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Nantucket CAFR 2015TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year July 1, 2014 – June 30, 2015 On the cover: A tradition that began in 1973 and is now over 40 years old is the Nantucket Christmas Stroll. Held on the first weekend in December, the celebration has grown into an internationally renowned holiday event and draws enormous crowds. Hundreds of decorated seven-foot Christmas trees line the downtown cobblestone streets and are illuminated in a ceremony with caroling at dusk the day after Thanksgiving. Above: The cottages that line the waterways provide the thousands of tourists that visit the Island each year a pleasant refuge from the normal daily routines they experience back home. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2015 C. Elizabeth Gibson, Town Manager Prepared by the Finance Department Brian E. Turbitt, Director of Municipal Finance This page intentionally left blank. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Letter of Transmittal ....................................................................................................................... 1-10 Certificate of Achievement For Excellence in Financial Reporting…………………………….....11 Organizational Chart ........................................................................................................................ 12 Principal Town Officials .................................................................................................................. 13 FINANCIAL SECTION Independent Auditor’s Report ....................................................................................................... 15-17 Management’s Discussion and Analysis ....................................................................................... 19-32 Basic Financial Statements: Statement of Net Position .......................................................................................................... 35 Statement of Activities ............................................................................................................... 36 Balance Sheet – Governmental Funds ....................................................................................... 37 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position ............................................................................................ 38 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........................................................................................................... 39 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..................................... 40 Statement of Net Position – Proprietary Funds .......................................................................... 41 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds.............. 42 Statement of Cash Flows – Proprietary Funds ........................................................................... 43 Statement of Fiduciary Net Position .......................................................................................... 44 Statement of Changes in Fiduciary Net Position ....................................................................... 45 Notes to Basic Financial Statements ....................................................................................... 46-84 Required Supplementary Information: Schedule of Town’s Proportionate Share of Net Pension Liability……………………………87 Schedule of Town’s Contributions to Pension Plan…………………………………………...87 Schedule of County’s Proportionate Share of Net Pension Liability………………………….88 Liabbbbb…………………………………….88 Liability……………………………87Schedule of County’s Contributions to Pension Plan………………………………………….88 Plan…………………………………………....87Schedule of Landbank’s Proportionate Share of Net Pension Liability……………………….89 Pension…………………………………..89 Liability……………………………87Schedule of Landbank’s Contributions to Pension Plan……………………………………….89 PPlanPlan…………………………………………....87Schedule of Commonwealth’s Collective Share of Net Pension Liability – Massachusetts Teacher’s Retirement System……………………………………………..90 Schedules of Funding Progress – Other Postemployment Benefits…………………………91 Schedules of Contribution Funding – Other Postemployement Benefits………………………91 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund .................................................................................................. 92-97 Notes to Required Supplementary Information………………………………………….......98-99 TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2015 TABLE OF CONTENTS Page(s) Combining Statements: Nonmajor Governmental Funds……………………………………………………………….......102-103 Combining Balance Sheet – Nonmajor Governmental Funds…………………...........104-106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ......................................................... 108-100 Internal Service Funds ........................................................................................................... 111 Combining Statement of Net Position – Internal Service Funds ..................................... 112 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ............................................................................................. 113 Combining Statement of Cash Flows – Internal Service Funds ....................................... 114 Fiduciary Funds ...................................................................................................................... 