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Nantucket Airport Financial Statements - FY2015NANTUCKET MEMORIAL AIRPORT An Enterprise Fund of the Town of Nantucket, Massachusetts Report on Examination of Basic Financial Statements Year Ended June 30, 2015 NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS TABLE OF CONTENTS JUNE 30, 2015 Page(s) INDEPENDENT AUDITORS' REPORT 1 – 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 – 6 BASIC FINANCIAL STATEMENTS: Statement of Net Position 7 Statement of Revenues, Expenses and Changes in Net Position 8 Statement of Cash Flows 9 Notes to Basic Financial Statements 10 – 25 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of the Airport’s Proportionate Share of the Net Pension Liability 26 Schedule of the Airport’s Contribution to Pension Plan 26 Schedules of Funding Progress and Contribution Funding – Other Postemployment Benefits 27 INDEPENDENT AUDITORS’ REPORT Nantucket Memorial Airport Commission Nantucket Memorial Airport Nantucket, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of the Nantucket Memorial Airport (the “Airport”), an enterprise fund of the Town of Nantucket, Massachusetts, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Airport’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Airport as of June 30, 2015, and the changes in financial position and, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Nantucket Memorial Airport Page 1 of 27 Basic Annual Financial Statements Restatement We audited the Airport’s basic financial statements for the year ended June 30, 2014, for which we issued an unmodified opinion dated December 22, 2014. As discussed in Note H to the financial statements, the Airport adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27. In connection with the adoption of this accounting standard, the previously reported total net position in the Statement of Net Position was restated. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis, the schedules of the Town’s proportionate share of the net pension liability and its contributions to pension plans, and the funding progress and contribution funding for other postemployment benefits information information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required By Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated January 15, 2016 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 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 in considering the Town’s internal control over financial reporting and compliance. Roselli, Clark & Associates Certified Public Accountants Woburn, Massachusetts January 15, 2016 Nantucket Memorial Airport Page 2 of 27 Basic Annual Financial Statements Roselli, Clark and Associates MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of the Nantucket Memorial Airport’s (the “Airport”) financial performance provides an overview of the Airport’s financial activities for the fiscal year ended June 30, 2015. The Airport is an enterprise fund of the Town of Nantucket, Massachusetts (the “Town”). We encourage readers to consider the information presented here in conjunction with their review of the basic financial statements, notes to the basic financial statements and required supplementary information. FINANCIAL HIGHLIGHTS  The assets of the Airport exceeded its liabilities at the close of the most recent fiscal year by nearly $51.6 million (total net position).  The Airport’s total net position at June 30, 2015 increased over $3.4 million, or 7.2%, from June 30, 2014. The Airport reported a net loss from operations of nearly $1.6 million in 2015. This operating loss was offset by nearly $5.4 million in intergovernmental revenues, primarily in the form of capital grants.  The adoption of new pension accounting standards in fiscal year 2015 required the restatement of the Airport’s prior year’s unrestricted net position and added a new $5.1 million long-term liability entitled net pension liability. The impact of this restatement to the Airport’s net position was a decrease of over $5.6 million.  The Airport’s general obligation bonds, net of unamortized premiums, decreased to approximately $11.7 million at June 30, 2015 from $12.4 million at June 30, 2014 as scheduled principal repayments exceeded borrowings in fiscal year 2015. OVERVIEW OF THE FINANCIAL STATEMENTS This report consists of two parts: management’s discussion and analysis and the basic financial statements. The financial statements also include notes that explain information in the financial statements in more detail. The Airport is an enterprise fund of the Town. Accordingly, the financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Enterprise fund statements offer short-term and long-term financial information about the activities and operations of the Airport. These statements are presented in a manner similar to a private business. The statement of net position presents information on all of the Airport’s assets and deferred outflows of resources and its liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial condition of the Airport is improving or deteriorating. The statement of revenues, expenses and changes in net position presents information showing how the Airport’s net position changed during the most recent fiscal year. All changes in net position 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 receivables and earned but unused vacation leave.) The statement of cash flows presents information on the Airport’s cash receipts, cash payments and changes in cash resulting from operations, investments and financing activities. Nantucket Memorial Airport Page 3 of 27 Basic Annual Financial Statements FINANCIAL ANALYSIS The following represents the condensed comparative financial data for the Airport for each of the years ended June 30, 2015 and 2014: June 30,June 30, 2015 2014 (a) Assets Current assets 10,804,885$ 8,311,013$ Capital assets, net 63,477,567 62,126,133 Total assets 74,282,452 70,437,146 Deferred Outflows of Resources Pensions 8,858 - Liabilities Current liabilities 4,087,921 3,367,232 Noncurrent liabilities 18,625,478 18,937,684 Total liabilities 22,713,399 22,304,916 Net Position Net investment in capital assets 50,246,479 48,749,526 Unrestricted 1,331,432 (617,296) Net Position 51,577,911$ 48,132,230$ 2015 2014 Operating revenues 13,119,422$ 