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HomeMy WebLinkAboutNantucket CAFR 2014TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2014 On the cover: Nantucket Harbor offers an excellent and well-protected harbor with some of the finest marinas in the country. Every year, thousands of boaters flock to Nantucket to experience the history of the island while mooring in the harbor or tying off at one of the Town's many marinas. Above: Nantucket's Main Street is one of the most beautiful thoroughfares in the world. Visitors are always impressed with its serpentine, meandering lay-out, lovely old houses, bustling merchants and cobblestone pavement. The cobblestones, which are very unique, are a great part of the interest, charm and folklore of the island. Tracing their beginnings to approximately 1840, there are many who believe the cobblestones were ballast from empty whaling ships returning to their homeport after unloading their cargo abroad. Others believe that homeowners, tired of the muddy streets, all contributed to a fund and purchased the cobblestone from Gloucester for the direct purpose of constructing Main Street. A movement to pave over the cobblestone in 1919, during the growth of the then recently invented automobile was defeated. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2014 C. Elizabeth Gibson, Town Manager Prepared by the Finance Department Brian E. Turbitt, Director of Municipal Finance This page intentionally left blank. INTRODUCTORY SECTION The Jared Coffin house, a historic mansion in the heart of Nantucket, is a rich landmark with ties to the sea that lines its sandy shores. Built in 1845 by Jared Coffin, one of the most successful ship owners during the island's prime whaling days, this splendid three-story mansion was constructed in the center of the Town as his family's residence. It was the first such ‘mansion' ever built on the island. Since it was erected, the Jared Coffin House has served as a centerpiece of the Nantucket Historic District and is presently a hotel comprised of 43 rooms. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Letter of Transmittal ....................................................................................................................... 1-10 Organizational Chart ........................................................................................................................ 11 Principal Town Officials .................................................................................................................. 12 FINANCIAL SECTION Independent Auditor’s Report ....................................................................................................... 13-15 Management’s Discussion and Analysis ....................................................................................... 17-30 Basic Financial Statements: Statement of Net Position .......................................................................................................... 33 Statement of Activities ............................................................................................................... 34 Balance Sheet – Governmental Funds ....................................................................................... 35 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position ............................................................................................ 36 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........................................................................................................... 37 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..................................... 38 Statement of Net Position – Proprietary Funds .......................................................................... 39 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds.............. 40 Statement of Cash Flows – Proprietary Funds ........................................................................... 41 Statement of Fiduciary Net Position .......................................................................................... 42 Statement of Changes in Fiduciary Net Position ....................................................................... 43 Notes to Basic Financial Statements ....................................................................................... 44-77 Required Supplementary Information: Schedules of Funding Progress .................................................................................................. 81 Schedules of Contribution Funding ........................................................................................... 81 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund .................................................................................................. 82-87 Notes to Required Supplementary Information ....................................................................... 88 Combining Statements: Nonmajor Governmental Funds ............................................................................................ 91-92 Combining Balance Sheet – Nonmajor Governmental Funds ........................................ 94-96 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds .......................................................... 98-100 TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2014 TABLE OF CONTENTS Page(s) Internal Service Funds ........................................................................................................... 101 Combining Statement of Net Position – Internal Service Funds ..................................... 102 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ............................................................................................. 103 Combining Statement of Cash Flows – Internal Service Funds ....................................... 104 Fiduciary Funds ...................................................................................................................... 105 Statement of Changes in Assets and Liabilities – Agency Fund ..................................... 106 STATISTICAL SECTION Narrative ..................................................................................................................................... 107 Net Position by Component – Last Ten Fiscal Years ...................................................................... 109 Changes in Net Position – Last Ten Fiscal Years ....................................................................... 110-111 Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 112 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 113 Assessed Value and Estimated Actual Value of Taxable Property By Classification and Tax Rates – Last Ten Fiscal Years ............................................................................ 114 Principal Taxpayers – Current Year and Nine Years Ago .............................................................. 115 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................ 116 Ratios of Outstanding Debt and General Obligation Debt – Last Ten Fiscal Years ....................... 117 Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 118 Direct and Overlapping Governmental Activities Debt .................................................................. 119 Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 120 Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 121 Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 122 Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 123 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 124 Town and County of Nantucket Board of Selectmen County Commissioners Rick Atherton, Chairman Robert DeCosta, Vice Chairman Matthew Fee Bruce D. Miller Tobias Glidden 16 Broad Street Nantucket, Massachusetts 02554 _________________ Telephone (508) 228-7255 Facimile (508) 228-7272 www.nantucket-ma.gov _________________ C. Elizabeth Gibson Town & County Manager Letter of Transmittal November 1, 2014 Honorable Board of Selectmen and Citizens of the Town of Nantucket, Massachusetts: We are pleased to acknowledge that the Town of Nantucket has completed its inaugural installment of the Comprehensive Annual Financial Report (CAFR). The report, which was prepared by the Town’s De- partment of Municipal Finance, is for the fiscal year ended June 30, 2014. We are confident this trans- mission will be the beginning of what will be an annual endeavor. The Town is responsible for the accuracy, completeness and fairness of the data presented in the CAFR. This letter of transmittal and the management’s discussion and analysis, located in the financial section of the CAFR, provide a comprehensive financial overview of the Town and ensure that the financial and general operations of Town government remain transparent, and therefore open for easy viewing. The CAFR represents a complete set of financial statements in conformity with generally accepted ac- counting principles (GAAP) in the United States of America (GAAP), that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. This CAFR meets and exceeds those requirements and presents itself as an informative resource for all those interest- ed in the financial activities of the Town. The report is designed to be used by the elected and appointed officials of the Town and others who are concerned with its management and progress such as bond analysts, banking institutions and rating agen- cies as well as its citizens and taxpayers. Since the report consists of management’s representations concerning the finances of the Town, manage- ment assumes full responsibility for the completeness and reliability of all of the information presented. In addition, management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformi- ty with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town of Nantucket’s comprehensive framework of internal controls has been designed to provide reasonable ra- ther than absolute assurance that the financial statements will be free from material misstatement. Town of Nantucket, Massachusetts Page 1 of 124 Comprehensive Annual Financial Report The Town of Nantucket’s financial statements have been audited by Roselli, Clark and Associates, a firm of licensed certified public accountants. The goal of the independent audit is to provide on an annual basis reasonable assurance that the financial statements of the Town of Nantucket are free of material mis- statement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant esti- mates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town of Nantucket’s financial statements for the fiscal year ended June 30, 2014 are fair- ly presented in conformity with GAAP. The independent auditor’s report is presented as the first compo- nent of the financial section of this report. The independent audit of the financial statements of the Town of Nantucket is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presen- tation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Nantucket’s separately issued Single Audit Reports Pursuant to OMB Circular A-133. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Nantucket’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town of Nantucket is located on Nantucket Island and the adjacent islets of Tuckernuck and Mus- keget. It is situated in the Atlantic Ocean and lies approximately 25 miles south of Cape Cod. It is bound by Nantucket Sound on the north and west, and by the Atlantic Ocean on the south and east. The Town has a total area of 304 square miles of which 45 square miles is land and 259 square miles is water. The island comprises the County of Nantucket, the smallest county in Massachusetts by land area. Town of Nantucket, Massachusetts Page 2 of 124 Comprehensive Annual Financial Report Nantucket was deeded in 1641 by the English to merchants from Watertown, Massachusetts and Martha’s Vineyard. In 1659 these merchants sold their interest in Nantucket to a group of investors led by Tristram Coffin for 30 pounds and two beaver hats. These investors began to populate Nantucket and in the 1670s the Nantucket whaling industry began. It was part of Dukes County, New York until 1691 when it was transferred to the Province of Massachusetts Bay and became Nantucket County. Nantucket’s whaling industry boomed until around the mid 1800’s when it was surpassed by New Bedford. This coupled with the great fire of 1846 sent the Town into an economic decline from which it took the better part of a cen- tury to recover. In the 1950’s speculative developers began buying large parts of the island and restoring or developing them to eventually create a high-end market destination in the Northeast United States which is what it has evolved into in the present day. In 2008 Nantucket was cited as having home values amongst the highest in the United States, and presently, the Town’s equalized valuation (market value) ranks fourth in Massachusetts behind Boston, Cambridge and Brookline. Nantucket is a tourist destination and summer colony. The population of the island increases from just over 10,000 year round to approximately 50,000 in the summer. It is approximately 90 air miles from Boston and 170 air miles from New York City. The island is accessible year-round via ferry service served by the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority (Steamship Authority) from the port of Hyannis. In calendar 2013, the Steamship Authority transported ap- proximately 600,000 passengers, 65,000 passenger vehicles and 45,000 commercial vehicles to Nan- tucket Island. The island is also served by Hy-line Cruises (the Hy-line), who operates one high speed ferry year-round and a larger, traditional ferry during peak seasons. Hy-line normally has over 200,000 embarkations annually and is very popular with professional daily commuters and contractors due to the speed of the transport and frequency of travel. Town of Nantucket, Massachusetts Page 3 of 124 Comprehensive Annual Financial Report The Nantucket Regional Transit Authority ("NRTA") provides seasonal fixed route shuttle service and year- round advanced reservation van service (“Your Island Ride”) for elders and persons with disabilities in Nantucket. The fixed route service operates daily mid-May through early October with complementary para-transit service; and a less frequent sched- ule operates before Memorial Day and after Labor Day. The Your Island Ride van service operates year-round Monday through Friday. The Town owns and operates its own municipal airport, Nantucket Memorial Airport, which provides daily service to Boston, New York, Hyannis, Martha’s Vineyard and New Bedford, in addition to less frequent travel to Philadelphia and Washington D.C. The airport is serviced by 6 airlines, some of which are seasonal. Governed by the Nantucket Airport Commission, the airport is a self-supporting enterprise fund. It is located 3 miles southeast of the center of town and in calendar 2013 with over 178,000 aircraft operations it was the second busiest airport in the Commonwealth trailing only Logan International Air- port in Boston. Town of Nantucket, Massachusetts Page 4 of 124 Comprehensive Annual Financial Report The Town offers a full range of other traditional municipal services including police and fire protec- tion, education, maintenance of streets, a sanitary landfill with materials recovery and composting fa- cilities, water and sewer services, parks and recrea- tional facilities. In addition, Nantucket also owns and operates Our Island Home, a nursing facility that provides long-term skilled nursing, short-term reha- bilitation, palliative and respite care for elderly is- land residents. It is a 45-bed smoke-free facility du- ally licensed in Medicaid and Medicare since August 2007. Nantucket prides itself on the quality of its school system. There are three Town administered schools in Nantucket; 1. Nantucket High School (grades 9 – 12) 2. Cyrus Pierce Middle School (grades 6 – 8) 3. Nantucket Elementary School (grades PK – 5) The executive branch of the public schools consists of a five-member School Committee elected to three- year terms on a staggered basis. The School Committee is the policy setting board. The Superintendent of Schools acts as the Chief Executive Officer responsible for enforcing the policies of the School Com- mittee, and the School Business Manager acts as the Chief Financial Officer. School enrollment for fiscal year 2014 is 1,483 (a 20% increase from 2009) and funding for schools is received via taxation and governmental revenues based on a minimum net school spending formula estab- lished by the Massachusetts Department of Elementary and Secondary Education (ESE). The Town cur- rently spends almost double the minimum legal requirement on each student. Town of Nantucket, Massachusetts Page 5 of 124 Comprehensive Annual Financial Report The mission of the Nantucket Public Schools, in partnership with the community, is a “commitment to providing a challenging curriculum, skilled instruction, and a learning environment that responds to indi- vidual student academic needs. Work is guided by research and the belief that every student is capable of attaining high levels of educational achievement in preparation for meeting the rigorous demands of the twenty-first century.” The Town operates under the selectmen, town manager and open town meeting form of government. The five elected Selectmen make policy decisions and the Town Manager is responsible for carrying out and enforcing the policies of the Selectmen and for managing the day to day operations of the Town. An annual operating budget is approved by Town Meeting in April. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government), department (e.g. finance) and category (e.g. Personnel Services, Purchase of Ser- vices, Supplies, Other Charges & Expenses) allowing the department heads to allocate resources within the department. Transfers between categories need approval from Town Meeting unless specifically ex- empted by state statute. Factors Affecting Economic Condition Industry Tourism represents 37% of the Town’s private employment on the Island, and thus is an im- portant component of the Town’s economy. The management of Nantucket's tourism industry is aided by the Town’s Visitor Services department, which is supported through revenues from the local option Room Occupancy Tax collections. The Town received over $2.3 million from this source in fiscal 2013 and ap- proximately $2.6 million for fiscal 2014. The preservation of open space is an important component of the Town's tourism-based economy. It is estimated that approximately 40% of the Island is currently pre- served as open space or conservation land either by the Town, the Nantucket Islands Land Bank or vari- ous non-profit local entities. Property Taxes The growth of the Town’s main source of revenues, property taxes, is capped by Proposi- tion 2 ½ and can only be overridden through a ballot vote by the voters. While revenue increases have been limited in recent years, fixed costs, including health insurance and pension costs, have increased more proportionally. As a result, balancing the annual budget can be a challenge. Given its geographical location and the limitations of being an island, the Town does not have a large commercial and industrial property tax base so it relies heavily on residential property taxes. Approximately 88% of the Town’s property taxes are derived from residential taxes therefore new growth is essential to revenue growth and the ability to sustain the Town’s annual costs. The following table summarizes the Town’s new growth over the prior 5 calendar years: Table 1 Calendar # of Residential Non-Residential Total Year Permits Value Value Value 2013 1,384 155,601,701$ 18,099,456$ 173,701,157$ 2012 1,485 147,981,125 14,540,467 162,521,592 2011 1,339 113,150,665 7,627,649 120,778,314 2010 1,095 105,463,222 13,166,864 118,630,086 2009 877 88,742,997 67,313,372 156,056,369 Total 6,180 610,939,710$ 120,747,808$ 731,687,518$ Town of Nantucket, Massachusetts Page 6 of 124 Comprehensive Annual Financial Report Growth has been much stronger than expected with nearly 3/4 billion dollars added to the Town’s equal- ized valuation (market value) during this period. The Town’s strong equalized valuation is attractive to stakeholders in the Town’s securities as the Town currently ranks 4th in total equalized valuation in the Commonwealth of Massachusetts. In addition, in measuring equalized valuation per capita, it is 1st in the Commonwealth by a significant margin with a factor of almost $1.7 million per resident. The Town’s strong growth as summarized in Table 1, has allowed the Town’s taxpayers the benefit of reduced property taxes through a large levy capacity. In fact the taxpayers benefited from a 3% to 4% saving in each of the last 3 fiscal years. This is summarized in Table 2 below: Table 2 Economic Development The Town’s downtown center remains a vibrant hub for small retail establish- ments, hospitality/resorts and restaurants. The Nantucket Island Chamber of Commerce, founded in 1937 and incorporated in 1954, has a diverse membership comprised of more than 650 businesses. The Town, including the Nantucket Planning and Economic Development Commission and Visitor Services depart- ment, has an on-going relationship with the Chamber involving the Town's economic issues. In 2008 at the annual town meeting, the town approved a study of an area known as the Wilkes Square Redevelopment site, which includes National Grid, Greenhound, Winthrop, and Nantucket Island Resort properties. To that end, the Board of Selectmen established a Downtown Revitalization Committee and charged it with identifying goals for the Nantucket downtown area that balance economic strength with community preservation, and encourage greater venues for social activity while recognizing the im- portance of planning. The focus of the study was to:  Attract a wide range of individuals through a multifunctional environment including: housing, work, shopping, culture, entertainment, government, and tourist attractions.  Balance the human, social, and economic needs with the infrastructure requirements of parking, public transportation, bike racks, road access, traffic flow, sidewalks, and water front walkways.  Attract commercial business to locate downtown by providing guidance on financing, zoning, and preliminary site design.  Protect the unique qualities, historical significance, and feel of the Town.  Incorporate attractive space for civic gatherings. Fiscal Year Levy Limit Levy Levy Capacity Tax savings 2014 67,372,224 64,647,039 2,725,185 4.04% 2013 65,695,822 63,618,274 2,077,548 3.16% 2012 64,834,729 62,274,744 2,559,985 3.95% 2011 63,114,088 63,040,150 73,938 0.12% 2010 61,394,213 61,333,595 60,618 0.10% Town of Nantucket, Massachusetts Page 7 of 124 Comprehensive Annual Financial Report The study area is approximately a 5.65-acre area bounded by Main Street, Commercial Street, Washing- ton Street, and New Whale Street. The site is currently owned by multiple land owners. The site’s close proximity to downtown and its waterfront location, present an extraordinary opportunity for the Town to develop its waterfront into a mixed-use gateway that will be a common ground for year- round residents as well as summertime residents and visitors. The vision for the site offers strategic opportunities to resolve or clarify long-standing infrastructure and transportation issues in Town, affords a strong vision for the program including a hotel, residential devel- opment, retail, dining and social venues. Town of Nantucket, Massachusetts Page 8 of 124 Comprehensive Annual Financial Report Unassigned Fund Balances One of the methods the Town uses to maintain reserves from year to year is to conservatively forecast revenues. This allows the Town to use free cash (surplus) for reserves, capital projects or other non-operating one-time expenses. Since the Town has a significant level of levy capacity as previously discussed, the challenge of conservatively forecasting revenue is diminished and as a result, the Town has been able to maintain and/or increase reserves from year to year. The following illustrates the Town’s unassigned fund balance trend since 2009: Long-term Financial Planning The Town prepares rolling ten-year operating budget projections. The Town believes this will (1) provide better insight when preparing annual budgets; (2) alert the Town to any potential budget issues far ahead of when these situations become real; and (3) allow the Town to determine when available financing for its capital needs can be provided or if a need for borrowing to finance projects is required. The following represents the Town’s ten-year revenue projections: The Town expects that annual budget sources as forecasted will be sufficient to fund annual appropria- tions. Fiscal Real and Personal Intergovernmental Miscellaneous Year Property Taxes Aid Local Receipts Nonrecurring Total 2015 64,045,384$ 1,155,816$ 10,326,031$ 1,848,007$ 77,375,237$ 2016 69,333,000 2,342,711 9,566,140 554,245 81,796,096 2017 71,643,000 2,342,711 9,566,140 554,245 84,106,096 2018 73,363,000 2,377,852 9,757,464 565,330 86,063,646 2019 74,951,000 2,413,520 9,952,618 576,637 87,893,775 2020 75,219,000 2,449,723 10,151,676 588,171 88,408,570 2021 77,533,000 2,486,469 10,354,715 599,936 90,974,120 2022 79,908,000 2,523,767 10,561,814 611,936 93,605,517 2023 82,345,000 2,561,624 10,773,057 624,176 96,303,857 2024 84,837,000 2,600,049 10,988,524 636,661 99,062,234 Town of Nantucket, Massachusetts Page 9 of 124 Comprehensive Annual Financial Report Capital Improvements The Town continues to invest aggressively in capital improvements. In the past five years the Town has invested approximately $200 million in improving facilities and adding much needed infrastructure. The following were key capital initiatives:  Improvement to Nantucket Memorial Airport, much of which was funded from Federal grants, almost $55 million.  A new Public Safety building over $15.5 million.  Improvements to the municipal water infrastructure; almost $20 million.  Improvements to the Siasconset water infrastructure; almost $9 million.  