116 Statement of Changes in Assets and Liabilities – Agency Fund ..................................... 117 STATISTICAL SECTION Narrative ..................................................................................................................................... 119 Net Position by Component – Last Ten Fiscal Years ...................................................................... 120 Changes in Net Position – Last Ten Fiscal Years ....................................................................... 121-122 Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 123 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 124 Assessed Value and Estimated Actual Value of Taxable Property By Classification and Tax Rates – Last Ten Fiscal Years ............................................................................ 125 Principal Taxpayers – Current Year and Nine Years Ago .............................................................. 126 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................ 127 Ratios of Outstanding Debt and General Obligation Debt – Last Ten Fiscal Years ....................... 128 Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 129 Direct and Overlapping Governmental Activities Debt .................................................................. 130 Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 131 Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 132 Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 133 Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 134 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 135 INTRODUCTORY SECTION Completed in 2011, the Nantucket Police Station is a state of the art facility that houses the Town’s Police Department and Emergency Management staff. The 35,000 square foot facility which cost approximately $15.5 million contains numerous modern features which include a communications/dispatch/911 call center, offices, records room, 2-bay sally port, prisoner processing and detention center, and meeting rooms where the Board of Selectmen and numerous other Town boards and committees hold their regular scheduled meetings. Community groups also use the facility as well. Town and County of Nantucket Board of Selectmen County Commissioners Robert DeCosta, Chairman Matthew Fee, Vice Chairman Rick Atherton Tobias Glidden Dawn E. Hill Holdgate 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 January 15, 2016 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 second annual Comprehen- sive Annual Financial Report (CAFR). The report, which was prepared by the Town’s Department of Municipal Finance, is for the fiscal year ended June 30, 2015. We are confident this transmission 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 prepared in conformity with generally ac- cepted accounting principles (GAAP) in the United States of America, 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 135 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 reasonable assur- ance that the financial statements of the Town are free of material misstatement. 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 estimates 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 unmodified opinion that the Town’s financial statements for the fiscal year ended June 30, 2015 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town 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 presentation 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 administra- tion of federal awards. These reports are available in the Town’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 MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town is located on Nantucket Island and the adjacent islets of Tuckernuck and Muskeget. It is situ- ated 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 135 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 2014, the Steamship Authority transported 605,852 passengers, 64,818 passen- ger vehicles and 45,197 commercial vehicles to Nantucket 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 had 487,758 embarkations in calendar year 2014 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 135 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 2014 with over 170,000 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 135 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 2015 is 1,535 (a 22% increase from 2006) and funding for schools is provided via taxation and governmental revenues based on a minimum net school spending formula es- tablished by the Massachusetts Department of Elementary and Secondary Education (ESE). The Town currently spends almost double the minimum legal requirement on each student. Town of Nantucket, Massachusetts Page 5 of 135 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 $3.0 million, $2.6 million and $2.3 million in fiscal 2015, 2014 and 2013 respectively from this source. The preservation of open space is an important component of the Town's tourism-based economy. It is estimated that approximately 40% of the Island is currently preserved as open space or conservation land either by the Town, the Nantucket Islands Land Bank or various non-profit local entities. Property Taxes The growth of the Town’s main source of revenues, property taxes, is capped by Proposi- tion 2 ½ and can only be overridden through a ballot vote by the voters. While revenue increases have been limited in recent years, fixed costs, including health insurance and pension costs, have increased more proportionally. As a