12,852,708$ Expenses: Operating expenses 11,647,329 11,944,071 Employee benefits 654,814 704,116 Depreciation expense 2,394,011 2,391,192 Total expenses 14,696,154 15,039,379 Nonoperating revenues, net 5,053,413 1,187,375 Net transfers (31,000) (24,498) Change in net position 3,445,681 (1,023,794) Net position - beginning of year 48,132,230 54,789,093 Restatement (a)- (5,633,069) Net position - end of year 51,577,911$ 48,132,230$ (a) As restated. See Notes E and H. Year Ended June 30, Exhibit II - Changes in Net Position Exhibit I - Net Position Nantucket Memorial Airport Page 4 of 27 Basic Annual Financial Statements As noted earlier, net position may serve over time as a useful indicator of the Airport’s financial condition. In the case of the Airport, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by nearly $51.6 million at June 30, 2015. The Airport’s net position is categorized as either unrestricted or net investment in capital assets. The vast majority of the Airport’s net position is classified as net investment in capital assets. This includes the historical cost or donated value of land, buildings, infrastructure, vehicles, machinery and equipment less any related debt used to acquire those assets outstanding at year end. The Airport uses these assets to serve its customers and consequently these assets are not available for future spending. Although the Airport’s investment in its 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. Unrestricted net position totaled over $1.3 million at June 30, 2015 and may be used by the Airport to meet its future obligations, subject to statutory restrictions. Unrestricted net position increased by over $1.9 million in fiscal year 2015 primarily as a result of capital grants. The Airport’s operations are subject to annual appropriations by Town Meeting. Statutory accounting differs greatly from accounting generally accepted in the United States of America, or GAAP. On a statutory basis, the Airport reported net operating income of $2,041,498. The primary contributors to the difference between the Airport’s statutory operating income and its decrease in net position (i.e., net loss) on a GAAP basis include: CAPITAL ASSET AND DEBT ADMINISTRATION The Airport’s capital assets, net of accumulated depreciation totaled nearly $63.5 million at June 30, 2015. This was approximately $1.4 million higher than the June 30, 2014 balance as fiscal year 2015 additions exceeded depreciation expense. Note E to the financial statements presents a detailed analysis of the Airport’s capital assets. General obligations bonds payable, net of unamortized premiums, totaled nearly $11.7 million at June 30, 2015, which was approximately $0.7 million lower than the balance at June 30, 2014. Notes G and H to the financial statements present detailed analyses of long-term and short-term debt. Net income on a statutory basis 2,041,498$ Adjustments to convert statutory records to GAAP: Repayment of bonds 834,000 Depreciation expense (2,394,011) Capital additions 3,745,445 Revenue recognition (287,695) Other postemployment benefits (262,027) Other items (231,529) Total adjustments to statutory net income 1,404,183 Increase in net position on a GAAP basis 3,445,681$ Nantucket Memorial Airport Page 5 of 27 Basic Annual Financial Statements REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the Airport’s finances for all those with an interest in its 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, 14 Airport Road, Nantucket, Massachusetts 02554 or to the Town of Nantucket’s Finance Department, 16 Broad Street, Nantucket, Massachusetts, 02554. Nantucket Memorial Airport Page 6 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2015 Assets: Current assets: Cash and cash equivalents 9,527,534$ Trade receivables, net of allowance of $5,000 516,110 Intergovernmental receivables 403,327 Inventory 357,914 Total current assets 10,804,885 Noncurrent assets: Nondepreciable capital assets 10,911,170 Capital assets, net of accumulated depreciation 52,566,397 Total noncurrent assets 63,477,567 Total Assets 74,282,452 Deferred outflows of resources 8,858 Liabilities: Current liabilities: Warrants payable 800,791 Accrued payroll 99,681 Accrued interest 92,051 Security deposits 387,286 Notes payable 1,573,912 Bonds payable 847,154 Compensated absences 287,046 Total current liabilities 4,087,921 Noncurrent liabilities: Bonds payable 10,810,022 Compensated absences 287,047 Other postemployment benefits 2,356,377 Net pension liability 5,172,032 Total noncurrent liabilities 18,625,478 Total Liabilities 22,713,399 Deferred inflows of resources - Net Position: Net investment in capital assets 50,246,479 Unrestricted net assets 1,331,432 Total Net Position 51,577,911$ See accompanying notes to basic financial statements. Nantucket Memorial Airport Page 7 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2015 Operating Revenues: Charges for services and other miscellaneous revenues 13,119,422$ Total Operating Revenues 13,119,422 Operating Expenses: Operating expenses 11,647,329 Maintenance 654,814 Depreciation expense 2,394,011 Total Operating Expenses 14,696,154 Operating Loss (1,576,732) Nonoperating Revenues: Intergovernmental grants 90,820 Interest income 22,909 Interest expense (438,160) Total Nonoperating Revenues (324,431) Loss Before Capital Contributions and Transfers (1,901,163) Capital Contributions: Capital grants 5,377,844 Transfers: Transfers out (31,000) Change in Net Position 3,445,681 Net Position - Beginning of year (as restated - see Notes E and H)48,132,230 Net Position - End of year 51,577,911$ See accompanying notes to basic financial statements. Nantucket Memorial Airport Page 8 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2015 Cash Flows from Operating Activities: Receipts from customers and users 13,394,482$ Payments to vendors (8,135,066) Payments for salaries, wages and related employee benefits (3,651,377) Net cash provided by operating activities 1,608,039 Cash Flows from Noncapital Financing Activities: Intergovernmental grants for operations 90,820 Transfers out (31,000) Net cash used in capital and related financing activities 59,820 Cash Flows from Capital and Related Financing Activities: Principal payments on bonds and notes payable (834,000) Intergovernmental grants for construction 