Improvements to the municipal sewer infrastructure; over $60 million, some of this funded through the State subsidized, low interest loan program.  Improvements to Schools; almost $6 million.  Improvements to roads, sidewalks, curbs and catch basins; almost $10 million of which almost half was funded through the State Chapter 90 Program. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certifi- cate of Achievement for Excellence in Financial Reporting. This is a very prestigious award and in order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted ac- counting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current compre- hensive annual financial report will meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for this certificate. The publication of this CAFR represents an important achievement in the ability of the Town of Nantuck- et to provide enhanced financial information and accountability to its citizens, elected and appointed offi- cials, and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff in the Finance Office. Special thanks also go to the certified public accounting firm of Roselli, Clark and Associates for their advice and assistance in the preparation of this report. Respectfully submitted, C. Elizabeth Gibson Town Manager Brian E. Turbitt Director of Municipal Finance Town of Nantucket, Massachusetts Page 10 of 124 Comprehensive Annual Financial Report Nantucket Voters Elected Boards & Officials Moderator Town Clerk School Committee Superintendent School Business Manager Elementary School Pierce Middle High School Community School Nantucket Water Commission Siasconset Water Commission Harbor & Shellfish Advisory Historic District Commission Board of Selectmen Town Manager Public Safety Fire Police Marine Emergency Management Public Works & Parks Engineering Central Fleet Maintenance Operations Public Facilities Solid Waste Management Human Services Our Island Home Senior Services Council on Aging Veterans' Services Commission on Disability General Admin Licenses & Permits Human Resources IT & GIS Visitor Services Energy Office Finance & Budget Accounting Assessor Budgeting Collector Treasurer Natural Resources Conservation Commission Endangered Species Resource Management Water Quality Planning & Land Use Services Building Health HDC Staff Planning Zoning Real Estate Register of Deeds Land Bank Commission Community Preservation Committee Planning Board NP&EDC Nantucket Housing Authority Town of Nantucket, Massachusetts Page 11 of 124 Comprehensive Annual Financial Report PRINCIPAL TOWN OFFICIALS As of June 30, 2014 Elected Officials Board of Selectmen John R. Atherton, Chairman Robert DeCosta, Vice Chairman Matthew Fee Bruce Miller Tobias Glidden Town Moderator Sarah Alger Town Clerk Catherine Flanagan Stover School Committee Dr. Timothy Lepore, Chairman Melissa Murphy, Vice Chairman Robin Harvey, Secretary Jennifer Iller Pauline Proch Appointed Financial Committees Audit Committee John R. Atherton, Chairman Bruce Miller Matthew T. Mulcahy Finance Committee Matthew T. Mulcahy, Chairman Christopher J. Kickham James Kelly David Worth Clifford Williams Craig Spery Stephen Maury Joseph T. Grause, Jr. John Tiffany Principal Executive Officers Town Manager C. Elizabeth Gibson Superintendent of Schools W. Michael Cozort Director of Finance Brian E. Turbitt Town of Nantucket, Massachusetts Page 12 of 124 Comprehensive Annual Financial Report FINANCIAL SECTION The Nantucket Atheneum, the island’s unique library, plays a vital role in the Nantucket community. Relying on both public and private funding, the Atheneum provides something for everyone: a wide variety of cultural and educational services and events; an expansive collection of books, online databases, periodicals, audiobooks, CDs and DVDs; and access to 1.4 million items through the Cape Libraries Automated Material Sharing network. The Antheum is certified by Massachusetts Board of Library Commissioners which ensures a high standard of excellence. INDEPENDENT AUDITOR’S REPORT Honorable Board of Selectmen Town of Nantucket, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the Town of Nantucket, Massachusetts, (the “Town”) as of and for the year ended June 30, 2014 which collectively comprise the Town’s basic financial statements as listed in the table of contents. We did not audit the financial statements of the Nantucket Islands Land Bank, a discretely presented component unit. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for this discretely presented component unit, is based solely on the report of the other auditors. 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. Auditor’s 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 of material misstatement. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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 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. Town of Nantucket, Massachusetts Page 13 of 124 Comprehensive Annual Financial Report Town of Nantucket Page Two Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the Town, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note III. Subsection H, the Town implemented Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion was not modified with respect to this matter. Restatement of Prior Year Ending Balances As more fully described in Note IV, a restatement of prior year ending net position balances was made to Nantucket Islands Land Bank, a discretely presented component unit, the Town’s business-type activities and the Nantucket Memorial Airport Enterprise Fund. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis, the funding and contribution progress for pension benefits and other post- employment benefits information and budgetary comparison 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 Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The introductory section, combining statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial Town of Nantucket, Massachusetts Page 14 of 124 Comprehensive Annual Financial Report Town of Nantucket Page Three statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required By Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated December 20, 2014, on our consideration of the Town of Nantucket, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Roselli, Clark and Associates Certified Public Accountants Woburn, Massachusetts 01801 December 20, 2014 Town of Nantucket, Massachusetts Page 15 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 16 of 124 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Nantucket, Massachusetts Page 17 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 18 of 124 Comprehensive Annual Financial Report MANAGEMENT’S DISCUSSION AND ANALYSIS As the management of the Town, we offer readers of the accompanying financial statements this narrative overview and analysis of the financial activities of the Town and its component units for the fiscal year ended June 30, 2014. Financial Highlights  The assets and deferred inflows of the Town exceeded its liabilities and deferred outflows at the close of the most recent fiscal year by approximately $326.2 million (total net position).  The government’s total net position increased by approximately $4.9 million (1.5% of total net position) over the prior year. This consisted of increases in both governmental activities’ net position by approximately $ 4.4 million (2.2% of total governmental activities’ net position) and in business - type activities’ net position of approximately $0.6 million (0.5% of business-type activities’ net position).  The Town’s Unassigned Fund Balance reported in the General Fund was approximately $14.7 million (21.5% of General Fund expenditures). Total Fund Balance in the General Fund was approximately $25.5 million (37.2% of General Fund expenditures). The Town reported a Restricted Fund Balance of $0.3 million in its Town Capital Projects Fund and reported Total Fund Balances of approximately $18.5 million in the Combined Nonmajor Governmental Funds.  The Town’s total debt decreased by over $7.0 million during the fiscal year. Detail of this net decrease is illustrated as follows: Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Regular scheduled maturities: Governmental Activities (5,405,946)$ Business-Type Activities (5,224,019) Amortization of bond premium: Governmental Activities (22,543) Business-Type Activities (132,697) Issuance of debt Governmental Activities - Business-Type Activities 3,761,000 (7,024,205)$ Town of Nantucket, Massachusetts Page 19 of 124 Comprehensive Annual Financial Report The layout and relationship of the financial statements and supplementary information is visually illustrated as follows: Government-wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. The statement of position presents information on all of the Town’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between these reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the government’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 taxes and earned but unused vacation leave.) The government-wide financial statements consist of three classifications; (1) those whose activities are principally supported by taxes and intergovernmental revenue (governmental activities); (2) those whose activities are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities), and (3) component units. Town of Nantucket, Massachusetts Page 20 of 124 Comprehensive Annual Financial Report The Town’s governmental activities consist of: 1. General government; 2. Public safety; 3. Education; 4. Public works; 5. Health and human services; 6. Culture and recreation; and, 7. Interest expense. The Town’s business-type activities consist of: 1. Siasconset Water District; 2. Wannacomet Water District; 3. Sewer; 4. Nantucket Memorial Airport; 5. Our Island Home; and 6. Solid waste. The Town’s component units consist of: 1. Nantucket County; and 2. Nantucket Islands Land Bank. Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported in the following classifications: • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation • Committed—amounts constrained by a government using its highest level of decision-making authority • Assigned—amounts a government intends to use for a particular purpose • Unassigned—amounts that are not constrained at all will be reported in the general fund or in other major funds if negative Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at Town of Nantucket, Massachusetts Page 21 of 124 Comprehensive Annual Financial Report the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. The Town maintains numerous individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, and Town Capital Projects Fund which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the form of combining statements. The Town adopts an annual appropriated budget for its general fund and its enterprise funds. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds – The Town maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses an enterprise fund to account for all the business-type activities previously discussed. Internal service funds are used to report activities that service all other Town Departments. The Town uses an internal service fund to account for self-insured health insurance claims. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information - In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s progress in funding its obligation to provide pension benefits and other post-employment benefits to its employees as well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by approximately $326.2 million at the close of the most recent fiscal year. Town of Nantucket, Massachusetts Page 22 of 124 Comprehensive Annual Financial Report The condensed Statement of Net Position is as follows: By far, the largest portion (approximately $288.2 million) of the Town’s net position reflects its investment in capital assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town’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. An additional portion, approximately $20.5 million, of the Town’s net position represents resources that are subject to external restrictions on how they may be used. The final portion, approximately $17.4 million is unrestricted and may be used to meet the Town’s current obligations and commitments. Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2014 2013 2014 2013 2014 2013 Assets Currrent and other assets 57,813,945$ 55,207,342$ 33,655,404$ 33,632,184$ 91,469,349$ 88,839,526$ Capital assets, net 230,518,065 231,330,728 203,147,189 200,338,265 433,665,254 431,668,993 Total assets 288,332,010 286,538,070 236,802,593 233,970,449 525,134,603 520,508,519 Deferred outflows of resources 42,100 - - - 42,100 - Liabilities Long-term liabilities 77,357,997 79,160,096 90,809,753 91,572,974 168,167,750 170,733,070 Other liabilities 13,315,733 14,053,131 17,537,374 14,514,004 30,853,107 28,567,135 Total liabilities 90,673,730 93,213,227 108,347,127 106,086,978 199,020,857 199,300,205 Deferred inflows of resources - - - - - - Net Position Invested in capital assets 175,687,378 179,338,227 112,541,419 116,596,172 288,228,797 295,934,399 Restricted 20,511,155 15,818,386 - - 20,511,155 15,818,386 Unrestricted 1,501,847 (1,831,770) 15,914,047 11,287,299 17,415,894 9,455,529 Total Net Position 197,700,380$ 193,324,843$ 128,455,466$ 127,883,471$ 326,155,846$ 321,208,314$ Town of Nantucket, Massachusetts Page 23 of 124 Comprehensive Annual Financial Report Condensed changes in net position data is presented as follows: Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2014 2013 2014 2013 2014 2013 Revenues Program revenues: Charges for services 6,446,350$ 5,562,748$ 33,592,609$ 31,799,794$ 40,038,959$ 37,362,542$ Operating grants and contributions 6,230,362 6,022,440 - 85,992 6,230,362 6,108,432 Capital grants and contributions 289,066 1,874,830 2,570,717 1,989,292 2,859,783 3,864,122 General revenues: Property taxes 64,160,459 63,594,267 - - 64,160,459 63,594,267 Hotel and meals excise 3,558,082 3,092,446 - - 3,558,082 3,092,446 Intergovernmental 278,049 737,402 - - 278,049 737,402 Other 6,234,349 6,169,618 44,030 55,748 6,278,379 6,225,366 Total Revenues 87,196,717 87,053,751 36,207,356 33,930,826 123,404,073 120,984,577 Expenses General government 10,068,331 9,765,641 - - 10,068,331 9,765,641 Public safety 14,779,274 14,042,554 - - 14,779,274 14,042,554 Education 36,829,209 35,190,752 - - 36,829,209 35,190,752 Public works 4,862,640 4,171,361 - - 4,862,640 4,171,361 Health and human services 1,641,325 2,301,279 - - 1,641,325 2,301,279 Culture and recreation 5,622,457 2,327,315 - - 5,622,457 2,327,315 Debt service 2,075,324 2,368,538 - - 2,075,324 2,368,538 Siasconset water - - 724,927 712,820 724,927 712,820 Wannacomet water - - 3,624,731 3,785,742 3,624,731 3,785,742 Sewer - - 6,002,582 6,149,616 6,002,582 6,149,616 Nantucket Memorial Airport - - 15,592,198 14,523,220 15,592,198 14,523,220 Our Island Home - - 7,670,514 7,079,676 7,670,514 7,079,676 Solid Waste - - 8,963,029 11,302,336 8,963,029 11,302,336 Total Expenses 75,878,560 70,167,440 42,577,981 43,553,410 118,456,541 113,720,850 Change in net position before transfers 11,318,157 16,886,311 (6,370,625) (9,622,584) 4,947,532 7,263,727 Transfers (6,942,620) (8,303,291) 6,942,620 8,303,291 - - Change in net position 4,375,537 8,583,020 571,995 (1,319,293) 4,947,532 7,263,727 Net position, beginning of year, as 193,324,843 184,741,823 127,883,471 129,202,764 321,208,314 313,944,587 Net position, end of year 197,700,380$ 193,324,843$ 128,455,466$ 127,883,471$ 326,155,846$ 321,208,314$ Town of Nantucket, Massachusetts Page 24 of 124 Comprehensive Annual Financial Report Governmental Activities – The governmental activities experienced a net increase in net position by approximately $ 4.4 million (2.2 % of governmental activities’ net position). This was a result of aggressive policies to conserve expenses and forecast revenues conservatively. This was netted due to increasing the provisions to the Town’s long-term liabilities and other factors. A detailed list of causes to this net increase in governmental activities is as follows: Net position of the business-type activities increased by approximately $0.6 million (less than 1.0% of business-type activities’ net position) from the prior year balances. Change in net position for each business-type fund is broken down individually as follows: The Nantucket Memorial Airport posted a loss over $1.0 million however this included one- time maintenance charges of approximately $0.7 million paid from restricted funds and a non-cash write-off of construction in process in the amount of $0.4 million for projects that did not evolve past the feasibility stage. All other business – type funds results were consistent with expectations. Expenses: Provision for other post employment benefits (3,994,000)$ Provision for compensated absences (356,390) Provision for workmen's compensation (157,802) Favorable expense budget 2,262,029 Restricted fund expenses exceeding revenues (1,748,687) Depreciation (3,506,396) Various other miscellaneous expense items (1,891,789) (9,393,035)$ Revenues: Favorable revenue forecast 1,780,138 Gain on sale of capital assets 1,379,639 3,159,777$ Other Items: Forecasted revenue surplus to fund capital additions 5,202,849$ Forecasted revenue surplus to fund principal payback 5,405,946 10,608,795$ Total Change 4,375,537$ Siasconset Water District 277,745$ Wannacomet Water District 1,040,215 Sewer 707,506 Nantucket Memorial Airport (1,023,794) Our Island Home (53,120) Solid Waste (376,557) Total Change 571,995$ Town of Nantucket, Massachusetts Page 25 of 124 Comprehensive Annual Financial Report Fiscal Year 2014 Expenses and Program Revenues – governmental activities are graphically presented as follows: Major revenue sources of governmental activities consist of revenue from; Property taxes which represented 73.6% of total revenues, consistent with 73.1% in the prior year. Although the percentage of overall revenue was equal, the property tax amount increased in accordance with proposition 2 1/2, which caps property tax increases at 2 1/2% of the prior year levy plus new growth. No other revenue sources exceeded 10% of total revenues in either fiscal 2014 or 2013. $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 Functional expenses Program Revenues 73.58% 7.15% 0.33% 7.39% 7.15%4.08%0.32% Revenues Property taxes Operating grants and contributions Capital grants and contributions Charges for services Other Hotel and meals excise Intergovernmental (unrestricted) Town of Nantucket, Massachusetts Page 26 of 124 Comprehensive Annual Financial Report Educational expenses continues to be an area in which the Town devotes substantial resources. Education costs represented the area of largest disbursement for the Town as approximately 48.5% of total disbursements related to education down from 50.2% in the prior year. Actual costs increased despite the ratio decreasing. The increase, representing approximately $1.6 million was primarily due to an increase in health insurance benefits, post- employment benefits, salaries and general inflation. The Town is required under State law to fund a net school spending calculation. The Town funds well in excess of the minimum requirements. Public Safety expenses represented 19.5% of total expenses, down slightly from 20.0% in the prior year as operations were consistent from year to year. General Government expenses represented approximately 13.3% of total expenses down slightly from 13.9% in the previous year as these operations were also consistent from year to year. No other expenses represented greater than 10.0% of total expenses in either fiscal 2014 or 2013 however Culture and Recreation costs were $3.3 million greater year over year due to expenses associated with the preservation of historical assets funded from the Town’s Community Preservation Fund. Fund-wide Financial Analysis of the Government’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds – The focus of the Town’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a combined ending fund balance of approximately $44.3 million, an increase of approximately $4.3 million over the prior year. 13% 20% 49% 6% 2%7%3% Expenses General government Public safety Education Public works Health and human services Culture and recreation Interest expense Town of Nantucket, Massachusetts Page 27 of 124 Comprehensive Annual Financial Report Decreases of $0.9 million in the Town Capital Projects Fund were offset by increases in the General Fund of $2.7 due to favorable operating results and increases in the aggregate Nonmajor Funds of $2.4 million were primarily due to proceeds received from the sale of a large parcel of real estate. Unassigned fund balance in the general fund was approximately $14.7 million or 21.5% of general fund expenditures. This is available for spending at the government’s discretion. Assigned fund balance of $2.0 million; committed fund balance of approximately $8.1 million and restricted fund balance of $0.7 million bring total general fund balance to $25.5 million or 37.2% of general fund expenditures. The remainder of governmental fund balances are included as Combined Nonmajor Fund Balances and are classified as either (1) non-spendable, due to being the corpus of an endowment in the amount of $114,762; or (2) restricted due to constraints placed externally by third-parties in the amount of approximately $18.4 million. Proprietary funds – The Town’s proprietary funds are made up of the same type of information found in the government-wide financial statements under business-type activities, but in more detail; and (2) the Town’s Internal Service Fund which accounts for the Town’s Health Claims Fund. The Health Claims Fund has a Net Asset balance of approximately $1.0 million. This represents an increase of approximately $0.8 million over the prior year. A positive amount from contributions combined with lower claim activity contributed to operating revenues exceeding operating expenses. Fiduciary Fund – The Town’s fiduciary fund is comprised primarily of the Town’s Private Purpose Trust Funds whose net assets are approximately $2.4 million. These assets are used strictly for purposes outside of the public domain such as scholarships and public assistance and decreased by about $347,000 over the prior year due to increased scholarships awarded and other public assistance. In addition, the Town has elected to establish a trust under Chapter 32B Section 20 of the MGL whose sole purpose will be to accumulate funds to reduce the Town’s unfunded Postemployment Benefits. In 2013 the Town elected to transfer seed money of $250,000 to establish the first contribution to the fund. No contributions were made during 2014. 5 7 9 11 13 15 Revenues Expenses Health Claims Fund Town of Nantucket, Massachusetts Page 28 of 124 Comprehensive Annual Financial Report General Fund Budgetary Highlights Differences between the original budget and the final amended were for the most part not significant (less than 1%). Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary Information following the footnotes to the report. Capital Asset and Debt Administration Capital Assets – The Town’s investment in capital assets for its governmental and business type activities as of June 30, 2014 amounts to approximately $433.7 million (net of accumulated depreciation) an increase from the previous year’s balance of approximately $2.7 million. This investment in capital assets includes land, buildings and improvements, infrastructure, machinery, equipment, and software. The total increase is due to capital investments exceeding depreciation for the year. Additional information on the Town’s capital assets can be found in Note II subsection D. Long-term Debt – At the end of the current fiscal year, the Town had total debt outstanding of approximately $137.2 million. The entire amount comprises debt backed by the full faith and credit of the government. The Town’s total debt decreased by approximately $7.0 million during the fiscal year due to: The Town’s most recent credit evaluation resulted in an “Aa2” rating from Moody’s Investment Services for general obligation debt. State statutes limit the amount of general obligation debt a governmental entity may issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately $855 million, which is significantly in excess of the Town’s outstanding general obligation debt classified as inside the debt limit. Bond anticipation note payable balances outstanding at year-end amount to approximately $9.0 million. $6.0 million of this amount relates to sewer projects; $1.3 million to water projects; $1.0 million to Airport activities; $1.1 million to Community Preservation and $0.5 million to the Septic Loan Program. Additional information on the Town’s short-term and long-term debt can be found in Note II under subsections F and G. Regular scheduled maturities: Governmental Activities (5,405,946)$ Business-Type Activities (5,224,019) Amortization of bond premium: Governmental Activities (22,543) Business-Type Activities (132,697) Issuance of debt Governmental Activities - Business-Type Activities 3,761,000 (7,024,205)$ Town of Nantucket, Massachusetts Page 29 of 124 Comprehensive Annual Financial Report Economic Factors and Next Year’s Budgets and Rates  Consistent with both State and National work force trends, the Town’s unemployment rates have improved over the last 24 months and have stabilized from the historic lows reached at the peak of the recession in 2009. While this trend is expected to continue, the extent, timing or certainty of any full economic rebound cannot be reasonably estimated at this time.  The Town’s real estate tax base is made up predominantly of residential taxes, which comprise nearly 87.8% of the Town’s real estate tax base. The Town also relies heavily on its commercial and industrial real estate tax base, which in aggregate comprise 10.2 % of the Town’s real estate tax base. In addition, Chapter 580 of the Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy plus new growth.  The Town’s housing market continues to be vibrant and consistently outpaces the state and national indexes. Average home prices approximate $1.5 million and the average residential tax rate is 3.67 per $1,000.  