result, balancing the annual budget can be a challenge. Given its geographical location and the limitations of being an island, the Town does not have a large commercial and industrial property tax base so it relies heavily on residential property taxes. Approximately 88% of the Town’s property taxes are derived from residential taxes therefore new growth is essential to revenue growth and the ability to sustain the Town’s annual costs. The following table summarizes the Town’s new growth over the prior 5 calendar years: Table 1 Calendar # of Residential Non-Residential Total Year Permits Value Value Value 2014 924 192,783,729$ 20,912,023$ 213,695,752$ 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 Total 6,227 714,980,442$ 74,346,459$ 789,326,901$ Town of Nantucket, Massachusetts Page 6 of 135 Comprehensive Annual Financial Report Growth has been much stronger than expected with over 3/4 billion dollars added to the Town’s equalized valuation (market value) during this period. The Town’s strong equalized valuation is attractive to stake- holders in the Town’s securities as the Town currently ranks 4th in total equalized valuation in the Com- monwealth of Massachusetts. In addition, in measuring equalized valuation per capita, it is 1st in the Commonwealth by a significant margin with a factor of over $2.0 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 5% savings in each of the last 4 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 Levy Year Limit Levy Levy Capacity Tax savings 2015 69,792,303 66,329,953$ 3,462,350 4.96% 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% Town of Nantucket, Massachusetts Page 7 of 135 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 135 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 chal- lenge 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 Town’s unassigned fund balance trend since 2009 is illustrated on the right: 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. 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: Fiscal Real and Personal Intergovernmental Miscellaneous Year Property Taxes Aid Local Receipts Nonrecurring Total 2016 69,636,374 3,180,702 9,338,584 - 82,155,660 2017 74,200,967 3,180,702 9,631,675 49,245 87,062,589 2018 76,055,991 3,228,413 9,762,992 49,737 89,097,133 2019 77,957,391 3,276,839 9,896,322 50,235 91,180,787 2020 79,906,326 3,325,991 10,031,699 50,737 93,314,753 2021 81,903,984 3,375,881 10,169,158 51,245 95,500,268 2022 83,851,583 3,426,519 10,308,735 51,757 97,638,594 2023 86,050,373 3,477,917 10,450,465 52,275 100,031,030 2024 88,201,632 3,530,086 10,594,385 52,797 102,378,900 2025 90,406,673 3,583,037 10,740,533 53,325 104,783,569 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 2009 2010 2011 2012 2013 2014 2015 Unassigned Fund Balance Town of Nantucket, Massachusetts Page 9 of 135 Comprehensive Annual Financial Report Improvement to Nantucket Memorial Airport, much of which was funded from Federal grants, almost $60 million. A new Public Safety building approximately $20.0 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. The GFOA awarded this Certificate of Achievement for Excellence in Financial Reporting to the Town of Nantucket for its comprehensive annual financial report for the fiscal year ended June 30, 2014. This was the first year that the Town has achieved this prestigious award. 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 135 Comprehensive Annual Financial Report Certificate of Presented to Town of Nantucket For its Comprehensive Annual June 30, 2014 Executive Director/CEO Financial Report for the Fiscal Year Ended Reporting in Financial for Excellence Achievement Text38:Massachusetts Government Finance Officers Association Town of Nantucket, Massachusetts Page 11 of 135 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 12 of 135 Comprehensive Annual Financial Report PRINCIPAL TOWN OFFICIALS As of June 30, 2015 Elected Officials Board of Selectmen Robert DeCosta, Chairman Matthew Fee, Vice Chairman Rick AthertonTobias Glidden Dawn E. Hill Holdgate Town Moderator Town Clerk Sarah Alger, Esquire Catherine Flanagan Stover School Committee Pauline Proch, Chairman Melissa Murphy, Vice Chairman Jennifer Iller, Secretary Dr. Timothy Lepore Kate Bartleman Appointed Financial Committees Audit Committee Robert DeCosta, Chairman Rick Atherton James Kelly Finance Committee James Kelly, Chairman Clifford Williams, Vice Chairman Matthew T. Mulcahy David Worth Peter McEachern Craig Spery Stephen Maury Joseph T. Grause, Jr. John Tiffany Principal Executive Officers Town Manager Superintendent of Schools C. Elizabeth Gibson W. Michael Cozort Director of Finance Brian E. Turbitt Town of Nantucket, Massachusetts Page 13 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 14 of 135 Comprehensive Annual Financial Report FINANCIAL SECTION Nantucket is home to some of the most beautiful and pristine beaches in the world. Even on a stormy winter day the beauty of the beaches is still breathtaking. Pictured above is Surfside Beach during a winter storm. 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, 2015 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 that represents 100% of the Nantucket Islands Land Bank Component unit column as presented in the financial statements. 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 15 of 135 Comprehensive Annual Financial Report Town of Nantucket Page Two Opinions In our opinion, based on our audit and the report of the other auditor, 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, 2015, 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 disclosed in the Note III to the financial statements, the Town implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68, during the fiscal year 2015. 