5,396,789 Acquisition and construction of capital assets (3,745,445) Proceeds from bond anticipation notes 1,717,912 Repayment of bond anticipation notes (1,001,000) Interest payments on bonds and notes payable (430,551) Net cash provided by capital and related financing activities 1,103,705 Cash Flows from Investing Activities: Investment income 22,909 Net cash provided by investing activities 22,909 Net Increase in Cash and Cash Equivalents 2,794,473 Cash and Cash Equivalents: Beginning of year 6,733,061 End of year 9,527,534$ Reconciliation of Operating Income to Net Cash Provided By Operating Activities: Operating loss (1,576,732)$ Depreciation and amortization 2,394,011 Changes in assets and liabilities: Accounts receivable 268,751 Inventory 12,905 Warrants payable and accrued expenses 29,754 Accrued long-term employee benefits 473,041 Security deposits 6,309 Net cash provided by operating activities 1,608,039$ See accompanying notes to basic financial statements. Nantucket Memorial Airport Page 9 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO THE FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED JUNE 30, 2015 NOTE A – REPORTING ENTITY The Nantucket Memorial Airport (the “Airport”) is an enterprise fund of the Town of Nantucket, Massachusetts (the “Town”). The Airport operates three runways and is the second busiest airport in the Commonwealth of Massachusetts. The Airport’s operations are governed by the Nantucket Memorial Airport Commission (the “Commission”), which is a five-person board appointed by the Town’s Board of Selectmen. NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Airport conform to accounting principles generally accepted in the United States of America, or GAAP, as applicable to governmental units. The Airport’s financial statements are not intended and do not present fairly the financial position of the Town. Following are the significant accounting and reporting policies of the Airport: Basis of Presentation – The Airport’s financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as specified by the Governmental Accounting Standards Board’s (“GASB”) requirements for an enterprise fund. The Airport’s operations are accounted for as an enterprise fund, which is a proprietary fund type. Proprietary funds distinguish operating revenues and expenses from nonoperating revenues and expenses. Operating revenues and expenses result from the day-to-day operation of the Airport. All other revenues and expenses are reported as nonoperating revenues and expenses. Use of Estimates – 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, disclosure for contingent assets and liabilities at the date of the basic financial statements, and the reported amounts of the revenues and expenses during the fiscal year. Actual results could vary from estimates that were used. Revenue Recognition – Revenues from the Airport’s operations are recorded when earned, regardless of the timing of related cash flows. Grants are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Fair Value of Financial Instruments – The carrying amount of cash and cash equivalents, accounts receivable and warrants payable approximates fair value due to the short-term nature of these items. Taxes – The Airport is exempt from all federal and state income taxes and local property taxes. Cash and Cash Equivalents – Cash and cash equivalents include cash on hand, demand deposits and short-term investments with original maturities of three months or less. Investments are carried at fair value. Nantucket Memorial Airport Page 10 of 27 Basic Annual Financial Statements Accounts Receivable – Accounts receivable are presented net of an allowance for uncollectible accounts. An allowance for uncollectible accounts is maintained for estimated losses resulting from the Airport’s inability to collect payments from customers. This allowance is established using estimates based on factors such as the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, changes to customer creditworthiness and current economic trends. Inventory – Inventory is stated at the lower of cost or market, with cost being determined on the first- in, first-out method. Inventory consists of aviation fuel at June 30, 2015. Capital Assets – Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. All purchases and construction costs in excess of $10,000 and with useful lives exceeding one year are capitalized at the date of acquisition or construction. The costs of normal repairs and maintenance that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets (excluding land) are depreciated by the Airport on a straight-line-basis. The estimated useful lives (in years) of capital assets by major asset class are as follows: Infrastructure 40 to 70 Buildings 33 to 50 Vehicles 5 Machinery and equipment 10 to 15 Furniture, fixtures and computer equipment 5 to 10 Deferred Outflows/Inflows of Resources – In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Airport reports deferred outflows of resources relative to pensions at June 30, 2015, as more fully described in Note I. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Airport does not have any items that meet the criteria of a deferred inflow of resources. Compensated Absences – Employees earn vacation and sick time as they provide services to the Airport. Employees may accumulate (subject to certain limitations) unused sick time earned and, upon retirement, termination or death, be compensated for unused portions of the time earned. Unused vacation time may be carried for six months, then, it reverts to a use-it or lose-it policy. These vested and accumulated benefits are reported as a liability in these financial statements. NOTE C – CASH AND CASH EQUIVALENTS As required by state law, the Airport’s cash is in the control of the Town’s treasurer. State laws and regulations require the treasurer to invest funds only in pre-approved investment instruments, which include, but are not necessarily limited to, bank deposits, money markets, certificates of deposit, U.S. obligations, repurchase agreements, and the State Treasurer’s investment pool (“the Pool”). In Nantucket Memorial Airport Page 11 of 27 Basic Annual Financial Statements addition, the statutes impose various limitations on the amount and length of investments and deposits. Repurchase agreements cannot be for a period of over ninety days, and the underlying security must be a United States obligation. 