The Town has responded well to the recent economic challenges. Reductions in local revenue, primarily interest income and other reductions in revenue have caused the Town to aggressively seek other revenue producing initiatives in order to maintain appropriations in ways that preserved local service levels.  All of the above items were considered when the Town developed its budget for fiscal year 2015. The budget was adopted in April 2014 and the Town expects its tax rate to be certified in December 2014. Requests for Information This financial report is designed to provide a general overview of the Town’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Office of the Finance Director, 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket County may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Islands Land Bank may be obtained by contacting Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Memorial Airport may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Town of Nantucket, Massachusetts Page 30 of 124 Comprehensive Annual Financial Report Basic Financial Statements Town of Nantucket, Massachusetts Page 31 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 32 of 124 Comprehensive Annual Financial Report Nantucket Governmental Business-Type Nantucket Islands Activities Activities Total County Land Bank Assets Cash and cash equivalents 42,296,622$ 24,594,935$ 66,891,557$ 3,475,767$ 11,361,086$ Investments 4,387,888 - 4,387,888 - 1,253,006 Investments, designated - - - - 4,707,175 Receivables, net: Property taxes 3,163,348 - 3,163,348 - - User fees - 4,718,029 4,718,029 - - Departmental and other 4,145,421 431,532 4,576,953 - 234,611 Intergovernmental 1,990,666 3,518,475 5,509,141 81,534 - Inventory - 392,433 392,433 - 269,209 Deposit held by third party 1,830,000 - 1,830,000 - - Other assets - - - - 92,737 Restricted cash and cash equivalents - - - - 1,768,189 Restricted investments - - - - 2,846,160 Cash surrender value of life insurance - - - - 764,946 Land conservation rights - - - - 30,000 Capital assets not being depreciated 181,967,158 33,030,444 214,997,602 3,283,842 257,810,267 Capital assets, net of depreciation 48,550,907 170,116,745 218,667,652 42,583 16,144,796 Total Assets 288,332,010 236,802,593 525,134,603 6,883,726 297,282,182 Deferred Outflows of Resources 42,100 - 42,100 - - Liabilities Warrants and accounts payable 2,520,369 1,718,580 4,238,949 6,011 246,934 Accrued payroll and withholdings 1,251,050 276,898 1,527,948 28,697 - Accrued expenses - - - - 696,909 Health claims incurred but not reported 775,395 - 775,395 - - Accrued interest 628,817 901,490 1,530,307 - - Other liabilities 196,962 380,977 577,939 - - Bond anticipation notes payable 1,621,551 8,300,200 9,921,751 - - Noncurrent liabilities: Due within one year 6,321,589 5,959,461 12,281,050 - 4,212,533 Due in more than one year 77,357,997 90,809,521 168,167,518 106,380 25,103,430 Total Liabilities 90,673,730 108,347,127 199,020,857 141,088 30,259,806 Deferred Inflows of Resources - - - - - Net Position Net Investment in Capital Assets 175,687,378 112,541,419 288,228,797 3,326,425 244,825,076 Restricted: Nonexpendable permanent funds 114,762 - 114,762 - - Federal and State grants 1,543,943 - 1,543,943 - - Community preservation 5,668,115 - 5,668,115 - - Sale of real estate 4,932,855 - 4,932,855 - - Revolving funds 4,899,114 - 4,899,114 - - Other purposes 3,352,366 - 3,352,366 2,121,457 4,614,349 Unrestricted 1,501,847 15,914,047 17,415,894 1,294,756 17,582,951 Total Net Position 197,700,380$ 128,455,466$ 326,155,846$ 6,742,638$ 267,022,376$ TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2014 See accompanying notes to basic financial statements. Primary Government Component Units Town of Nantucket, Massachusetts Page 33 of 124 Comprehensive Annual Financial Report Program Revenues Net (Expenses) Revenues and Changes in Net Position Operating Capital Nantucket Charges for Grants and Grants and Governmental Business-Type Nantucket Islands Functions/Programs Expenses Services Contributions Contributions Activities Activities Total County Land Bank Primary government: Governmental activities: General government 10,068,331$ 917,730$ 486,574$ -$ (8,664,027)$ (8,664,027)$ Public safety 14,779,274 3,213,998 37,169 98,594 (11,429,513) (11,429,513) Education 36,829,209 1,490,713 5,345,336 - (29,993,160) (29,993,160) Public works 4,862,640 340,272 - - (4,522,368) (4,522,368) Health and human services 1,641,325 188,221 88,788 - (1,364,316) (1,364,316) Culture and recreation 5,622,457 295,416 22,495 190,472 (5,114,074) (5,114,074) Interest expense 2,075,324 - 250,000 - (1,825,324) (1,825,324) Total governmental activities 75,878,560 6,446,350 6,230,362 289,066 (62,912,782) (62,912,782) Business-type activities: Siasconset water 724,927 862,804 - - 137,877$ 137,877 Wannacomet water 3,624,731 4,833,938 - - 1,209,207 1,209,207 Sewer 6,002,582 6,133,941 - 762,312 893,671 893,671 Nantucket Memorial Airport 15,592,198 12,761,708 91,000 1,717,405 (1,022,085) (1,022,085) Our Island Home 7,670,514 5,507,647 - - (2,162,867) (2,162,867) Solid waste 8,963,029 3,492,571 - - (5,470,458) (5,470,458) Total business-type activities 42,577,981 33,592,609 91,000 2,479,717 (6,414,655) (6,414,655) Total Primary Government 118,456,541$ 40,038,959$ 6,321,362$ 2,768,783$ (62,912,782) (6,414,655) (69,327,437) Component units: Nantucket County 790,527$ 945,151$ 170,201$ -$ 324,825 - Nantucket Islands Land Bank 7,016,431 21,869,068 443,100 - - 15,295,737 Total Component units 7,806,958$ 22,814,219$ 613,301$ -$ 324,825 15,295,737 General Revenues: Property taxes 64,160,459 - 64,160,459 - - Motor vehicle and boat excise 2,314,472 - 2,314,472 - - Hotel and meals excise 3,558,082 - 3,558,082 - - Community Preservation Fund surcharges 1,782,598 - 1,782,598 - - Grants and contributions not restricted to specific programs 278,049 - 278,049 - - Penalties and interest on taxes 598,411 - 598,411 - - Unrestricted investment income 159,229 44,030 203,259 8,413 82,854 Gain (loss) on sale of capital assets 1,379,639 - 1,379,639 - (65,599) Transfers (net)(6,942,620) 6,942,620 - - - Total general revenues and transfers 67,288,319 6,986,650 74,274,969 8,413 17,255 Change in Net Position 4,375,537 571,995 4,947,532 333,238 15,312,992 Net Position: Beginning of year, as restated (see Note IV)193,324,843 127,883,471 321,208,314 6,409,400 251,709,384 End of year 197,700,380$ 128,455,466$ 326,155,846$ 6,742,638$ 267,022,376$ See accompanying notes to basic financial statements. TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2014 Component Units Town of Nantucket, Massachusetts Page 34 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2014 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents 21,412,743$ 352,396$ 19,836,431$ 41,601,570$ Investments 4,272,906 - 114,982 4,387,888 Receivables, net of allowance for uncollectibles: Property taxes 3,006,688 - 156,660 3,163,348 Departmental and other 3,802,641 - 161,282 3,963,923 Intergovernmental 423,213 - 1,567,453 1,990,666 Due from other funds 776,230 - - 776,230 Total Assets 33,694,421 352,396 21,836,808 55,883,625 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 33,694,421$ 352,396$ 21,836,808$ 55,883,625$ Liabilities: Warrants and accounts payable 1,268,580$ 6,482$ 358,858$ 1,633,920$ Accrued payroll and withholdings 1,164,273 - 86,777 1,251,050 Other liabilities - - 196,962 196,962 Due to other funds - - 776,230 776,230 Bond anticipation notes payable - - 1,621,551 1,621,551 Total Liabilities 2,432,853 6,482 3,040,378 5,479,713 Deferred Inflows of Resources Unavailable revenue - property taxes 2,373,564 - 156,660 2,530,224 Unavailable revenue - other 3,382,805 - 161,282 3,544,087 Total Deferred Inflows of Resources 5,756,369 - 317,942 6,074,311 Fund Balances: Nonspendable - - 114,762 114,762 Restricted 650,518 345,914 18,363,726 19,360,158 Committed 8,061,318 - - 8,061,318 Assigned 2,047,757 - - 2,047,757 Unassigned 14,745,606 - - 14,745,606 Total Fund Balances 25,505,199 345,914 18,478,488 44,329,601 Total Liabilities , Deferred Inflows of Resources and Fund Balances 33,694,421$ 352,396$ 21,836,808$ 55,883,625$ - - - - See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 35 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION JUNE 30, 2014 Total Governmental Fund Balances 44,329,601$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.230,518,065 Other assets are not available to pay for current-period expenditures and are therfore deferred inflows of financial resources in the funds.6,074,311 Assets and liabilities of the Town's internal service funds are included in the Statement of Net Position, but are not reported in the governmental funds.1,036,235 In the Statement of Activities, interest is accrued on outstanding long-term debt whereas in the governmental funds, interest is not reported until due.(628,817) Long-term liabilities are not due and payable in the current period and therefore are not reported in the government funds: Unamortized premiums on bonds (40,366) Bonds and notes payable (54,830,687) Compensated absences (1,540,760) Other postemployment benefits (27,217,202) Net Position of Governmental Activities 197,700,380$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 36 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2014 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Property taxes 63,434,664$ -$ -$ 63,434,664$ Intergovernmental 4,479,707 - 3,639,639 8,119,346 Motor vehicle and other excises 2,478,758 - 33,851 2,512,609 Hotel and meals taxes 3,558,082 - - 3,558,082 Community preservation surcharges - - 1,773,519 1,773,519 Licenses and permits 1,405,911 - - 1,405,911 Penalties and interest on taxes 598,411 - - 598,411 Fines and forfeitures 296,917 - - 296,917 Investment income 114,392 - 33,129 147,521 Departmental and other revenue 1,691,987 - 2,949,256 4,641,243 Contributions and donations - - 372,331 372,331 Total Revenues 78,058,829 - 8,801,725 86,860,554 Expenditures: Current: General government 7,515,564 223,343 734,652 8,473,559 Public safety 8,603,860 8,877 1,387,531 10,000,268 Education 23,710,704 - 3,071,779 26,782,483 Public works 3,288,705 4,405 819,123 4,112,233 Health and human services 912,264 - 323,815 1,236,079 Culture and recreation 1,182,179 29,449 3,871,814 5,083,442 Pension and fringe benefits 15,661,255 - - 15,661,255 State and county assessments 566,814 - - 566,814 Debt service: Principal 4,994,611 - 411,333 5,405,944 Interest 2,186,325 - - 2,186,325 Total Expenditures 68,622,281 266,074 10,620,047 79,508,402 Excess (Deficiency) of Revenues Over (Under) Expenditures 9,436,548 (266,074) (1,818,322) 7,352,152 Other Financing Sources (Uses): Sale of capital assets - - 3,888,758 3,888,758 Transfers in 1,751,972 - 350,000 2,101,972 Transfers out (8,403,098) (641,494) - (9,044,592) Total Other Financing Sources (Uses)(6,651,126) (641,494) 4,238,758 (3,053,862) Net Change in Fund Balances 2,785,422 (907,568) 2,420,436 4,298,290 Fund Balances - Beginning 22,719,777 1,253,482 16,058,052 40,031,311 Fund Balances - Ending 25,505,199$ 345,914$ 18,478,488$ 44,329,601$ See acompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 37 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2014 Net Change in Fund Balances - Total Governmental Fund Balances 4,298,290$ Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In addition, when a capital asset is disposed of, a gain or loss is calculated and reported in the Statement of Activities whereas the in the governmental funds, proceeds are reported as revenues. The net amounts are reflected here as reconciling items: Gain on disposal of capital assets reported in the Statement of Activities 1,379,639 Proceeds from disposition of capital assets reported as revenues in the governmental funds (3,888,758) Capital outlays 5,202,849 Depreciation expense (3,506,396) Net effect of reporting capital assets (812,666) In the Statement of Activities, Internal Service Funds established to administer the Town's health insurance and worker's compensation activities are included within the Statement of activities whereas these activities are not presented in the Statement of Revenues, Expenditures and Changes in Fund Balances.778,634 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the financial resources of governmental funds. Neither has any effect on net position. Also governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are amortized in the Statement of Activities. The net amounts are reflected here as reconciling items: Repayments of debt 5,405,946 Net effect of reporting long-term debt 5,405,946 Revenues in the Statement of Activities that do not provide current financial resources are unavailable in the Statement of Revenues, Expenditures and Changes in Fund Balances. Therefore, the recognition of revenue for various types of accounts receivable differ between the two statements. The amount presented represents the following differences derived . from unavailable revenue.(1,055,189) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Accrued interest 88,458 Compensated absences (356,390) Amortization of premiums on bonds and notes payable 22,543 Other Postemployment benefits (3,994,092) Other net items 3 Net effect of reporting long-term liabilities (4,239,478) Change in Net Position of Governmental Activities 4,375,537$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 38 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2014 Governmental Activities Nantucket Our Internal Siasconset Wannacomet Memorial Island Solid Service Water Water Sewer Airport Home Waste Total Fund Assets: Current assets: Cash and cash equivalents 445,742$ 2,662,741$ 8,636,658$ 6,733,061$ 3,413,537$ 2,703,196$ 24,594,935$ 695,052$ Receivables (net): User charges 140,864 544,074 777,305 874,861 1,809,261 571,664 4,718,029 - Privilege fees - - 431,532 - - - 431,532 - Intergovernmental - - 1,478,575 332,272 - - 1,810,847 - Inventory - 21,614 - 370,819 - - 392,433 - Reinsured claims receivable - - - - - - - 181,498 Total current assets 586,606 3,228,429 11,324,070 8,311,013 5,222,798 3,274,860 31,947,776 876,550 Noncurrent assets: Receivables (net): Intergovernmental - - 1,707,628 - - - 1,707,628 - Deposit held by third party - - - - - - - 1,830,000 Nondepreciable capital assets 3,817,361 5,537,171 12,419,246 8,605,260 - 2,651,406 33,030,444 - Capital assets (net of depreciation)8,922,168 28,993,763 71,800,048 54,019,878 682,765 5,698,123 170,116,745 - Total noncurrent assets 12,739,529 34,530,934 85,926,922 62,625,138 682,765 8,349,529 204,854,817 1,830,000 Total Assets 13,326,135 37,759,363 97,250,992 70,936,151 5,905,563 11,624,389 236,802,593 2,706,550 Deferred Outflows of Resources Prepaid expense - - - - - - - 42,100 Total Deferred Outflows of Resources - - - - - - - 42,100 Total Assets and Deferred Outflows of Resources 13,326,135$ 37,759,363$ 97,250,992$ 70,936,151$ 5,905,563$ 11,624,389$ 236,802,593$ 2,748,650$ Liabilities: Current liabilities: Warrants and accounts payable 7,779 142,332 506,835 784,004 110,789 166,841 1,718,580 886,449 Accrued payroll and withholdings - 26,974 22,379 86,714 140,262 569 276,898 - Health claims incurred but not reported - - - - - - - 775,395 Accrued interest 87,804 232,277 518,723 56,011 - 6,675 901,490 - Other liabilities - - - 380,977 - - 380,977 - Bond anticipation notes payable 500,000 800,000 5,999,200 1,001,000 - - 8,300,200 - Unamortized premiums on bonds 5,048 62,717 30,738 28,431 - - 126,934 - Compensated absences - 107,011 23,757 196,095 144,140 - 471,003 - Workers' compensation claims incurred but not reported - - - - - - - 50,571 Bonds and notes payable 605,000 1,560,000 2,322,524 834,000 - 40,000 5,361,524 - Total current liabilities 1,205,631 2,931,311 9,424,156 3,367,232 395,191 214,085 17,537,606 1,712,415 Noncurrent liabilities: Unamortized premiums on bonds 70,672 499,812 202,017 213,176 - - 985,677 - Compensated absences - 107,011 23,757 196,094 144,139 - 471,001 - Landfill closure - - - - - 7,294,000 7,294,000 - Other postemployment benefits 166,434 500,292 341,491 2,094,350 3,124,841 - 6,227,408 - Bonds and notes payable 6,180,000 18,150,000 39,746,435 11,300,000 - 455,000 75,831,435 - Total noncurrent liabilities 6,417,106 19,257,115 40,313,700 13,803,620 3,268,980 7,749,000 90,809,521 - Total Liabilities 7,622,737 22,188,426 49,737,856 17,170,852 3,664,171 7,963,085 108,347,127 1,712,415 Total Deferred Inflows of Resources - - - - - - - - Total Liabilities and Deferred Inflows of Resources 7,622,737 22,188,426 49,737,856 17,170,852 3,664,171 7,963,085 108,347,127 1,712,415 Net Position: Net Investment in capital assets 5,378,809 13,458,405 35,918,380 49,248,531 682,765 7,854,529 112,541,419 - Unrestricted 324,589 2,112,532 11,594,756 4,516,768 1,558,627 (4,193,225) 15,914,047 1,036,235 Total Net Position 5,703,398$ 15,570,937$ 47,513,136$ 53,765,299$ 2,241,392$ 3,661,304$ 128,455,466$ 1,036,235$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 39 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2014 Governmental Activities Nantucket Our Internal Siasconset Wannacomet Memorial Island Solid Service Water Water Sewer Airport Home Waste Total Fund Operating Revenues: Charges for services 802,294$ 4,554,300$ 5,935,331$ 12,761,708$ 5,494,749$ 3,492,571$ 33,040,953$ -$ Contributions - - - - - - - 12,934,294 Intergovernmental - - - 91,000 - - 91,000 - Other 60,510 279,638 198,610 - 12,898 - 551,656 418,706 Total Operating Revenues 862,804 4,833,938 6,133,941 12,852,708 5,507,647 3,492,571 33,683,609 13,353,000 Operating Expenses: Operating costs 227,567 2,107,408 2,562,788 11,944,071 7,598,409 8,067,750 32,507,993 - Depreciation 207,029 778,698 2,197,593 2,391,192 72,105 288,633 5,935,250 - Maintenance - - - 704,116 - 587,120 1,291,236 - Employee benefits - - - - - - - 12,586,074 Total Operating Expenses 434,596 2,886,106 4,760,381 15,039,379 7,670,514 8,943,503 39,734,479 12,586,074 Total Operating Income 428,208 1,947,832 1,373,560 (2,186,671) (2,162,867) (5,450,932) (6,050,870) 766,926 Nonoperating Revenues (Expenses): Intergovernmental - - 259,563 1,717,405 - - 1,976,968 - Investment income 1,618 10,273 6,151 22,789 3,199 - 44,030 11,708 Interest expense (290,331) (738,625) (1,242,201) (552,819) - (19,526) (2,843,502) - Total Nonoperating Revenues (Expenses)(288,713) (728,352) (976,487) 1,187,375 3,199 (19,526) (822,504) 11,708 Income (Loss) Before Capital Contributions and Transfers 139,495 1,219,480 397,073 (999,296) (2,159,668) (5,470,458) (6,873,374) 778,634 Capital Contributions Privilege fees - - 502,749 - - - 502,749 - Transfers Transfers in 153,500 - - 304,598 2,295,000 5,300,000 8,053,098 - Transfers out (15,250) (179,265) (192,316) (329,096) (188,452) (206,099) (1,110,478) - Transfers 138,250 (179,265) (192,316) (24,498) 2,106,548 5,093,901 6,942,620 - Change in Net Position 277,745 1,040,215 707,506 (1,023,794) (53,120) (376,557) 571,995 778,634 Net Position at Beginning of Year, as restated (See note IV)5,425,653 14,530,722 46,805,630 54,789,093 2,294,512 4,037,861 127,883,471 257,601 Net Position at End of Year 5,703,398$ 15,570,937$ 47,513,136$ 53,765,299$ 2,241,392$ 3,661,304$ 128,455,466$ 1,036,235$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 40 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED JUNE 30, 2014 Governmental Activities Nantucket Our Internal Siasconset Wannacomet Memorial Island Solid Service Water Water Sewer Airport Home Waste Total Fund Cash Flows from Operating Activities: Receipts from users 766,789$ 4,486,880$ 5,926,416$ 13,021,757$ 4,821,762$ 3,426,564$ 32,450,168$ -$ Employee and employer contributions - - - - - - - 12,934,294 Receipts from other operating revenues 60,510 279,638 198,610 - 12,898 - 551,656 237,208 Payments to employees - (1,554,318) (1,106,710) (4,270,173) (3,955,305) (19,526) (10,906,032) - Payments to vendors (223,327) (308,417) (1,172,871) (7,701,414) (3,172,220) (8,487,754) (21,066,003) - Payments for interfund services used - - - - - - - (13,742,036) Net Cash Provided by (Used in) Operating Activities 603,972 2,903,783 3,845,445 1,050,170 (2,292,865) (5,080,716) 1,029,789 (570,534) Cash Flows from Noncapital Financing Activities: Operating grants - - 405,048 15,713 - - 420,761 - Advances (to) from other funds 412,362 (669,008) 526,304 (23,122) - - 246,536 197,000 Transfers in 153,500 - - 304,598 2,295,000 5,300,000 8,053,098 - Transfers out (15,250) (179,265) (192,316) (329,096) (188,452) (206,099) (1,110,478) - Net Cash Provided by (Used in) Noncapital Financing Activities 550,612 (848,273) 739,036 (31,907) 2,106,548 5,093,901 7,609,917 197,000 Cash Flows from Capital and Related Financing Activities: Proceeds from the issuance of bonds and notes - - 97,000 3,664,000 - - 3,761,000 - Sewer privilege fees - - 345,087 - - - 345,087 - Proceeds from capital grants - - - 1,385,133 - - 1,385,133 - Acquisition and construction of capital assets (1,005,294) (2,374,861) (3,635,219) (1,982,091) (141,585) (7,880) (9,146,930) - Proceeds from bond anticipation notes - - 4,675,981 1,001,000 - - 5,676,981 - Repayments of bond anticipation notes - - (97,000) (4,663,895) - - (4,760,895) - Principal payments on bonds and notes (590,000) (1,545,000) (2,284,019) (765,000) - (40,000) (5,224,019) - Interest payments on bonds and notes (304,383) (825,374) (1,341,150) (592,138) - (20,352) (3,083,397) - Net Cash Used in Capital and Related Financing Activities (1,899,677) (4,745,235) (2,239,320) (1,952,991) (141,585) (68,232) (11,047,040) - Cash Flows from Investing Activities: Investment income 1,618 10,273 6,151 22,789 3,199 - 44,030 11,708 Investment of operating cash - - - - - - - 174,087 Net Cash Provided by Investing Activities 1,618 10,273 6,151 22,789 3,199 - 44,030 185,795 Net Change in Cash and Cash Equivalents (743,475) (2,679,452) 2,351,312 (911,939) (324,703) (55,047) (2,363,304) (187,739) Cash and Cash Equivalents: Beginning of the year 1,189,217 5,342,193 6,285,346 7,645,000 3,738,240 2,758,243 26,958,239 882,791 End of the year 445,742$ 2,662,741$ 8,636,658$ 6,733,061$ 3,413,537$ 2,703,196$ 24,594,935$ 695,052$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating Income (Loss)428,208$ 1,947,832$ 1,373,560$ (2,186,671)$ (2,162,867)$ (5,450,932)$ (6,050,870)$ 766,926$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 207,029 778,698 2,197,593 2,391,192 72,105 288,633 5,935,250 - Changes in assets and liabilities: Receivables (35,505) (67,420) (8,915) 169,049 (672,987) (66,007) (681,785) (181,498) Prepaid expenses - - - - - - - (42,100) Inventory - - - 74,010 - - 74,010 - Accounts payable and accrued expenses 4,240 244,673 283,207 578,691 470,884 (221,660) 1,360,035 (1,113,862) Landfill closure - - - - - 369,250 369,250 - Other liabilities - - - 23,899 - - 23,899 - Net Cash Provided by (Used in) Operating Activities 603,972$ 2,903,783$ 3,845,445$ 1,050,170$ (2,292,865)$ (5,080,716)$ 1,029,789$ (570,534)$ Noncash investing capital and financing activities: Intergovernmental subsidies of debt service -$ -$ 1,323,219$ -$ -$ -$ 1,323,219$ -$ Amortization of bond premiums 5,048 65,148 33,005 29,496 - - 132,697 - See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 41 of 124 Comprehensive Annual Financial Report TOWN OF NANUCKET, MASSACHUSETTS FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2014 Other Postemployment Private Benefits Purpose Agency Trust Fund Trust Funds Funds Assets: Cash and cash equivalents 248,522$ -$ 767,476$ Investments - 2,360,052 - Receivables, net of allowance for uncollectibles - - 98,628 Total Assets 248,522 2,360,052 866,104 Liabilities: Warrants payable - - 28,654 Accrued payroll and withholdings - - 16,930 Agency liabilities - - 280,855 Planning board deposits - - 539,665 Total Liabilities - - 866,104 Net Position: Held in trust for other postemployment benefits 248,522 - - Held in trust for private purposes - 2,360,052 - Total Net Position 248,522$ 2,360,052$ -$ - - - - - - See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 42 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2014 Other Postemployment Private Benefits Purpose Trust Fund Trust Funds Additions Contributions: Other -$ 55,670$ Total contributions - 55,670 Investment income: Interest and dividends (1,589) 26,760 Net investment earnings (1,589) 26,760 Total Additions (1,589) 82,430 Deductions Education - scholarships - 160,900 Health and human services - public assistance - 185,833 Total Deductions - 346,733 CHANGE IN NET POSITION (1,589) (264,303) NET POSITION AT BEGINNING OF YEAR 250,111 2,624,355 NET POSITION AT END OF YEAR 248,522$ 2,360,052$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 43 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2014 I. Summary of Significant Accounting Policies The accompanying basic financial statements of the Town have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to state and local governments. GAAP is prescribed by the Governmental Accounting Standards Board (GASB), which is the primary standard-setting body for state and local government entities. The following is a summary of the more significant policies and practices used by the Town: A. Reporting Entity The Town is located in Nantucket County, twenty-five miles south of Cape Cod and was incorporated as a Town in 1671. An elected five member Board of Selectmen (“Selectmen”) governs the Town and an appointed Town Manager oversees the Town’s daily executive and administrative duties. The Town provides governmental services for the territory within its boundaries, including police and fire protection, public education in grades K-12, water and sewer services, solid waste disposal, street maintenance, elderly housing, parks and recreational facilities and an airport. Discretely Presented Component Units – The Town includes two entities as component units in the Town's reporting entity because of the significance of their operations or financial relationships with the Town are such that exclusion would cause the basic financial statements to be misleading. Unless otherwise indicated, the notes to the basic financial statements pertain only to the primary government. A description of the discretely presented component units and their relationships with the Town follows: Nantucket County – The County of Nantucket (“the County”) is presented in a separate column to emphasize that it is legally separate from the Town but included because the Town is financially accountable for, and can impose its will on, the organization. The County shares the same geographical boundaries as the Town, and the Town’s Selectmen serve ex-officio as the County Commissioners. The County operates a Registry of Deeds and a Corrections Office. The County issued complete stand-alone financial statements at June 30, 2014 which may be obtained by contacting the County of Nantucket, 16 Broad Street Nantucket, Massachusetts 02554 Nantucket Islands Land Bank – The Nantucket Islands Land Bank (“the Land Bank”) was created by Chapter 669 of the Acts of 1983 of the Commonwealth of Massachusetts to acquire and manage open space and protect natural resources in Nantucket County. The Land Bank is administered by the Nantucket Islands Land Bank Commission, which is comprised of five elected members. It is legally separate from the Town but presented as a discrete component unit as the Land Bank’s bonds payable are guaranteed by the full faith and credit of the Town. The Land Bank issued complete stand-alone financial statements at June 30, 2014 which may be obtained by contacting Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Availability of Financial Information of Certain Town Enterprise Funds – The Nantucket Memorial Airport issues separate stand-alone financial statements which may be obtained by contacting them at 14 Airport Road, Nantucket, MA 02554. Town of Nantucket, Massachusetts Page 44 of 124 Comprehensive Annual Financial Report B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the fiduciary funds are excluded from the government-wide financial statements. Major individual government funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column. Major Fund Criteria – Major funds must be reported if both of the following criteria are met: 1) The total assets and deferred outflow of resources, liabilities and deferred inflow of resources, revenues, or expenditures/expenses of an individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type, and 2) The total assets and deferred outflows of resources, liabilities and deferred inflow of resources, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding element for all governmental and enterprise funds combined. Additionally, any other governmental or enterprise fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. Town of Nantucket, Massachusetts Page 45 of 124 Comprehensive Annual Financial Report The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when susceptible to accrual (i.e. measurable and available). Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, certain compensated absences, claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. The Town applies the susceptible to accrual criteria to intergovernmental revenues. In applying the susceptible to accrual concept, there are two types of revenues. In one, moneys must be expended for a specific purpose or project before any amounts will be paid to the; therefore, revenues are recognized as expenditures are incurred. In the other, moneys are virtually unrestricted and are usually revocable only for failure to comply with prescribed requirements. These resources are reflected as revenues when cash is received, or earlier if the susceptible to accrual criteria are met. State aid is accrued as revenue in the year that the funds are appropriated by the Commonwealth. The Town considers property tax revenues to be available if they are collected within 60 days after the end of the fiscal year and are material. Investment income associated with the current fiscal period is susceptible to accrual and has been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when the cash is received and are recognized as revenue at that time. The government reports the following major Governmental Funds: General Fund – is the government’s primary operating fund. It accounts for all financial resources of the general government except those required to be accounted for in another fund. Town Capital Projects Fund – is used to account for all financial resources that are restricted, committed or assigned for the acquisition or construction of capital facilities and other capital assets of the governmental funds. Nonmajor Governmental Funds – consist of other special revenue and permanent funds that are aggregated and presented in the Nonmajor Governmental Funds column on the Governmental Funds financial statements. The following describes the general use of these fund types: The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The Permanent Funds are used to account for financial resources that are restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. The proprietary fund financial statements are reported using the 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. Town of Nantucket, Massachusetts Page 46 of 124 Comprehensive Annual Financial Report Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues are user charges and fees, while operating expenses consist of salaries, ordinary maintenance, assessments and depreciation. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The government reports the following major proprietary funds: Siasconset Water Enterprise Fund – is used to account for the operations of the Town’s water activities in the Siasconset service area of the Town. Wannacomet Water Enterprise Fund – is used to account for the operations of the Town’s water activities in the remaining service areas of the Town. Sewer Enterprise Fund – is used to account for the operations of the Town’s sewer activities. Nantucket Memorial Airport Enterprise Fund – is used to account for the operations of the Town’s airport. Our Island Home Enterprise Fund – is used to account for the operations of Town’s nursing home activities. Solid Waste Enterprise Fund – is used to account for the operations of the Town’s solid waste activities. Additionally, the following proprietary fund type is reported: Internal Service Fund – is used to account for the Town’s self-insured health insurance and workers’ compensation activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government-wide financial statements. Fiduciary fund financial statements are reported using the economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity and cannot be used to support the governmental programs. The government reports the following fiduciary funds: Other Postemployment Benefits Trust Fund – is used to accumulate funds for future payments of other postemployment benefits for retirees, such as health and life insurance. Private Purpose Trust Fund – is used to account for trust arrangements under which the principal and income benefit individuals, private organizations or other governments. This fund is used for scholarships and affordable housing programs. Agency Fund – is used to account for assets held in a purely custodial capacity. The Town’s agency funds consist primarily of student activities, off-duty work details, escrow and other deposits. Town of Nantucket, Massachusetts Page 47 of 124 Comprehensive Annual Financial Report When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources, as they are needed. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Equity Deposits and Investments – The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments for the Town and its component units are reported at fair value. Receivables – Real estate and personal property taxes are assessed on January 1 every year. Bills are sent quarterly and are due on August 1, November 1, February 1, and May 1, or thirty days subsequent to the mailing date. Interest accrues on delinquent taxes at the rate of 14% per annum. Property taxes levied are recorded as receivables in the fiscal year of the levy. The Town is allowed to take delinquent taxes into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. User charges receivables represent amounts billed for water, sewer, monthly landfill tipping fees, annual commercial landfill user fees, airport travel and fuel sales and nursing home fees. Water and sewer charges are billed monthly and are subject to penalties and interest if not paid by the respective due date. The Town is authorized to take water and sewer fees into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. Real estate taxes, water user fees and sewer user fees that are secured through a lien process are considered 100% collectible. Accordingly, an allowance for uncollectible balances for these receivables is not reported. All personal property tax and excise tax receivables are shown net of an allowance for uncollectible balances comprised of those outstanding amounts greater than five years old. Departmental, landfill, airport and nursing home receivables are shown net of an allowance for uncollectible balances based on historical trends and specific account analysis. Sewer privilege fees represent betterments assessed to property owners related to upgrades to the Surfside Wastewater Treatment Plant. These are considered 100% collectible since they are secured through a lien on the owner’s property. Inventories and Prepaid Items – Inventories of the Wannacomet Water Enterprise Fund and Nantucket Memorial Airport Enterprise Fund are valued at the lower of cost or market, with cost determined on a first-in, first out basis. Certain supplies and small tools are expensed when purchased. All other inventories, which are not material to the basic financial statements, are considered to be expenditures at the time of purchase. Restricted Assets – Certain assets of the component units are classified as restricted because their use is restricted by contract covenants. Capital Assets – Capital assets, which include land, land improvements, buildings and improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer mains, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded Town of Nantucket, Massachusetts Page 48 of 124 Comprehensive Annual Financial Report at the estimated fair market value at the date of donation. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or construction, respectively, with expected lives of greater than one year. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets (excluding land and construction-in-process) are depreciated on a straight-line- basis. The estimated useful lives of capital assets being depreciated are as follows: Buildings and improvements 33-50 years Machinery and equipment 5-7 years Vehicles 5-10 years Infrastructure 40-70 years Interfund Balances – Activity between funds that are representative of lending arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Interfund Transfers – During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out in the individual fund statements. Transfers between and within governmental and fiduciary funds are eliminated from the governmental activities in the statement of activities. Any residual balances outstanding between the governmental activities and the business –type activities are reported in the statement of activities as transfers, net. Investment Income – Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by state law. Investment income of the proprietary funds is assigned to the fund within which it applies. Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but unused sick pay benefits. Vacation time may be carried for a period of 6 months subsequent to year-end and if not used during this period is lost. Compensated absence liabilities related to both governmental and business-type activities are normally paid from the funds reporting payroll and related expenditures. Amounts related to these benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in Governmental Funds only if they have matured. Long-term Obligations – Long-term debt is reported as a liability in the government-wide and proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond anticipation notes payable are reported net of the applicable bond premium or discount. Town of Nantucket, Massachusetts Page 49 of 124 Comprehensive Annual Financial Report In the governmental fund financial statements, the face amount of long-term debt issued is reported as other financing sources. Premiums received on a debt issuance are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are exclusively reported as general government expenditures regardless of whether they are withheld from the actual proceeds. Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial 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. In addition to liabilities, the statement of financial 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 thus will not be recognized as an inflow of resources (revenue) until that time. Net Position – In the government-wide financial statements, net position reported as “Net investment in capital assets” includes capital assets, net of accumulated depreciation, less the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital related debt are not considered to be capital related debt. Net position is reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific use. Net position has been restricted for the following: Nonexpendable permanent funds represent the endowment portion of donor restricted trusts that support governmental programs. Federal and State grants represent assets that have restrictions placed on them from federal and state granting agencies. Community preservation represents assets that are restricted by state law for the purposes of acquiring or developing open space and recreational facilities, historic resources and affordable housing. Sale of real estate – represents assets that have accumulated from the proceeds of the sale of Town owned property. These are restricted by state law for the purposes of funding capital projects. Revolving funds – represent assets that have accumulated from user charges assessed to support specific programs. These amounts are restricted by state law for the purpose of funding those programs for which the user charges were assessed. Other purposes represent assets that are restricted by donors for numerous various minor specific governmental programs and uses. Fund Equity – In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent in which the Town is required to honor constraints on the specific purpose for which amounts in the funds can be spent. Town of Nantucket, Massachusetts Page 50 of 124 Comprehensive Annual Financial Report Fund balance is reported in five components – non-spendable, restricted, committed, assigned, and unassigned as described below: Non-spendable represents amounts that cannot be spent because they are either (a) not in spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be maintained intact such as the corpus of an endowment. Restricted represents amounts that have constraints placed either externally by third-parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the Town to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes a legally enforceable requirement (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation. Committed represents amounts that can only be used for specific purposes pursuant to formal action of the Town Meeting through Town Meeting Articles, which represent the most binding constraint that give rise to committed fund balance. Those committed amounts cannot be used for any other purpose unless the Town Meeting removes or changes the specified use by taking the same type of action (through Town Meeting Articles) it employed previously to commit those amounts. Assigned represents amounts that are constrained by the Town’s intent to be used for specific purposes, but are neither restricted nor committed. The Town has by ordinance authorized the Director of Municipal Finance to assign fund balance. The Town Meeting may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unassigned represents amounts that have not been restricted, committed or assigned to specific purposes within the general fund. The general fund is the only fund that reports a positive unassigned fund balance amount. Other governmental funds besides the general fund can only report a negative unassigned fund balance amount. When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use it is the Town’s policy to use committed resources first, then assigned, and then unassigned as they are needed. The Town has not established financial policies with respect to maintaining minimum fund balance amounts. Stabilization Fund – The Town maintains a general stabilization fund which may be used for any municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals $4,776,308 at June 30, 2014 and is reported as unassigned fund balance in the General Fund. Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify encumbrances that arise from the issuance of purchase orders resulting from normal purchasing activity approved by the Director of Finance as assigned, and (2) classify encumbrances that result from an action of the Town Meeting as committed. Encumbrances of funds already restricted, or committed are included within the classification of those fund balances and not Town of Nantucket, Massachusetts Page 51 of 124 Comprehensive Annual Financial Report reported separately. The Town reports $2,047,757 of encumbrances from normal purchasing activity in the general fund as assigned. There are no, encumbrances reported in any other fund. The following table reflects the Town’s fund equity categorizations: E. Excess of Expenditures Over Appropriations During the fiscal year ended, the Town overspent its appropriation for unemployment benefits by $231,322. This will be raised through future tax assessments when the Town sets its tax rate for fiscal year 2015. The Town did not did not exceed appropriations for any of its other legally adopted line item appropriations in the budget. In addition, the Town did not experience deficits in any of its other funds. F. Use of Estimates The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. Town Nonmajor Capital Governmental General Projects Funds Total Nonspendable: Nonexpendable trust funds -$ -$ 44,305$ 44,305$ Restricted: General government - - 5,742,985 5,742,985 Public safety - - 4,055,667 4,055,667 Education - - 1,773,295 1,773,295 Public works - - 622,151 622,151 Health and human services - - 503,584 503,584 Culture and recreation - - 68,386 68,386 Community preservation - - 5,668,115 5,668,115 Capital outlay - 345,914 - 345,914 Debt service 650,518 - - 650,518 Committed: General government 1,531,037 - - 1,531,037 Education 1,028,264 - - 1,028,264 Public safety 203,846 - - 203,846 Public works 840,111 - - 840,111 Assigned: Purchase orders 2,047,757 - - 2,047,757 Subsequent years' budget 4,458,060 - - 4,458,060 Unassigned 14,745,606 - - 14,745,606 25,505,199$ 345,914$ 18,478,488$ 44,329,601$ Town of Nantucket, Massachusetts Page 52 of 124 Comprehensive Annual Financial Report II. Detailed Notes to All Funds A. Deposits and Investments A cash and investment pool is maintained that is available for use by all funds. Each fund type’s portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The deposits and investments of trust funds are held separately from those of other funds. State laws and regulations require the Town 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 State Treasurer’s investment pool (the Pool). In 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 (the 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. Primary Government (Town) Custodial Credit Risk: Deposits - 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 has adopted a deposit policy which 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. At year-end, the carrying amount of the Town's deposits was $67,907,555 and the bank balance was $70,057,652. Of the Town's bank balance, $19,154,334 was covered by federal depository insurance or the Depositors Insurance Fund (“DIF”), and $50,789,819 was fully collateralized. Custodial Credit Risk: Investments – 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 has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town’s name and tax identification number. The Town’s investments of $4,293,301 in U.S. government obligations and $348,500 in corporate debt securities are held by a broker-dealer where the Town’s assets are segregated from the broker-dealer firm assets and are protected up to $500,000 under coverage through the Securities Investor Protection Corporation (“SIPC”). Additionally, the broker-dealer carries excess insurance to cover claims over the SIPC limit through Lloyd’s with a firm cap of $1 billion with no individual client limit. The repurchase agreements consist of overnight sweep agreements which are invested in U.S. Treasury notes. Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other Town of Nantucket, Massachusetts Page 53 of 124 Comprehensive Annual Financial Report special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio. Credit Risk – The Town restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. Concentration of Credit Risk – The Town does not place a limit on the amount that may be invested in any one issuer. The Town has 35% of its investments in United States government backed securities and 13% in MMDT. At June 30, 2014 the Town had the following investments and maturities: Time Until Maturity (Years) Fair Less More Investment Type Value Than 1 1-5 6-10 Than 10 Corporate fixed income securities 348,500$ -$ -$ -$ 348,500$ U.S. government obligations 4,293,301 509,178 2,370,371 1,413,752 - Certificates of Deposit 4,788,926 1,430,321 2,551,010 655,904 151,691 Total Town investments with maturities 9,430,727 1,939,499$ 4,921,381$ 2,069,656$ 500,191$ Other Investments: Equities 451,173 Mutual Funds 1,654,968 State Investment Pool 1,770,365 Money Market Mutual Funds 8,825 Total Town investments 13,316,058$ U.S. Government Other Agencies & Governments Certificates Treasuries (Municipal) Of Deposit Total AA+4,293,301$ -$ -$ 4,293,301$ A - 248,125 - 248,125 BB - 100,375 - 100,375 Not Rated - - 4,788,926 4,788,926 Total - All 4,293,301$ 348,500$ 4,788,926$ 9,430,727$ Town of Nantucket, Massachusetts Page 54 of 124 Comprehensive Annual Financial Report Discretely Presented Component Unit – Nantucket County Custodial Credit Risk: Deposits- The County has adopted a deposit policy which requires that the Treasurer review each bank doing business with the County on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. At year-end, the carrying amount of the County's deposits was $3,432,850 and the bank balance of $3,493,508 was covered by federal depository insurance or fully collateralized. Custodial Credit Risk: Investments- The County has adopted an investment policy regarding custodial credit risk that 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 At year-end, the County’s investments consisted of Certificates of Deposit totaling $42,917 which were covered by federal depository insurance and were not subject to custodial credit risk. These are recorded as cash equivalents at June 30, 2014. Interest Rate Risk - The County 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 County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer Discretely Presented Component Unit – Nantucket Islands Land Bank Custodial Credit Risk: Deposits -The Land Bank does not have a policy regarding custodial credit risk for deposits. At year-end, the carrying amount of the Land Bank’s deposits was $13,129,275, of which $301,519 was exposed to custodial credit risk. The Land Bank is required to hold monies in reserve in accordance with certain land acquisitions and debt service requirements of bond issuances. These reserve funds are included as restricted cash in the financial statements. Restricted Cash consist of the following as of June 30, 2014: Series A Debt Reserve $1,222,129 Mitigation agreements 336,525 Life insurance premium 209,535 $1,768,189 Town of Nantucket, Massachusetts Page 55 of 124 Comprehensive Annual Financial Report Custodial Credit Risk: Investments -The Land Bank does not have a policy regarding custodial credit risk for investments. At year-end, the Land Bank’s investments consisted of Certificates of Deposit totaling $7,553,335 which were covered by federal depository insurance or DIF and were not subject to custodial credit risk. The Land Bank has entered into an agreement with the Town, which requires the Land Bank to establish a working capital reserve fund. This fund, along with the guarantee of the Town of its full faith and credit, secures the Series 2007A, Series 2009A and Series 2012A bonds outstanding as of June 30, 2014. In addition, the Land Bank is prohibited from acquiring additional real estate at any time that an amount equal to one year’s debt service relating to the bonds in the reserve fund is not on deposit. Interest Rate Risk -The Land Bank does not have a formal policy regarding interest rate risk. B. Receivables Receivables as of year-end for the Town’s individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables as of year-end for the Town’s propriety funds are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes 3,364,399$ (248,293)$ 3,116,106$ Tax liens 2,939,567 - 2,939,567 Motor vehicle and other excise taxes 1,338,561 (518,221) 820,340 Departmental and other 412,258 (161,000) 251,258 Intergovernmental 1,990,666 - 1,990,666 Total 10,045,451$ (927,514)$ 9,117,937$ Gross Allowance for Net Amount Uncollectibles Amount Receivables: Water user charges 684,938$ -$ 684,938$ Sewer user charges 1,208,837 - 1,208,837 Airport user charges 874,861 - 874,861 Our Island Home user charges 1,809,261 - 1,809,261 Solid waste user charges 571,664 - 571,664 Intergovernmental 3,518,475 - 3,518,475 Total 8,668,036$ -$ 8,668,036$ Town of Nantucket, Massachusetts Page 56 of 124 Comprehensive Annual Financial Report Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquate liabilities of the current period. The following identifies the componetns of deferred inflows of resources in the governmental funds: Massachusetts Water Pollution Abatement Trust – The Town has entered into numerous loan agreements with the Massachusetts Water Pollution Abatement Trust (“MWPAT”). It is expected that the Town will be subsidized by MWPAT on a periodic basis for principal in the amount of $1,862,984 and interest in the amount of $1,390,688 until