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Fiscal Year 2011 Single Audit Nantucket Memorial Airport NANTUCKET MEMORIAL AIRPORT REPORT ON EXAMINATION OF FINANCIAL STATEMENTS FISCAL YEARS ENDED JUNE 30, 2011 AND 2010 NANTUCKET MEMORIAL AIRPORT REPORT ON EXAMINATION OF FINANCIAL STATEMENTS JUNE 30, 2011 AND 2010 TABLE OF CONTENTS Page Independent Auditors’ Report..........................................................................................................................................1 Management’s Discussion and Analysis.........................................................................................................................3 Financial Statements.......................................................................................................................................................8 Statement of Net Assets..............................................................................................................................................9 Statement of Revenues, Expenses and Changes in Fund Net Assets .....................................................................10 Statement of Cash Flows...........................................................................................................................................11 Notes to Financial Statements...................................................................................................................................12 Required Supplementary Information............................................................................................................................27 Retirement System Schedules...................................................................................................................................28 Retirement System Schedule of Funding Progress...............................................................................................29 Retirement System Schedule of Employer Contributions......................................................................................30 Other Postemployment Schedules ............................................................................................................................31 Other Postemployment Benefit Plan Schedule of Funding Progress and Employer Contributions.......................32 Other Postemployment Benefit Plan Actuarial Methods and Assumptions...........................................................33 Notes to Required Supplementary Information..........................................................................................................34 1 Independent Auditors’ Report To the Nantucket Airport Commission Nantucket Memorial Airport Nantucket, Massachusetts We have audited the accompanying financial statements of the Nantucket Memorial Airport, an enterprise fund of the Town Nantucket, Massachusetts, as of and for the fiscal years ended June 30, 2011 and 2010, as listed in the table of contents. These financial statements are the responsibility of the Town of Nantucket Massachusetts’ management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. These financial statements, as noted in Note 1, present only the Nantucket Memorial Airport and do not purport to, and do not present fairly the financial position of the Town of Nantucket, Massachusetts, as of June 30, 2011 and 2010, and the changes in its financial position or, where applicable, its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Nantucket Memorial Airport of the Town of Nantucket, Massachusetts, as of June 30, 2011 and 2010, and the respective changes in financial position and cash flows, thereof for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 21, 2012, on our consideration of the Town of Nantucket, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. That report was issued in conjunction with the audit of the Nantucket Memorial Airport, which is an enterprise fund of the Town of Nantucket, Massachusetts. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Management’s discussion and analysis, located on the following pages, the 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 financial statements, are not a required part of the 2 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 21, 2012 Nantucket Memorial Airport 3 Financial Statements Management’s Discussion and Analysis Nantucket Memorial Airport 4 Financial Statements Management’s Discussion and Analysis As management of the Nantucket Memorial Airport (the Airport), we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal years ended June 30, 2011 and 2010. The Airport complies with financial reporting requirements issued by the Governmental Accounting Standards Board (GASB), and Management’s Discussion and Analysis are part of these requirements. The GASB is the authoritative standards-setting body that provides guidance on the preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP). The Airport’s performance is discussed and analyzed within the context of the accompanying financial statements and disclosures following this section. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Nantucket Memorial Airport’s financial statements. The financial statements include the Statement of Net Assets, the Statement of Revenue, Expenses and Change in Fund Net Assets, the Statement of Cash Flows and the notes to the financial statements. The Statement of Net Assets presents information on all assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position is improving or deteriorating. The Statement of Revenues, Expenses and Changes in Fund Net Assets presents information showing how the Airport’s net assets changed during the most recent fiscal years. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected fees and earned but unused vacation leave). The Statement of Cashflows presents information showing the cash inflows and outflows for the Airport. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the financial statements. Financial Highlights Fiscal 2011 and 2010 • The total of assets exceeded liabilities (i.e., net assets) by $49.8 million and $48.2 million respectively. • Unrestricted net assets for the Airport totaled ($320,000) and $267,000 respectively. • Total debt totaled $12.6 million and $27 million respectively. Nantucket Memorial Airport 5 Financial Statements Financial Analysis The following chart provides a summary of the Airport’s financial data for fiscal year 2011, with comparative fiscal year 2010 information. 2011 2010 Assets: Current assets……………………………………………$ 7,617,439 $ 23,049,652 Capital assets, not being depreciated………………… 12,219,446 9,382,257 Capital assets, net of accumulated depreciation…… 46,530,667 47,328,946 Total assets………………………………………… 66,367,552 79,760,855 Liabilities: Current liabilities (excluding debt)……………………… 2,305,052 3,084,074 Noncurrent liabilities (excluding debt)………………… 1,635,824 1,410,783 Current debt……………………………………………… 6,820,000 25,596,500 Noncurrent debt………………………………………… 5,770,000 1,440,000 Total liabilities……………………………………… 16,530,876 31,531,357 Net Assets: Invested in capital assets net of related debt………… 50,156,616 47,962,783 Unrestricted……………………………………………… (319,940) 266,715 Total net assets……………………………………$49,836,676 $48,229,498 Operating Revenues: Charges for services……………………………………$ 10,855,671 $ 9,612,444 Nonoperating Revenues: Investment income……………………………………… 51,861 132,093 Intergovernmental capital grants……………………… 4,027,927 7,245,682 Total revenues……………………………………… 14,935,459 16,990,219 Operating Expenses: Cost of services and administration…………………… 9,248,536 9,735,740 Depreciation……………………………………………… 2,409,276 1,859,907 Employee benefits……………………………………… 1,032,163 1,464,838 Interest expense………………………………………… 468,431 481,430 Total expenses……………………………………… 13,158,406 13,541,915 Transfers…………………………………………………… (169,875) (161,021) Change in net assets…………………………………… $ 1,607,178 $ 3,287,283 There was an increase of $1.6 million in net assets related with the Nantucket Memorial Airport’s activities. Noncurrent liabilities included an accrued liability for other postemployment benefits in the amount of $1,353,858 as of June 30, 2011. The Airport will continue to amortize this unfunded liability on an annual basis to the extent that the net cost, including the amortization of the unfunded liability exceeds contributions. This liability is based on an actuarially determined calculation of the cost of providing benefits, other than pension costs, to retirees and their spouses. The Town of Nantucket obtained an updated actuarial valuation report for Nantucket Memorial Airport 6 Financial Statements fiscal year 2011 which showed a significant decrease in the Town’s unfunded liability. Correspondingly, the portion of the unfunded liability attributable to the Airport also decreased. This resulted in a reduction in employee benefit expenses in fiscal year 2011. Capital Asset and Debt Administration Capital Assets The Airport’s year end capital assets totaled $58.8 million which represented a net increase of $2 million from the prior year. Major current additions included construction costs related to the aircraft rescue and fire fighting building (A.R.F.F), runway design, and terminal construction. Construction costs on the A.R.F.F. building are reported within construction in progress as of June 30, 2011, as the Airport has not completed this project and has not begun depreciating it. Depreciation expense of approximately $2.3 million was recorded in fiscal 2011. Debt At the end of the fiscal years 2011 and 2010, the Nantucket Memorial Airport had total bonded debt outstanding of $6.4 million and $2.1 million, respectively. The Airport also retired $24.9 million in bond anticipation notes and issued $6.1 million in bond anticipation notes during fiscal year 2011 related to airport construction projects. The $24.9 million was retired through a combination of long-term debt, available funds, and capital grant proceeds. The Airport’s debt is fully supported by the revenue of the Airport, and does not rely upon a general fund subsidy. Please refer to the notes to the financial statements for further discussion of the major capital assets and debt activity. Requests for Information This financial report is designed to provide a general overview of the Nantucket Memorial Airport finances for all those with an interest in the finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Nantucket Memorial Airport at 14 Airport Road, Nantucket, Massachusetts 02554, or to the Finance Department of the Town of Nantucket at 16 Broad Street, Nantucket, Massachusetts 02554. Nantucket Memorial Airport 7 Financial Statements This page intentionally left blank. Nantucket Memorial Airport 8 Financial Statements Financial Statements 2011 2010 ASSETS CURRENT: Cash and cash equivalents……………………………… $ 3,933,053 $ 19,301,736 Receivables, net of allowance for uncollectibles: User fees………………………………………………… 264,694 173,930 Intergovernmental……………………………………… 2,478,724 2,563,416 Inventory…………………………………………………… 539,896 305,078 Due from other funds……………………………………… 401,072 705,492 Total current assets………………………………… 7,617,439 23,049,652 NONCURRENT: Capital assets, not being depreciated…………………… 12,219,446 9,382,257 Capital assets, net of accumulated depreciation……… 46,530,667 47,328,946 Total noncurrent assets…………………………… 58,750,113 56,711,203 TOTAL ASSETS……………………………………………… 66,367,552 79,760,855 LIABILITIES CURRENT: Warrants payable…………………………………………… 124,191 2,095,737 Accrued liabilities…………………………………………… 592,706 - Accrued payroll……………………………………………… 40,658 118,398 Security deposits…………………………………………… 331,928 348,998 Accrued interest…………………………………………… 90,477 147,968 Other liabilities……………………………………………… 50,750 295,855 Due to other funds………………………………………… 1,003,851 11,010 Compensated absences…………………………………… 70,491 66,108 Notes payable……………………………………………… 6,150,000 24,916,500 Bonds payable……………………………………………… 670,000 680,000 Total current liabilities……………………………… 9,125,052 28,680,574 NONCURRENT: Compensated absences…………………………………… 281,966 264,433 Other postemployment benefits…………………………… 1,353,858 1,146,350 Bonds payable……………………………………………… 5,770,000 1,440,000 Total noncurrent liabilities………………………… 7,405,824 2,850,783 TOTAL LIABILITIES…………………………………………… 16,530,876 31,531,357 