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. At June 30, 2015, the Airport maintained $3,533,711 in investments that it classified as cash equivalents in these financial statements. Short-term investments consisted of $654,336 in the MMDT and $2,879,375 in repurchase agreements. The Airport’s carrying amount of cash totaled $2,460,112 and is pooled with the Town’s cash. The Board of Selectmen has adopted policies related to risk for the Town, its enterprise funds, all departments and the County of Nantucket (the “County”). These policies may be reviewed at the Town’s website, under the Finance Department. Those policies that apply to the Airport are summarized below: Custodial Credit Risk: Deposits and Investments - In the case of deposits, this is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The Town’s current deposit requires that the Treasurer review each bank doing business with the Town on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. In the case of investments, this is the risk that in the event of the invested party not being able to provide required payments to investors, ceasing to exist, or filing of bankruptcy, the Town may not be able to recover the full amount of its principal investment and/or investment earnings. The Town’s current policy requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town/County’s name and tax identification number. Concentration of Credit Risk – The Town does not place a limit on the amount that may be invested in any one issuer. All of the Airport’s investments were in the form of pooled investments with the MMDT and repurchase agreements. Approximately 19% of the Airport’s investments were in the MMDT and 81% in repurchase agreements. Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio. Credit Risk – The Town restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. The Airport’s current investments are short-term and classified as cash equivalents. Nantucket Memorial Airport Page 12 of 27 Basic Annual Financial Statements NOTE D – ACCOUNTS RECEIVABLE Accounts receivable at June 30, 2015 consisted of the following: NOTE E – CAPITAL ASSETS Capital asset activity for the Airport for the fiscal year ended June 30, 2015 was as follows: The Airport conducted an evaluation of its capital assets in fiscal year 2015. As a result of this evaluation, the Airport determined that previously reported capital assets, net were overstated by $499,005. This amount was reported as a restatement to the Airport’s net position at June 30, 2014. Gross Amount Allowance for Uncollectible Accounts Net Amount Airport fees 521,110$ (5,000)$ 516,110$ Intergovernmental 403,327 - 403,327 924,437$ (5,000)$ 919,437$ Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 2,736,587$ -$ -$ 2,736,587$ Construction in process 5,868,673 2,994,662 (688,752) 8,174,583 Total capital assets not being depreciated 8,605,260 2,994,662 (688,752) 10,911,170 Capital assets being depreciated: Infrastructure (a)34,429,586 771,427 - 35,201,013 Buildings and improvements 45,745,494 51,052 - 45,796,546 Vehicles 3,220,499 365,792 (39,648) 3,546,643 Machinery and equipment 1,326,238 251,264 (36,255) 1,541,247 Total capital assets being depreciated 84,721,817 1,439,535 (75,903) 86,085,449 Less accumulated depreciation (a)(31,200,944) (2,394,011) 75,903 (33,519,052) Total capital assets being depreciated, net 53,520,873 (954,476) - 52,566,397 Capital assets, net 62,126,133$ 2,040,186$ (688,752)$ 63,477,567$ (a) As restated; see below. Nantucket Memorial Airport Page 13 of 27 Basic Annual Financial Statements NOTE F – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS In fiscal year 2015, the Airport transferred $31,000 to the Town for capital purposes. The Airport did not report any interfund receivables or payables at June 30, 2015. NOTE G – TEMPORARY DEBT PLAN The Airport is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to the collection of revenues, expenditures may be financed through the issuance of tax anticipation notes (“TANS”) or revenue anticipation notes (“RANS”). Capital Projects and Other Approved Costs – Projects may be temporarily funded through the issuance of bond anticipation notes (“BANS”) or grant anticipation notes (“GANS”). In certain cases, prior to the issuance of these temporary notes, the governing body must take the necessary legal steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed the aggregate amount of bonds authorized or the grant award amount. Details related to temporary debt activity for the fiscal year ended June 30, 2015 was as follows: Temporary notes are general obligations of the Airport and carry maturity dates not in excess of one year and are interest bearing and will be paid through future issuance of general obligation bonds. The BANS were issued primarily to finance costs related to the Airport’s general administration building construction, runway improvements and an Airport Master Plan update. In October 2015, the Town issued approximately $2.9 million in general obligation bonds with variable interest rates of 2.0% to 3.0%. Of this total, $144,000 was used to retire a portion of the outstanding BAN maturing on November 13, 2015. Balance Balance Interest Maturity July 1, Subsequently June 30, Type Rate Date 2014 Additions Retirements Rollovers Bonded 2015 BAN 1.00% matured 1,001,000$ -$ (491,000)$ (510,000)$ -$ -$ BAN 0.75% 11/13/15 - - 1,207,912 510,000 (144,000) 1,573,912 1,001,000$ -$ 716,912$ -$ (144,000)$ 1,573,912$ Nantucket Memorial Airport Page 14 of 27 Basic Annual Financial Statements NOTE H – LONG-TERM OBLIGATIONS The following reflects the activity in the Airport’s long-term liability accounts during the fiscal year ended June 30, 2015: Bond and Note Indebtedness – The Airport, through the Town, issues general obligation bonds and notes to provide funds for the acquisition and construction of major capital facilities. State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize indebtedness up to a limit of five percent of its equalized valuation. Debt issued in accordance with this section of the law is designated as being “inside the debt limit.” In addition, the Town may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is designated