the maturity of these agreements. GAAP requires the recognition of gross debt relative to these agreements; therefore, a receivable totaling $1,862,984 has been reported in the Sewer Enterprise Fund. Also, as of June 30, 2014 the Town had yet to receive, from undrawn loan proceeds an amount of $1,323,219; however, since the Town is legally obligated for the total amount of the debt, the gross total amount to be received has been recorded as temporary debt in the accompanying basic financial statements and the amount not yet received has been recorded as a receivable in the accompanying basic financial statements within the Sewer Enterprise Fund. C. Interfund Receivables, Payables and Transfers The composition of interfund transfer for the fiscal year ended June 30, 2014, was as follows: Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes 2,521,706$ 156,660$ 2,678,366$ Tax liens 2,744,183 - 2,744,183 Motor vehicle and other excise taxes 400,504 - 400,504 Departmental and other 89,976 161,282 251,258 Intergovernmental - - - Total 5,756,369$ 317,942$ 6,074,311$ Nonmajor Nantucket Old General Governmental Siasconset Memorial Island Solid Fund Funds Water Airport Home Waste Total General Fund -$ 350,000$ 153,500$ 304,598$ 2,295,000$ 5,300,000$ 8,403,098$ (1) Town Capital Projects 641,494 - - - - - 641,494 (2) Siasconset Water 15,250 - - - - - 15,250 (3) Wannacomet Water 179,266 - - - - - 179,266 (3) Sewer 192,316 - - - - - 192,316 (3) Nantucket Memorial Airport 329,096 - - - - - 329,096 (3) Old Island Home 188,451 - - - - - 188,451 (3) Solid Waste 206,099 - - - - - 206,099 (3) Total 1,751,972$ 350,000$ 153,500$ 304,598$ 2,295,000$ 5,300,000$ 10,155,070$ (1) Transfer to nonmajor funds to fund community school program and waterways. Transfers to enterprise funds to subsidize operations. (2) Transfers to general fund to close out unspent capital funds. (3) Transfers to general fund for indirect costs. Transfers In Transfers Out Town of Nantucket, Massachusetts Page 57 of 124 Comprehensive Annual Financial Report D. Capital Assets Capital asset activity for governmental activities for the year ended June 30, 2014, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land 170,310,175$ -$ (2,501,621)$ 167,808,554$ Construction in process 13,624,174 2,055,148 (1,520,718) 14,158,604 Total capital assets not being depreciated 183,934,349 2,055,148 (4,022,339) 181,967,158 Capital assets being depreciated: Buildings and improvements 53,331,503 1,510,874 - 54,842,377 Infrastructure 28,003,801 1,904,620 - 29,908,421 Machinery and equipment 5,305,409 914,374 (413,548) 5,806,235 Vehicles 8,617,299 338,556 (434,390) 8,521,465 Total capital assets being depreciated 95,258,012 4,668,424 (847,938) 99,078,498 Less accumulated depreciation for: Buildings and improvements (19,072,969) (1,367,851) - (20,440,820) Infrastructure (19,381,639) (838,694) - (20,220,333) Machinery and equipment (3,026,994) (744,290) 413,548 (3,357,736) Vehicles (6,387,531) (555,561) 434,390 (6,508,702) Total accumulated depreciation (47,869,133) (3,506,396) 847,938 (50,527,591) Total capital assets being depreciated, net 47,388,879 1,162,028 - 48,550,907 Total governmental activities capital assets, net 231,323,228$ 3,217,176$ (4,022,339)$ 230,518,065$ Town of Nantucket, Massachusetts Page 58 of 124 Comprehensive Annual Financial Report Capital asset activity for business-type activities for the year ended June 30, 2014, was as follows: Beginning Ending Balance Increases Decreases Balance Business-Type Activities: Capital assets not being depreciated: Land 17,833,070$ -$ (6,500)$ 17,826,570$ Construction in process 9,560,019 8,009,718 (2,365,862) 15,203,875 Total capital assets not being depreciated 27,393,089 8,009,718 (2,372,362) 33,030,445 Capital assets being depreciated: Buildings and improvements 13,278,687 154,721 - 13,433,408 Infrastructure 203,730,586 3,561,252 - 207,291,838 Machinery and equipment 22,490,662 217,607 (410,824) 22,297,445 Vehicles 5,308,537 - (820,934) 4,487,603 Total capital assets being depreciated 244,808,472 3,933,580 (1,231,758) 247,510,294 Less accumulated depreciation for: Buildings and improvements (5,298,617) (344,033) - (5,642,650) Infrastructure (46,347,305) (4,738,917) - (51,086,222) Machinery and equipment (16,394,181) (709,417) 410,824 (16,692,774) Vehicles (4,649,955) (142,883) 820,934 (3,971,904) Total accumulated depreciation (72,690,058) (5,935,250) 1,231,758 (77,393,550) Total capital assets being depreciated, net 172,118,414 (2,001,670) - 170,116,744 Total business-type activities capital assets, net 199,511,503$ 6,008,048$ (2,372,362)$ 203,147,189$ Town of Nantucket, Massachusetts Page 59 of 124 Comprehensive Annual Financial Report Beginning Ending Balance Increases Decreases Balance Business-type Activities: Siasconset Water Capital assets not being depreciated: Land 2,681,127$ -$ (6,500)$ 2,674,627$ Construction in process 130,940 1,011,794 - 1,142,734 Total capital assets not being depreciated 2,812,067 1,011,794 (6,500) 3,817,361 Capital assets being depreciated: Buildings and improvements 364,855$ -$ -$ 364,855$ Infrastructure 9,890,167 - - 9,890,167 Machinery and equipment 76,796 - - 76,796 Total capital assets being depreciated 10,331,818 - - 10,331,818 Less accumulated depreciation for: Buildings and improvements (210,528) (9,122) - (219,650) Infrastructure (941,428) (194,833) - (1,136,261) Machinery and equipment (50,665) (3,074) - (53,739) Total accumulated depreciation (1,202,621) (207,029) - (1,409,650) Total capital assets being depreciated, net 9,129,197 (207,029) - 8,922,168 Total Siasconset Water capital assets, net 11,941,264$ 804,765$ (6,500)$ 12,739,529$ Business-type Activities: Wannacomet Water Capital assets not being depreciated: Land 3,388,367$ -$ -$ 3,388,367$ Construction in process - 2,148,804 - 2,148,804 Total capital assets not being depreciated 3,388,367 2,148,804 - 5,537,171 Capital assets being depreciated: Buildings and improvements 1,792,458 - - 1,792,458 Infrastructure 32,826,514 147,805 - 32,974,319 Machinery and equipment 3,751,282 78,252 - 3,829,534 Vehicles 267,998 - (30,099) 237,899 Total capital assets being depreciated 38,638,252 226,057 (30,099) 38,834,210 Less accumulated depreciation for: Buildings and improvements (384,726) (43,409) - (428,135) Infrastructure (5,531,814) (658,548) - (6,190,362) Machinery and equipment (2,908,697) (75,355) - (2,984,052) Vehicles (266,611) (1,386) 30,099 (237,898) Total accumulated depreciation (9,091,848) (778,698) 30,099 (9,840,447) Total capital assets being depreciated, net 29,546,404 (552,641) - 28,993,763 Total Wannacomet Water capital assets, net 32,934,771$ 1,596,163$ -$ 34,530,934$ Town of Nantucket, Massachusetts Page 60 of 124 Comprehensive Annual Financial Report Beginning Ending Business-type Activities: Sewer Balance Increases Decreases Balance Capital assets not being depreciated: Land 6,375,583$ -$ -$ 6,375,583$ Construction in process 2,519,624 3,524,039 6,043,663 Total capital assets not being depreciated 8,895,207 3,524,039 - 12,419,246 Capital assets being depreciated: Buildings and improvements 271,701 - - 271,701 Infrastructure 82,962,990 - - 82,962,990 Machinery and equipment 15,581,287 103,680 (17,290) 15,667,677 Vehicles 1,180,452 - (390,350) 790,102 Total capital assets being depreciated 99,996,430 103,680 (407,640) 99,692,470 Less accumulated depreciation for: Buildings and improvements (142,955) (6,864) - (149,819) Infrastructure (14,158,490) (1,701,051) - (15,859,541) Machinery and equipment (11,065,067) (420,589) 17,290 (11,468,366) Vehicles (735,957) (69,089) 390,350 (414,696) Total accumulated depreciation (26,102,469) (2,197,593) 407,640 (27,892,422) Total capital assets being depreciated, net 73,893,961 (2,093,913) - 71,800,048 Total Sewer capital assets, net 82,789,168$ 1,430,126$ -$ 84,219,294$ Capital assets not being depreciated: Land 2,736,587$ -$ -$ 2,736,587$ Construction in process 6,873,738 1,325,081 (2,330,145) 5,868,674 Total capital assets not being depreciated 9,610,325 1,325,081 (2,330,145) 8,605,261 Capital assets being depreciated: Infrastructure 77,273,432 3,413,447 - 80,686,879 Machinery and equipment 1,594,537 5,214 (393,534) 1,206,217 Vehicles 3,741,004 - (400,485) 3,340,519 Total capital assets being depreciated 82,608,973 3,418,661 (794,019) 85,233,615 Less accumulated depreciation for: Infrastructure (24,938,091) (2,184,485) - (27,122,576) Machinery and equipment (1,150,170) (134,299) 393,534 (890,935) Vehicles (3,528,304) (72,408) 400,485 (3,200,227) Total accumulated depreciation (29,616,565) (2,391,192) 794,019 (31,213,738) Total capital assets being depreciated, net 52,992,408 1,027,469 - 54,019,877 Total Nantucket Memorial Airport capital assets, net 62,602,733$ 2,352,550$ (2,330,145)$ 62,625,138$ Business-type Activities: Nantucket Memorial Airport Town of Nantucket, Massachusetts Page 61 of 124 Comprehensive Annual Financial Report Beginning Ending Business-type Activities: Our Island Home Balance Increases Decreases Balance Capital assets not being depreciated: Construction in process 35,717$ -$ (35,717)$ -$ Capital assets being depreciated: Buildings and improvements 1,420,317 146,841 - 1,567,158 Machinery and equipment 185,824 30,461 - 216,285 Vehicles 119,083 - - 119,083 Total capital assets being depreciated 1,725,224 177,302 - 1,902,526 Less accumulated depreciation for: Buildings and improvements (950,249) (48,510) - (998,759) Machinery and equipment (78,324) (23,595) - (101,919) Vehicles (119,083) - - (119,083) Total accumulated depreciation (1,147,656) (72,105) - (1,219,761) Total capital assets being depreciated, net 577,568 105,197 - 682,765 Total Our Island Home capital assets, net 613,285$ 105,197$ (35,717)$ 682,765$ Business-type Activities: Solid Waste Capital assets not being depreciated: Land 2,651,406$ -$ -$ 2,651,406$ Capital assets being depreciated: Buildings and improvements 9,429,356 7,880 - 9,437,236 Infrastructure 777,483 - - 777,483 Machinery and equipment 1,300,936 - - 1,300,936 Total capital assets being depreciated 11,507,775 7,880 - 11,515,655 Less accumulated depreciation for: Buildings and improvements (3,610,159) (236,128) - (3,846,287) Infrastructure (777,482) - - (777,482) Machinery and equipment (1,141,258) (52,505) - (1,193,763) Total accumulated depreciation (5,528,899) (288,633) - (5,817,532) Total capital assets being depreciated, net 5,978,876 (280,753) - 5,698,123 Total Solid Waste capital assets, net 8,630,282$ (280,753)$ -$ 8,349,529$ Town of Nantucket, Massachusetts Page 62 of 124 Comprehensive Annual Financial Report Depreciation expense was charged to functions/programs as follows: Governmental Activities:Business-Type Activities: General government 172,726$ Water 985,727$ Public safety 1,157,592 Sewer 2,197,593 Education 1,084,822 Airport 2,391,192 Public works 811,733 Our Island Home 72,105 Health and human services 10,186 Solid waste 288,633 Culture and recreation 269,337 5,935,250$ 3,506,396$ Discretely Presented Component Unit - Nantucket County Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 3,283,842$ -$ -$ 3,283,842$ Capital assets being depreciated: Machinery and equipment 211,012 6,505 (29,590) 187,927 Less accumulated depreciation for: Machinery and equipment (159,592) (15,342) 29,590 (145,344) Total capital assets being depreciated, net 51,420 (8,837) - 42,583 Total Nantucket County capital assets, net 3,335,262$ (8,837)$ -$ 3,326,425$ Discretely Presented Component Unit - Nantucket Islands Land Bank Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 251,723,240$ 6,087,027$ -$ 257,810,267$ Capital assets being depreciated: Buildings, improvements and equipment 23,968,879 850,673 (71,400) 24,748,152 Less: accumulated depreciation (7,568,137) (1,041,020) 5,801 (8,603,356) Total capital assets being depreciated, net 16,400,742 (190,347) (65,599) 16,144,796 Total Nantucket Islands Land Bank capital assets, net 268,123,982$ 5,896,680$ (65,599)$ 273,955,063$ Town of Nantucket, Massachusetts Page 63 of 124 Comprehensive Annual Financial Report E. Temporary Debt The Town is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to collection of revenues, expenditures may be financed through the issuance of revenue or tax anticipation notes (RANS or TANS). 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 and carry maturity dates that are limited by state law. Interest expenditures and expenses for temporary borrowings are accounted for in the general fund and enterprise funds, respectively. Temporary notes outstanding at June 30, 2014, are payable as follows: Short-term (BANs) issued for nonmajor governmental funds were used for septic betterments ($521,551), and recreational fields ($1,100,000). Those issued for business-type funds were issued for water projects ($1,300,000), sewer projects ($5,999,200) and airport projects ($1,001,000). In addition, the Town has entered into a $1,000,000 no-interest loan agreement with the MWPAT, with proceeds used to fund the Town’s septic management program. A portion of the loan was permanently financed during the fiscal year ($478,449), while the remainder ($521,551) will be recorded as short-term debt until permanently financed. F. Long–Term Obligations The Town issues general obligation bonds and notes to provide funds for the acquisition and construction of major capital facilities. General obligation bonds and notes have been issued for both governmental and business-type activities. Additionally, the Town incurs various other long-term obligations relative to associated personnel costs. Interest Maturity July 1,June 30, Type Rate Date 2013 Additions Retirements 2014 BAN 0.00% N/A 521,551$ -$ -$ 521,551$ BAN 1.25% 06/05/14 1,100,000 - (1,100,000) - BAN 1.00% 06/05/15 - 1,100,000 - 1,100,000 BAN 0.70% 06/05/14 633,483 - (633,483) - Total Governmental Notes 2,255,034 1,100,000 (1,733,483) 1,621,551 BAN 1.00% 06/05/15 - 3,301,000 - 3,301,000 BAN 0.13% 12/15/15 - 4,999,200 - 4,999,200 BAN 1.25% 06/06/14 6,060,895 - (6,060,895) - Total Business-Type Notes 6,060,895 8,300,200 (6,060,895) 8,300,200 Total Notes Payable 8,315,929$ 9,400,200$ (7,794,378)$ 9,921,751$ Town of Nantucket, Massachusetts Page 64 of 124 Comprehensive Annual Financial Report The following reflects the current year activity in the long-term liability accounts: The governmental activities liabilities will be liquidated by the general fund. The business-type liabilities will be liquidated by the respective business-type funds. Beginning Ending Due within Balance Additions Deletions Balance one year Governmental Activities: Bond and note indebtedness 60,236,633$ -$ (5,405,946)$ 54,830,687$ 5,478,306$ Unamortized bond premium 62,909 - (22,543) 40,366 22,332 Workers' compensation 161,236 12,741 (123,406) 50,571 50,571 Compensated absences 1,184,370 360,099 (3,709) 1,540,760 770,380 Other post employment benefits 23,223,110 6,423,395 (2,429,303) 27,217,202 - Total Governmental Activities 84,868,258$ 6,796,235$ (7,984,907)$ 83,679,586$ 6,321,589$ Business-Type Activities - Siasconset Water: Bond and note debt 7,375,000$ -$ (590,000)$ 6,785,000$ 605,000$ Unamortized bond premium 80,768 - (5,048) 75,720 5,048 Other post employment benefits 92,379 119,097 (45,042) 166,434 - Total Siasconset Water 7,548,147 119,097 (640,090) 7,027,154 610,048 Business-Type Activities - Wannacomet Water: Bond and note debt 21,255,000 - (1,545,000) 19,710,000 1,560,000 Unamortized bond premium 627,676 - (65,147) 562,529 62,717 Compensated absences 133,226 80,796 - 214,022 107,011 Other post employment benefits 458,999 66,408 (25,115) 500,292 - Total Wannacomet Water 22,474,901 147,204 (1,635,262) 20,986,843 1,729,728 Business-Type Activities - Sewer: Bond and note debt 44,255,978 97,000 (2,284,019) 42,068,959 2,322,524 Unamortized bond premium 265,760 - (33,005) 232,755 30,738 Compensated absences 43,093 4,421 - 47,514 23,757 Other post employment benefits 341,375 186 (70) 341,491 - Total Sewer 44,906,206 101,607 (2,317,094) 42,690,719 2,377,019 Business-Type Activities - Nantucket Memorial Airport: Bond and note debt 9,235,000 3,664,000 (765,000) 12,134,000 834,000 Unamortized bond premium 271,103 - (29,496) 241,607 28,431 Compensated absences 303,026 89,163 - 392,189 196,095 Other post employment benefits 1,854,402 385,890 (145,942) 2,094,350 - Total Nantucket Memorial Airport 11,663,531 4,139,053 (940,438) 14,862,146 1,058,526 Business-Type Activities - Our Island Home: Compensated absences 187,666 100,613 - 288,279 144,140 Other post employment benefits 2,756,191 592,872 (224,222) 3,124,841 - Total Our Island Home 2,943,857 693,485 (224,222) 3,413,120 144,140 Business-Type Activities - Solid Waste: Bond and note debt 535,000 - (40,000) 495,000 40,000 Landfill closure 6,924,750 369,250 - 7,294,000 - Total Solid Waste 7,459,750 369,250 (40,000) 7,789,000 40,000 Total Business-Type Activities 96,996,392$ 5,569,696$ (5,797,106)$ 96,768,982$ 5,959,461$ Town of Nantucket, Massachusetts Page 65 of 124 Comprehensive Annual Financial Report The following is a summary of outstanding long-term debt obligations as of June 30, 2014: State law permits a Town, under the provisions of Chapter 44, Section 10, to authorize indebtedness up to a limit of 5.0 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, a Town may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is designated as being “outside the debt limit”. Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Governmental Activities: General Obligation Bonds 2.25 - 5.00% 22,822,000$ -$ (2,916,800)$ 19,905,200$ Refunding Bonds 1.50 - 5.00% 19,668,900 - (1,835,000) 17,833,900 USDA Notes 4.13%1,242,000 - (34,500) 1,207,500 Massachusetts Water Pollution Abatement Trust 0.00 - 2.42% 16,503,733 - (619,646) 15,884,087 Total Governmental Activities 60,236,633 - (5,405,946) 54,830,687 Add: Unamortized bond premium 62,909 - (22,543) 40,366 Total Governmental Activities, net 60,299,542$ -$ (5,428,489)$ 54,871,053$ Business-Type Activities - Siasconset Water: General Obligation Bonds 2.00 - 5.00% 7,375,000$ -$ (590,000)$ 6,785,000$ Total Siasconset Water 7,375,000 - (590,000) 6,785,000 Business-Type Activities - Wannacomet Water: General Obligation Bonds 2.00 - 5.00% 18,860,000 - (1,490,000) 17,370,000 Refunding Bonds 1.50 - 5.00% 2,395,000 - (55,000) 2,340,000 Total Wannacomet Water 21,255,000 - (1,545,000) 19,710,000 Business-Type Activities - Sewer: General Obligation Bonds 2.00 - 5.00% 4,943,000 97,000 (543,200) 4,496,800 Refunding Bonds 2.00 - 5.00%871,100 - (45,000) 826,100 Massachusetts Water Pollution Abatement Trust 0.00 - 5.50% 38,441,878 - (1,695,819) 36,746,059 Total Sewer 44,255,978 97,000 (2,284,019) 42,068,959 Business-Type Activities - Nantucket Memorial Airport: General Obligation Bonds 2.00 - 5.00% 9,235,000 3,664,000 (765,000) 12,134,000 Total Nantucket Memorial Airport 9,235,000 3,664,000 (765,000) 12,134,000 Business-Type Activities - Solid Waste: General Obligation Bonds 2.50 - 5.00%485,000 - (40,000) 445,000 Refunding Bonds 1.50 - 4.00%50,000 - - 50,000 Total Solid Waste 535,000 - (40,000) 495,000 Total Business-Type Activities 82,655,978 3,761,000 (5,224,019) 81,192,959 Add: Unamortized bond premium 1,245,307 - (132,696) 1,112,611 Total Business-Type Activities, net 83,901,285$ 3,761,000$ (5,356,715)$ 82,305,570$ Town of Nantucket, Massachusetts Page 66 of 124 Comprehensive Annual Financial Report Payments on general long-term debt obligation bonds and notes due in future years consist of the following: Year Ending Principal Interest June 30 Balance Subsidy Net of Subsidy Balance Subsidy Net of Subsidy Total Governmental Activities 2015 5,478,306$ -$ 5,478,306$ 1,724,082$ (354)$ 1,723,728$ 7,202,034$ 2016 5,498,941 - 5,498,941 1,533,653 (292) 1,533,361 7,032,302 2017 5,583,010 - 5,583,010 1,335,113 (228) 1,334,885 6,917,895 2018 5,099,993 - 5,099,993 1,146,236 (162) 1,146,074 6,246,067 2019 3,155,301 - 3,155,301 1,009,178 (96) 1,009,082 4,164,383 2020-2024 15,158,499 - 15,158,499 3,566,536 (32) 3,566,504 18,725,003 2025-2029 8,529,483 - 8,529,483 1,563,660 - 1,563,660 10,093,143 2030-2034 3,317,556 - 3,317,556 614,816 - 614,816 3,932,372 2035-2039 2,664,598 - 2,664,598 214,638 - 214,638 2,879,236 2040-2044 172,500 - 172,500 56,925 - 56,925 229,425 2045-2049 172,500 - 172,500 21,345 - 21,345 193,845 Total 54,830,687$ -$ 54,830,687$ 12,786,182$ (1,164)$ 12,785,018$ 67,615,705$ Business-Type Activities: Siasconset Water 2015 605,000$ -$ 605,000$ 273,125$ -$ 273,125$ 878,125$ 2016 620,000 - 620,000 245,875 - 245,875 865,875 2017 350,000 - 350,000 228,300 - 228,300 578,300 2018 355,000 - 355,000 217,100 - 217,100 572,100 2019 370,000 - 370,000 204,324 - 204,324 574,324 2020-2024 2,015,000 - 2,015,000 780,627 - 780,627 2,795,627 2025-2029 2,400,000 - 2,400,000 336,761 - 336,761 2,736,761 2030-2034 70,000 - 70,000 2,800 - 2,800 72,800 6,785,000$ -$ 6,785,000$ 2,288,912$ -$ 2,288,912$ 9,073,912$ Business-Type Activities: Wannacomet Water 2015 1,560,000$ -$ 1,560,000$ 750,120$ -$ 750,120$ 2,310,120$ 2016 1,598,000 - 1,598,000 695,890 - 695,890 2,293,890 2017 1,523,000 - 1,523,000 640,497 - 640,497 2,163,497 2018 1,500,000 - 1,500,000 585,002 - 585,002 2,085,002 2019 1,509,000 - 1,509,000 527,858 - 527,858 2,036,858 2020-2024 6,882,000 - 6,882,000 1,786,537 - 1,786,537 8,668,537 2025-2029 4,608,000 - 4,608,000 527,017 - 527,017 5,135,017 2030-2034 530,000 - 530,000 26,099 - 26,099 556,099 19,710,000$ -$ 19,710,000$ 5,539,020$ -$ 5,539,020$ 25,249,020$ Business-Type Activities: Sewer 2015 2,322,524$ (155,356)$ 2,167,168$ 1,207,992$ (252,251)$ 955,741$ 3,122,909$ 2016 2,340,733 (164,747) 2,175,986 1,131,326 (228,350) 902,976 3,078,962 2017 2,388,417 (176,386) 2,212,031 1,046,921 (200,123) 846,798 3,058,829 2018 2,276,131 (184,053) 2,092,078 969,039 (179,364) 789,675 2,881,753 2019 2,238,778 (189,738) 2,049,040 899,644 (162,957) 736,687 2,785,727 2020-2024 11,387,406 (915,101) 10,472,305 3,303,521 (367,643) 2,935,878 13,408,183 2025-2029 8,075,216 (77,603) 7,997,613 1,801,948 - 1,801,948 9,799,561 2030-2034 6,202,152 - 6,202,152 942,299 - 942,299 7,144,451 2035-2039 4,837,602 - 4,837,602 237,083 - 237,083 5,074,685 42,068,959$ (1,862,984)$ 40,205,975$ 11,539,773$ (1,390,688)$ 10,149,085$ 50,355,060$ Town of Nantucket, Massachusetts Page 67 of 124 Comprehensive Annual Financial Report MWPAT Loan Subsidies – As previously noted in Note I. B., the Town has entered into loan agreements with the MWPAT. It is expected that the Town will be subsidized by MWPAT on a periodic basis for principal in the amount of $1,862,984 and interest in the amount of $1,390,688 until the maturity of these agreements. The following represents authorized and unissued debt as of June 30, 2014: Year Ending Principal Interest June 30 Balance Subsidy Net of Subsidy Balance Subsidy Net of Subsidy Total Business-Type Activities: Nantucket Memorial Airport 2015 834,000$ -$ 834,000$ 420,568$ -$ 420,568$ 1,254,568$ 2016 820,000 - 820,000 401,243 - 401,243 1,221,243 2017 800,000 - 800,000 379,498 - 379,498 1,179,498 2018 720,000 - 720,000 356,662 - 356,662 1,076,662 2019 705,000 - 705,000 335,612 - 335,612 1,040,612 2020-2024 2,915,000 - 2,915,000 1,349,163 - 1,349,163 4,264,163 2025-2029 2,455,000 - 2,455,000 851,118 - 851,118 3,306,118 2030-2034 2,325,000 - 2,325,000 401,633 - 401,633 2,726,633 2035-2039 560,000 - 560,000 40,850 - 40,850 600,850 12,134,000$ -$ 12,134,000$ 4,536,347$ -$ 4,536,347$ 16,670,347$ Business-Type Activities: Solid Waste 2015 40,000$ -$ 40,000$ 18,232$ -$ 18,232$ 58,232$ 2016 40,000 - 40,000 17,032 - 17,032 57,032 2017 40,000 - 40,000 15,812 - 15,812 55,812 2018 40,000 - 40,000 14,563 - 14,563 54,563 2019 35,000 - 35,000 13,225 - 13,225 48,225 2020-2024 175,000 - 175,000 46,572 - 46,572 221,572 2025-2029 125,000 - 125,000 12,825 - 12,825 137,825 495,000$ -$ 495,000$ 138,261$ -$ 138,261$ 633,261$ Project Amount Governmental: Title V Septic 1,521,551$ Recreational playing fields 1,100,000 Business-type: Siasconset water 500,000 Wannacomet water 1,650,000 Sewer 9,305,613 Nantucket Memorial Airport 5,911,000 Solid waste - landfill 1,133,000 Total Authorized and Unissued 21,121,164$ Town of Nantucket, Massachusetts Page 68 of 124 Comprehensive Annual Financial Report Discretely Presented Component Unit – Nantucket Islands Land Bank The general obligation bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. Payments on general long-term debt obligation bonds and notes due in future years consist of the following: The following reflects the activity in the long-term liability accounts for the Land Bank for the year ended June 30, 2014: Beginning Ending Due within Balance Additions Deletions Balance one year Bond and note indebtedness 31,532,463$ -$ (2,399,892)$ 29,132,571$ 4,153,575$ Capital Leases - 250,135 (66,743) 183,392 58,958 Total Land Bank 31,532,463$ 250,135$ (2,466,635)$ 29,315,963$ 4,212,533$ The following is a summary of outstanding long-term debt obligations as of June 30, 2014: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Notes payable 3.00 - 6.06% 3,106,218$ -$ (453,611)$ 2,652,607$ General Obligation Bonds 2.00 - 5.00% 28,426,245 - (1,946,281) 26,479,964 Total Land Bank 31,532,463$ -$ (2,399,892)$ 29,132,571$ Year Ending June 30 Principal Interest Total 2015 4,175,279$ 1,005,725$ 5,181,004$ 2016 2,570,736 821,949 3,392,685 2017 2,151,704 738,204 2,889,908 2018 2,226,704 640,167 2,866,871 2019 2,296,704 566,448 2,863,152 2020-2024 8,318,520 1,869,183 10,187,703 2025-2029 6,148,282 637,547 6,785,829 2030-2032 1,244,642 64,090 1,308,732 Total 29,132,571$ 6,343,313$ 35,475,884$ Town of Nantucket, Massachusetts Page 69 of 124 Comprehensive Annual Financial Report III. Other Information A. Retirement System Plan Description - The Town and the Nantucket County discretely presented component unit contribute to the Barnstable County Retirement System (BCRS), a multiple-employer defined benefit pension plan established under MGL Chapter 32 and is administered by the Barnstable County Retirement Board (BCRB). The BCRS 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 directly. Cost-of-living adjustments granted after 1997 must be approved by the BCRB and are borne by the BCRS. The BCRS issues a publicly available unaudited financial report in accordance with guidelines established by the Commonwealth of Massachusetts’ Public Employee Retirement Administration Commission (PERAC) that includes financial statements and required supplementary information. The report may be obtained by writing to the Barnstable County Retirement System, 750 Attucks Lane, Hyannis, Massachusetts 02601. Funding Policy – Plan members are required to contribute to the BCRS at rates ranging from 5% to 11% of annual covered compensation. The Town and County are required to pay into the BCRS for its share of the system-wide actuarial determined contribution that is apportioned among the employers based on active current payroll. The contributions of plan members, the Town, and the County are governed by Chapter 32 of the MGL. The Town’s contributions to the BCRS for the fiscal years ended June 30, 2014, 2013, and 2012 were $4,667,475, $4,543,194, and $4,372,452 respectively, which equaled its required contribution for each year. The County’s contributions to the BCRS for the fiscal years ended June 30, 2014, 2013, and 2012 were $44,672, $40,348, and $41,544 respectively, which equaled its required contribution for each year. 