Schools, budget shortfalls within the Siasconset and Wannacomet Water Company’s, free cash for Landfill mining, subsidies to the Solid Waste Enterprise Fund and Workers Compensation Fund, an operating override from previous years for the Solid Waste Enterprise Fund and various voted articles. (2) Transfers from the various Capital Projects Funds to the General Fund for free cash appropriations. (3) Transfers to the General Fund from the Ferry Embarkation Fund, Ambulance Reserve Fund and the Sale of Real Estate Fund. (4) Transfers to the General Fund from the Enterprise for indirect costs, along with a transfer from the Sewer Capital Project Funds to the Sewer Enterprise Fund for the rescind of unused borrowing funds related to the Surfside Wastewater Treatment Facility. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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, 2010, are as follows: Balance at Balance at Rate June 30, Renewed/ Retired/ June 30, Type Purpose (%) Due Date 2009 Issued Redeemed 2010 Governmental Funds BAN Stormwater Drainage Improvements………… 1.75 02/26/10 $ 889,510 $- $ 889,510 $- BAN Police Station Construction…………………… 1.50 02/26/10 6,000,000 - 6,000,000 - Total Governmental Funds.………………………………………………… 6,889,510 - 6,889,510 - Enterprise Funds BAN Airport Terminal………………………………… 1.50 02/25/11 8,712,725 8,316,500 8,712,725 8,316,500 BAN Airport Aircraft Rescue Fire Fighting Building 1.50 02/25/11 - 6,850,000 - 6,850,000 BAN Airport Air Traffic Control Tower……………… 1.50 02/25/11 - 4,000,000 - 4,000,000 BAN Airport Construction…………………………… 1.50 02/25/11 - 3,000,000 - 3,000,000 BAN Airport Runway Design………………………… 1.50 02/25/11 2,000,000 2,000,000 2,000,000 2,000,000 BAN Airport Remodeling……………………………… 1.50 02/25/11 500,000 500,000 500,000 500,000 BAN Airport Departmental Equipment ……………… 1.50 02/25/11 500,000 250,000 500,000 250,000 BAN Airport Construction…………………………… 1.50 02/26/10 13,850,000 - 13,850,000 - BAN MWPAT………………………………………… 1.22 12/31/10 4,006,000 - 4,006,000 - BAN Sewer Equipment……………………………… 1.50 02/26/10 120,000 - 120,000 - BAN Water……………………………………………… 1.50 02/26/10 3,200,000 - 3,200,000 - Total Enterprise Fund………………………………………………………… 32,888,725 24,916,500 32,888,725 24,916,500 Total…………………………………………………………………………$ 39,778,235 $ 24,916,500 $ 39,778,235 $ 24,916,500 As of June 30, 2010, the Town had $4,006,000 in a 1.22% interim loan with the Massachusetts Water Pollution Abatement Trust with an original maturity date of December 31, 2010. In July of 2010, the MWPAT permanently financed the loan at a 2% interest rate over 20 years. Accordingly, the Town has recorded the loan as long-term debt as of June 30, 2010 in the Sewer Enterprise Fund. In February, 2011, the Town issued $5,000,000 in long-term debt, which was combined with $17,316,500 in grant proceeds to retire $22,316,500 of the maturing Airport BANs. The remaining $2,600,000 in BANs were reissued at 1.25%. The new BANs will mature on February 24, 2012. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 49 Basic Financial Statements 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". Details related to the outstanding indebtedness at June 30, 2010, 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 (%)2009 Issued Redeemed 2010 Advanced refunding of 1991 landfill………………………… 4.75 - 6.00 $ 2,437,277 $ - $ 768,693 $ 1,668,584 Advanced refunding of 1991 sewer………………………… 4.75 - 6.00 1,516,363 - 484,947 1,031,416 Advanced refunding of 1991 school………………………… 4.75 - 6.00 206,360 - 206,360 - Land acquisition……………………………………………… 4.00 - 4.90 170,000 - 20,000 150,000 MWPAT Title V Loan - 97-1148……………………………… - 12,756 - 1,162 11,594 Recreational facility…………………………………………… 2.25 - 5.00 400,000 - 40,000 360,000 School remodeling…………………………………………… 2.25 - 5.00 1,745,000 - 120,000 1,625,000 School remodeling…………………………………………… 2.50 - 4.25 110,000 - 10,000 100,000 Land acquisition……………………………………………… 2.50 - 4.10 13,285,000 - 620,000 12,665,000 Road, sidewalk and bikepath………………………………… 2.50 - 3.00 110,000 - 110,000 - Recreational facility…………………………………………… 2.50 - 4.00 250,000 - 25,000 225,000 Planning………………………………………………………… 2.50 - 3.00 25,000 - 25,000 - Public wharf…………………………………………………… 2.50 - 4.00 60,000 - 10,000 50,000 Assessors map………………………………………………… 2.50 - 4.00 30,000 - 5,000 25,000 Fire departmental equipment………………………………… 2.50 - 3.00 5,000 - 5,000 - Departmental equipment……………………………………… 2.50 - 3.00 190,000 - 190,000 - Computer hardware…………………………………………… 2.50 - 4.00 330,000 - 55,000 275,000 Remodeling…………………………………………………… 2.50 - 4.13 435,000 - 30,000 405,000 Road and drainage…………………………………………… 2.50 - 3.00 105,000 - 105,000 - Bulkhead……………………………………………………… 2.50 - 4.00 65,000 - 15,000 50,000 Public wharf…………………………………………………… 2.50 - 4.00 40,000 - 10,000 30,000 School remodeling…………………………………………… 3.75 - 5.00 595,000 - 35,000 560,000 Planning………………………………………………………… 3.75 - 4.00 200,000 - 100,000 100,000 Outdoor recreational facility………………………………… 3.75 - 5.00 455,000 - 40,000 415,000 Fire departmental equipment………………………………… 3.75 - 4.00 140,000 - 70,000 70,000 Bath house construction……………………………………… 3.75 - 5.00 205,000 - 15,000 190,000 Public works equipment……………………………………… 3.75 - 4.00 45,000 - 25,000 20,000 Land acquisition……………………………………………… 3.75 - 5.00 255,000 - 15,000 240,000 Advance refunding of 1997 land bonds…………………… 3.75 - 5.00 16,230,000 - 1,540,000 14,690,000 Children's beach ramp………………………………………… 3.00 - 5.00 185,000 - 15,000 170,000 Public safety communications……………………………… 3.00 - 5.00 2,665,000 - 335,000 2,330,000 Bikepath………………………………………………………… 3.00 - 5.00 600,000 - 50,000 550,000 Fairgrounds road……………………………………………… 3.00 - 5.00 1,030,000 - 