NET ASSETS Invested in capital assets, net of related debt……………… 50,156,616 47,962,783 Unrestricted……………………………………………………… (319,940) 266,715 TOTAL NET ASSETS…………………………………………$ 49,836,676 $ 48,229,498 See notes to financial statements. JUNE 30, 2011 AND 2010 STATEMENT OF NET ASSETS NANTUCKET MEMORIAL AIRPORT Nantucket Memorial Airport 9 Financial Statements 2011 2010 OPERATING REVENUES: Charges for services……………………………………… $ 10,855,671 $ 9,612,444 OPERATING EXPENSES: Cost of services and administration……………………… 9,248,536 9,735,740 Depreciation………………………………………………… 2,409,276 1,859,907 Employee benefits………………………………………… 1,032,163 1,464,838 TOTAL OPERATING EXPENSES…………………… 12,689,975 13,060,485 OPERATING INCOME (LOSS)……………………… (1,834,304) (3,448,041) NONOPERATING REVENUES (EXPENSES): Investment income………………………………………… 51,861 132,093 Interest expense…………………………………………… (468,431) (481,430) Intergovernmental capital grants………………………… 4,027,927 7,245,682 TOTAL NONOPERATING REVENUES (EXPENSES), NET…………………… 3,611,357 6,896,345 INCOME (LOSS) BEFORE TRANSFERS…………… 1,777,053 3,448,304 Transfers in……………………………………………………… 4,060 997 Transfers out…………………………………………………… (173,935) (162,018) Total Transfers…………………………………………… (169,875) (161,021) CHANGE IN NET ASSETS………………………………… 1,607,178 3,287,283 NET ASSETS AT BEGINNING OF YEAR…………………… 48,229,498 44,942,215 NET ASSETS AT END OF YEAR……………………………$ 49,836,676 $ 48,229,498 See notes to financial statements. FISCAL YEAR ENDED JUNE 30, 2011 AND 2010 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NANTUCKET MEMORIAL AIRPORT Nantucket Memorial Airport 10 Financial Statements 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users…………………………………………………………… $ 10,764,907 $ 9,892,333 Payments to vendors……………………………………………………………………………… (5,271,327) (4,603,183) Payments to employees…………………………………………………………………………… (4,110,928) (3,870,357) Payments for interfund services used…………………………………………………………… (1,032,163) (1,464,838) NET CASH FROM OPERATING ACTIVITIES…………………………………………………… 350,489 (46,045) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in………………………………………………………………………………………… 4,060 997 Transfers out……………………………………………………………………………………… (173,935) (162,018) Advances (to) from other funds………………………………………………………………… 1,297,261 (921,371) NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………………………… 1,127,386 (1,082,392) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds and notes……………………………………………… 11,150,000 - Capital grants……………………………………………………………………………………… 4,112,619 8,575,081 Acquisition and construction of capital assets………………………………………………… (6,038,616) (9,930,573) Principal payments on bonds and notes………………………………………………………… (25,596,500) (1,376,225) Interest expense…………………………………………………………………………………… (525,922) (420,920) NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……………………… (16,898,419) (3,152,637) CASH FLOWS FROM INVESTING ACTIVITIES: Investment income………………………………………………………………………………… 51,861 132,093 NET CHANGE IN CASH AND CASH EQUIVALENTS…………………………………………… (15,368,683) (4,148,981) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR………………………………… 19,301,736 23,450,717 CASH AND CASH EQUIVALENTS AT END OF YEAR………………………………………… $ 3,933,053 19,301,736 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES: Operating income (loss)……………………………………………………………………………$ (1,834,304) (3,448,041) Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation…………………………………………………………………………………… 2,409,276 1,859,907 User fees…………………………………………………………………………………… (90,764) 279,889 Inventory…………………………………………………………………………………… (234,818) 152,529 Warrants payable…………………………………………………………………………… (381,116) 116,844 Accrued liabilities…………………………………………………………………………… 592,706 - Security deposits………………………………...………………………………………… (17,070) 12,668 Accrued payroll……………………………………………………………………………… (77,740) 12,388 Other liabilities……………………………………………………………………………… (245,105) 242,105 Accrued compensated absences………………………………………………………… 21,916 43,942 Other postemployment benefits…………………………………………………………… 207,508 681,724 Total adjustments……………………………………………………………………… 2,184,793 3,401,996 NET CASH FROM OPERATING ACTIVITIES…………………………………………………… $ 350,489 $ (46,045) See notes to financial statements. FISCAL YEAR ENDED JUNE 30, 2011 AND 2010 STATEMENT OF CASH FLOWS NANTUCKET MEMORIAL AIRPORT Nantucket Memorial Airport 11 Financial Statements Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 12 Financial Statements NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to Financial Statements The accompanying financial statements present the Nantucket Memorial Airport (the Airport) an enterprise fund of the Town of Nantucket, Massachusetts. These statements are not intended to and do not present fairly the financial position of the Town of Nantucket, Massachusetts. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described herein. A. Reporting Entity The Nantucket Memorial Airport is an enterprise fund of the Town of Nantucket. Its operation is governed by the Nantucket Memorial Airport Commission. B. Measurement Focus. Basis of Accounting and Financial Statement Presentation The Nantucket Memorial Airport’s financial statements are presented using the flow of economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recorded when the liabilities are incurred. This operation of the Airport is accounted for as an enterprise fund, which is a proprietary fund type. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. For enterprise fund accounts, 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. C. Cash and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are carried at fair value. D. Accounts Receivable The recognition of revenue related to accounts receivable reported are reported under the accrual basis of accounting. 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. Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 13 Financial Statements Airport User Fees The outstanding receivable for Airport Fees is comprised primarily of fuel sales. E. Inventories Inventories of the Nantucket Memorial Airport are priced at the lower of cost or market, with cost being determined on the first-in, first-out method basis. Expendable supplies and small tools are not inventoried but rather expensed when purchased. F. Capital Assets Capital assets, which include land; land improvements; buildings; vehicle; machinery and equipment; and furniture, fixtures and computer equipment, are reported in the statements. Capital assets are recorded at historical cost or at estimated historical cost when actual historical cost could not be determined. Donated capital assets are recorded at the estimated fair market value at the date of donation. Construction period interest is capitalized on constructed capital assets. All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or construction, respectively, with expected useful lives of greater than one year. Capital assets (excluding land) are depreciated on a straight-line basis. The estimated useful lives of capital assets are as follows: Estimated Useful Life (in years) Vehicles……………………………………………… 5 Furniture, fixtures and computer equipment………… 5-10 Machinery and equipment……………………………… 10-15 Infrastructure…………………………………………… 40-70 Buildings………………………………………………… 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. G. Net Assets Net assets are reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific future use. H. Long-term debt Long-term debt is reported as liabilities in the statement of net assets. Material bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 14 Financial Statements I. Advertising The Airport’s policy is to expense advertising costs the first time the advertising takes place. Advertising expense for the years ended June 30, 2011 and 2010 totaled $7,329 and $5,285, respectively. J. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial resources, is reported as an expense and a liability. K. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and liabilities at the date of the financial statements and the reported amounts of the revenues and expenses during the fiscal year. Actual results could vary from estimates that were used. NOTE 2 – CASH AND INVESTMENTS Cash for the Nantucket Memorial Airport is in control of the Town Treasurer as required by state law. Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment Pool (the Pool). The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts Municipal Depository Trust (MMDT), which was established by the Treasurer of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares. Custodial Credit Risk – Deposits The Town Treasurer, at times, commingles other Town cash accounts with those specifically related to the Nantucket Memorial Airport. The Airport’s portion of these funds is reported on the Statement of Net Assets as cash and cash equivalents. In the case of deposits, this is the risk that in the event of a bank failure, the Nantucket Memorial Airport’s deposits may not be returned to it. The Airport does not have a deposit policy for custodial credit risk. At fiscal year-end June 30, 2011 and 2010, the carrying amount of deposits totaled $2,578,548 and $18,560,921, respectively and the bank balance totaled $2,193,956 and $18,328,292 respectively. Of the bank balance, $250,000 and $250,000 were covered by the Federal Depositors Insurance Company (“FDIC”), $1,943,956 and $18,078,292 were collateralized, therefore the Airport did not have funds that were exposed to custodial credit risk because of being uninsured or uncollateralized. The repurchase agreement consists of an overnight sweep agreement which is invested in U.S. Treasurer Notes. Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 15 Financial Statements Investments As of June 30, 2011, the Nantucket Memorial Airport had the following investments: Under Fair Value 1 Year Investment Type: Repurchase Agreements……………………………………$ 705,915 $ 705,915 Other Investments: MMDT………………………………………………………… 648,590 Total Investments........................................................... $ 1,354,505 Maturity As of June 30, 2010, the Nantucket Memorial Airport had the following investments: Maturity Under Fair Value 1 Year Investment Type: Repurchase Agreements……………………………………$ 94,200 $ 94,200 Other Investments: MMDT………………………………………………………… 646,615 Total Investments........................................................... $ 740,815 The Nantucket Memorial Airport participates in MMDT. Investments in MMDT are unrated. Custodial Credit Risk – Investments For an investment, this is the risk that, in the event of a failure by the counterparty, the Airport will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. The Airport does not have an investment policy for custodial credit risk. Interest Rate Risk The Airport 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 Airport has not adopted a formal policy related to Credit Risk. Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 16 Financial Statements Concentration of Credit Risk The Airport places no limit on the amount that they may invest in any one issuer. 100% of the Airport’s investments in fiscal year 2011 were in MMDT and repurchase agreements. Percentage of Issuer Repurchase Agreements…………………………………… 52% MMDT………………………………………………………… 48% Total Investments More than 5% of the Airport’s investments are in the following securities for 2010: Percentage of Issuer Repurchase Agreements…………………………………… 13% MMDT………………………………………………………… 87% Total Investments NOTE 3 – RECEIVABLES At June 30, 2011 and 2010, receivables for the Airport consist of the following: 2011 Receivables: Allowance Gross for Net Amount Uncollectibles Amount Receivables: Airport fees………………………………………………$ 339,694 $ (75,000) $ 264,694 Intergovernmental……………………………………… 2,478,724 - 2,478,724 Total………………………………………………………$ 2,818,418 $ (75,000) $ 2,743,418 2010 Receivables: Allowance Gross for Net Amount Uncollectibles Amount Receivables: Airport fees………………………………………………$ 248,930 $ (75,000) $ 173,930 Intergovernmental……………………………………… 2,563,416 - 2,563,416 Total………………………………………………………$ 2,812,346 $ (75,000) $ 2,737,346 Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 17 Financial Statements NOTE 4 – CAPITAL ASSETS Capital asset activity for the Nantucket Memorial Airport for the fiscal year ended June 30, 2011, was as