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 actuarial accrued liability for benefits. B. Massachusetts Teachers’ Retirement System Teachers and certain administrative employees of the School Department participate in a contributory retirement system administered by the Massachusetts Teachers Retirement Board. Contributions to that system totaled $2,765,243 for the fiscal year and were made entirely by the Commonwealth of Massachusetts, on behalf of the Town, which does not contribute directly to this system. C. Other Post-Employment Benefits (OPEB) Plan Description – The Town administers a multiple-employer defined benefit healthcare plan (the “Plan”). The Plan provides health and life insurance benefits to current and future retirees, their dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B. Specific benefit provisions and contribution rates are established by collective bargaining Town of Nantucket, Massachusetts Page 70 of 124 Comprehensive Annual Financial Report agreements, state law, and Town ordinance. All benefits are provided through the Town’s self- funded insurance program described previously. The Plan does not issue a stand–alone financial report. The number of participants in the Plan consists of 463 active employees and 307 retired employees for a total of 770. Funding Policy – The contribution requirements of Plan members and the Town are established and may be amended by the Town, through negotiation with the Town employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the Town. The Town pays the remainder. The Town 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 Town. Annual OPEB Cost and Net OPEB Obligation – The Town’s annual OPEB cost is calculated based on the annual required contribution “ARC” of the employer, an actuarially determined amount that is calculated in accordance with GASB Statement #45. 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 Town’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, 2012 $ 6,257,000 40.5% $ 24,161,583 June 30, 2013 $ 7,177,116 36.4% $ 28,726,456 June 30, 2014 $ 7,587,850* 37.8% $ 33,444,609 * Reflected in the Statement of Activities as follows: The AOPEBC at June 30, 2014 was charged to the following functional programs: General Government $650,726; Public Safety $1,387,817; Education $3,812,721; Public Works $362,761; Health and Human Services $126,245; Culture and Recreation $83,127; Siasconset water $119,097; Wannacomet water $66,408; Sewer $186; Airport $385,890; and Old Island Home $592,872. Annual required contribution (ARC)7,343,769$ Interest on net OPEB obligation 1,291,841 Adjustment to ARC (1,047,760) Annual OPEB cost 7,587,850 Contributions made (2,869,694)$ Increase in net OPEB obligation 4,718,156 Net OPEB obligation at beginning of year 28,726,456 Net OPEB obligation at end of year 33,444,612$ Town of Nantucket, Massachusetts Page 71 of 124 Comprehensive Annual Financial Report Funding Status and Funding Progress – The funded status of the Plan at June 30, 2014, based on the most recent actuarial valuation performed as of June 30, 2012, 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) $ - $88.6 $88.6 0.0% N/A N/A Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events 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, 2012 Actuarial cost method Projected Unit Credit Amortization method 4.0 percent increasing Remaining amortization period: 30 years (open) Interest discount rate: 4.5 percent Inflation rate: 4.0 percent Healthcare/Medical cost trend rate: 8.0% decreasing by 0.5% for 6 years to an ultimate level of 5.0% per year Discretely Presented Component Unit – Nantucket County Plan Description – Nantucket County’s employees participate in the multiple-employer defined benefit healthcare plan administered by the Town which was described previously. Funding Policy – The contribution requirements of Plan members and the County are established and may be amended by the Town, through negotiation with the County employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the County. The County 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 Town. Town of Nantucket, Massachusetts Page 72 of 124 Comprehensive Annual Financial Report Annual OPEB Cost and Net OPEB Obligation – The County'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 #45. 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 County's OPEB obligation: D. Risk Financing The Town is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial insurance. The amount of claim settlements has not exceeded insurance coverage in any of the previous three years. Health Insurance – The Town maintains a "reinsured cost reimbursement program" which covers the group health insurance requirements of a majority of Town employees. The Plan is essentially a self-insurance program and employee claims in excess of $150,000 are reinsured by the Plan. The Town accrues an amount representing claims incurred but not reported (IBNR), which is based on a one month claims paid average. At June 30, 2014, the amount of the liability for IBNR health insurance claims totaled $775,395. This liability is the best estimate based on available information. In the fund-wide financial statements, the Town reports these self-insured activities in the Internal Service Fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. Changes in the reported liability since July 1, 2011, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2014 $667,271 $13,328,647 $(13,220,523 $775,395 $775,395 Fiscal Year 2013 778,820 12,022,770 (12,134,319) 667,271 667,271 Fiscal Year 2012 729,885 11,207,253 (11,158,288) 778,820 778,820 Workers’ Compensation – The Town is also self-insured for their workers’ compensation activities. Workers’ compensation claims are administered by a third-party and are funded on a Annual required contribution (ARC)27,517$ Interest on net OPEB obligation 4,841 Adjustment to ARC (3,926) Annual OPEB cost 28,432 Contributions made (10,754)$ Increase in net OPEB obligation 17,678 Net OPEB obligation at beginning of year 88,699 Net OPEB obligation at end of year 106,377$ Town of Nantucket, Massachusetts Page 73 of 124 Comprehensive Annual Financial Report pay-as-you-go basis from an Internal Service Fund, with annual appropriations being made to the fund. The estimated future workers’ compensation liability is based on history and injury type. At June 30, 2014, the amount of the liability for workers’ compensation claims totaled $50,571. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2011: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2014 $161,236 $157,802 $(268,467) $50,571 $50,571 Fiscal Year 2013 89,510 234,186 (162,460) 161,236 161,236 Fiscal Year 2012 176,650 102,269 (262,133) 89,510 89,510 E. Commitments The Town is in the process of completing sewer and water system improvements. The Town has entered into contracts to expend approximately $325,000 and $700,000, respectively to complete the projects. F. Contingencies The Town is party to certain legal claims, which are subject to many uncertainties, and the outcome of individual litigation matters in these situations cannot be reasonably estimated. Although the amount of liability, if any, in these situations at June 30, 2014, cannot be ascertained, management believes that the resulting liability, if any, should not materially affect the basic financial statements of the Town at June 30, 2014. Other 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 Town expects such amounts, if any, to be immaterial. The Town 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 Town does not believe it has failed to comply with any of these agreements. The Town is contingently liable for 35% of any deficit, including operating and debt service costs, which may be incurred by the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority (the “Authority”). As of December 31, 2013, the Authority’s reserve fund balance totaled $2,642,500 and bonds outstanding totaled $54,132,860, net of unamortized premiums of $1,347,017 and a deferred loss on refunding of $64,157. For the fiscal year ended December 31, 2013, the Authority’s revenues exceeded its cost of services by $4,159,625. The Town is not required to make payments to the Authority unless the amount in the Authority’s reserve fund is insufficient. Since 1962, the Town has not made any payments to the Authority. Town of Nantucket, Massachusetts Page 74 of 124 Comprehensive Annual Financial Report G. Landfill Closure and Post-Closure Care Costs The Town operates a landfill under an Administrative Consent Order (ACO) with the Massachusetts Department of Environmental Protection (DEP). The current ACO allows the Town to mine the current landfill for useable materials through fiscal year 2014. The landfill consists of five cells, three lined and two unlined. The largest cell is unlined and has been closed for several years with sections scheduled for excavation under the mining program. Two cells, which are no longer accepting waste, are uncapped and unlined and have been previously excavated under the mining program. Another cell is inactive, lined but uncapped. There is one lined cell that is currently accepting waste. The final capping and closure of the unclosed cells are dependent on construction of new cells and DEP approval of the continuation of the mining program. The Town has recognized a closure liability of $7,294,000 in the Solid Waste Enterprise fund. This liability is based on estimates of the cost of all closure and post-closure care for 30 years. Actual costs may change due to inflation, changes in technology, or changes in regulations. H. Implementation of GASB pronouncements Current Year Implementations – In March 2012, the GASB issued GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The provisions of this Statement are effective for the Town in fiscal year 2014 and did not have a material effect on its financial statements. In March 2012, the GASB issued GASB Statement No. 66, an amendment of GASB Statements No. 10 and No. 62. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement became effective for the Town in fiscal year 2014 and did not have a material effect on its 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 is to improve accounting and financial reporting by governments that extend and receive nonexchange financial guarantees. The provisions of GASB 70 became effective for the Town in fiscal year 2014 and did not have a material effect on its financial statements. Future Year Implementation In June 2012, the GASB issued GASB Statement No. 67, Financial Reporting for Pension Plans. This Statement replaces the requirements of Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Statement 50 as Town of Nantucket, Massachusetts Page 75 of 124 Comprehensive Annual Financial Report they relate to pension plans that are administered through trusts or similar arrangements meeting certain criteria. This Statement builds upon the existing framework for financial reports of defined benefit pension plans, which includes a statement of fiduciary net position (the amount held in a trust for paying retirement benefits) and a statement of changes in fiduciary net position. Statement 67 enhances note disclosures and RSI for both defined benefit and defined contribution pension plans. Statement 67 also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10-year RSI schedules. The provisions of GASB 67 become effective for the BCRS as of December 31, 2014 and the correlative impact will be reflected by the Town in fiscal year 2015. The Town believes the adoption of this statement will have a material impact on the financial statements. 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 replaces 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 requires 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 enhances accountability and transparency through revised and new note disclosures and required supplementary information. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2013 (fiscal year 2014). The Town believes the adoption of this statement will have a material impact on the financial statements. 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 this Statement are effective for financial reporting periods beginning after December 15, 2013 (fiscal year 2015). The Town is currently evaluating whether adoption will have a material impact on the 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 is to address an issue regarding application of the transition provision of GASB 68. The issue relates 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 this Statement are effective for financial statements for periods beginning after June 15, 2014 (fiscal year 2015). The Town is currently evaluating whether adoption will have a material impact on the financial statements. Town of Nantucket, Massachusetts Page 76 of 124 Comprehensive Annual Financial Report IV. Prior Period Restatements Nantucket Island Land Bank (Discretely Presented Component Unit) As the result of implementing GASB Statement No. 65 the Land Bank was required to restate the beginning net position in its Statement of Net Position by $256,580 due to immediately expensing bond issuance costs that were previously being amortized. Nantucket Memorial Airport During 2014, the Town determined that charges that had previously been classified as maintenance more appropriately should have been capitalized to construction in process. As a result, beginning business-type activities net position and the Nantucket Memorial Airport enterprise fund were increased by $834,262. Town of Nantucket, Massachusetts Page 77 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 78 of 124 Comprehensive Annual Financial Report Required Supplementary Information Town of Nantucket, Massachusetts Page 79 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 80 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2014 BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM SCHEDULES OF FUNDING PROGRESS Retirement System UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)((b-a)/c) 1/1/2012 651,063,981$ 1,173,483,848$ 522,419,867$ 55.5%239,437,303$ 218.2% 1/1/2010 554,876,554 1,030,210,321 475,333,767 53.9%234,374,075 202.8% 1/1/2009 520,089,855 966,564,614 446,474,759 53.8%249,971,296 178.6% Other Postemployment Benefits UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)((b-a)/c) 7/1/2012 -$ 88,559,116$ 88,559,116$ 0%N/A N/A 7/1/2010 - 82,253,000 82,253,000 0%N/A N/A 7/1/2009 - 127,923,000 127,923,000 0%N/A N/A 7/1/2007 - 104,980,000 104,980,000 0%N/A N/A BARNSTABLE COUNTY CONTRIBUTORY RETIREMENT SYSTEM Total Retirement System (B / A)(B / A) Annual (A)(B)Town's Percentage (B)County's Percentage Year Ended Required Actual Percentage Actual of System-Wide Actual of System-Wide December 31,Contributions Contributions Contributed Contribution Actual Contributions Contribution Actual Contributions 2013 49,504,212$ 49,504,212$ 100%4,667,475$ 9.4%44,672$ 0.1% 2012 46,702,087 46,702,087 100%4,543,194 9.7%40,348 0.1% 2011 43,807,158 43,807,158 100%4,372,452 10.0%41,544 0.1% Other Postemployment Benefits Annual (A) Year Ended Required Actual Percentage June 30,Contributions Contributions Contributed 2014 7,343,765$ 2,869,694$ 39.1% 2013 6,995,125 2,622,032 37.5% 2012 5,982,000 2,534,000 42.4% 2011 5,680,000 2,200,000 38.7% 2010 10,647,000 2,587,000 24.3% 2009 10,745,000 2,534,000 23.6% The Town implemented GASB Statement No. 45 for the fiscal year ending June 30, 2009. See accompanying independent auditors' report. SCHEDULES OF CONTRIBUTION FUNDING Retirement System Town County Town of Nantucket, Massachusetts Page 81 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Revenues: Taxes: Real estate taxes 61,848,844$ 61,848,844$ 62,474,015$ -$ 62,474,015 625,171 Personal property taxes 1,378,854 1,378,854 1,307,757 - 1,307,757 (71,097) Tax title - - 211,131 - 211,131 211,131 Motor vehicle excise 1,850,100 1,850,100 2,444,483 - 2,444,483 594,383 Boat excise 30,515 30,515 34,275 - 34,275 3,760 Meals taxes 783,500 783,500 860,798 - 860,798 77,298 Room occupancy taxes 2,346,100 2,346,100 2,582,944 - 2,582,944 236,844 68,237,913 68,237,913 69,915,403 - 69,915,403 1,677,490 Intergovernmental: State aid - chapter 70 1,421,503 1,421,503 1,422,222 - 1,422,222 719 State aid - unrestricted 68,601 68,601 68,601 - 68,601 - State aid - state owned land 209,457 209,457 209,457 - 209,457 - State aid - other 14,912 14,912 14,184 - 14,184 (728) 1,714,473 1,714,473 1,714,464 - 1,714,464 (9) Departmental fees, charges, and other: Payments in lieu of taxes 7,330 7,330 - - - (7,330) Selectmen rentals 137,215 137,215 186,996 - 186,996 49,781 Planning office filing and inspection fees 156,635 156,635 98,074 - 98,074 (58,561) Police department fees 151,215 151,215 146,878 - 146,878 (4,337) Public safety detail charges 39,098 39,098 51,395 - 51,395 12,297 Fire department fees 41,705 41,705 56,550 - 56,550 14,845 Inspection fees 175,180 175,180 215,211 - 215,211 40,031 Harbormaster fees 187,080 187,080 178,799 - 178,799 (8,281) Public works rentals 199,990 199,990 190,404 - 190,404 (9,586) Historic district fees 97,030 97,030 176,562 - 176,562 79,532 Medicare reimbursements 79,954 79,954 49,245 - 49,245 (30,709) Other miscellaneous 229,353 229,353 340,873 - 340,873 111,520 1,501,785 1,501,785 1,690,987 - 1,690,987 189,202 Licenses and permits: Liquor licenses 220,500 220,500 293,950 - 293,950 73,450 Building permits 642,918 642,918 900,680 - 900,680 257,762 Other licenses and permits 211,657 211,657 211,281 - 211,281 (376) 1,075,075 1,075,075 1,405,911 - 1,405,911 330,836 Fines and forfeitures: Parking and court fines 197,403 197,403 254,449 - 254,449 57,046 Other fines 11,100 11,100 42,468 - 42,468 31,368 208,503 208,503 296,917 - 296,917 88,414 Penalties and interest on taxes 677,900 677,900 598,411 - 598,411 (79,489) Interest and investment income 96,800 96,800 79,072 - 79,072 (17,728) Total Revenues 73,512,449 73,512,449 75,701,165 - 75,701,165 2,188,716 Town of Nantucket, Massachusetts Page 82 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Expenditures: General Government: Moderator: Salary 175 178 178 - 178 - Operating 1,500 1,500 1,497 - 1,497 3 1,675 1,678 1,675 - 1,675 3 Town Administration: Salary 534,750 518,250 505,832 - 505,832 12,418 Operating 557,648 584,840 164,286 116,269 280,555 304,285 Articles 2,261,878 2,148,399 381,986 1,766,413 2,148,399 - 3,354,276 3,251,489 1,052,104 1,882,682 2,934,786 316,703 Finance Committee: Operating 17,738 17,738 17,482 - 17,482 256 Articles 500,000 191,595 - - - 191,595 517,738 209,333 17,482 - 17,482 191,851 Finance and Operations: Salary 460,512 466,512 466,200 - 466,200 312 Operating 274,149 273,714 124,464 110,393 234,857 38,857 Articles 14,835 19,316 5,132 - 5,132 14,184 749,496 759,542 595,796 110,393 706,189 53,353 Assessor: Salary 393,290 393,290 392,741 - 392,741 549 Operating 191,118 191,553 54,153 69,877 124,030 67,523 584,408 584,843 446,894 69,877 516,771 68,072 Collector: Salary 247,120 254,620 254,336 - 254,336 284 Operating 91,723 91,723 79,259 2,984 82,243 9,480 338,843 346,343 333,595 2,984 336,579 9,764 Treasurer: Salary 356,020 342,520 334,658 - 334,658 7,862 Operating 83,625 83,625 68,183 19,848 88,031 (4,406) 439,645 426,145 402,841 19,848 422,689 3,456 Information Systems/GIS: Salary 458,190 459,190 458,601 - 458,601 589 Operating 269,296 268,296 243,144 14,372 257,516 10,780 Articles 80,719 73,208 48,272 24,936 73,208 - 808,205 800,694 750,017 39,308 789,325 11,369 Legal: Operating 355,863 400,863 377,662 5,000 382,662 18,201 355,863 400,863 377,662 5,000 382,662 18,201 Human Resources: Salary 152,700 152,700 144,798 - 144,798 7,902 Operating 31,842 31,842 24,351 192 24,543 7,299 184,542 184,542 169,149 192 169,341 15,201 Town Clerk: Salary 217,800 228,300 227,574 - 227,574 726 Operating 59,700 59,700 44,346 9,000 53,346 6,354 277,500 288,000 271,920 9,000 280,920 7,080 Nantucket Planning Office: Salary 615,115 606,637 585,384 - 585,384 21,253 Operating 354,424 289,577 79,215 51,232 130,447 159,130 Articles 10,000 10,000 3,555 6,445 10,000 - 979,539 906,214 668,154 57,677 725,831 180,383 (continued) Town of Nantucket, Massachusetts Page 83 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Public Buildings: Operating 870,021 870,021 720,685 21,771 742,456 127,565 870,021 870,021 720,685 21,771 742,456 127,565 Natural Resources: Salary 243,240 259,740 256,523 - 256,523 3,217 Operating 14,611 14,611 12,426 840 13,266 1,345 257,851 274,351 268,949 840 269,789 4,562 Insurances: Auto casualty 173,000 167,810 106,201 - 106,201 61,609 Blanket liability 1,243,000 1,205,710 1,068,802 - 1,068,802 136,908 Claims deductible 109,500 144,500 69,332 10,203 79,535 64,965 Insurance consulting 33,977 33,977 39,960 - 39,960 (5,983) 1,559,477 1,551,997 1,284,295 10,203 1,294,498 257,499 Total General Government 11,279,079 10,856,055 7,361,218 2,229,775 9,590,993 1,265,062 Public Safety: Police: Salary 3,912,550 3,607,862 3,597,550 - 3,597,550 10,312 Operating 735,086 769,680 613,205 152,747 765,952 3,728 4,647,636 4,377,542 4,210,755 152,747 4,363,502 14,040 Centralized Dispatch: Salary 613,745 673,745 673,745 - 673,745 - 613,745 673,745 673,745 - 673,745 - Fire: Salary 2,239,260 2,269,260 2,269,260 - 2,269,260 - Operating 232,164 232,164 224,548 4,854 229,402 2,762 Articles 35,076 32,940 32,940 - 32,940 - 2,506,500 2,534,364 2,526,748 4,854 2,531,602 2,762 Code Enforcement: Operating 5,982 5,982 3,140 - 3,140 2,842 5,982 5,982 3,140 - 3,140 2,842 Inspectors: Salary 470,090 476,062 476,062 - 476,062 - Operating 11,850 16,822 14,910 500 15,410 1,412 481,940 492,884 490,972 500 491,472 1,412 Emergency Management: Operating 13,959 13,959 8,155 1,200 9,355 4,604 13,959 13,959 8,155 1,200 9,355 4,604 Marine: Salary 618,810 597,753 576,498 - 576,498 21,255 Operating 104,340 104,340 71,287 18,669 89,956 14,384 Articles 282,000 282,000 42,560 239,440 282,000 - 1,005,150 984,093 690,345 258,109 948,454 35,639 Total Public Safety 9,274,912 9,082,569 8,603,860 417,410 9,021,270 61,299 Town of Nantucket, Massachusetts Page 84 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Education: Salary and operating 24,099,229 24,099,229 22,883,372 923,122 23,806,494 292,735 Articles 2,051,030 2,174,155 827,332 1,222,485 2,049,817 124,338 Total Education 26,150,259 26,273,384 23,710,704 2,145,607 25,856,311 417,073 Public Works: Public Works: Salary 1,902,654 2,001,703 1,782,417 12,112 1,794,529 207,174 Operating 546,110 464,025 451,831 - 451,831 12,194 Articles 1,292,754 1,292,754 452,085 840,111 1,292,196 558 3,741,518 3,758,482 2,686,333 852,223 3,538,556 219,926 Street Lighting: Operating 120,363 120,363 107,009 - 107,009 13,354 120,363 120,363 107,009 - 107,009 13,354 Mosquito Control: Operating 114,040 114,040 71,352 - 71,352 42,688 114,040 114,040 71,352 - 71,352 42,688 Snow and Ice Removal: Operating 25,000 50,900 50,877 - 50,877 23 25,000 50,900 50,877 - 50,877 23 Gas/Town Vehicles: Operating 325,000 380,000 373,134 - 373,134 6,866 325,000 380,000 373,134 - 373,134 6,866 Total Public Works 4,325,921 4,423,785 3,288,705 852,223 4,140,928 282,857 Health and Human Services: Health: Salary 115,154 121,560 121,560 - 121,560 - Operating 17,946 29,501 28,838 - 28,838 663 133,100 151,061 150,398 - 150,398 663 Commision on Disability: Salary 10,100 10,100 5,783 - 5,783 4,317 Operating 1,575 1,675 1,674 - 1,674 1 11,675 11,775 7,457 - 7,457 4,318 Senior Services/Council on Aging: Salary 217,590 208,590 206,464 - 206,464 2,126 Operating 30,675 30,575 20,963 - 20,963 9,612 248,265 239,165 227,427 - 227,427 11,738 Veterans Services: Salary 5,100 6,600 6,190 - 6,190 410 Operating 6,500 6,500 5,840 - 5,840 660 11,600 13,100 12,030 - 12,030 1,070 Human Services: Salary 181,310 188,810 188,245 - 188,245 565 Operating 18,101 18,101 10,455 - 10,455 7,646 Articles 317,880 317,880 316,252 - 316,252 1,628 517,291 524,791 514,952 - 514,952 9,839 Total Health and Human Services 921,931 939,892 912,264 - 912,264 27,628 (Continued) Town of Nantucket, Massachusetts Page 85 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Culture and Recreation: Atheneum (Library): Operating 676,444 676,444 676,444 - 676,444 - 676,444 676,444 676,444 - 676,444 - Visitor Services: Salary 223,870 248,870 248,870 - 248,870 - Operating 79,678 64,678 62,758 - 62,758 1,920 303,548 313,548 311,628 - 311,628 1,920 Historical District Commission: Salary 184,710 188,310 188,310 - 188,310 - Operating 4,490 3,288 3,288 - 3,288 - 189,200 191,598 191,598 - 191,598 - Town Clock: Operating 3,094 3,094 2,509 - 2,509 585 3,094 3,094 2,509 - 2,509 585 Total Culture and Recreation 1,172,286 1,184,684 1,182,179 - 1,182,179 2,505 State and County Assessments: State assessments and charges 66,779 66,779 66,779 - 66,779 - Transportation authorities assessments 329,834 329,834 329,834 - 329,834 - County assessments and charges 170,201 170,201 170,201 - 170,201 - Total State and County Assessments 566,814 566,814 566,814 - 566,814 - Pension and Fringe Benefits: Medical Insurance: Salary 8,369,402 8,619,402 8,619,402 - 8,619,402 - 8,369,402 8,619,402 8,619,402 - 8,619,402 - Unemployment: Salary 300,000 300,000 531,322 - 531,322 (231,322) 300,000 300,000 531,322 - 531,322 (231,322) Workers' Compensation: Salary 190,000 190,000 190,000 - 190,000 - 190,000 190,000 190,000 - 190,000 - Laborer's Union