345,000 685,000 Fire engine……………………………………………………… 3.00 - 5.00 360,000 - 90,000 270,000 Washington street building…………………………………… 3.00 - 5.00 190,000 - 10,000 180,000 Sidewalk design……………………………………………… 3.00 - 5.00 20,000 - 5,000 15,000 South Shore Road bike path………………………………… 3.00 - 5.00 395,000 - 30,000 365,000 Nobadeer Farm Road bike path……………………………… 3.00 - 5.00 90,000 - 10,000 80,000 Study of proposed bulk fuel facility………………………… 3.00 - 5.00 200,000 - 50,000 150,000 Nantucket Elementary School building improvements…… 3.00 - 5.00 565,000 - 35,000 530,000 Cyrus Pierce School building improvements……………… 3.00 - 5.00 695,000 - 45,000 650,000 Nantucket High School building improvements…………… 3.00 - 5.00 1,500,000 - 90,000 1,410,000 General Government share of MWPAT loans……………… 2.00 - 2.414 20,477,041 - 1,807,841 18,669,200 New school playing fields…………………………………… 3.00 - 5.00 1,120,000 - 80,000 1,040,000 School bus lanes and parking lot improvements………… 3.00 - 5.00 200,000 - 50,000 150,000 Surfside wastewater design………………………………… 4.125 1,380,000 - 34,500 1,345,500 Stormwater drainage………………………………………… 2.50 - 4.00 - 870,000 - 870,000 Police station…………………………………………………… 2.50 - 4.00 - 12,200,000 - 12,200,000 Total Governmental Bonds Payable……………………… 71,324,797 13,070,000 7,778,503 76,616,294 Unamortized Premiums on Bonds and Notes…………… 196,829 - 39,520 157,309 Total…………………………………………………………… $ 71,521,626 $ 13,070,000 $ 7,818,023 $ 76,773,603 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 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 2011………………$ 6,706,444 $ 2,590,763 $ 9,297,207 2012……………… 6,699,463 2,336,677 9,036,140 2013……………… 5,322,782 2,103,872 7,426,654 2014……………… 5,186,404 1,916,143 7,102,547 2015……………… 5,270,341 1,718,236 6,988,577 2016……………… 5,274,570 1,524,908 6,799,478 2017……………… 5,369,150 1,324,393 6,693,543 2018……………… 4,899,062 1,133,421 6,032,483 2019……………… 2,969,318 992,391 3,961,709 2020……………… 2,944,921 889,902 3,834,823 2021……………… 2,934,734 792,740 3,727,474 2022……………… 2,916,061 689,124 3,605,185 2023……………… 2,872,762 591,908 3,464,670 2024……………… 2,779,846 488,658 3,268,504 2025……………… 1,737,321 415,614 2,152,935 2026……………… 1,725,197 359,633 2,084,830 2027……………… 1,621,598 305,753 1,927,351 2028……………… 1,564,053 256,724 1,820,777 2029……………… 1,495,113 207,150 1,702,263 2030……………… 916,852 163,669 1,080,521 2031……………… 579,860 135,237 715,097 2032……………… 593,185 120,489 713,674 2033……………… 606,837 105,414 712,251 2034……………… 620,822 90,006 710,828 2035……………… 635,148 74,257 709,405 2036……………… 649,825 58,157 707,982 2037……………… 664,861 41,698 706,559 2038……………… 680,264 24,872 705,136 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………………$ 76,616,294 $ 21,545,735 $ 98,162,029 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 51 Basic Financial Statements Bonds Payable Schedule – Enterprise Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2009 Issued Redeemed 2010 Sewer……………………………………………………………4.00 - 5.00 $ 530,000 $ - $ 40,000 $ 490,000 MWPAT - 94-10……………………………………………… Various 116,802 - 16,882 99,920 MWPAT CW-01-40……………………………………………2.00 - 5.50 1,499,705 - 79,643 1,420,062 Sewer……………………………………………………………2.25 - 5.00 900,000 - 60,000 840,000 MWPAT Sewer 98-143……………………………………… 4.50 - 5.25 671,141 - 47,404 623,737 MWPAT Sewer 98-144……………………………………… 4.50 - 5.25 150,849 - 10,272 140,577 MWPAT Sewer 98-145……………………………………… 4.50 - 5.25 167,379 - 11,026 156,353 MWPAT CW-02-50-A…………………………………………Various 4,564,581 - 282,970 4,281,611 Sewer department…………………………………………..…3.75 - 4.00 30,000 - 15,000 15,000 MWPAT CW-02-50……………………………………………Various 3,735,204 - 144,770 3,590,434 MWPAT CW-05-21……………………………………………2.414 28,833,662 - 3,012,024 25,821,638 Stormwater planning………………………………………… 3.75 - 4.00 20,000 - 10,000 10,000 Cleaning equipment……………………………………………3.00 - 5.00 120,000 - 40,000 80,000 Sewer construction……………………………………………3.00 - 5.00 235,000 - 15,000 220,000 Sewer……………………………………………………………3.00 - 5.00 825,000 - 45,000 780,000 Waste Water Treatment Facility…………………………… 3.00 - 5.00 250,800 - 13,200 237,600 Sewer departmental equipment………………………………3.00 - 5.00 120,000 - 30,000 90,000 Sewer……………………………………………………………3.00 - 5.00 1,360,000 - 75,000 1,285,000 MWPAT CW 04-20……………………………………………2.00 3,125,318 - 145,698 2,979,620 Sewer departmental equipment………………………………2.50 - 3.00 - 120,000 - 120,000 MWPAT CW 07-17……………………………………………2.00 - 4,006,000 - 4,006,000 Total Sewer Enterprise Bonds Payable…………………… 47,255,441 4,126,000 4,093,889 47,287,552 Airport land acquisition……………………………………… 4.00 - 4.25 190,000 - 95,000 95,000 Airport……………………………………………………………2.25 - 5.00 190,000 - 40,000 150,000 Airport department equipment……………………………… 2.50 - 3.00 30,000 - 30,000 - Airport improvement……………………………………………2.50 - 4.00 970,000 - 195,000 775,000 Airport improvement……………………………………………3.75 - 5.00 145,000 - 25,000 120,000 Airport equipment………………………………………………3.75 - 4.00 100,000 - 50,000 50,000 Airport equipment………………………………………………3.00 - 5.00 325,000 - 115,000 210,000 Airport improvements and protection……………………… 3.00 - 5.00 600,000 - 75,000 525,000 Airport equipment………………………………………………3.00 - 5.00 170,000 - 60,000 110,000 Airport equipment refurbishment……………………………3.00 - 5.00 130,000 - 45,000 85,000 Total Airport Enterprise Bonds Payable……………………2,850,000 - 730,000 2,120,000 Water projects…………………………………………………4.00 - 5.00 685,000 - 60,000 625,000 Water meters……………………………………………………4.00 - 4.25 300,000 - 150,000 150,000 Water……………………………………………………………2.50 - 4.13 400,000 - 25,000 375,000 Water……………………………………………………………2.50 - 4.13 400,000 - 25,000 375,000 Land acquisition……………………………………………… 2.50 - 4.13 2,400,000 - 150,000 2,250,000 Water……………………………………………………………3.75 - 5.00 2,685,000 - 105,000 2,580,000 Water……………………………………………………………3.75 - 5.00 560,000 - 70,000 490,000 Water……………………………………………………………3.75 - 5.00 455,000 - 20,000 435,000 Garage and maintenance facility……………………………3.75 - 5.00 810,000 - 30,000 780,000 Rehab and administration building………………………… 3.00 - 5.00 710,000 - 40,000 670,000 Source well and pump…………………………………………3.00 - 5.00 1,235,000 - 65,000 1,170,000 Water storage tank……………………………………………3.00 - 5.00 4,750,000 - 250,000 4,500,000 Water mains……………………………………………………3.00 - 5.00 1,185,000 - 65,000 1,120,000 Water system distribution improvements……………………3.00 - 5.00 950,000 - 50,000 900,000 Water mains…….