as being “outside the debt limit.” General obligation bonds outstanding at June 30, 2015 were as follows: Beginning Ending Due within Description of Issue Balance Additions Deletions Balance one year General obligation bonds and notes payable 12,134,000$ 144,000$ (834,000)$ 11,444,000$ 820,000$ Unamortized premiums 241,607 - (28,431) 213,176 27,154 Compensated absences 392,189 377,999 (196,095) 574,093 287,046 Other postemployment benefits 2,094,350 377,913 (115,886) 2,356,377 - Net pension liability (a)5,134,064 506,911 (468,943) 5,172,032 - Total 19,996,210$ 1,406,823$ (1,643,355)$ 19,759,678$ 1,134,200$ (a) The Airport adopted GASB Statement No. 68 in fiscal year 2015, which resulted in the restatement of the beginning balances in its unrestricted net assets and its net pension liability. The Airport recorded $5,134,064 as a restatement in connection with the adoption of this new accounting standard. Outstanding Outstanding Interest at June 30, Maturities and at June 30, Description Rate 2015 Additions Retirements 2015 General obligation bonds - November 2005 3.75 - 5.00% 40,000$ -$ (20,000)$ 20,000$ General obligation bonds - February 2008 3.00 - 5.00% 225,000 - (75,000) 150,000 General obligation bonds - February 2011 2.00 - 5.00% 4,570,000 - (155,000) 4,415,000 General obligation bonds - June 2012 2.00 - 5.00% 2,460,000 - (145,000) 2,315,000 General obligation bonds - June 2013 2.00 - 3.00% 1,175,000 - (145,000) 1,030,000 General obligation bonds - June 2014 2.00 - 3.35% 3,664,000 - (294,000) 3,370,000 General obligation bonds - October 2015 2.00 - 3.00%- 144,000 - 144,000 12,134,000 144,000 (834,000) 11,444,000 Unamortized premiums on June 2012 bonds 241,607 - (28,431) 213,176 12,375,607$ 144,000$ (862,431)$ 11,657,176$ Nantucket Memorial Airport Page 15 of 27 Basic Annual Financial Statements Future Debt Payoff – Payments on general long-term debt obligation bonds due in future years are as follows: At June 30, 2015, the Airport had approximately $7,172,000 in authorized and unissued debt. NOTE I – RETIREMENT SYSTEM Pension Plan Description – The Airport contributes to the Barnstable County Regional Retirement System Full Name (the “Retirement System”), a cost-sharing multiple-employer defined benefit pension plan. The Retirement System was established under Chapter 32 of Massachusetts General Laws. The Retirement System is administered by the Barnstable County Retirement Board (the “Retirement Board”). Stand-alone audited financial statements for the year ended December 31, 2014 were issued and are available at the Retirement Board’s offices located at 750 Attucks Lane, Hyannis, Massachusetts 02601. Current membership in the Retirement System for all employers as of December 31, 2014 was as follows: Retirees and beneficiaries currently receiving benefits 2,729 Inactive members entitled to a return of their employee contributions 513 Inactive members with a vested right to a deferred or immediate benefit 138 Active members 4,696 8,076 Benefit Terms – Membership in the Retirement System is mandatory for all full-time employees and non-seasonal, part-time employees who, in general, regularly work more than twenty-five hours per week. Members of the Retirement System do not participate in the federal Social Security retirement system. Massachusetts contributory retirement system benefits are uniform from retirement system to system. The Retirement System provides for retirement allowance benefits up to a maximum of 80% of a participant’s highest three-year or five-year average annual rate of regular compensation, depending Year Ending June 30,Principal Interest Total 2016 820,000$ 401,243$ 1,221,243$ 2017 839,000 385,309 1,224,309 2018 755,000 359,287 1,114,287 2019 740,000 337,187 1,077,187 2020 625,000 314,138 939,138 2021 - 2025 2,825,000 1,241,387 4,066,387 2026 - 2030 2,455,000 762,939 3,217,939 2031 - 2035 2,100,000 310,931 2,410,931 2036 285,000 13,894 298,894 Total 11,444,000$ 4,126,315$ 15,570,315$ Nantucket Memorial Airport Page 16 of 27 Basic Annual Financial Statements on the participant’s date of hire. Benefit payments are based upon a participant’s age, length of creditable service, level of compensation and job classification. The most common benefits paid by the Retirement System include normal retirement, disability retirement and survivor benefits. Normal retirement generally occurs at age 65. However, participants may retire after twenty years of service or at any time after attaining age 55, if hired prior to April 2, 2012 or at any time after attaining age 60 if hired on or after April 2, 2012. Participants with hire dates subsequent to January 1, 1978 must have a minimum of ten years’ creditable service in order to retire at age 55. Participants become vested after ten years of service. Benefits commencing before age 65 are provided at a reduced rate. Members working in certain occupations may retire with full benefits earlier than age 65. Ordinary disability retirement is where a participant is permanently incapacitated from a cause unrelated to employment. Accidental disability retirement is where the disability is the result of an injury or illness received or aggravated in the performance of duty. The amount of benefits to be received in such cases is dependent upon several factors, including the age at which the disability retirement occurs, the years of service, average compensation and veteran status. Survivor benefits are extended to eligible beneficiaries of participants whose death occurs prior to or following retirement. Cost-of-living adjustments granted to members of Massachusetts retirement systems granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth during those years have been the financial responsibility of the Commonwealth. Beginning in 1998, the funding of cost- of-living amounts became the responsibility of the participating units like the Retirement System. Contributions Requirements – The Retirement System and its member employers have elected provisions of Chapter 32, Section 22D (as amended) of Massachusetts General Laws, which require that a funding schedule be established to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating employers are assessed their share of the total retirement cost based on the entry age, normal actuarial cost method. The Airport contributed $477,801 to