Pension: Salary 44,000 44,000 35,293 - 35,293 8,707 44,000 44,000 35,293 - 35,293 8,707 Pension Assessments: Barnstable Retirement 3,228,051 3,228,051 3,228,050 - 3,228,050 1 3,228,051 3,228,051 3,228,050 - 3,228,050 1 Other Employee Benefits: Salary 301,201 301,201 291,945 6,000 297,945 3,256 301,201 301,201 291,945 6,000 297,945 3,256 Total Pension and Fringe Benefits 12,432,654 12,682,654 12,896,012 6,000 12,902,012 (219,358) Town of Nantucket, Massachusetts Page 86 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2014 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Debt Service 7,605,899 7,605,899 7,180,936 - 7,180,936 424,963 Total Expenditures 73,729,755 73,615,736 65,702,692 5,651,015 71,353,707 2,262,029 Other Financing Sources (Uses) Transfers in 1,214,784 1,214,784 1,751,972 1,751,972 537,188 Transfers out (8,249,598) (9,403,098) (9,403,098) (9,403,098) - Total Other Financing Sources (Uses)(7,034,814) (8,188,314) (7,651,126) (7,651,126)$ 537,188 Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures/Uses Of Prior Year Budgetary Fund Balance (7,252,120) (8,291,601) 2,347,347$ 4,987,933$ Other Budgetary Items Use of unassigned fund balance 2,689,084$ 3,693,565$ Prior year encumbrances 4,316,296 4,316,296 Prior year articles 244,447 244,447 Prior year deficits (9,610) (9,610) Other items 11,903 46,903 Total Other Budgetary Items 7,252,120 8,291,601 Net budget and actual -$ -$ (Concluded) The notes to the financial statements are an integral part of this statement. The notes to the required supplementary information are and integral part of this statement. Town of Nantucket, Massachusetts Page 87 of 124 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2014 I. Budgetary Basis of Accounting Budgetary Information – An annual budget is legally adopted for the General Fund and the Enterprise Funds. The annual budgets are prepared by Town Administration, reviewed and approved by the Board of Selectmen, recommended by the Finance Committee and voted by the taxpayers at the Annual Town Meeting. Expenditures may not legally exceed appropriations at the department level, or in the categories of personnel and non-personnel expenses. Transfers between and within departments require approval at a Special Town Meeting, unless allowed under Massachusetts General Law. At the close of each fiscal year, unencumbered appropriation balances lapse and revert to unassigned fund balance. The Town Meeting adopts an annual budget for the general fund in conformity with the guidelines described above. During fiscal year 2014, Town Meeting approved various supplemental budgetary appropriations which resulted in a net increase of approximately $1,050,000 from the original voted budget. The appropriations were funded primarily from free cash (unassigned fund balance) for additional enterprise fund subsidies and contributions for health insurance. The Finance Director’s Office has the responsibility to ensure that budgetary control is maintained in the manner in which the appropriations were voted by Town Meeting. Budgetary control is exercised through the Town’s accounting system. Budgetary-to-GAAP Reconciliation – The Town’s general fund is prepared on a basis of accounting other than GAAP to conform to the Uniform Municipal Accounting System basis of accounting as prescribed by the Massachusetts Department of Revenue. A reconciliation of the budgetary-basis to GAAP-basis results for the General Fund for the fiscal year ended June 30, 2014, is as follows: Basis of Accounting Fund Perspective Differences Differences Total Revenues on a budgetary basis 75,701,165$ Stabilization revenue -$ 35,320$ 35,320 Change in accruing revenues to GAAP basis (442,899) - (442,899) On behalf payments 2,765,243 - 2,765,243 Revenues on a GAAP basis 2,765,243$ -$ 78,058,829$ Expenditures on a budgetary basis 65,702,692$ Transfer recognition 154,346$ -$ 154,346 On behalf payments 2,765,243 - 2,765,243 Expenditures on a GAAP basis 2,765,243$ -$ 68,622,281$ Other financing (uses) on a budgetary basis (7,651,126)$ Stabilization transfer -$ 1,000,000$ 1,000,000 Other financing (uses) on a GAAP basis -$ 1,000,000$ (6,651,126)$ Town of Nantucket, Massachusetts Page 88 of 124 Comprehensive Annual Financial Report Combining Statements Town of Nantucket, Massachusetts Page 89 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 90 of 124 Comprehensive Annual Financial Report Nonmajor Governmental Funds Special Revenue Funds – Special revenue funds are used to account for certain revenue generating activities that are legally and/or programmatically restricted to expenditures for a specific purpose. From the Town’s financial ledgers, these activities can be distinctly categorized into the following groupings: School Lunch Fund – This segregated revolving fund accounts for the activities of the child nutrition programs; amounts collected from services include federal and state meal reimbursements and meal charges. School Federal Grants – This fund accounts for educational-based grant programs received either directly from federal agencies or indirectly through pass-through entities. School State Grants – This fund accounts for educational-based grant programs received directly from State agencies. Town Federal Grants – This fund accounts for non-school grant programs received either directly from federal or indirectly through pass-through entities. Town State Grants – This fund accounts for non-school grant programs received directly from State agencies. Community Preservation – This fund accounts for monies received by the Town through a tax surcharge to its taxpayers and a match from the State. The purpose of the fund is for the preservation of space in Nantucket. Road Improvements – This fund accounts for monies received from the State under MGL Chapter 90 for eligible road improvements. School Revolving Funds – This fund accounts for educational-based activities within revolving funds established in accordance with MGL Chapter 44, Section 53E ½ and Chapter 71. Town Revolving Funds – This fund accounts for the non-school related activity within revolving funds established in accordance with MGL Chapter 44, Section 53E ½ and other applicable statutes. Property Sale Proceeds – This fund accounts for receipts collected from the sale of Town owned real property. Gifts – This fund accounts for donated monies which relate to all Town activities. Town of Nantucket, Massachusetts Page 91 of 124 Comprehensive Annual Financial Report Permanent Funds – Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support governmental programs. Cemetery Trust Funds – This fund accounts for contributions earmarked for the perpetual care and maintenance of cemetery facilities and property. Other Trust Funds – This fund accounts for all contributions including: gifts, donations and bequests for which only earnings on the original trust corpus may be expended to benefit government approved programs, other than those associated with cemetery and library activities. 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Town of Nantucket, Massachusetts Page 93 of 124 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Assets: Cash and cash equivalents 235,129$ 86,717$ 538,922$ 24,315$ 480,833$ Investments - - - - - Receivables, net of allowance for uncollectibles: Property taxes - - - - - Departmental and other - - - - - Intergovernmental - - 130,106 55,669 521,551 Total Assets 235,129 86,717 669,028 79,984 1,002,384 Total Deferred Outflows of Resources - - - - - Total Assets and Deferred Outflows of Resources 235,129$ 86,717$ 669,028$ 79,984$ 1,002,384$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable 50,445$ 225$ 5,057$ -$ 1,645$ Accrued payroll and withholdings - 3,945 - 5,123 445 Other liabilities - - - - - Due to other funds - - - - - Bond anticipation notes payable - - - - 521,551 Total Liabilities 50,445 4,170 5,057 5,123 523,641 Deferred Inflows of Resources Unavailable revenue - property taxes - - - - - Unavailable revenue - other - - - - - Total Deferred Inflows of Resources - - - - - Fund Balances: Nonspendable - - - - - Restricted 184,684 82,547 663,971 74,861 478,743 Total Fund Balances 184,684 82,547 663,971 74,861 478,743 Total Liabilities, Deferred Inflows of Resources and Fund Balances 235,129$ 86,717$ 669,028$ 79,984$ 1,002,384$ JUNE 30, 2014 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Town of Nantucket, Massachusetts Page 94 of 124 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 6,613,680$ -$ 1,052,206$ 5,153,538$ 4,932,855$ 718,236$ 19,836,431$ 220 - - - - - 220 156,660 - - - - - 156,660 - - - 161,282 - - 161,282 - 776,230 - 83,897 - - 1,567,453 6,770,560 776,230 1,052,206 5,398,717 4,932,855 718,236 21,722,046 - - - - - - - 6,770,560$ 776,230$ 1,052,206$ 5,398,717$ 4,932,855$ 718,236$ 21,722,046$ 80,097$ -$ 9,330$ 204,364$ -$ 7,695$ 358,858$ 810 - 26,393 50,061 - - 86,777 - - 196,962 - - - 196,962 - 776,230 - - - - 776,230 1,100,000 - - - - - 1,621,551 1,180,907 776,230 232,685 254,425 - 7,695 3,040,378 156,660 - - - - - 156,660 - - - 161,282 - - 161,282 156,660 - - 161,282 - - 317,942 - - - - - - - 5,432,993 - 819,521 4,983,010 4,932,855 710,541 18,363,726 5,432,993 - 819,521 4,983,010 4,932,855 710,541 18,363,726 6,770,560$ 776,230$ 1,052,206$ 5,398,717$ 4,932,855$ 718,236$ 21,722,046$ (Continued) Town of Nantucket, Massachusetts Page 95 of 124 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2014 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Assets: Cash and cash equivalents -$ -$ -$ 19,836,431$ Investments 97,469 17,293 114,762 114,982 Receivables, net of allowance for uncollectibles: Property taxes - - - 156,660 Departmental and other - - - 161,282 Intergovernmental - - - 1,567,453 Total Assets 97,469 17,293 114,762 21,836,808 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 97,469$ 17,293$ 114,762$ 21,836,808$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable -$ -$ -$ 358,858$ Accrued payroll and withholdings - - - 86,777 Other liabilities - - - 196,962 Due to other funds - - - 776,230 Bond anticipation notes payable - - - 1,621,551 Total Liabilities - - - 3,040,378 Deferred Inflows of Resources Unavailable revenue - property taxes - - - 156,660 Unavailable revenue - other - - - 161,282 Total Deferred Inflows of Resources - - - 317,942 Fund Balances: Nonspendable 97,469 17,293 114,762 114,762 Restricted - - - 18,363,726 Total Fund Balances 97,469 17,293 114,762 18,478,488 Total Liabilities, Deferred Inflows of Resources and Fund Balances 97,469$ 17,293$ 114,762$ 21,836,808$ (Concluded) Town of Nantucket, Massachusetts Page 96 of 124 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 97 of 124 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Revenues: Intergovernmental 83,027$ 422,490$ 618,166$ 280,491$ 338,499$ Motor vehicle and other excises - - - - - Community preservation surcharges - - - - - Investment income - - - 38 - Departmental and other revenue 430,242 - - - 16,860 Contributions and donations - - - - - Total Revenues 513,269 422,490 618,166 280,529 355,359 Expenditures: Current: General government - - - 219,334 24,845 Public safety - - - - 179,332 Education 586,457 491,905 633,993 - - Public works - - - - 29,783 Health and human services - - - 59,500 161,552 Culture and recreation - - - - 9,124 Debt service: Principal - - - - 250,000 Total Expenditures 586,457 491,905 633,993 278,834 654,636 Excess (Deficiency) Of Revenues Over (Under) Expenditures (73,188) (69,415) (15,827) 1,695 (299,277) Other Financing Sources (Uses): Sale of capital assets - - - - - Transfers in - - - - - Total Other Financing Sources (Uses)- - - - - Net Change in Fund Balances (73,188) (69,415) (15,827) 1,695 (299,277) Fund Balances - Beginning of Year 257,872 151,962 679,798 73,166 778,020 Fund Balances - End of Year 184,684$ 82,547$ 663,971$ 74,861$ 478,743$ Special Revenue Funds FISCAL YEAR ENDED JUNE 30, 2014 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 98 of 124 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 986,617$ 762,965$ -$ 147,384$ -$ -$ 3,639,639$ - - - 33,851 - - 33,851 1,773,519 - - - - - 1,773,519 31,724 - - 1,367 - - 33,129 9,138 - 1,047,313 1,445,703 - - 2,949,256 - - - - - 371,251 371,251 2,800,998 762,965 1,047,313 1,628,305 - 371,251 8,800,645 - - - 337,660 - 152,813 734,652 - - - 1,012,979 83,979 111,241 1,387,531 - - 1,325,345 - - 34,079 3,071,779 - 776,230 - 1,401 - 11,709 819,123 - - - 99,826 - 2,937 323,815 3,784,709 - - 73,908 - 4,073 3,871,814 - - - - - 161,333 411,333 3,784,709 776,230 1,325,345 1,525,774 83,979 478,185 10,620,047 (983,711) (13,265) (278,032) 102,531 (83,979) (106,934) (1,819,402) - - - - 3,888,758 - 3,888,758 - - 350,000 - - - 350,000 - - 350,000 - 3,888,758 - 4,238,758 (983,711) (13,265) 71,968 102,531 3,804,779 (106,934) 2,419,356 6,416,704 13,265 747,553 4,880,479 1,128,076 817,475 15,944,370 5,432,993$ -$ 819,521$ 4,983,010$ 4,932,855$ 710,541$ 18,363,726$ (Continued) Town of Nantucket, Massachusetts Page 99 of 124 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2014 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Revenues: Intergovernmental -$ -$ -$ 3,639,639$ Motor vehicle and other excises - - - 33,851 Community preservation surcharges - - - 1,773,519 Investment income - - - 33,129 Departmental and other revenue - - - 2,949,256 Contributions and donations 918 162 1,080 372,331 Total Revenues 918 162 1,080 8,801,725 Expenditures: Current: General government - - - 734,652 Public safety - - - 1,387,531 Education - - - 3,071,779 Public works - - - 819,123 Health and human services - - - 323,815 Culture and recreation - - - 3,871,814 Pension and fringe benefits - - - - Debt service: Principal - - - 411,333 Total Expenditures - - - 10,620,047 Excess (Deficiency) Of Revenues Over (Under) Expenditures 918 162 1,080 (1,818,322) Other Financing Sources (Uses): Sale of capital assets - - - 3,888,758 Transfers in - - - 350,000 Total Other Financing Sources (Uses)- - - 4,238,758 Net Change in Fund Balances 918 162 1,080 2,420,436 Fund Balances - Beginning of Year 96,551 17,131 113,682 16,058,052 Fund Balances - End of Year 97,469$ 17,293$ 114,762$ 18,478,488$ (Concluded) Town of Nantucket, Massachusetts Page 100 of 124 Comprehensive Annual Financial Report Internal Service Funds Narrative Internal service funds are used to account for the financing of services provided by one department to other departments or governmental units. The Town’s risk financing activities accounts for in the internal service funds can be distinctly categorized into the following groupings: Health Claims – This fund accounts for the group health and dental insurance activity for active Town employees and retirees. Workers’ Compensation Claims – This fund accounts for workers’ compensation benefits, replacement wages and medical claims expenses of employees that qualify for such benefits. Town of Nantucket, Massachusetts Page 101 of 124 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2014 Total Health Workers'Internal Claims Compensation Service Funds Assets: Current assets: Cash and cash equivalents 396,642$ 298,410$ 695,052$ Investments - - - Reinsured claims receivable 181,498 - 181,498 Deposit held by third party 1,830,000 - 1,830,000 Total Current Assets 2,408,140 298,410 2,706,550 Deferred Outflows of Resources Prepaid expense 42,100 - 42,100 Total Deferred Outflows of Resources 42,100 - 42,100 Total Assets and Deferred Outflows of Resources 2,450,240$ 298,410$ 2,748,650$ Liabilities: Current liabilities: Warrants and accounts payable 882,440 4,009 886,449 Health claims incurred but not reported 775,395 - 775,395 Workers' compensation claims - 50,571 50,571 Total Current Liabilities 1,657,835 54,580 1,712,415 Total Deferred Inflows of Resources - - - Total Liabilities and Deferred Inflows of Resources 1,657,835 54,580 1,712,415 Net Position: Unrestricted 792,405 243,830 1,036,235 TOTAL NET POSITION 792,405$ 243,830$ 1,036,235$ Town of Nantucket, Massachusetts Page 102 of 124 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2014 Total Health Workers'Internal Service Claims Compensation Funds Operating Revenues: Employee contributions 2,156,770$ -$ 2,156,770$ Employer contributions 10,587,522 190,000 10,777,522 Reinsured claims proceeds 418,708 - 418,708 Total Operating Revenues 13,163,000 190,000 13,353,000 Operating Expenditures: Employee benefits 12,428,272 157,802 12,586,074 Operating Income 734,728 32,198 766,926 Nonoperating Revenues: Investment Income 5,494 6,214 11,708 Income Before Transfers 740,222 38,412 778,634 Change in Net Position 740,222 38,412 778,634 Fund Balances - Beginning of Year 52,183 205,418 257,601 Fund Balances - End of Year 792,405$ 243,830$ 1,036,235$ Town of Nantucket, Massachusetts Page 103 of 124 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2014 Total Health Workers'Internal Service Claims Compensation Funds Cash Flows From Operating Activities: Receipts from interfund services provided 12,744,294$ 190,000$ 12,934,294$ Receipts from reinsured claims 237,208 237,208.00 Payments for interfund services used (13,477,578) (264,458) (13,742,036) Net Cash Used in Operating Activities (496,076) (74,458) (570,534) Cash Flows from Noncapital Financing Activities: Advances from other funds - 197,000 197,000 Cash Flows From Investing Activities: Investment income 5,494 6,214 11,708 Investment of operating cash 4,433 169,654 174,087 Net Cash Provided by Investing Activities 9,927 175,868 185,795 Net Change in Cash and Cash Equivalents (486,149) 298,410 (187,739) Cash and Cash Equivalents: Beginning of the Year 882,791 - 882,791 End of the Year 396,642$ 298,410$ 695,052$ Reconciliation of Operating Income to Net Cash Used in Operating Activities: Operating income 734,728 32,198 766,926 Adjustments to reconcile operating income to net cash used in operating activities: Changes in assets and liablities: Receivables (181,498) - (181,498) Prepaid expense (42,100) - (42,100) Accounts payable and accrued expenses (1,007,206) (106,656) (1,113,862) Net Cash Used in Operating Activities (496,076)$ (74,458)$ (570,534)$ Town of Nantucket, Massachusetts Page 104 of 124 Comprehensive Annual Financial Report Fiduciary Funds Agency Funds – Agency funds are used to account for assets maintained in a custodial capacity. Such activities primarily consist of performance bonds and school deposits held, as well as, monies due to Town personnel for certain services rendered that were collected from external parties on their behalf. Town of Nantucket, Massachusetts Page 105 of 124 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2014 Beginning End of Year Additions Deletions of Year Assets Current assets: Cash and cash equivalents 299,625$ 1,929,117$ (1,461,266)$ 767,476$ Receivables, net of allowance 99,046 563,578 (563,996) 98,628 Total Assets 398,671$ 2,492,695$ (2,025,262)$ 866,104$ Liabilities Current liabilities: Warrants and accounts payable -$ 297,517$ (268,863)$ 28,654$ Accrued payroll and withholdings 8,281 565,104 (556,455) 16,930 Agency liabilities 390,390 1,630,074 (1,199,944) 820,520 Total Liabilities 398,671$ 2,492,695$ (2,025,262)$ 866,104$ Town of Nantucket, Massachusetts Page 106 of 124 Comprehensive Annual Financial Report STATISTICAL SECTION Built in 1746, the Brant Point Lighthouse is the county’s second oldest lighthouse and one of three lighthouses located on the island. At 26 feet tall it is one of the shortest lighthouses in the country. The current structure is the 10th that has stood at this location as others have succumbed to the elements. The location of the lighthouse in town makes it very popular with tourists, and while it is not open to the public the property is open to exploration and is an excellent destination for beach picnics, surfcasting, sightseeing and even weddings during the summer months. Statistical Section This part of the comprehensive annual financial report presents information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the Town’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the Town’s most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the Town’s current levels of outstanding debt, and the Town’s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s financial report relates to the services the Town provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the financial statements for the relevant year. 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Town of Nantucket, Massachusetts Page 108 of 124 Comprehensive Annual Financial Report LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 (1)2013 2014 Governmental activities: Invested in capital assets……….…………………. 138,216,914$ 138,374,510$ 145,427,507$ 153,639,878$ 156,034,000$ 171,102,098$ 177,625,537$ 180,988,633$ 179,338,227$ 175,687,378$ Restricted………………………………………………………………………….. 6,306,885 8,090,273 9,291,543 13,803,760 14,401,121 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 Unrestricted……………………………………………………………… 12,747,782 19,842,330 21,078,145 8,821,281 3,072,293 (7,324,139) 2,459,785 1,293,781 (1,831,770) 1,501,847 Total governmental activities net position……………………………………….. 157,271,581$ 166,307,113$ 175,797,195$ 176,264,919$ 173,507,414$ 177,072,954$ 183,235,378$ 184,741,823$ 193,324,843$ 197,700,380$ Business-type activities: Invested in capital assets……….…………………. 64,046,189$ 66,991,624$ 69,117,523$ 78,358,807$ 109,858,055$ 114,762,981$ 119,408,316$ 118,502,610$ 116,596,172$ 112,541,419$ Restricted……………………………...…………………..… - - - - - - - - - - Unrestricted………………………………………………………………. 13,595,950 10,896,735 12,511,077 24,272,569 7,313,124 7,264,425 3,199,868 9,865,892 11,287,299 15,914,047 Total business-type activities net position……………………………. 77,642,139$ 77,888,359$ 81,628,600$ 102,631,376$ 117,171,179$ 122,027,406$ 122,608,184$ 128,368,502$ 127,883,471$ 128,455,466$ Primary government: Invested in capital assets……….…………………. 202,263,103$ 205,366,134$ 214,545,030$ 231,998,685$ 265,892,055$ 285,865,079$ 297,033,853$ 299,491,243$ 295,934,399$ 288,228,797$ Restricted………………………………………………………………………. 6,306,885 8,090,273 9,291,543 13,803,760 14,401,121 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 Unrestricted…………………………………………………………… 26,343,732 30,739,065 33,589,222 33,093,850 10,385,417 (59,714) 5,659,653 11,159,673 9,455,529 17,415,894 Total primary government net position…………………………………………………. 234,913,720$ 244,195,472$ 257,425,795$ 278,896,295$ 290,678,593$ 299,100,360$ 305,843,562$ 313,110,325$ 321,208,314$ 326,155,846$ (1)During fiscal year 2013, the Town conducted a comprehensive analysis of its capital assets. As a result, a restatement was required to reduce beginning net position of the governmental activities by $1,951,844 and reduce beginning net position of the business-type activities by $1,447,762. NET POSITION BY COMPONENT Town of Nantucket, Massachusetts Page 109 of 124 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Expenses - Governmental activities: General government…...……………………………………………………9,293,110$ 7,519,902$ 9,115,782$ 8,937,924$ 10,730,618$ 10,319,800$ 10,940,662$ 10,015,072$ 9,765,641$ 10,068,331$ Public safety…..………………………………………………………………9,823,535 10,078,205 10,073,622 10,691,407 14,346,976 14,684,244 12,172,241 13,601,442 14,042,554 14,779,274 Education……..………………………………………………………………….27,004,880 25,550,190 25,691,799 27,607,296 27,861,059 30,380,350 28,867,553 29,011,944 35,190,752 36,829,209 Public works……...……………………………………………………………….3,412,780 3,405,572 3,889,166 3,146,271 4,195,016 4,514,082 4,082,163 4,692,304 4,171,361 4,862,640 Health and human services………………………………………………………7,845,803 7,863,147 7,537,766 7,473,662 9,699,805 9,714,459 2,765,497 3,741,941 2,301,279 1,641,325 Culture and recreation………...……………………………………………………..2,818,139 2,356,992 2,147,117 2,232,982 3,872,616 3,392,381 2,119,755 2,170,903 2,327,315 5,622,457 Interest expense……………………………………………………………………2,382,346 1,987,423 2,246,838 2,419,841 3,189,350 2,351,987 2,354,427 2,082,337 2,368,538 2,075,324 Total government activities expenses……………………………………..62,580,593 58,761,431 60,702,090 62,509,383 73,895,440 75,357,303 63,302,298 65,315,943 70,167,440 75,878,560 Business-type activities: Siasconset Water……………………………………………………………………239,388 277,724 413,420 434,272 577,851 602,507 719,668 682,682 712,820 724,927 Wannacomet Water……………………………………………………………………2,263,288 2,197,304 2,805,631 3,507,036 4,022,463 3,582,097 3,570,999 3,674,493 3,785,742 3,624,731 Sewer……………………………………………………………………2,975,692 2,732,123 3,954,894 4,416,855 5,527,480 5,491,001 5,613,007 5,760,776 6,149,616 6,002,582 Solid waste……………………………………………………………………6,335,053 7,495,601 8,983,570 8,988,076 10,575,310 8,114,794 8,679,984 8,851,378 11,302,336 8,963,029 Nantucket Memorial Airport……………………………………………………………………10,520,301 11,515,615 12,171,263 13,717,716 11,912,883 13,541,915 13,158,406 15,331,231 14,523,220 15,592,198 Our Island Home……………………………………………………………………- - - - - 8,808,654 6,923,716 7,079,676 7,670,514 Total business-type activities expenses……………………………………..22,333,722 24,218,367 28,328,778 31,063,955 32,615,987 31,332,314 40,550,718 41,224,276 43,553,410 42,577,981 Total primary government expenses……………………………………….84,914,315$ 82,979,798$ 89,030,868$ 93,573,338$ 106,511,427$ 106,689,617$ 103,853,016$ 106,540,219$ 113,720,850$ 118,456,541$ Program Revenues - Governmental activities: Charges for services: General government…………………………………………………General government…...……………………………………………………1,313,978$ 87,871$ 448,176$ 1,018,223$ 211,203$ 1,358,150$ 426,552$ 741,512$ 622,049$ 917,730$ Public safety………………………………………………………………..Public safety…..………………………………………………………………2,573,334 2,340,490 2,266,005 2,028,994 1,633,813 1,418,330 1,362,466 1,668,420 2,771,517 3,213,998 Education……………………………………………………………….Education……..………………………………………………………………….716,799 565,693 569,468 688,028 515,790 498,985 501,915 780,977 1,488,121 1,490,713 Public works……………………………………………………………….Public works……...……………………………………………………………….94,095 111,057 124,570 69,200 66,298 55,092 59,430 276,502 300,317 340,272 Health and human services………………………………………………………3,906,267 3,143,759 2,687,242 3,284,823 3,120,051 3,661,973 35,445 82,788 132,655 188,221 Culture and recreation………...