………………………………………………3.00 - 5.00 95,000 - 5,000 90,000 Water tank………………………………………………………3.00 - 5.00 2,815,000 - 105,000 2,710,000 Water meter battery and distribution system………………2.50 - 4.00 - 1,800,000 - 1,800,000 Total Wannacomet Water Enterprise Bonds Payable……20,435,000 1,800,000 1,215,000 21,020,000 (Continued) Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 52 Basic Financial Statements Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%)2009 Issued Redeemed 2010 Water meter………………………………………………3.75 - 5.00 1,415,000 - 175,000 1,240,000 Water……………………………………………………………3.75 - 5.00 70,000 - 10,000 60,000 Water tank………………………………………………………3.00 - 5.00 3,900,000 - 145,000 3,755,000 Water tank………………………………………………………3.00 - 5.00 2,473,000 - 93,000 2,380,000 Low beach water main…………………………………………2.50 - 4.00 - 1,400,000 - 1,400,000 Total Siasconset Water Enterprise Bonds Payable………7,858,000 1,400,000 423,000 8,835,000 Solid waste facility…………………………………………… 2.50 - 4.13 80,000 - 5,000 75,000 Landfill cell………………………………………………………3.00 - 5.00 615,000 - 35,000 580,000 Material recovery facility………………………………………3.00 - 5.00 280,000 - 70,000 210,000 Total Solid Waste Enterprise Bonds Payable…………… 975,000 - 110,000 865,000 Total Enterprise Bonds Payable……………………………79,373,441 7,326,000 6,571,889 80,127,552 Unamortized Premiums on Bonds and Notes…………… - 339,695 - 339,695 Total……………………………………………………………$ 79,373,441 $ 7,665,695 $ 6,571,889 $ 80,467,247 (Concluded) Debt service requirements for principal and interest for enterprise fund bonds payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2011………………$ 4,465,974 $ 2,658,834 $ 7,124,808 2012……………… 4,363,685 2,544,469 6,908,154 2013……………… 4,193,015 2,396,350 6,589,365 2014……………… 4,144,019 2,233,562 6,377,581 2015……………… 3,969,825 2,069,849 6,039,674 2016……………… 4,035,333 1,922,868 5,958,201 2017……………… 3,753,417 1,785,322 5,538,739 2018……………… 3,711,131 1,660,740 5,371,871 2019……………… 3,773,779 1,538,120 5,311,899 2020……………… 3,760,068 1,385,431 5,145,499 2021……………… 3,874,484 1,252,142 5,126,626 2022……………… 3,721,162 1,119,212 4,840,374 2023……………… 3,816,001 983,440 4,799,441 2024……………… 3,770,691 846,111 4,616,802 2025……………… 3,659,792 712,242 4,372,034 2026……………… 2,984,826 595,813 3,580,639 2027……………… 2,726,204 501,331 3,227,535 2028……………… 2,539,477 414,601 2,954,078 2029……………… 2,004,916 328,278 2,333,194 2030……………… 1,389,234 247,254 1,636,488 2031……………… 1,299,250 212,438 1,511,688 2032……………… 1,084,507 184,164 1,268,671 2033……………… 1,111,007 157,664 1,268,671 2034……………… 1,138,154 130,517 1,268,671 2035……………… 1,165,964 102,707 1,268,671 2036……………… 1,194,455 74,217 1,268,672 2037……………… 1,223,641 45,030 1,268,671 2038……………… 1,253,541 15,130 1,268,671 Total………………$ 80,127,552 $ 28,117,836 $ 108,245,388 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 $2,259,138 and interest costs of $2,845,991 relating to certain Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 53 Basic Financial Statements MWPAT bonds outstanding in the sewer enterprise fund. Thus, net principal debt repayments in the sewer enterprise fund are scheduled to be $45,028,234. The principal subsidies are guaranteed and therefore a $2,259,138 intergovernmental receivable has been reported in the sewer enterprise fund. 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 2010 principal and interest subsidies totaled approximately $108,000 and $389,000, respectively. For MWPAT loans issued for projects first appearing on Department of Environmental Protection’s Intended Use Plan in 2002 and forward, the net debt service is structured to result in the financial equivalent of a loan with an annual interest rate of 2%. The Town is eligible to draw down funds from the MWPAT against outstanding loans once eligible costs associated with the construction of the projects have been submitted and approved. As of June 30, 2010, $805,000 of the $4,006,000 loan recorded in the sewer enterprise fund and $684,141 of the $4,600,000 loan recorded in the governmental financial statements have not been drawn down from the MWPAT. Accordingly, these amounts have been recorded as intergovernmental receivables in the sewer enterprise fund and in the governmental activities, respectively, as of June 30, 2010. Bonds and Notes Payable Schedule – Land Bank Component Unit Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2009 Issued Redeemed 2010 Land Bank Bonds and Notes Payable………………………6.063 $ 4,700,000 $ - $ 750,000 $ 3,950,000 Land Bank Bonds and Notes Payable………………………4.00 - 5.50 28,035,399 - 1,537,782 26,497,617 Total Land Bank Component Unit Bonds Payable……… $ 32,735,399 $ - $ 2,287,782 $ 30,447,617 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 2011………………$ 3,957,782 $ 1,042,036 $ 4,999,818 2012……………… 2,317,782 884,359 3,202,141 2013……………… 2,372,782 824,948 3,197,730 2014……………… 1,672,782 745,249 2,418,031 2015……………… 1,727,782 689,063 2,416,845 2016-2020……… 9,613,909 2,526,833 12,140,742 2021-2025……… 5,538,909 1,167,104 6,706,013 2026-2029……… 3,245,889 203,053 3,448,942 Total………………$ 30,447,617 $ 8,082,645 $ 38,530,262 