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 the Nantucket County and Nantucket Islands Land Bank discretely presented component units, the Town’s governmental activities, business-type activities and the Siasconset Water, Wannacomet Water, Sewer, Nantucket Memorial Airport, and Our Island Home Enterprise Funds. Our opinion was not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedules of the Town’s proportionate share of net pension liability and the Town’s contributions to pension plan, the schedule of the Commonwealth’s share of the net pension liability of the Massachusetts Teacher’s Retirement System, the funding progress and contribution funding for other postemployment benefits, 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. Town of Nantucket, Massachusetts Page 16 of 135 Comprehensive Annual Financial Report Town of Nantucket Page Three 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 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 January 15, 2016, on our consideration of the Town of Nantucket, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. 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 January 15, 2016 Town of Nantucket, Massachusetts Page 17 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 18 of 135 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Nantucket, Massachusetts Page 19 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 20 of 135 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, 2015. Financial Highlights As disclosed in the Note III to the financial statements, the Town implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68, during the fiscal year 2015. The impact to the beginning balances as a result of this implementation was to reduce Governmental activities by $37.0 million and Business-type activities by $16.3 million. The assets and deferred outflows of resources of the Town exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by approximately $283.9 million (total net position). The government’s total net position increased by approximately $10.4 million (3.2% of total net position) over the prior year. This consisted of increases in both governmental activities’ net position by approximately $ 5.6 million (3.4% of total governmental activities’ net position) and in business - type activities’ net position of approximately $4.7 million (4.0% of business-type activities’ net position). The Town’s unassigned fund balance reported in the General Fund was approximately $15.5 million (21.4% of General Fund expenditures). Total fund balance in the General Fund was approximately $26.3 million (36.4% of General Fund expenditures). The Town reported a deficit of $0.7 million in its Town Capital Projects Fund and reported total fund balances of approximately $20.6 million in the Combined Nonmajor Governmental Funds. The Town’s total debt decreased by almost $3.7 million during the fiscal year. Detail of this net decrease is illustrated under capital and debt administration section of the Management Discussion and Analysis. The Town’s bond rating was increased to Aa1 from Aa2 as rated by Moody’s Investor Services. Town of Nantucket, Massachusetts Page 21 of 135 Comprehensive Annual Financial Report 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. 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.) Required Supplementary Information Management Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements Notes to the Basic Financial Statements Required SupplementaryInformation – Other than MD&A Budgetary Reporting with Notes, Pension Schedules And Other Postemployment Benefit Schedules Other Supplementary Information Combining Fund Financial Statements/Schedules Town of Nantucket, Massachusetts Page 22 of 135 Comprehensive Annual Financial Report 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. 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 Town of Nantucket, Massachusetts Page 23 of 135 Comprehensive Annual Financial Report 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 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 proportionate share of net pension liability, contributions to pension plan, information regarding the Town’s special funding situation for teacher contributions to pensions and funding and contribution progress of the Town’s other postemployment benefits to its employees as well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund. Town of Nantucket, Massachusetts Page 24 of 135 Comprehensive Annual Financial Report 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 $283.9 million at the close of the most recent fiscal year. The condensed Statement of Net Position is as follows: By far, the largest portion (approximately $301.0 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 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 $21.0 million, of the Town’s net position represents resources that are subject to external restrictions on how they may be used. Unrestricted net position reflects the remainder of net position; a deficit of approximately $38.0 million. This consisted of Governmental activities unrestricted net position which is in a deficit position of approximately $36.5 million. This is due to the recognition of other postemployment benefits (net OPEB obligation) of approximately $31.6 million since the implementation of Governmental Accounting Standards Board Statement (“GASB”) No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit Plans Other Than Pension Plans, in fiscal year 2009, and the implementation of GASB 68 in 2015, which, as discussed previously, resulted in the recognition of almost $37.3 million in net pension liability. In similar fashion, the Business-type activities included a net OPEB obligation of over $7.0 million and a net pension liability of over $16.4 million which contributed to the deficit position of approximately $1.5 million. Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2015 2014 2015 2014 2015 2014 Assets Currrent and other assets 63,066,853$ 57,813,945$ 34,298,867$ 33,655,404$ 97,365,720$ 91,469,349$ Capital assets, net 235,134,667 230,518,065 204,988,922 203,147,189 440,123,589 433,665,254 Total assets 298,201,520 288,332,010 239,287,789 236,802,593 537,489,309 525,134,603 Deferred outflows of resources 63,804 42,100 28,121 - 91,925 42,100 Liabilities Long-term liabilities 121,193,351 77,357,997 115,532,241 90,809,521 236,725,592 168,167,518 Other liabilities 10,846,837 13,315,733 6,063,815 17,537,606 16,910,652 30,853,339 Total liabilities 132,040,188 90,673,730 121,596,056 108,347,127 253,636,244 199,020,857 Deferred inflows of resources - - - - - - Net Position Net investment in capital assets 181,710,594 175,687,378 119,242,898 112,541,419 300,953,492 288,228,797 Restricted 20,995,512 20,511,155 - - 20,995,512 20,511,155 Unrestricted (36,480,970) 1,501,847 (1,523,044) 15,914,047 (38,004,014) 17,415,894 Total Net Position 166,225,136$ 197,700,380$ 117,719,854$ 128,455,466$ 283,944,990$ 326,155,846$ Town of Nantucket, Massachusetts Page 25 of 135 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, 2015 2014 2015 2014 2015 2014 Revenues Program revenues: Charges for services 6,322,542$ 6,446,350$ 33,738,945$ 33,592,609$ 40,061,487$ 40,038,959$ Operating grants and contributions 6,761,994 6,230,362 90,820 91,000 6,852,814 6,321,362 Capital grants and contributions 1,886,943 289,066 6,078,185 2,479,717 7,965,128 2,768,783 General revenues: Property taxes 65,895,498 64,160,459 - - 65,895,498 64,160,459 Hotel and meals excise 4,026,389 3,558,082 - - 4,026,389 3,558,082 Intergovernmental 186,666 278,049 - - 186,666 278,049 Other 8,012,789 6,234,349 862,147 44,030 8,874,936 6,278,379 Total Revenues 93,092,821 87,196,717 40,770,097 36,207,356 133,862,918 123,404,073 Expenses General government 11,574,757 10,068,331 - - 11,574,757 10,068,331 Public safety 15,484,735 14,779,274 - - 15,484,735 14,779,274 Education 38,839,302 36,829,209 - - 38,839,302 36,829,209 Public works 5,131,842 4,862,640 - - 5,131,842 4,862,640 Health and human services 1,528,171 1,641,325 - - 1,528,171 1,641,325 Culture and recreation 5,397,098 5,622,457 - - 5,397,098 5,622,457 Debt service 1,616,600 2,075,324 - - 1,616,600 2,075,324 Siasconset water - - 738,719 724,927 738,719 724,927 Wannacomet water - - 3,544,191 3,624,731 3,544,191 3,624,731 Sewer - - 6,255,624 6,002,582 6,255,624 6,002,582 Nantucket Memorial Airport - - 15,096,177 15,592,198 15,096,177 15,592,198 Our Island Home - - 7,945,959 7,670,514 7,945,959 7,670,514 Solid Waste - - 10,324,817 8,963,029 10,324,817 8,963,029 Total Expenses 79,572,505 75,878,560 43,905,487 42,577,981 123,477,992 118,456,541 Change in net position before transfers 13,520,316 11,318,157 (3,135,390) (6,370,625) 10,384,926 4,947,532 Transfers (7,881,295) (6,942,620) 7,881,295 6,942,620 - - Change in net position 5,639,021 4,375,537 4,745,905 571,995 10,384,926 4,947,532 Net position, beginning of year 197,700,380 193,324,843 128,455,466 127,883,471 326,155,846 321,208,314 Restatement for net pension liability (36,982,558) - (16,298,817) - (53,281,375) - Restatement for capital assets - - 685,593 - 685,593 - Restatement for 'look-back'(131,707) - 131,707 - - - Net position, beginning of year, as restated 160,586,115 193,324,843 112,973,949 127,883,471 273,560,064 321,208,314 Net position, end of year 166,225,136$ 197,700,380$ 117,719,854$ 128,455,466$ 283,944,990$ 326,155,846$ Town of Nantucket, Massachusetts Page 26 of 135 Comprehensive Annual Financial Report Governmental Activities – The governmental activities experienced a net increase in net position by approximately $ 5.6 million (3.5 % of governmental activities’ net position) as compared to an approximate $4.4 million increase in the prior year. This was due to revenues increasing at a faster pace than expenses. Revenues Total revenue increases were $5.9 million. Specifically, property taxes, which made up 70.8% of total revenues increased by approximately $1.7 million; this was in line with the statutory allow able increase in assessment of 2.5% permissible in Massachusetts. Capital grants increased by $1.6 million due to the timing in the recognition of the Town’s Chapter 90 grants, which represent road construction funds received from the Commonwealth. The Town’s Other Revenue category consists of local receipts such as motor vehicle excise, departmental receipts and other revenues not specifically classified. This increased by approximately $1.8 million and was made up of reinsurance proceeds of approximately $0.8 million and an increase in local receipts described due to the continued expansion in the economy of approximately $1.0 million. The remaining increase is due to hotel and meals excise increasing by approximately $0.5 million also due to the continued expanding economy and other net