follows: Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land………………………………………………………… $ 2,434,312 $ - $ - $ 2,434,312 Construction in progress…………………………………… 6,947,945 2,953,667 (116,478) 9,785,134 Total capital assets not being depreciated………… 9,382,257 2,953,667 (116,478) 12,219,446 Capital assets being depreciated: Infrastructure………………………………………………… 25,020,203 711,308 - 25,731,511 Buildings……………………………………………………… 39,722,581 760,322 - 40,482,903 Vehicles……………………………………………………… 3,650,742 - - 3,650,742 Machinery and equipment………………………………… 1,330,308 22,889 - 1,353,197 Furniture, fixtures and computer equipment……………… 187,739 - - 187,739 Total capital assets being depreciated……………… 69,911,573 1,494,519 - 71,406,092 Less accumulated depreciation………………………………… (22,582,627) (2,292,798) - (24,875,425) Total capital assets being depreciated, net…………………… 47,328,946 (798,279) - 46,530,667 Total capital assets………………………………………………$ 56,711,203 $ 2,155,388 $ (116,478) $ 58,750,113 Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 18 Financial Statements Capital asset activity for the Nantucket Memorial Airport for the fiscal year ended June 30, 2010, was as follows: Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land………………………………………………………… $ 2,434,312 $ - $ - $ 2,434,312 Construction in progress…………………………………… 28,733,910 9,112,107 (30,898,072) 6,947,945 Total capital assets not being depreciated………… 31,168,222 9,112,107 (30,898,072) 9,382,257 Capital assets being depreciated: Infrastructure………………………………………………… 24,554,894 465,309 - 25,020,203 Buildings……………………………………………………… 9,507,075 30,215,506 - 39,722,581 Vehicles……………………………………………………… 3,566,916 83,826 - 3,650,742 Machinery and equipment………………………………… 914,316 415,992 - 1,330,308 Furniture, fixtures and computer equipment……………… 176,419 11,320 - 187,739 Total capital assets being depreciated……………… 38,719,620 31,191,953 - 69,911,573 Less accumulated depreciation………………………………… (20,722,719) (1,859,908) - (22,582,627) Total capital assets being depreciated, net…………………… 17,996,901 29,332,045 - 47,328,946 Total capital assets………………………………………………$ 49,165,123 $ 38,444,152 $ (30,898,072) $ 56,711,203 NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Receivables and payables resulting from transactions of a buyer/seller nature between the Town of Nantucket’s general fund and Nantucket Memorial Airport are classified as “due to other funds” and “due from other funds”. Interfund receivables and payables at June 30, 2011 are summarized as follows: Town Nantucket General Memorial Fund Airport Total Town General Fund…………………$- $ 401,072 $ 401,072 Nantucket Memorial Airport……… 1,003,851 - 1,003,851 Total……………………………$ 1,003,851 $ 401,072 $ 1,404,923 Due To: Due From: Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 19 Financial Statements Interfund receivables and payables at June 30, 2010 are summarized as follows: Nantucket Town Memorial Internal Service Airport Fund Total General Fund………………………… $ 705,492 $ - $ 705,492 Nantucket Memorial Airport………… - 11,010 11,010 Total……………………………$ 705,492 $ 11,010 $ 716,502 Due To: Due From: Interfund transfers for the fiscal year ended June 30, 2011 are summarized as follows: Town Nantucket General Memorial Fund Airport Total Nantucket Memorial Airport…………………$173,935 $ - $ 173,935 (1) Town General Fund………………………… - 4,060 4,060 (2) Total……………………………………………$173,935 $ 4,060 $ 177,995 (1) Transfer out to Town General Fund for Indirect costs. (2) Transfer out of Town General Fund to fund prior year deficit raise on the recap. Transfers In: Transfers Out: Interfund transfers for the fiscal year ended June 30, 2010 are summarized as follows: Town Nantucket General Memorial Fund Airport Total Nantucket Memorial Airport…………………$ 162,018 $ - $ 162,018 (1) Town General Fund………………………… - 997 997 (2) Total……………………………………………$ 162,018 $ 997 $ 163,015 (1) Transfer out to Town General Fund for Indirect costs. (2) Transfer out of General Fund for runway improvements. Transfers In: Transfers Out: Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 20 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. Details related to the short-term debt activity for the fiscal year ended June 30, 2011, are as follows: Balance at Balance at Rate June 30, Renewed/ Retired/ June 30, Type Purpose (%) Due Date 2010 Issued Redeemed 2011 BAN Airport Construction…………………………………… 1.50 02/25/11 $ 24,916,500 $ - $ 24,916,500 $ - BAN Airport Construction…………………………………… 1.50 02/24/12 - 6,150,000 - 6,150,000 Total short term debt………………………………………………………………$ 24,916,500 $ 6,150,000 $ 24,916,500 $ 6,150,000 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 BAN Airport Construction…………………………………… 1.50 02/25/11 $ - $ 24,916,500 $ - $ 24,916,500 BAN Airport Construction…………………………………… 1.75 02/26/10 8,712,725 - 8,712,725 - BAN Airport Construction…………………………………… 1.50 02/26/10 16,850,000 - 16,850,000 - Total short term debt………………………………………………………………$ 25,562,725 $ 24,916,500 $ 25,562,725 $ 24,916,500 NOTE 7 – LONG-TERM DEBT Under the provisions of Chapter 44, Section 10, Municipal Law authorizes The Town of Nantucket indebtedness up to a limit of 5% of the Town’s equalized valuation. Debt issued in accordance with this section of the law is designated as being "inside the debt limit". In addition, however, debt may be authorized in excess of that limit for specific purposes. Such debt, when issued, is designated as being "outside the debt limit". Details related to the Airport’s outstanding indebtedness at June 30, 2011, and the debt service requirements are as follows: Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 21 Financial Statements Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2010 Issued Redeemed 2011 Airport Land Acquisition…………………… 4.00 - 4.25 $ 95,000 $ - $ 95,000 $ - Airport Improvement……………………… 2.25 - 5.00 150,000 - 40,000 110,000 Airport Improvement……………………… 2.50 - 4.00 775,000 - 195,000 580,000 Airport Improvement……………………… 3.75 - 5.00 170,000 - 70,000 100,000 Airport Equipment………………………… 3.00 - 5.00 930,000 - 280,000 650,000 Airport Parking Lot………………………… 3.00 - 5.00 - 500,000 - 500,000 Airport Terminal…………………………… 3.00 - 5.00 - 4,500,000 - 4,500,000 Total Bonds