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 54 Basic Financial Statements The Land Bank’s notes payable are with various entities. One note bears interest at 6.063% with principal of $1,700,000 being relieved upon termination of certain trust instruments. The other note bears interest at 3.00% and is collateralized by all the Land Bank’s funds and revenues with annual installments, including principal and interest of $750,000 due January 28, 2013. The notes payable balance is amortized over periods of one to sixteen years. Bonds payable is comprised of the 2007 Series A Bonds dated December 1, 2007 and bearing interest at rates ranging from 4% to 5.5% and mature serially from December 1, 2008 through December 1, 2027. The 2009 Series A Bonds dated March 13, 2009 bear interest at a rate of 2.95% and mature serially from June 30, 2009 through June 30, 2023. The bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. The Town is subject to various debt limits by statute and may issue additional general obligation debt under the normal debt limit. At June 30, 2010, the Town had the following authorized and unissued debt: General Government Purpose Amount Bikepaths……………………………………………………$ 599,250 Public Safety Facility……………………………... ………1,100,000 Sewer………………………………………………………763,589 Total General Government………………………………$2,462,839 Enterprise Purpose Amount Landfill…………………………………………………..…$ 383,000 Sewer………………………………………………………35,306,500 Solid Waste…………………………………………………1,300,000 Nantucket Memorial Airport………………………………26,818,600 Siasconsset Water Company……………………………2,600,000 Wannacomet Water Company………………………… 2,300,000 Total Enterprise……………….……………………………$68,708,100 Land Bank Component Unit Purpose Amount Land Bank …………………………………………………$1,144,798 Total…………………………………………………………$72,315,737 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 55 Basic Financial Statements Changes in Long-term Liabilities During the fiscal year ended June 30, 2010, the following changes occurred in long-term liabilities: Balance at Balance at June 30,June 30, Current 2009 Additions Reductions 2010 Portion GOVERNMENTAL ACTIVITIES: Long-Term Bonds and Notes…………………$ 71,324,797 $ 13,070,000 $ (7,778,503) $ 76,616,294 $ 6,706,444 Compensated Absences……………………… 1,477,821 377,810 (295,564) 1,560,067 312,013 Workers' Compensation……………………… 93,146 176,650 (93,146) 176,650 176,650 Other Postemployment Benefits…………… 7,401,174 9,974,315 (2,317,628) 15,057,861 - Total Governmental Funds……………………$ 80,296,938 $ 23,598,775 $ (10,484,841) $ 93,410,872 $ 7,195,107 BUSINESS-TYPE ACTIVITIES: Long-Term Bonds and Notes…………………$ 79,373,441 $ 7,326,000 $ (6,571,889) $ 80,127,552 $ 4,465,974 Compensated Absences……………………… 517,426 135,730 (103,486) 549,670 109,934 Other Postemployment Benefits…………… 728,126 1,291,383 (269,372) 1,750,137 - Landfill Closure………………………………… 2,428,000 150,403 - 2,578,403 - Total Business-type Funds……………………$ 83,046,993 $ 8,903,516 $ (6,944,747) $ 85,005,762 $ 4,575,908 LAND BANK COMPONENT UNIT: Long-Term Bonds and Notes…………………$ 32,735,399 $- $(2,287,782) $ 30,447,617 $ 3,945,000 Other Postemployment Benefits…………… 348,900 - - 348,900 - Total Land Bank Component Unit…………… 33,084,299 - (2,287,782) 30,796,517 3,945,000 COUNTY COMPONENT UNIT: Other Postemployment Benefits…………… 81,699 26,054 (56,814) 50,939 - Total Component Units……………………… $ 33,165,998 $ 26,054 $ (2,344,596) $ 30,847,456 $ 3,945,000 Total…………………………………………… $ 196,509,929 $ 32,528,345 $ (19,774,184) $ 209,264,090 $ 15,716,015 The governmental activities long-term liabilities are generally liquidated by the general fund. 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. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 56 Basic Financial Statements (a) Health Insurance The estimate of Incurred But Not Reported (IBNR) claims is based on history. At June 30, 2010, the amount of the liability for health insurance claims totaled $783,083. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2007, are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-End Fiscal Year 2009…………$ 710,419 $ 9,102,460 $ (9,091,095) $ 721,784 Fiscal Year 2010………… 721,784 11,167,039 (11,050,453) 783,083 (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, 2010, the amount of the liability for workers’ compensation claims totaled $176,650. This liability is the Town’s best estimate based on available information. Changes in the reported liability since July 1, 2007, are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-End Fiscal Year 2009…………$ 94,336 $ 102,296 $ (103,486) $ 93,146 Fiscal Year 2010………… 93,146 228,930 (145,426) 176,650 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 by the Teachers Retirement Board are the legal responsibility of the Commonwealth. The amount of these on- behalf payments totaled approximately $2,008,000 for the fiscal year ended June 30, 2010, 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 increases 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 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 57 Basic Financial Statements 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, 2008, 2009 and 2010 totaled $3,346,353, $3,643,915 and $3,925,224 respectively, which equaled its required contributions for each fiscal year. The County’s contribution to the System for the fiscal years ended June 30, 2008, 2009 and 2010 were $138,012, $145,083 and $152,865 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 – POSTEMPLOYMENT 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 Postemployment Benefits Other Than Pensions (GASB 45). As allowed by GASB 45, the Town has established the net Other Postemployment 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 