the Retirement System in fiscal year 2015, which equaled the actuarially-determined contribution requirement for the fiscal year. The Airport’s contributions as a percentage of covered payroll was approximately 20% in fiscal year 2015. Net Pension Liability – At June 30, 2015, the Airport reported a liability of $5,172,032 for its proportionate share of the net pension liability. The net pension liability was measured as of January 1, 2014 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. These figures were updated by the independent actuary to December 31, 2014. There were no material changes made in this update to the actuarial assumptions (see below) nor were there any material changes to the Retirement System’s benefit terms since the actuarial valuation. The Airport’s proportion of the net pension liability is based on a projection of the Airport’s long- term share of contributions to the Retirement System relative to the projected contributions of all employers. The Airport’s proportion was approximately 0.916% at December 31, 2014, which was consistent with the proportion measured at January 1, 2014. Nantucket Memorial Airport Page 17 of 27 Basic Annual Financial Statements Fiduciary Net Position – The elements of the Retirement System’s basic financial statements (that is, all information about the Retirement System’s assets, deferred outflows of resources, liabilities, deferred inflows of resources and fiduciary net position) can be found in the Retirement System’s full financial statements as of and for the year ended December 31, 2014, which can be obtained by contacting the Retirement Board. The Retirement System’s fiduciary net position was determined using the accrual basis of accounting. The Retirement System’s accounting records are maintained on a calendar-year basis in accordance with the standards and procedures established by PERAC. Contributions from employers and employees are recognized in the period in which they become due pursuant to formal commitments, statutory or contractual requirements. Benefit payments (including refunds of employee contributions) are recorded when incurred, regardless of the timing of payment. Investments are reported at fair value; fair value is determined as the price one would receive in an orderly transaction between market participants at a measurement date. Pension Expense – The Airport recognized $506,911 in pension expense in the statement of activities in fiscal year 2015. Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2015, the Airport reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ — $ — Changes of assumptions — — Net difference between projected and actual earnings on pension plan investments 8,858 — Changes in proportion and differences between Airport contributions and proportionate share of contributions — — Airport contributions subsequent to the measurement date — — Total $ 8,858 $ — The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the Airport’s pension expense as follows: Year ended June 30, 2016 $ 2,214 2017 2,214 2018 2,215 2019 2,215 Total $ 8,858 Nantucket Memorial Airport Page 18 of 27 Basic Annual Financial Statements Actuarial Valuation – The measurement of the Retirement System’s total pension liability is developed by an independent actuary. The latest actuarial valuation was performed as of January 1, 2014. The significant actuarial assumptions used in the January 1, 2014 actuarial valuation included: Actuarial cost method: Entry age normal cost method Amortization method: Payments increase at 4.0%, except for 2010 Early Retirement Incentive, which is a level payment Remaining amortization period: 22 years for 2002 and 2003 Early Retirement Incentives, retiree sherrifs liability and remaining unfunded liability; 8 years for 2010 Early Retirement Inventive Asset valuation method: Sum of actuarial value at beginning of the year, contributions and investment earnings based on the actuarial interest assumption less benefit payments and operating expenses plus 20% of the market value at the end of the year in excess of that sum, plus additional adjustment toward market value as necessary so that the final actuarial value is within 20% of market value Inflation rate: 4.00% per annum Investment rate of return: 7.75% per annum Projected salary increases: Service based table with ultimate ranges of 4.25%, 4.50% and 4.75% for groups 1, 2 and 4, respectively Cost of living adjustments: 3% on the first $15,000 of benefits Rates of disability: For general employees, it was assumed that 45% of all disabilities are normal (55% are service connected); for police and fire employees, 10% of all disabilities are assumed to be ordinary (90% are service connected) Mortality rates: Pre-retirement rates reflect the RP-2000 Employee projected generationally with a Scale AA to 2010; healthy retiree rates reflect the RP-2000 Healthy Annuitant table projected generationally with a Scale AA from 2010; disabled retiree rates reflect the RP- 2000 Healthy Annuitant Mortality table set forward three years (for males only) projected generationally with Scale AA from 2010 The investment rate of return assumption is a long-term assumption and is based on capital market expectations by asset class, historical returns and professional judgment. The market expectations analysis used a building-block approach, which included expected returns by asset class and the target asset allocation. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real returns for each major asset class are summarized in the following table: Nantucket Memorial Airport Page 19 of 27 Basic Annual Financial Statements Asset Class Target Allocation Long-term Expected Real Rate of Return Domestic equity 20.0% 6.6% International developed markets equity 16.0% 7.1% International emerging markets equity 7.0% 9.4% Core fixed income 13.0% 2.2% High-yield fixed income 10.0% 4.7% Real estate 10.0% 4.4% Commodities 4.0% 4.4% Hedge fund, GTAA, Risk parity 10.0% 3.9% Private equity 10.0% 11.7% Discount Rate – The discount rate used to measure the total pension liability in the January 1, 2014 actuarial valuation report was 7.75%, which was a reduction from the previous discount rate of 7.875%. The projection of cash flows used to determine the discount rate assumed plan member contributions were made at the current contribution rate and that employer contributions will be made at rates equal to the actuarially-determined contribution rates and the member rate. Based on those assumptions, the Retirement System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis – The following presents the Airport’s proportionate share of the net pension liability calculated using the discount rate of 7.75% as well as the Airport’s proportionate share of the net pension liability using a discount rate that is one percentage point lower (6.75%) or one percentage point higher (8.75%) than the current rate (dollar amounts are in thousands): 1% Decrease (6.75%) Current Discount (7.75%) 1% Increase (8.75%) Airport’s proportionate share of the net pension liability $ 6,667,547 $ 5,172,032 $ 3,903,912 NOTE J – OTHER POSTEMPLOYMENT BENEFITS In addition to the pension benefits previously described, the Airport provides health and life insurance benefits to current and future retirees, their dependents and beneficiaries (the “Plan”) in accordance with Massachusetts General Law Chapter 32B. Specific benefit provisions and contribution rates are established by collective bargaining agreements, state law, and Town ordinance. All benefits are provided through the Town’s insurance program. The Plan does not issue a stand-alone financial report since there are no assets legally segregated for the sole purpose of paying benefits under the Plan. For purposes of the Plan, the Airport is a department within the Town, which at June 30, 2014 (the date of the latest actuarial valuation) had 490 active employees and 311 retirees, beneficiaries and dependents for a total of 801. Nantucket Memorial Airport Page 20 of 27 Basic Annual Financial Statements Funding Policy – The contribution requirements of Plan members and the Airport are established through collective bargaining agreements. Retirees contribute approximately 20% of the calculated contribution primarily through pension benefit deductions. The remainder of the cost is funded by the Airport. The Airport currently contributes enough money to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the Plan are paid by the Airport. Annual OPEB Cost and Net OPEB Obligation – The Airport’s annual OPEB cost is calculated based on the annual required contribution (“ARC”) of the employer, and actuarially determined amount that is calculated in accordance with GASB Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded liabilities over a period not to exceed thirty years. The following table reflects the activity regarding the Airport’s OPEB obligation: Trend information regarding annual OPEB cost, the percentage of the annual OPEB cost contributed and the net OPEB obligation is as follows: Fiscal Year Ending Annual OPEB Cost (AOPEBC) Percentage of AOPEBC Contributed Net OPEB Obligation June 30, 2015 $ 377,913 31% $ 2,356,377 June 30, 2014 385,890 38% 2,094,350 June 30, 2013 387,675 34% 1,854,402 Annual required contribution (ARC)365,093$ Interest on net OPEB obligation 76,423 Adjustment to ARC (63,603) Annual OPEB cost 377,913 Contributions made (115,886) Increase in net OPEB obligation 262,027 Net OPEB obligation at beginning of year 2,094,350 Net OPEB obligation at end of year 2,356,377$ Nantucket Memorial Airport Page 21 of 27 Basic Annual Financial Statements Funding Status and Funding Progress – The funded status of the Plan at June 30, 2015 for the Town, for which the Airport is an enterprise fund, for the most recent actuarial valuation performed as of June 30, 2014, was as follows (in millions): Actuarial Value of Assets (A) Actuarial Accrued Liability (AAL) Entry Age Normal Cost (B) Unfunded AAL (UAAL) (B – A) Funded Ratio (A/B) Covered Payroll (C) UAAL as a Percentage of Covered Payroll ((B-A)/C) $0.25 $ 88.8 $ 88.8 0.28% 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 into the future. Amounts determined regarding the funded status of the Plan and the ARC of the employer are subject to continual revision as estimates are compared to actual results and past expectations. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AAL for benefits. Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive Plan 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 the Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short- term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The significant methods and assumptions as of the latest valuation are as follows: Valuation date June 30, 2014 Actuarial cost method Projected Unit Credit Amortization method Amortization payments increasing at 4.0% Amortization period 30 years open Interest discount rate 4.5% Inflation rate 4.0% Healthcare/medical cost trend rate 10.0% decreasing by 0.5% for 10 years to an ultimate level of 5.0% per year NOTE K – COMMITMENTS AND CONTINGENCIES At June 30, 2014, the Airport had open contracts totaling over $5.8 million, the majority of which pertained to various construction-related projects at the Airport facility. The Airport is party to certain legal claims, which are subject to many uncertainties, and the outcome of individual litigation matters is not always predictable with assurance. Although the amount of liability, if any, at June 30, 2015, cannot be determined, management believes that any resulting liability, if any, should not materially affect the basic financial statements of the Airport at June 30, 2015. Nantucket Memorial Airport Page 22 of 27 Basic Annual Financial Statements Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the Airport expects such amounts, if any, to be immaterial. The Airport is subject to certain Federal arbitrage laws in accordance with long-term borrowing agreements. Failure to comply with the rules could result in the payment of penalties. The amount of penalties, if any, cannot be determined at this time, although the Airport expects such amounts, if any, to be immaterial. NOTE L – ECONOMIC DEPENDENCE The Airport is dependent in part on intergovernmental grants from federal and state agencies as well as operating transfers from the Town. In fiscal years 2015 and 2014, the Airport recorded and $5,468,664 and $1,808,226 in intergovernmental revenues, respectively. Without these funds, the Airport would not generate sufficient funds from its operations to sustain its operations. NOTE M – SUBSEQUENT EVENTS The Airport has evaluated