Payable……………………… $ 2,120,000 $ 5,000,000 $ 680,000 $ 6,440,000 Debt service requirements for principal and interest for Airport bonds payable in future fiscal years as of June 30, 2011 are as follows: Fiscal Year Principal Interest Total 2012………………$ 670,000 $ 251,266 $ 921,266 2013……………… 465,000 232,526 697,526 2014……………… 470,000 213,509 683,509 2015……………… 250,000 201,546 451,546 2016……………… 250,000 194,906 444,906 2017……………… 235,000 187,412 422,412 2018……………… 165,000 180,174 345,174 2019……………… 170,000 174,400 344,400 2020……………… 175,000 169,300 344,300 2021……………… 185,000 162,300 347,300 2022……………… 190,000 153,050 343,050 2023……………… 205,000 143,550 348,550 2024……………… 210,000 135,350 345,350 2025……………… 215,000 126,950 341,950 2026……………… 230,000 118,350 348,350 2027……………… 190,000 108,862 298,862 2028……………… 200,000 100,788 300,788 2029……………… 210,000 92,038 302,038 2030……………… 220,000 82,587 302,587 2031……………… 225,000 72,688 297,688 2032……………… 240,000 62,282 302,282 2033……………… 250,000 51,182 301,182 2034……………… 260,000 39,306 299,306 2035……………… 275,000 26,956 301,956 2036……………… 285,000 13,894 298,894 Total………………$ 6,440,000 $ 3,295,172 $ 9,735,172 Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 22 Financial Statements Details related to the Airport’s outstanding indebtedness at June 30, 2010, and the debt service requirements are as follows: Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2009 Issued Redeemed 2010 Airport Land Acquisition…………………… 4.00 - 4.25 $ 190,000 $ - $ 95,000 $ 95,000 Airport Improvement……………………… 2.25 - 5.00 190,000 - 40,000 150,000 Airport Improvement……………………… 2.50 - 4.00 1,000,000 - 225,000 775,000 Airport Improvement……………………… 3.75 - 5.00 245,000 - 75,000 170,000 Airport Equipment………………………… 3.00 - 5.00 1,225,000 - 295,000 930,000 Total Bonds Payable……………………… $ 2,850,000 $ - $ 730,000 $ 2,120,000 Debt service requirements for principal and interest for Airport bonds payable in future fiscal years as of June 30, 2010 are as follows: Fiscal Year Principal Interest Total 2011………………$ 680,000 $ 69,278 $ 749,278 2012……………… 530,000 46,989 576,989 2013……………… 325,000 29,412 354,412 2014……………… 320,000 17,395 337,395 2015……………… 95,000 8,432 103,432 2016……………… 95,000 5,282 100,282 2017……………… 75,000 2,438 77,438 Total………………$ 2,120,000 $ 179,226 $ 2,299,226 At June 30, 2011 and June 30, 2010, the Airport had the following authorized and unissued debt: 2011 2010 Purpose Amount Amount Nantucket Memorial Airport………………………………$ 25,966,000 $ 26,818,600 Changes in Long-term Liabilities During the fiscal year ended June 30, 2011, the following changes occurred in long-term liabilities: Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 23 Financial Statements Balance at Balance at June 30, June 30, Current 2010 Additions Reductions 2011 Portion Nantucket Memorial Airport: Long-Term Bonds and Notes……………$ 2,120,000 $ 5,000,000 $ (680,000) $ 6,440,000 $ 670,000 Compensated Absences………………… 330,541 88,024 (66,108) 352,457 70,491 Other Postemployment Benefits……… 1,146,350 388,357 (180,849) 1,353,858 - Total Long-Term Liabilities …………… $ 3,596,891 $ 5,476,381 $ (926,957) $ 8,146,315 $ 740,491 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 Nantucket Memorial Airport: Long-Term Bonds and Notes……………$ 2,850,000 $ - $ (730,000) $ 2,120,000 $ 680,000 Compensated Absences………………… 286,599 101,262 (57,320) 330,541 66,108 Other Postemployment Benefits……… 464,626 858,164 (176,440) 1,146,350 - Total Long-Term Liabilities………………$ 3,601,225 $ 959,426 $ (963,760) $ 3,596,891 $ 746,108 NOTE 8 – RISK FINANCING The Airport 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 of Nantucket is self-insured for its health insurance activities, the Airport is included in the Town’s insurance plan. The Airport pays the Town’s health insurance fund for its proportionate share of coverage. NOTE 9 – PENSION PLAN Plan Description - The Airport contributes to the Barnstable County Contributory Retirement System (the System), a cost-sharing multiple-employer defined benefit pension plan administered by the Barnstable County Retirement Board. Substantially all employees of the Airport are members of the System. The System provides retirement, disability and death benefits to plan members and beneficiaries. Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan. Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth’s state law during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of-living adjustments granted after 1997 must be approved by the Barnstable County Retirement Board and are borne by 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 Airport is required to pay into the System their share of the system-wide actuarial determined contribution that is apportioned among the employers based on active current payroll. Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 24 Financial Statements Administrative expenses are funded through investment earnings. Chapter 32 of the MGL governs the contributions of plan members and the Airport. The Airport’s contributions to the System for the fiscal year ended June 30, 2011, 2010 and 2009 totaled $495,449, $415,234, and $419,860 respectively, which equaled its required contributions for each fiscal year. The schedule of funding progress, presented as required supplementary information, following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule of employer contributions, presented as required supplementary information, following the notes to the financial statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Airport is one participating employer, as well as the Airport’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 Airport. NOTE 10 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description – The Town of Nantucket administers a single-employer defined benefit healthcare plan (the plan), in which the Nantucket Memorial Airport participates. The plan provides lifetime healthcare for eligible retirees and their spouses through the Town’s health insurance plan, which covers both active and retired members, including the Town’s school teachers. Chapter 32B of the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are negotiated