2010, the Town contributed $2,587,000 to the plan. Annual OPEB Cost and Net OPEB Obligation – The Town’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the Town’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town’s net OPEB obligation are summarized in the following table: Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 58 Basic Financial Statements Annual required contribution……………………………………$ 10,647,000 Interest on net OPEB obligation……………………………… 537,000 Annual OPEB cost (expense)……………………………… 11,184,000 Contributions made……………………………………………… (2,587,000) Increase in net OPEB obligation……………………………… 8,597,000 Net OPEB obligation - beginning of year……………………… 8,211,000 Net OPEB obligation - end of year……………………………$ 16,808,000 The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2010 was as follows: Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/2010 $ 11,184,000 23% $ 16,808,000 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 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) 7/1/2009 $ - $ 127,923,000 $ 127,923,000 0% $ N/A N/A 7/1/2007 - 104,980,000 104,980,000 0% N/A N/A Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2009, 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 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 59 Basic Financial Statements 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, 2010 is 28 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 2010 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 $2,578,000 closure liability at June 30, 2010, 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 contracts with J.K. Scanlan Co., Inc. for the Nantucket Public Safety Building at Fairgrounds, and Fire Fighting Building at the airport. At year end, the open contract totaled approximately $7,412,452. The Town has a contract with C.B. & I. for the North Pasture Water Tank, and Siasconset Water Tank. At year end, the open contract totaled approximately $1,826,109. The Town has contracts with C.C. Construction for the Storm Water Improvements. At year end, the open contract totaled approximately $677,622. The Town has a contract with Skanska USA Building for the Airport Terminal. At year end, the open contract totaled approximately $527,991. The Town has a contract with AECOM Technical Service for the upgrade to Surfside WWTF, and down town Sewer Replacement Phase IIA. At year end, the open contract totaled approximately $237,795. The Town has a contract with Jacobs Engineering Group, Inc. for the Airport Terminal Expansion and Air Traffic Control Tower. At year end, the open contract totaled approximately $34,630. The Town has a contract with Fennick McCredie Architecture for the Airport Fire Fighting Building. At year end, the open contract totaled approximately $20,984. The Town has a contract with Earth Tech for the Nantucket Memorial Airport Terminal, and WWTF Upgrade. At year end, the open contract totaled approximately $19,557. 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, 2010, these programs are still subject to financial and compliance audits. The amount, if any, of expenditures which may be Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 60 Basic Financial Statements 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, 2010, cannot be ascertained, management believes any resulting liability should not materially affect the financial position at June 30, 2010. NOTE 14 – TRANSFER OF SHERIFF’S OPERATIONS In accordance with Chapter 61 of the acts of 2010, An Act Transferring County Sheriffs to the Commonwealth, as of January 1, 2010, the office of the Nantucket County Sheriff was transferred to the Commonwealth. With this transfer, all functions, duties and responsibilities of the Sheriff’s office were transferred to the Commonwealth, and the Sheriff became an employee of the Commonwealth. As a result, all valid liabilities and debts of the Sheriff’s office, which were in force on the effective date of the act, became obligations of the Commonwealth as of that date. Additionally, all assets of the Sheriff’s Office were transferred to the Commonwealth. Cash transferred is shown within the County combining statements as an expense within the Sheriff Deeds Excise Fund. NOTE 15 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS During fiscal year 2010, the Town has implemented the following GASB pronouncements: • The GASB issued Statement #57, OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans. The standards in this statement permits an agent employer that has an individual employer OPEB plan with fewer than 100 members to use an alternative measurement method to produce actuarially based information for purposes of financial reporting, regardless of the number of total plan members in the agent multiple-employer OPEB plan in which it participates. Management elected to implement this standard early and this standard did not impact the basic financial statements. • The GASB issued Statement #58, Accounting and Financial Reporting for Chapter 9 Bankruptcies. The standards in this statement provide guidance for bankrupt state and local governments by establishing requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities and for classifying changes in those items and related costs. Management elected to implement this standard early and this standard 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. • The GASB issued Statement #59, Financial Instruments Omnibus, which is required to be implemented in fiscal year 2011. Management is assessing the impact this pronouncement will have on the basic financial statements. • The GASB issued Statement #60, Accounting and Financial Reporting for Service Concession Arrangements, which is required to be implemented in fiscal year 2013. Management is assessing the impact this pronouncement will have on the basic financial statements. Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 61 Basic Financial Statements • The GASB issued Statement #61, The Financial Reporting Entity: Omnibus, which is required to be implemented in fiscal year 2013. Management is assessing the impact this pronouncement will have on the basic financial statements. • The GASB issued Statement #62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, which is required to be implemented in fiscal year 2013. Management is assessing the impact this pronouncement will have on the basic financial statements. Town of Nantucket, Massachusetts 62 Required Supplementary Information Required Supplementary Information Town of Nantucket, Massachusetts 63 Required Supplementary Information General Fund Budgetary Comparison Schedule General Fund Budgetary Comparison Schedule The General Fund is the general operating fund of the Town. It is used to account for all of the Town’s financial resources, except those required to be accounted for in another fund. 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…………………………………………$- $ 60,501,284 $ 60,501,284 $ 60,501,284 Tax liens……………………………………………………… - - - - Motor vehicle and other excise taxes……………………… - 1,529,000 1,529,000 1,529,000 Hotel/motel tax……………………………………………… - 1,125,000 1,125,000 1,125,000 Charges for services………………………………………… - 4,772,518 4,772,518 4,772,518 Penalties and interest on taxes…………………………… - 470,000 470,000 470,000 Payments in lieu of taxes…………………………………… - 7,300 7,300 7,300 Licenses and permits………………………………………… - 754,000 754,000 754,000 Fines and forfeitures………………………………………… - 245,000 245,000 245,000 Intergovernmental…………………………………………… - 1,689,126 1,689,126 1,689,126 Departmental and other……………………………………… - 133,100 133,100 133,100 Investment income…………………………………………… - 100,000 100,000 100,000 Miscellaneous………………………………………………… - 47,000 47,000 47,000 TOTAL REVENUES……………………………………… - 71,373,328 71,373,328 71,373,328 EXPENDITURES: Current: General government……………………………………… 1,279,311 7,436,609 8,715,920 7,989,253 Public safety……………………………………………… 392,809 8,225,529 8,618,338 8,914,979 Education………………………………………………… 572,910 23,359,000 23,931,910 23,618,513 Public works……………………………………………… 419,567 2,793,860 3,213,427 3,133,916 Human services…………………………………………… 209,017 6,245,480 6,454,497 6,097,964 Culture and recreation…………………………………… 15,384 1,699,715 1,715,099 1,779,533 Pension benefits………………………………………… - 3,217,730 3,217,730 3,237,930 Employee benefits……………………………………… 17,105 8,125,062 8,142,167 8,321,113 State and county charges…………………………………… - 466,044 466,044 466,088 Debt service: Principal…………………………………………………… - 6,096,000 6,096,000 6,369,738 Interest…………………………………………………… - 2,989,738 2,989,738 2,716,000 TOTAL EXPENDITURES……………………………… 2,906,103 70,654,767 73,560,870 72,645,027 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES……………………………………………… (2,906,103) 718,561 (2,187,542) (1,271,699) OTHER FINANCING SOURCES (USES): Premium from issuance of bonds………………………… - 53,049 53,049 53,049 Sale of capital assets………………………………………… - - - Transfers in…………………………………………………… - 898,897 898,897 859,272 Transfers out………………………………………………… - (5,136,907) (5,136,907) (5,586,595) TOTAL OTHER FINANCING SOURCES (USES)…… - (4,184,961) (4,184,961) (4,674,274) NET CHANGE IN FUND BALANCE…………………………… (2,906,103) (3,466,400) (6,372,503) (5,945,973) BUDGETARY FUND BALANCE, Beginning of year………… 10,123,490 10,123,490 10,123,490 10,123,490 BUDGETARY FUND BALANCE, End of year…………………$ 7,217,387 $ 6,657,090 $ 3,750,987 $ 4,177,517 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, 2010 Town of Nantucket, Massachusetts 64 Required Supplementary Information Actual Amounts Variance Budgetary Carried Forward To Final Amounts To Next Year Budget $ 59,833,408 $- $ (667,876) 285,995 - 285,995 1,724,857 - 195,857 1,114,228 - (10,772) 4,755,568 - (16,950) 654,572 - 184,572 11,846 - 4,546 932,004 - 178,004 248,231 - 3,231 1,953,045 - 263,919 193,921 - 60,821 101,859 - 1,859 58,278 - 11,278 71,867,812 - 494,484 6,620,373 1,358,519 10,361 7,947,949 134,383 832,647 22,834,458 784,020 35 2,264,682 677,137 192,097 5,793,062 137,486 167,416 1,656,195 44,890 78,448 3,237,834 96 7,452,901 - 868,212 458,657 - 7,431 6,583,650 - (213,912) 2,535,541 - 180,459 67,385,302 3,136,435 2,123,290 4,482,510 (3,136,435) 2,617,774 279,138 - 226,089 801,000 - 801,000 2,344,027 - 1,484,755 (5,586,595) - - (2,162,430) - 2,511,844 2,320,080 (3,136,435) 5,129,618 10,123,490 - - $ 12,443,570 $ (3,136,435) $ 5,129,618 Town of Nantucket, Massachusetts 65 Required Supplementary Information Town of Nantucket, Massachusetts 66 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% 1/1/2009 520,089,855 966,564,614 446,474,759 53.8% 249,971,296 178.6% The Town's share of the UAAL, as of January 1, 2009, is approximately 9.69%. See notes to required supplementary information. BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS Town of Nantucket, Massachusetts 67 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 34,360,812 34,360,912 100%3,346,353 9.74% 2008 39,899,322 39,899,322 100%3,643,915 9.13% 2009 43,893,051 43,893,051 100%3,925,224 8.94% (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 34,360,812 34,360,912 100%138,012 0.40% 2008 39,899,322 39,899,322 100%145,083 0.36% 2009 43,893,051 43,893,051 100%152,865 0.35% 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 68 Required Supplementary Information Town of Nantucket, Massachusetts 69 Required Supplementary Information