……………………………………………………..332,828 326,786 348,352 318,742 321,181 289,279 325,010 522,063 248,089 295,416 Operating grants and contributions……………………………………4,242,952 6,690,901 7,391,686 5,462,762 5,795,452 5,090,233 3,989,493 2,131,096 6,022,440 6,230,362 Capital grants and contributions…………………………………………..3,039,119 1,834,355 1,881,330 1,991,891 1,270,878 1,230,625 1,067,782 1,030,215 1,874,830 289,066 Total government activities program revenues...……………………………..16,219,372 15,100,912 15,716,829 14,862,663 12,934,666 13,602,667 7,768,093 7,233,573 13,460,018 12,965,778 Business-type activities: Charges for services……………….………………………………….16,823,638 20,836,060 24,449,745 25,376,292 24,172,299 24,820,469 27,568,533 32,847,185 31,799,794 33,592,609 Operating grants and contributions……………………………………3,942,443 1,728,527 3,494,514 1,773,605 1,113,866 776,060 1,287,762 746,499 85,992 91,000 Capital grants and contributions…………………………………………..5,654,409 - - 6,804,856 15,208,679 7,057,702 3,307,275 2,146,931 1,989,292 2,479,717 Total business-type activities program revenues……………………………………..26,420,490 22,564,587 27,944,259 33,954,753 40,494,844 32,654,231 32,163,570 35,740,615 33,875,078 36,163,326 Total primary government program revenues……………………………………….42,639,862$ 37,665,499$ 43,661,088$ 48,817,416$ 53,429,510$ 46,256,898$ 39,931,663$ 42,974,188$ 47,335,096$ 49,129,104$ Net (Expense)/Program Revenue Governmental activities……………………....……………………………..(46,361,221)$ (43,660,519)$ (44,985,261)$ (47,646,720)$ (60,960,774)$ (61,754,636)$ (55,534,205)$ (58,082,370)$ (56,707,422)$ (62,912,782)$ Business-type activities……………………....……………………………..4,086,768 (1,653,780) (384,519) 2,890,798 7,878,857 1,321,917 (8,387,148) (5,483,661) (9,678,332) (6,414,655) Total primary government net (expense)/program revenue……………………………………….(42,274,453)$ (45,314,299)$ (45,369,780)$ (44,755,922)$ (53,081,917)$ (60,432,719)$ (63,921,353)$ (63,566,031)$ (66,385,754)$ (69,327,437)$ (continued) Town of Nantucket, Massachusetts Page 110 of 124 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Revenues and other Changes in Net Position - Governmental activities: Real estate and personal property taxes, net of tax refunds payable…………………………………………………. 42,958,421$ 46,953,932$ 51,865,354$ 55,581,598$ 57,830,875$ 60,956,838$ 61,948,050$ 61,863,287$ 63,594,267$ 64,160,459$ Motor vehicle and other excise taxes…………………………………………………… 2,292,165 2,315,570 2,222,084 2,367,735 2,201,004 1,852,563 1,867,286 2,066,878 2,338,423 2,314,472 Hotel and meals excise…………………………………………….. 1,380,719 1,444,085 1,291,414 1,343,140 1,237,233 1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 Penalties and interest on taxes………………………………………………………………419,694 306,207 398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 Community Preservation Fund surcharges………………………………………………………………1,253,374 1,279,459 1,459,647 1,535,337 1,616,989 1,669,975 1,666,540 1,724,556 1,745,927 1,782,598 Grants and contributions not restricted to specific programs………………………………………………………………203,986 240,798 413,538 469,868 376,265 587,474 935,761 307,901 737,402 278,049 Unrestricted investment income……………………………………………. 421,196 678,052 355,288 634,539 277,329 160,970 65,960 173,698 66,235 159,229 Gain on sale of capital assets……………………………………………. - - - - - 1,143,075 73,530 813,011 736,256 1,379,639 Other revenue………………………………………………………………488,428 1,377,948 593,982 583,420 850,819 789,238 748,060 438,678 604,871 - Transfers……………………………………………………………… (2,172,967) (1,900,000) (4,124,760) (14,811,978) (6,660,946) (3,534,310) (8,967,926) (11,231,986) (8,303,291) (6,942,620) Total governmental activities………………………………………………………………… 47,245,016 52,696,051 54,475,343 48,114,444 58,203,269 65,320,176 61,696,629 59,588,815 65,290,442 67,288,319 Business-type activities: Grants and contributions not restricted to specific programs………………………………………………………………- - - - - - - - - - Unrestricted investment income………………………………………………………………- - - - - - - 11,993 55,748 44,030 Transfers……………………………………………………………… 2,172,967 1,900,000 4,124,760 18,111,978 6,660,946 3,534,310 8,967,926 11,231,986 8,303,291 6,942,620 Total business-type activities….………..………………………………….. 2,172,967 1,900,000 4,124,760 18,111,978 6,660,946 3,534,310 8,967,926 11,243,979 8,359,039 6,986,650 Total primary government general revenues and other changes in net position…………………………………………………. 49,417,983$ 54,596,051$ 58,600,103$ 66,226,422$ 64,864,215$ 68,854,486$ 70,664,555$ 70,832,794$ 73,649,481$ 74,274,969$ Changes in Net Position Governmental activities……………………....…………………………….. 883,795$ 9,035,532$ 9,490,082$ 467,724$ (2,757,505)$ 3,565,540$ 6,162,424$ 1,506,445$ 8,583,020$ 4,375,537$ Business-type activities……………………....…………………………….. 6,259,735 246,220 3,740,241 21,002,776 14,539,803 4,856,227 580,778 5,760,318 (1,319,293) 571,995 Total primary government changes in net position………………………………………. 7,143,530$ 9,281,752$ 13,230,323$ 21,470,500$ 11,782,298$ 8,421,767$ 6,743,202$ 7,266,763$ 7,263,727$ 4,947,532$ (concluded) Town of Nantucket, Massachusetts Page 111 of 124 Comprehensive Annual Financial Report 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Fund: Restricted………………………………. -$ 398,963$ 374,421$ 931,390$ -$ 250,000$ -$ 1,485,147$ 1,577,323$ 650,518$ Committed…………………………….. 3,174,000 2,348,000 1,759,500 364,200 3,236,873 2,471,550 2,136,060 1,941,738 2,114,218 8,061,318 Assigned…………………………….. 734,211 1,340,476 1,689,093 2,142,523 2,906,103 3,136,435 4,488,570 2,182,323 5,146,635 2,047,757 Unassigned…………………………… 6,972,282 8,927,855 8,177,909 9,894,585 7,963,323 11,047,142 12,186,769 14,373,770 13,881,601 14,745,606 Total general fund…………………………….. 10,880,493$ 13,015,294$ 12,000,923$ 13,332,698$ 14,106,299$ 16,905,127$ 18,811,399$ 19,982,978$ 22,719,777$ 25,505,199$ All Other Governmental Funds: Nonspendable……………………………….308,153$ 308,153$ 308,153$ 308,153$ 308,153$ 308,153$ 288,280$ 44,305$ 44,305$ 114,762$ Restricted………………………………. 10,097,826 10,469,477 15,373,074 20,851,574 19,796,252 19,427,291 16,039,900 18,987,991 17,267,229 18,709,640 Unassigned…………………………… - - - - - - (138,806) (104,106) - - Total all other governmental funds…………….. 10,405,979$ 10,777,630$ 15,681,227$ 21,159,727$ 20,104,405$ 19,735,444$ 16,189,374$ 18,928,190$ 17,311,534$ 18,824,402$ Note: The Town implemented GASB 54 in fiscal year 2011. All previous years (2005 - 2010) data presented were restated to conform to GASB 54 presentation. FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 112 of 124 Comprehensive Annual Financial Report 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues: Real estate and personal property taxes, net of tax refunds……………………………………………………. 44,482,013$ 46,334,424$ 51,197,402$ 55,204,590$ 56,947,358$ 59,769,412$ 62,486,485$ 62,120,715$ 63,517,709$ 63,434,664$ Motor vehicle and boat excise………………………………………… 2,042,363 2,547,032 2,173,566 2,332,743 2,210,996 1,757,392 2,090,373 1,986,900 1,913,789 2,512,609 Hotel and meals excise………………………………………………. 1,380,719 1,444,085 1,291,414 1,343,140 1,237,233 1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 Departmental and other……………………………………….. 9,220,836 9,283,838 8,224,727 8,649,333 8,970,419 7,834,515 4,032,108 6,414,807 4,910,252 4,641,243 Communities Preservation surcharges……………………………………… 1,253,374 1,279,459 1,459,647 1,535,337 1,616,989 1,669,975 1,666,540 1,724,556 1,739,157 1,773,519 Penalties and interest on taxes………………………………………………………..419,694 306,207 398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 Licenses and permits………………………………………………………..1,724,026 1,579,981 1,805,794 1,321,794 919,644 932,004 1,015,424 1,058,052 1,075,074 1,405,911 Fines and forfeitures…………………………………………………………….391,744 331,706 411,439 266,693 240,648 248,231 254,285 223,054 208,503 296,917 Intergovernmental………………………………………………………..6,487,429 8,009,953 5,753,380 7,178,707 7,066,988 6,946,282 7,131,244 7,280,969 7,148,723 8,119,346 Contributions………………………………………………………..330,180 - 850 1,300 96,821 83,320 1,249,415 - 258,425 372,331 Investment income……………………………………………………….. 416,945 635,636 436,029 758,901 440,459 278,439 159,602 164,936 63,751 147,521 Total Revenue………………………………………………… 68,149,323 71,752,321 73,153,044 79,003,323 80,221,256 81,213,923 83,444,844 84,406,781 84,605,735 86,860,554 Expenditures: General government……………………………………………………………. 7,520,860 4,218,264 5,572,471 5,327,955 5,090,318 5,837,165 6,209,441 7,179,875 7,114,409 7,596,379 Public safety……………………………………………………………… 7,050,097 7,157,058 6,617,581 8,416,870 8,997,534 10,513,956 10,437,125 10,041,235 9,018,372 9,284,157 Education………………………………………………………………… 20,622,239 19,981,556 21,743,149 22,044,432 23,209,204 23,175,994 23,764,115 23,829,685 23,139,532 24,585,011 Public works…………………………………………………………….. 3,171,745 3,178,421 3,646,799 3,997,185 3,031,636 2,323,502 2,406,506 2,582,349 2,242,399 2,700,144 Human services………………………………………………… 6,012,305 5,499,220 5,742,080 6,152,000 5,917,474 5,845,124 889,848 1,305,274 1,899,449 1,236,079 Culture and recreation……………………………………………….. 2,304,630 2,370,902 2,861,570 2,649,053 2,236,031 2,312,808 2,037,840 1,492,926 1,842,298 5,083,442 Pension and fringe benefits………………………………………………………… 10,560,048 11,943,375 13,330,835 13,303,787 12,143,139 12,698,735 11,662,320 11,479,906 14,831,570 15,661,255 State and county charges………………………………………… 431,758 440,372 447,745 462,130 449,457 458,657 461,358 531,772 546,250 566,814 Capital outlay and other………………………………………………………………. 17,290,659 9,354,381 6,044,041 7,508,083 9,254,440 16,296,496 8,912,763 5,047,157 7,481,872 5,202,852 Debt service: Principal……………………………………………………………… 2,661,151 3,942,163 4,547,154 4,728,096 6,338,863 7,778,503 7,558,823 6,657,855 5,496,332 5,405,944 Interest……………………………………………………………………. 2,302,624 2,167,297 2,262,233 2,343,057 2,952,425 2,501,019 2,401,588 2,171,097 2,260,152 2,186,325 Total Expenditures……………………………………………………….. 79,928,116 70,253,009 72,815,658 76,932,648 79,620,521 89,741,959 76,741,727 72,319,131 75,872,635 79,508,402 Excess of revenues over (under) expenditures………………………………………………… (11,778,793) 1,499,312 337,386 2,070,675 600,735 (8,528,036) 6,703,117 12,087,650 8,733,100 7,352,152 Other Financing Sources (Uses): Proceeds from bonds and notes………………...………………………………………… 4,231,000 2,810,000 6,680,000 19,551,578 5,990,490 13,070,000 - 3,200,000 478,449 - Proceeds from refunding bonds………………...…………………………………………27,646 17,924,000 - - - - 1,329,900 8,685,000 - Premiums from debt issuances………………………….- 434,629 - - - 279,138 - 212,513 808,509 - Payments to refunded bond escrow agent………………………….- (18,261,489) - - - - - (1,519,037) (9,505,125) - Sale of capital assets………………………………………………… - - - - - 1,143,075 73,530 - 865,210 3,888,758 Transfers in……………………………………………………………………………… 1,152,918 3,075,727 1,946,827 4,852,464 1,345,000 4,008,898 1,554,704 1,008,975 919,323 2,101,972 Transfers out…………………………………………………………………………… (3,325,885) (4,975,727) (5,074,987) (19,664,442) (8,217,946) (7,543,208) (9,971,149) (12,409,606) (9,864,323) (9,044,592) Total other financing sources (uses)………………………………………………………………….. 2,085,679 1,007,140 3,551,840 4,739,600 (882,456) 10,957,903 (8,342,915) (8,177,255) (7,612,957) (3,053,862) Net change in fund balance…………………………………………………………………. (9,693,114)$ 2,506,452$ 3,889,226$ 6,810,275$ (281,721)$ 2,429,867$ (1,639,798)$ 3,910,395$ 1,120,143$ 4,298,290$ Debt service as a percentage of noncapital expenditures………………………………………………. 7.92% 10.03% 10.20% 10.19%13.20%14.00% 14.68%13.12%11.34%10.22% LAST TEN FISCAL YEARS CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 113 of 124 Comprehensive Annual Financial Report Ratio of Total Total State Assessed to Fiscal Residential Open Space Commercial Industrial Personal Commercial Town Equalized Equalized Residential Commercial Average Year Value Value Value Value Property Value Value Value Value Tax Rate Tax Rate Tax Rate 2005 11,922,460,580$ 10,097,300$ 890,334,460$ 44,510,760$ 180,154,570$ 1,114,999,790$ 13,047,557,670$ 13,575,803,900 96.11%3.30$ 4.99$ 4.29$ 2006 15,279,279,419 26,903,100 923,693,708 48,005,773 197,094,197 1,168,793,678 16,474,976,197 17,562,057,600 93.81%2.84 5.06 4.15 2007 18,833,057,056 28,148,400 1,276,678,766 65,568,478 180,259,113 1,522,506,357 20,383,711,813 17,562,057,600 116.07%2.49 4.46 3.65 2008 19,075,765,006 28,148,400 1,248,404,516 71,831,978 199,459,060 1,519,695,554 20,623,608,960 22,498,040,300 91.67%2.67 4.77 3.91 2009 19,297,012,011 28,148,400 1,212,268,373 73,994,478 207,661,750 1,493,924,601 20,819,085,012 22,498,040,300 92.54%2.76 4.92 4.03 2010 18,609,952,032 15,300,200 1,171,917,524 61,207,044 204,631,215 1,437,755,783 20,063,008,015 21,914,393,400 91.55%3.01 5.35 4.39 2011 15,812,302,942 12,152,700 1,118,103,719 56,154,439 209,716,105 1,383,974,263 17,208,429,905 21,914,393,400 78.53%3.58 6.41 5.25 2012 15,502,597,155 21,974,500 1,056,502,692 53,625,153 209,470,691 1,319,598,536 16,844,170,191 18,041,019,200 93.37%3.62 6.47 5.30 2013 15,890,745,965 22,428,100 932,271,034 50,373,351 205,311,229 1,187,955,614 17,101,129,679 18,041,019,200 94.79%3.67 6.51 5.34 2014 15,734,218,626 11,460,900 939,061,724 48,571,000 206,415,205 1,194,047,929 16,939,727,455 17,816,255,100 95.08%3.76 6.68 6.68 Source: Official Statements, State Division of Local Services Note: All property in the Commonwealth of Massachusetts is assessed at 100% of full and fair cash value. The State estimates this "equalized valuation" for all municipalities every two years. Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2% of the full and fair cash value. The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2 1/2%, subject to an exception for property added to the tax rolls and for certain valuation increases. This secondary limit may be exceeded in any fiscal year by majority approval of the voters, however, it cannot exceed the primary limitation. Assessed Value Tax Rates LAST TEN FISCAL YEARS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY BY CLASSIFICATION AND TAX RATES 1.0% 3.0% 5.0% 7.0% 9.0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Commercial Value as % of Total Value Town of Nantucket, Massachusetts Page 114 of 124 Comprehensive Annual Financial Report PRINCIPAL TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Percentage of Percentage of Total Taxable Total Taxable Nature of Assessed Assessed Assessed Assessed Taxpayer Business Valuation Rank Value Valuation Rank Value NIR Retail LLC Resort 94,028,834$ 1 0.56% Glowacki, Walter Private 58,272,814 2 0.34% Nantucket Electric Company Private Utility 49,854,033 3 0.29%33,133,180$ 4 0.25% Penant Realty LLC Residential 40,984,630 4 0.24% Nantucket Yacht Club Recreation 39,128,820 5 0.23%38,671,736 3 0.30% Nantucket Island Resort LLC Resort 34,146,133 6 0.20%52,704,221 2 0.40% Great Harbor Yacht Club Inc.Private 32,004,051 7 0.19% White Elephant Hotel LLC Resort 21,315,516 8 0.13% Sankaty Head Golf Club, Inc.Recreation 18,623,888 9 0.11%19,206,044 7 0.15% US REIF Marine Nantucket FEE LLC Retail 17,649,618 10 0.10% Hess, Walter R. Trustee Residential 55,938,720 1 0.43% Helleran, Arthur J.Etal, Trust Resort 23,082,530 5 0.18% Winthrop Nantucket 2 Realty Trust Resort 22,570,395 6 0.17% Nantucket Golf Course Recreation 14,262,489 8 0.11% Wauwinet Inn, LLC Resort 12,490,825 9 0.10% Sherburne Associates Resort 11,589,400 10 0.09% Totals 406,008,337$ 2.40%283,649,540$ 2.17% Source: Official Statements 2014 2005 Town of Nantucket, Massachusetts Page 115 of 124 Comprehensive Annual Financial Report Percent of Less First Year Percent of Delinquent Total Total Tax Fiscal Total Abatements &Net Current Net Levy Tax Tax Collections to Year Tax Levy Exemptions Tax Levy Tax Collections Collected Collections Collections Net Tax Levy 2005 43,317,462$ 250,800$ 43,066,662$ 42,685,293$ 99.11%503,782$ 43,189,075$ 100.28% 2006 47,620,883 914,316 46,706,567 46,658,644 99.90%518,754 47,177,398 101.01% 2007 51,919,271 764,192 51,155,079 49,648,871 97.06%1,946,257 51,595,128 100.86% 2008 56,220,005 389,568 55,830,437 54,162,568 97.01%1,896,329 56,058,897 100.41% 2009 58,510,142 494,228 58,015,914 54,375,139 93.72%2,642,562 57,017,701 98.28% 2010 61,333,595 832,311 60,501,284 57,209,185 94.56%2,468,120 59,677,305 98.64% 2011 63,040,150 879,419 62,160,731 59,524,809 95.76%2,438,465 61,963,274 99.68% 2012 62,274,744 1,022,718 61,252,026 59,159,055 96.58%2,210,122 61,369,177 100.19% 2013 63,618,273 1,436,973 62,181,300 61,289,075 98.57%1,053,149 62,342,224 100.26% 2014 64,647,039 1,419,342 63,227,697 62,277,217 98.50%- 62,277,217 98.50% Source: Accounting Records and Official Statements PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Tax Levy Collections Town of Nantucket, Massachusetts Page 116 of 124 Comprehensive Annual Financial Report RATIOS OF OUTSTANDING DEBT AND GENERAL OBLIGATION DEBT General Obligation Percentage Percentage Fiscal U. S. Census Personal Assessed Bonds and Per of Personal of Assessed Year Population Income Value Other Notes Capita Income Value 2005 10,168 430,736,816$ 13,047,557,670$ 54,333,405$ 5,344$ 12.61%0.42% 2006 10,241 456,461,852 16,474,976,197 53,720,243 5,246 11.77%0.33% 2007 10,531 492,650,711 20,383,711,813 56,849,688 5,398 11.54%0.28% 2008 11,215 549,422,850 20,623,608,960 71,673,170 6,391 13.05%0.35% 2009 11,322 579,686,400 20,819,085,012 71,324,797 6,300 12.30%0.34% 2010 10,172 543,286,520 20,063,008,015 76,773,603 7,548 14.13%0.38% 2011 10,130 563,420,470 17,208,429,905 69,057,471 6,817 12.26%0.40% 2012 10,298 572,764,462 16,844,170,191 65,559,307 6,366 11.45%0.39% 2013 10,298 572,764,462 17,101,129,679 60,299,542 5,855 10.53%0.35% 2014 10,298 572,764,462 16,939,727,455 54,871,053 5,328 9.58%0.32% General Percentage Percentage Total Percentage Percentage Fiscal Obligation Per of Personal of Assessed Debt Per of Personal of Assessed Year Bonds Capita Income Value Outstanding Capita Income Value 2005 24,842,846$ 2,443$ 5.77%0.19%79,176,251$ 7,787 18.4%0.61% 2006 31,934,333 3,118 7.00%0.19%85,654,576 8,364 18.8%0.52% 2007 54,655,811 5,190 11.09%0.27%111,505,499 10,588 22.6%0.55% 2008 74,856,609 6,675 13.62%0.36%146,529,779 13,066 26.7%0.71% 2009 79,373,441 7,011 13.69%0.38%150,698,238 13,310 26.0%0.72% 2010 80,467,247 7,911 14.81%0.40%157,240,850 15,458 28.9%0.78% 2011 80,983,395 7,994 14.37%0.47%150,040,866 14,812 26.6%0.87% 2012 87,513,595 8,498 15.28%0.52%153,072,902 14,864 26.7%0.91% 2013 83,901,285 8,147 14.65%0.49%144,200,827 14,003 25.2%0.84% 2014 82,305,570 7,992 14.37%0.49%137,176,623 13,321 23.9%0.81% Source: U. S. Census, State Division of Local Services LAST TEN FISCAL YEARS Governmental Activities Debt Business Type Activities Debt Total Primary Government Town of Nantucket, Massachusetts Page 117 of 124 Comprehensive Annual Financial Report 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Equalized Valuation………………………………….. 13,575,803,900$ 17,562,057,600$ 17,562,057,600$ 22,498,040,300$ 22,498,040,300$ 21,914,393,400$ 21,914,393,400$ 18,041,019,200$ 18,041,019,200$ 17,816,255,100$ Debt Limit…………………………..…………………. 678,790,195 878,102,880 878,102,880 1,124,902,015 1,124,902,015 1,095,719,670 1,095,719,670 902,050,960 902,050,960 890,812,755 Outstanding general obligation bonds………………. 79,176,251 85,654,576 111,505,499 146,529,779 150,698,238 157,240,850 150,040,866 153,072,902 144,200,827 137,176,623 Authorized and unissued debt…………………………. 105,027,139 114,109,539 95,034,114 81,093,282 68,310,085 72,315,737 48,369,825 51,318,862 24,976,578 21,121,164 Debt not applicable to debt limit…………………………. (27,918,297) (25,140,246) (30,913,035) (43,482,004) (51,917,004) (42,042,147) (47,042,147) (43,393,647) (42,671,460) (42,622,571) Legal debt margin………………………………………….. 466,668,508$ 653,198,519$ 640,650,232$ 853,796,950$ 853,976,688$ 824,120,936$ 850,266,832$ 654,265,549$ 690,202,095$ 689,892,397$ Total debt applicable to the limit as a percentage of debt limit………………………………….. 23.02%19.89%20.00%16.37%14.85%17.11%13.81%17.85%14.02%12.99% Source: State Division of Local Services, Accounting Records COMPUTATION OF LEGAL DEBT MARGIN LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 118 of 124 Comprehensive Annual Financial Report Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable*Debt Debt repaid with property taxes: Nantucket Regional Transit Authority -$ 100%-$ Nantucket County - 100%- Subtotal, overlapping debt………………………………………………………………………….. - Town direct debt……………………………………………………………. 54,871,053 Total direct and overlapping debt…………………………………………… 54,871,053$ *Outstanding debt as of June 30, 2014. Source: Official Statements, Accounting Records The estimated percentage applicable is based 100% to the Town. AS OF JUNE 30, 2014 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Town of Nantucket, Massachusetts Page 119 of 124 Comprehensive Annual Financial Report DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Per Capita Fiscal Population Personal Personal Median School Unemployment Year Estimates Income Income Age Enrollment Rate 2005 10,168 430,736,816$ 42,362$ 36.7 - 2.40% 2006 10,241 456,461,852 44,572 36.7 - 2.50% 2007 10,531 492,650,711 46,781 36.7 - 2.30% 2008 11,215 549,422,850 48,990 36.7 - 6.30% 2009 11,322 579,686,400 51,200 36.7 - 7.40% 2010 10,172 543,286,520 53,410 39.4 - 7.80% 2011 10,130 563,420,470 55,619 39.4 - 6.80% 2012 10,298 572,764,462 55,619 39.4 - 6.00% 2013 10,298 572,764,462 55,619 39.4 - 5.90% 2014 10,298 572,764,462 55,619 39.4 1,525 5.70% Source: U. S. Census, Division of Local Services, Massachusetts Department of Elementary and Secondary Education Median age is based on most recent census data Town of Nantucket, Massachusetts Page 120 of 124 Comprehensive Annual Financial Report Nature Percentage Percentage of Employees of Total Town Employees of Total Town Employer Business Year-Round Rank Employment Year-Round Rank Employment Town of Nantucket Government 941 1 12.28%707 1 7.30% Nantucket Cottage Hospital Medical 180 2 2.35%106 2 1.10% Nantucket Island Resorts Hospitality 125 3 1.63%105 3 1.08% Marine Home Center Retail 135 4 1.76%105 4 1.08% Nantucket Bank Finance 80 5 1.04%70 5 0.72% Stop & Shop Retail 65 6 0.85%65 6 0.67% Steamship Authority Transportation 28 7 0.37%32 7 0.33% Harbor Fuel Petroleum Products 23 8 0.30%30 8 0.31% Pacific National Bank/Fleet Finance 20 9 0.26%28 9 0.29% The Brotherhood Restaurant 20 10 0.26%0.00% Inquirer & Mirror Media 26 10 0.27% Source: Official Statements 2014 2005 CURRENT YEAR AND NINE YEARS AGO PRINCIPAL EMPLOYERS (EXCLUDING TOWN) Town of Nantucket, Massachusetts Page 121 of 124 Comprehensive Annual Financial Report Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General government……………………………………………………………. 49 51 54 53 58 60 60 63 60 66 Public safety…………………………………………….. 79 78 79 79 78 77 77 81 81 81 Education…………………………………………………… 301 302 305 306 293 295 292 299 299 301 Public works…………………………………………………………….. 27 23 24 26 27 24 26 28 27 30 Health and human services………………………………………………………….. 4 5 5 4 4 4 4 4 5 5 Culture and recreation………………………………………………… 37 29 25 22 18 16 17 9 10 10 Sub-total governmental activities ……………………………………………………….. 497 488 492 490 478 476 476 484 482 493 Nantucket Memorial Airport………………………… 42 46 47 47 41 45 47 44 44 41 Siasconset Water………………………………………………………………… 1 1 1 1 1 1 1 - - - Wannacomet Water………………………….. 11 11 11 11 11 11 11 11 11 11 Sewer………………………………………………………………… 10 10 10 10 12 12 12 10 10 10 Landfill………………………………………………………………… 1 1 1 1 1 1 1 1 1 1 Our Island Home………………………………………………………………… 74 74 78 80 78 72 73 71 - 69 69 Sub-total business-type activities ……………………………………………………….. 139 143 148 150 144 142 145 137 135 132 Total Town employees…………….…………………...…….. 636 631 640 640 622 618 621 621 617 625 Source: Town personnel records FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 122 of 124 Comprehensive Annual Financial Report Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Government: Town Clerk Registered voters…………………………………….. 7,873 7,998 7,998 8,164 8,164 7,907 7,907 8,394 8,394 8,546 Public Safety: Police Criminal offenses Violent………………………… N/A 69 156 136 154 140 133 155 150 112 Property………………………. N/A 855 832 378 495 645 543 547 580 521 Total criminal offenses…………. - 924 988 514 649 785 676 702 730 633 Fire Incidents Fires…………………………….. 206 188 86 63 56 40 66 41 52 67 Non-fire incidents……………………………………………………….. 4,225 4,464 3,974 3,896 4,072 3,783 3,637 3,640 3,721 4,915 Total fire calls………………… 4,431 4,652 4,060 3,959 4,128 3,823 3,703 3,681 3,773 4,982 Inspectional Services: Number of building permits…………………………………. 1,404 1,435 1,439 1,280 972 1,156 1,145 1,406 1,639 1,797 Education: Number of students…………………………………. 1,158 1,199 1,220 1,288 1,294 1,255 1,230 1,282 1,322 1,378 Public Works: Landfill Solid waste tonnage………………………….. 38,979 35,000 38,000 33,359 40,056 24,687 34,933 34,000 33,710 N/A Health and Human Services: Board of Health Inspections Food establishments…………………. 235 239 231 230 228 210 205 212 230 247 Other………………………….. 334 308 348 328 355 329 302 341 358 367 Total inspections………………….. 569 547 579 558 583 539 507 553 588 614 Our Island Home - Nursing Home Number of beds………………… 45 45 45 45 45 45 45 45 45 45 Culture and Recreation: Beaches Beach Stickers N/A N/A 3,965 3,889 3,512 3,838 3,628 3,845 3,795 3,973 Transportation: Nantucket Memorial Airport Number of enplanements……… 249,002 269,433 278,133 257,755 203,786 201,638 179,410 175,420 178,303 174,129 Number of tower operations…… 147,259 161,685 150,200 144,073 127,482 127,575 120,806 125,960 126,898 119,976 Gallons of fuel sold……………. N/A N/A N/A N/A N/A N/A 1,127,270 1,217,635 1,164,958 1,194,978 N/A - Information not available Source: Various Town Departments and State websites. OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 123 of 124 Comprehensive Annual Financial Report Function 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General Government: Number of buildings……………………………….. 7 7 7 7 7 7 7 7 7 7 Public Safety: Police Number of stations……………………………. 1 1 1 1 1 1 2 2 2 2 Fire Number of stations……………………………. 2 2 2 2 2 2 2 2 2 2 Education: Number of elementary schools……………………………………. 1 1 1 1 1 1 1 1 1 1 Number of middle schools……………………………………. 1 1 1 1 1 1 1 1 1 1 Number of high schools……………………………………….. 1 1 1 1 1 1 1 1 1 1 Public Works: Number of cemeteries…………………….. 8 8 8 8 8 8 8 8 8 8 Human Services Number of nursing homes…………………….. 1 1 1 1 1 1 1 1 1 1 Culture and Recreation: Number of beaches……………………………. 17 17 17 17 17 17 17 17 17 17 Transportation: Number of airports…………………………. 1 1 1 1 1 1 1 1 1 1 Source: Various Town Departments and State websites. CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 124 of 124 Comprehensive Annual Financial Report