subsequent events through [Date Pending Approval] which is the date the financial statements were available to be issued. NOTE N – IMPLEMENTATION OF GASB PRONOUNCEMENTS Current Year Implementations In June 2012, the GASB issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27. Statement 68 replaced the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement 68 required governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. The Statement also enhanced accountability and transparency through revised and new note disclosures and required supplementary information. The provisions of GASB 68 became effective for the Airport in fiscal year 2015 and had a material effect on its financial statements and required a restatement of the prior period’s reported net position. Refer to Note E. In January 2013, the GASB issued GASB Statement No. 69, Government Combinations and Disposals of Government Operations. GASB 69 established accounting and financial reporting standards to government combinations and disposals of government operations. The provisions of GASB 69 became effective for the Airport in fiscal 2015 and did not have a material effect on its financial statements. Nantucket Memorial Airport Page 23 of 27 Basic Annual Financial Statements In April 2013, the GASB issued GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The objective of GASB 70 was to improve accounting and financial reporting by governments that extend and receive nonexchange financial guarantees. The provisions of GASB 70 became effective for the Airport in fiscal year 2015 and did not have a material effect on its financial statements. In November 2013, the GASB issued GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. The objective of GASB 71 was to address an issue regarding application of the transition provisions of GASB 68. The issue related to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined pension plan after the measurement date of the government’s beginning net pension liability. The provisions of GASB 71 became effective for the Airport in fiscal year 2015 and had a material effect on its financial statements. Refer to Note E. Future Implementations In February 2015, the GASB issued GASB Statement No. 72, Fair Value Measurement and Application. GASB 72 addresses accounting and financial reporting issues relating to fair value measurements by providing guidance for determining a fair value measurement for financial reporting purposes. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016). The Airport is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 73, Accounting and Financial Reporting for Pension and Related Assets That Are Not within the Scope of GASB Statement No. 68 and Amendments to Certain Provision of GASB Statement No. 67 and No. 68. The objective of GASB 73 is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement 68, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016) – except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of GASB Statement No. 68, which are effective for fiscal years beginning after June 15, 2106 (fiscal year 2017). The Airport is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans. GASB 74’s objective is to improve the usefulness of information about postemployment benefits other than pensions included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2016 (fiscal year 2017). The Airport is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension Plans. GASB 75 establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial Nantucket Memorial Airport Page 24 of 27 Basic Annual Financial Statements support for OPEB provided to the employees of other entities. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2017 (fiscal year 2018). The Airport is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of GASB 76 is to identify – in the context of the current governmental financial reporting environment – the hierarchy of generally accepted principles, or GAAP. This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016). The Airport is currently evaluating whether adoption will have a material impact on the financial statements. * * * * * * Nantucket Memorial Airport Page 25 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSION YEAR ENDED JUNE 30, 2015 SCHEDULE OF THE AIRPORT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Year Ended December 31, 2014 Airport's proportion of the net pension liability (asset)0.9160% Airport's proportionate share of the net pension liability (asset)5,172$ Airport's covered-employee payroll 2,404$ Airport's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 215.1% Plan fiduciary net position as a percentage of the total pension liability 60.43% SCHEDULE OF THE AIRPORT'S CONTRIBUTIONS TO PENSION PLAN Year Ended December 31, 2014 Actuarially determined contribution 477$ Contributions in relation to the actuarially determined contribution 477 Contribution deficiency (excess)-$ Airport's covered-employee payroll 2,404$ Contributions as a percentage of covered-employee payroll 19.84% The Airport is a member of the Barnstable Country Contributory Retirement System. Stand-alone, audited financial statements may be obtained by contacting the Barnstable County Retirement System at 750 Attucks Lane, Hyannis, MA 02601. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditors' report. (dollar amounts are in thousands) (dollar amounts are in thousands) Nantucket Memorial Airport Page 26 of 27 Basic Annual Financial Statements NANTUCKET MEMORIAL AIRPORT AN ENTERPRISE FUND OF THE TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2015 SCHEDULES OF FUNDING PROGRESS (dollar amounts are in thousands) UAAL as a Actuarial Actuarial Actuarial Unfunded Percentage Valuation Value of Accrued AAL Funded Covered of Covered Date Assets Liability (AAL)(UAAL)Ratio Payroll Payroll (a)(b)(b-a)(a/b)(c)(b-a/c) 6/30/2014 -$ 4,867$ 4,867$ 0.0%N/A N/A 6/30/2012 - 5,116 5,116 0.0%N/A N/A 6/30/2010 - 5,429 5,429 0.0%N/A N/A SCHEDULES OF CONTRIBUTION FUNDING (dollar amounts are in thousands) Other Postemployment Benefits Annual Year Ended OPEB Actual Percentage June 30,Cost Contributions Contributed 2015 378$ 116$ 30.7% 2014 386 146 37.8% 2013 388 133 34.3% See accompanying independent auditors' report. Nantucket Memorial Airport Page 27 of 27 Basic Annual Financial Statements