Other Postemployment Benefits Plan Schedules The Schedule of Funding Progress compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets. The Other Postemployment 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 Postemployment Benefit Schedules 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) 7/1/2009 $- $ 127,923,000 $ 127,923,000 0% $ N/A N/A 7/1/2007 - 104,980,000 104,980,000 0%N/A N/A Annual Actual Percentage of Year Required Contributions the ARC Ended Contribution (ARC)Made Contributed 6/30/2010 $ 10,647,000 $2,587,000 24% 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. SCHEDULE OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS Schedule of Funding Progress Schedule of Employer Contributions OTHER POSTEMPLOYMENT BENEFIT PLAN Town of Nantucket, Massachusetts 70 Required Supplementary Information Actuarial Methods: Valuation date………………………………………… July 1, 2009 Actuarial cost method………………………………… Projected Unit Credit Cost Method Amortization method………………………………… Amortization payments increasing at 4.50% Remaining amortization period……………………… 28 years as of July 1, 2009, 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… 228 Current active members……………………………… 682 Total……………………………………………………910 See notes to required supplementary information. ACTUARIAL METHODS AND ASSUMPTIONS OTHER POSTEMPLOYMENT BENEFIT PLAN Town of Nantucket, Massachusetts 71 Required Supplementary Information Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 72 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 2010 budget includes $78,697,777 in appropriations and other amounts to be raised and $2,906,103 in amounts carried forward from the previous fiscal year. During fiscal year 2010, the Town’s budget increased by $78,698 mainly due to a combination of $317 thousand in budget reductions and votes to transfer available funds of $650 thousand to various funds 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, 2010, is presented below: Net change in fund balance - budgetary basis…………………$2,320,080 Basis of accounting differences: Recognition of revenue based on available criteria………… (428,928) Accrued expenditures…………………………………………… 818,397 Recognition of revenue for on-behalf payments……………… 2,008,000 Recognition of expenditures for on-behalf payments………… (2,008,000) Net change in fund balance - GAAP basis………………………$ 2,709,549 Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010 Town of Nantucket, Massachusetts 73 Required Supplementary Information 3. Appropriation Deficits During fiscal year 2010, 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, 2010 Town of Nantucket, Massachusetts 74 Required Supplementary Information Actuarial Methods and Assumptions: Valuation Date…………………………………………………January 1, 2009 Actuarial Cost Method……………………………………… Entry Age Normal Cost Method Amortization Method…………………………………………Increasing at 4.50% per year after fiscal 2013 and 2003 Early Retirement Incentives and 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……………………………………… 2,368 Terminated participants entitled to a return of their employee contributions………………… 635 Terminated participants with a vested right to a deferred or immediate benefit……………… 113 Active participants………………………………………………………………………………… 5,290 Total………………………………………………………………………………………………… 8,406 Remaining Amortization Period………………………………19 years from July 1, 2009 for 2002 NOTE C – OTHER POSTEMPLOYMENT 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 postemployment benefits (OPEB) on a pay-as-you-go basis. As a result, the funded ratio (actual value of assets expressed as a percentage of the actuarial accrued liability) is 0%. In accordance with Governmental Accounting Standards, the 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 75 Other Supplementary Information Nantucket County Component Unit Combining Statements Town of Nantucket, Massachusetts 76 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. Note: In accordance with Chapter 61 of the acts of 2010, An Act Transferring County Sheriffs to the Commonwealth, as of January 1, 2010, the office of the Nantucket County Sheriff was transferred to the Commonwealth. With this transfer, all functions, duties and responsibilities of the Sheriff’s office were transferred to the Commonwealth, and the Sheriff became an employee of the Commonwealth. As a result, all valid liabilities and debts of the Sheriff’s office, which were in force on the effective date of the act, became obligations of the Commonwealth as of that date. Additionally, all assets of the Sheriff’s Office were transferred to the Commonwealth. Cash transferred is shown within the County combining statements as an expense within the Sheriff Deeds Excise Fund. Total Total General County Sheriff's Registry Deeds Excise Other Special Nantucket ASSETS Fund Administration Department of Deeds Fund Revenue Funds County Cash and cash equivalents……………………………………$ 458,652 $ 117,485 $ 220,253 $ 862,001 $ 1,199,739 $ 639,191 $ 2,297,582 Receivables, net of uncollectibles: Departmental and other…………………………………… 6,059 -----6,059 Intergovernmental………………………………………… 115,083 - - - - 1,580 116,663 Due from other funds………………………………………… 228,744 - - 16,503 16,503 126 245,373 Other assets…………………………………………………… 50,871 - - - - - 50,871 TOTAL ASSETS……………………………………………… $ 859,409 $ 117,485 $ 220,253 $ 878,504 $ 1,216,242 $ 640,897 $ 2,716,548 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable……………………………………………$18,224 $- $- $- $- $- $ 18,224 Accrued payroll……………………………………………… 7,647 - - - - - 7,647 Payroll withholdings………………………………………… 387,231 - - - - - 387,231 Other liabilities……………………………………………… 153,718 - - - - 1,580 155,298 Due to other