between the Airport and the unions representing Airport 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 Airport and union representatives. The required contribution is based on a pay-as-you-go financing requirement. The Airport contributes 80% of the cost of current-year premiums for eligible retired plan members and their spouses. Plan members receiving benefits contribute the remaining 20% of their premium costs. For fiscal year 2011, the Airport contributed approximately $145,000 to the plan. Annual OPEB Cost and Net OPEB Obligation – The Airport’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. Annual Required Contribution………………………………… $ 332,555 Interest on net OPEB obligation……………………………… 55,298 Adjustment to the ARC………………………………………… (35,547) Annual OPEB cost (expense)……………………………… 352,306 Contributions made……………………………………………… (144,798) Increase in net OPEB obligation……………………………… 207,508 Net OPEB obligation - beginning of year……………………… 1,146,350 Net OPEB obligation - end of year…………………………… $ 1,353,858 Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 25 Financial Statements The Airport’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2011 was as follows: Percentage of Fiscal Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/2011 $ 352,306 41% $ 1,353,858 6/30/2010 858,157 21% 1,146,350 6/30/2009 608,014 24% 464,626 Funded Status and Funding Progress – As of July 1, 2010, the most recent actuarial valuation date, the actuarial accrued liability for benefits totaled approximately $5.4 million, all of which was unfunded. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2010, actuarial valuation, actuarial liabilities were determined using the projected unit credit cost method. The actuarial assumptions included a 5% investment return assumption, which is based on the expected yield on the assets of the Airport, calculated based on the funded level of the plan at the valuation date, and an annual medical/drug cost trend rate of 10% decreasing by .75% for 6 years and by .50% for 1 year to an ultimate level of 5% per year. The UAAL is being amortized over a 30 year period, with amortization payments increasing at 4.50% per year. The remaining amortization period at June 30, 2011 is 27 years. NOTE 11 – COMMITMENTS   The Airport has contracts with JK Scanlan and Jacobs, William Payne Engineering and Edwards and Kelcey for construction of the new aircraft rescue and fire fighting (A.R.F.F.) building. At year end, the open contracts totaled approximately $696,000, $219,000 and $434,000. NOTE 12 – CONTINGENCIES The Airport 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, 2011 and 2010, these programs are still subject to financial and compliance audits. The amount, if any, of expenditures which Notes to Financial Statements Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 26 Financial Statements may be disallowed by the granting agencies cannot be determined at this time, although it is expected such amounts, if any, to be immaterial. Various legal actions and claims are pending. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not always predictable. Although the amount of liability, if any, at June 30, 2011, cannot be ascertained, management believes any resulting liability should not materially affect the Airport’s financial position at June 30, 2011 and 2010. NOTE 13 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS During fiscal year 2011, the Airport has implemented the following GASB pronouncements: • The GASB issued Statement #54, Fund Balance Reporting and Governmental Fund Type Definitions, was implemented in fiscal year 2011. • The GASB issued Statement #59, Financial Instruments Omnibus, was implemented in fiscal year 2011 and did not impact the financial statements. Future Implementation of GASB Pronouncements: • The GASB issued Statement #60, Accounting and Financial Reporting for Service Concession Arrangements, which is required to be implemented in fiscal year 2013. Management is assessing the impact this pronouncement will have on the 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. • The GASB issued Statement #63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which is required to be implemented in fiscal year 2013. Management is assessing the impact this pronouncement will have on the basic financial statements. • The GASB issued Statement #64, Derivative Instruments: Application of Hedge Accounting Termination Provisions-an amendment of GASB Statement No. 53, which is required to be implemented in fiscal year 2012. Management is assessing the impact this pronouncement will have on the basic financial statements. Nantucket Memorial Airport 27 Required Supplementary Information Required Supplementary Information Nantucket Memorial Airport 28 Required Supplementary Information Retirement System Schedules of Funding Progress and Employer Contributions The Retirement System Schedule of Funding Progress presents multiyear trend information about whether the actuarial value of planned assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The Retirement System Schedule of Employer Contributions presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Airport is one participating employer, as well as the Airport’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) 1/1/2010 $ 554,876,554 $ 1,030,210,321 $ 475,333,767 53.9% $ 234,374,075 202.8% 1/1/2009 520,089,855 966,564,614 446,474,759 53.8% 249,971,296 178.6% 1/1/2007 517,396,087 825,863,068 308,466,981 62.6% 226,391,633 136.3% 1/2/2006 465,637,984 765,747,723 300,109,739 60.8% 215,474,180 139.3% 1/1/2004 378,317,300 647,655,411 269,338,111 58.4% 190,614,004 141.3% 1/1/2002 362,911,896 553,531,966 190,620,070 65.6% 173,610,557 109.8% 1/1/2000 300,396,700 462,462,500 162,065,800 65.0% 152,293,100 106.4% 1/1/1998 235,247,660 404,215,695 168,968,035 58.2% 121,161,677 139.5% 1/1/1996 157,044,089 276,107,221 119,063,132 56.9% 108,456,079 109.8% 1/1/1993 97,194,645 226,430,792 129,236,147 42.9% 97,074,725 133.1% The Airport's share of the UAAL, as of January 1, 2010, is approximately 1.20%. See notes to required supplementary information. BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS Nantucket Memorial Airport 29 Required Supplementary Information (B/A) Plan Year Annual (A) (B) Airport's Percentage Ended Required Actual Percentage Actual of System Wide December 31 Contributions Contributions Contributed Contributions Actual Contributions 2010 $ 41,327,508 $ 41,327,508 100% $ 495,449 1.20% 2009 36,943,817 36,943,817 100% 415,234 1.12% 2008 34,360,912 34,360,912 100% 419,860 1.22% 2007 32,038,146 32,038,146 100% 343,055 1.07% 2006 31,044,132 31,044,132 100% 350,906 1.13% 2005 27,846,430 27,846,430 100% 311,318 1.12% The Airport's Actual Contributions equaled 100% of its Required Contributions for each year presented. See notes to required supplementary information. BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM SCHEDULE OF EMPLOYER CONTRIBUTIONS System Wide Nantucket Memorial Airport Nantucket Memorial Airport 30 Required Supplementary Information Nantucket Memorial Airport 31 Required Supplementary Information Other Postemployment Benefit 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 Schedules SCHEDULE OF FUNDING PROGRESS AND EMPLOYER COONTRIBUTIONS Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets Projected Unit Credit (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 7/1/2010 $ - $ 5,428,722 $ 5,428,722 0% $ N/A N/A 7/1/2009 - 8,725,000 8,725,000 0% N/A N/A 7/1/2007 - 2,935,000 2,935,000 0% N/A N/A Annual Actual Year Required Contributions Percentage Ended Contribution Made Contributed 6/30/2011 $ 332,555 $ 144,798 44% 6/30/2010 858,157 176,433 21% 6/30/2009 608,014 143,388 24% Schedule of Employer Contributions OTHER POSTEMPLOYMENT BENEFIT PLAN Schedule of Funding Progress Nantucket Memorial Airport 32 Required Supplementary Information ACTUARIAL METHODS AND ASSUMPTIONS Actuarial Methods: Valuation date……………………………………………… July 1, 2010 Actuarial cost method……………………………………… Projected Unit Credit Cost Method Amortization method……………………………………… Amortization payments increasing at 4.50% Remaining amortization period…………………………… 30 years, open Actuarial Assumptions: Investment rate of return…………………………………… 5.00%, pay-as-you-go scenario Medical/drug cost trend rate……………………………… 10% decreasing by .75% for 6 years and by .50% for 1 year to an ultimate level of 5% per year. Plan Membership, Town Wide: Current retirees, beneficiaries, and dependents………… 213 Current active members…………………………………… 474 Total………………………………………………………… 687 See notes to required supplementary information. OTHER POSTEMPLOYMENT BENEFIT PLAN Nantucke Memorial Airport 33 Required Supplementary Information Notes to Required Supplementary Information Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 34 Required Supplementary Information NOTE A – PENSION PLAN Notes to Required Supplementary Information The Airport contributes to the Barnstable County Contributory Retirement System (“Retirement System”), a cost- sharing, multiple-employer defined benefit pension plan (“Plan”) administered by the Barnstable County Retirement Board. The Retirement System provides retirement, disability, and death benefits to members and beneficiaries. Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the Plan. Plan members are required to contribute to the Retirement System at rates ranging from 5% to 11% of annual covered compensation. The Airport is required to pay into the Retirement System its share of the systemwide actuarially determined contribution which is apportioned among the employers based on active covered payroll. The schedule of funding progress, presented as required supplementary information, following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule of employer contributions, presented as required supplementary information, following the notes to the financial statements, presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Airport is one participating employer, as well as the Airport’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 Airport. The following actuarial methods and assumptions were used in the Retirement System’s most recent actuarial valuation: Actuarial Methods and Assumptions: Valuation Date…………………………………………………January 1, 2010 Actuarial Cost Method…………………………………………Entry Age Normal Cost Method Amortization Method…………………………………………Increasing at 4.0% per year after fiscal 2015 Early Retirement Incentives and remaining unfunded liability Asset Valuation Method………………………………………5-year smoothing of investment returns greater (less) than expected. Actuarial Assumptions: Investment rate of return……………………………………8.00% Projected salary increases…………………………………Varies by length of service with 4.75% and 5.25% for Groups 1 and 4, respectively Cost of living adjustments………………………………… 3.0% for the first $12,000 of retirement income, increasing to $13,000 in fiscal 2012. Plan Membership: Retired participants and beneficiaries receiving benefits…………………………………… 2,422 Terminated participants entitled to a return of their employee contributions……………… 649 Terminated participants with a vested right to a deferred or immediate benefit………… 123 Active participants……………………………………………………………………………… 4,786 Total……………………………………………………………………………………………… 7,980 Remaining Amortization Period………………………………28 years from July 1, 2010 for 2002 and 2003 Notes to Required Supplementary Information Fiscal Years Ended June 30, 2011 and 2010 Nantucket Memorial Airport 35 Required Supplementary Information NOTE B – OTHER POSTEMPLOYMENT BENEFITS The Nantucket Memorial Airport participates in the Town’s healthcare plan. The Town administers a single- employer defined benefit healthcare plan (“the Retiree Health plan”). The plan provides lifetime healthcare for eligible retirees and their spouses through the Town’s health insurance plan, which covers both active and retired members, including teachers. The Airport 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 multiyear trend information which compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets Projections of benefits for financial reporting purposes are based on the substantive plan and included the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of trends in the amounts reported.