funds………………………………………… 25,120 - 220,253 - 220,253 - 245,373 TOTAL LIABILITIES…………………………………………… 591,940 - 220,253 - 220,253 1,580 813,773 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations……… 2,275 - - - - - 2,275 Unreserved: Undesignated, reported in: General fund………………………………………… 265,194 - - - - - 265,194 Special revenue funds……………………………… - 117,485 - 878,504 995,989 639,317 1,635,306 TOTAL FUND BALANCES…………………………………… 267,469 117,485 - 878,504 995,989 639,317 1,902,775 TOTAL LIABILITIES AND FUND BALANCES………………$ 859,409 $ 117,485 $ 220,253 $ 878,504 $ 1,216,242 $ 640,897 $ 2,716,548 Deeds Excise Special Revenue Fund NANTUCKET COUNTY COMBINING BALANCE SHEET JUNE 30, 2010 Town of Nantucket, Massachusetts 77 Other Supplementary Information Total Other Total General County Sheriff's Registry Deeds Special Revenue Nantucket Fund Administration Department of Deeds Excise Funds County REVENUES: Intergovernmental………………………………………………$ 105,400 $- $- $ - - $- $ 105,400 Departmental and other……………………………………… 51,596 163,958 735,444 101,721 1,001,123 115,570 1,168,289 Contributions…………………………………………………… - - 13,100 13,100 Investment income……………………………………………… 8,237 279 3,221 2,151 5,651 438 14,326 Miscellaneous…………………………………………………… 3,926 - - - - - 3,926 TOTAL REVENUES…………………………………… 169,159 164,237 738,665 103,872 1,006,774 129,108 1,305,041 EXPENDITURES: Current: County administration……………………………………… 1,045,532 - - - - - 1,045,532 Registry of Deeds…………………………………………… 327,224 - - 16,138 16,138 4,636 347,998 Sheriff's Department………………………………………… 408,133 - 523,788 - 523,788 - 931,921 Special Projects…………………………………………… - - - - - 163,547 163,547 General government………………………………………… 531 - - - - - 531 Public safety………………………………………………… 7,621 - - - - 7,621 TOTAL EXPENDITURES……………………………… 1,789,041 - 523,788 16,138 539,926 168,183 2,497,150 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES…………………………… (1,619,882) 164,237 214,877 87,734 466,848 (39,075) (1,192,109) OTHER FINANCING SOURCES (USES): Transfers in……………………………………………………… 1,419,045 - - - - - 1,419,045 Transfers out…………………………………………………… - (152,581) (1,266,464) - (1,419,045) - (1,419,045) TOTAL OTHER FINANCING SOURCES (USES)…… 1,419,045 (152,581) (1,266,464) - (1,419,045) - - NET CHANGE IN FUND BALANCES…………………………… (200,837) 11,656 (1,051,587) 87,734 (952,197) (39,075) (1,192,109) FUND BALANCES AT BEGINNING OF YEAR………………… 468,306 105,829 1,051,587 790,770 1,948,186 678,392 3,094,884 FUND BALANCES AT END OF YEAR………………………… $ 267,469 $ 117,485 $- $ 878,504 $ 995,989 $ 639,317 $ 1,902,775 FISCAL YEAR ENDED JUNE 30, 2010 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NANTUCKET COUNTY Deeds Excise Special Revenue Fund Town of Nantucket Massachusetts 78 Other Supplementary Information Town of Nantucket, Massachusetts 79 Additional Information Additional Information Reimbursed Reimbursed OtherDirectDirectDirect Indirect Direct Direct Indirect Total LaborCostsCostsCosts Labor Costs Costs ExpendituresEXPENDITURES:Direct Salaries…………………………$ 96,309 $ - $ 4,332 $- $ 30,122 $- $ - $ 130,763 Payroll taxes…………………………… - - 1,479 - - 483 - 1,962 Consultants and professional fees… - 38,383 4,488 - - 6,466 - 49,337 Travel…………………………………… - 1,457 - - - 3,970 - 5,427 Equipment……………………………… - 687 - - - - - 687 Supplies………………………………… - - - - - 6,420 - 6,420 Advertising……………………………… - 827 - - - - - 827 Postage………………………………… - 42 - - - 60 - 102 Printing………………………………… - 127 - - - - - 127 Dues and subscriptions……………… - 415 - - - - - 415 General governance………………… - - - 4,391 - - 2,525 6,916 Finance and treasurer's office……… - - - 2,702 - - 2,459 5,161 Information Technology……………… - - - 1,501 - - 1,410 2,911 Utilities………………………………… - - - 2,971 - 2,506 5,477 Pension………………………………… - - 21,110 - - 6,897 - 28,007 Health insurance……………………… - - 9,031 - - 11,026 - 20,057 TOTAL EXPENDITURES………… $ 96,309 $ 41,938 $ 40,440 $ 11,565 $ 30,122 $ 35,322 $ 8,900 $ 264,596 (a)(a)(a) = Direct and indirect grant costs not reimbursed. Indirect Cost Rate = All related costs not paid by grant/Direct labor paid by grant126,349 96,309 NANTUCKET PLANNING AND ECONOMIC DEVELOPMENT COMMISSION131.191%=SCHEDULE OF INDIRECT COST RATEFISCAL YEAR ENDED JUNE 30, 2010Highway Planning andConstruction GrantAmounts allocable to 3C GrantGeneral FundTown of Nantucket, Massachusetts80Additional Information Highway Planning and General Construction Fund Grant Total REVENUES: Federal and State grants……………………………………………$- $ 224,982 $ 224,982 Other local revenue………………………………………………… 74,344 - 74,344 TOTAL REVENUES…………………………………………… 74,344 224,982 299,326 EXPENDITURES: Salaries……………………………………………………………… 30,122 100,641 130,763 Payroll taxes………………………………………………………… 483 1,479 1,962 Consultants and professional fees………………………………… 6,466 42,871 49,337 Travel………………………………………………………………… 3,970 1,457 5,427 Supplies……………………………………………………………… 6,420 - 6,420 Postage……………………………………………………………… 60 42 102 Pension……………………………………………………………… 6,897 21,110 28,007 Health insurance…………………………………………………… 11,026 9,031 20,057 Equipment…………………………………………………………… - 687 687 Advertising…………………………………………………………… - 827 827 Printing…………………..…………………………………………… - 127 127 Dues and subscriptions…………………………………………… - 415 415 Indirect costs............................................................................. 8,900 11,565 20,465 TOTAL EXPENDITURES…………………………………… 74,344 190,252 264,596 (a) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES……$- $ 34,730 $ 34,730 (a) Includes $52,005 in non-reimbursed direct and indirect grant costs. NANTUCKET PLANNING AND ECONOMIC DEVELOPMENT COMMISSION SCHEDULE OF PUBLIC SUPPORT FISCAL YEAR ENDED JUNE 30, 2010 Town of Nantucket, Massachusetts 81 Additional Information