minor increases and decreases. Expenses Total expense increases were $3.7 million. Specifically, general government which represented 14.5% of total expenses increased by $1.5 million; this was due primarily to general fund articles that included public building expenses, legal services, and assessor’s revaluation services; these are non-recurring costs. Benefits, which were allocated across all functional expenses, increased $0.7 million due to increased costs. Education which is the Town’s largest expense and represents 48.8% of total expenses increased by approximately $2.0 million a portion of which was the benefit allocation and the remainder was due to the Town devoting more expenses to education in its original budget. The remainder of the expenses net increase and decreases were minor after factoring in the benefits allocation. 70.78% 7.26% 2.03% 6.79% 8.61%4.33%0.20% Revenues Property taxes Operating grants and contributions Capital grants and contributions Charges for services Other Hotel and meals excise Intergovernmental (unrestricted) 15% 19% 49% 6% 2%7% 2% Expenses General government Public safety Education Public works Health and human services Culture and recreation Interest expense Town of Nantucket, Massachusetts Page 27 of 135 Comprehensive Annual Financial Report Fiscal Year 2015 Expenses and Program Revenues – governmental activities are graphically presented as follows: Net position of the business-type activities increased by approximately $4.6 million from the prior year balances. Change in net position for each business-type fund is broken down individually as follows: With respect to Siasconset, Wannacomet, and Sewer; revenues are always assessed to cover operational costs and also principal maturity of debt which is not an expense in the change in net position, therefore, other than some minor increases in revenue due to improved collections, these positive results are consistent with expectations. The Airport was the recipient of $5.3 million in grant funds. These were used to fund capital improvements which are also not an expense therefore these positive results were as expected. Our Island Home and Solid Waste do not generate sufficient revenue to cover operations, therefore are subsidized by taxation. This is consistent with prior years. The losses are generated due to the net increase in OPEB and pension liabilities which are not budgeted for. $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 $50,000,000 Functional expenses Program Revenues Siasconset Water District 1,105,926$ Wannacomet Water District 1,467,089 Sewer 891,661 Nantucket Memorial Airport 3,445,681 Our Island Home (1,122,956) Solid Waste (1,165,807) Total Change 4,621,594$ Town of Nantucket, Massachusetts Page 28 of 135 Comprehensive Annual Financial Report 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, unassigned 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 $46.1 million, an increase of approximately $1.8 million over the prior year. The continued economic expansion was responsible for an increase in the general fund of over $0.8 million as local receipts tracked higher than estimates. The timing of capital costs verses bond proceeds was primarily responsible for a decrease in capital projects of over $1.0 million. A sale of a capital asset which generated $2.5 million in proceeds was primarily responsible for the increase of $2.1 million in the aggregate nonmajor funds. Unassigned fund balance in the general fund was approximately $15.5 million or 21.4% of general fund expenditures. This is available for spending at the government’s discretion. Assigned fund balance of $6.3 million; committed fund balance of approximately $4.0 million and restricted fund balance of $0.5 million bring total general fund balance to $26.3 million or 36.4% of general fund expenditures. Capital Projects include $0.4 million as restricted for Capital Projects and a $1.1 million deficit due to construction funded from short-term notes for a total fund deficit of almost $0.7 million. 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 $44,805; or (2) restricted due to constraints placed externally by third-parties in the amount of approximately $20.5 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 Position balance of approximately $1.6 million. This represents an increase of over $0.5 million over the prior year. Reinsurance proceeds of approximately $0.8 million were primarily responsible for these positive operating results. 5 7 9 11 13 15 Revenues Expenses Health Claims Fund Town of Nantucket, Massachusetts Page 29 of 135 Comprehensive Annual Financial Report Fiduciary Fund – The Town’s fiduciary fund is comprised primarily of the Town’s Private Purpose Trust Funds and its Other Postemployment Benefits Trust. Total Net Position of these two funds is approximately $3.1 million. The Private Purpose Trust Funds make up almost $2.4 million; These assets are used strictly for purposes outside of the public domain such as scholarships and public assistance and increased by about $12,631 as additions approximated expenses. 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. This fund increased by approximately $0.5 million due to a contribution made by the Town in excess of premiums paid for retirees. General Fund Budgetary Highlights Differences between the original budget and the final amended budget 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, 2015 amounts to approximately $440.1 million (net of accumulated depreciation) an increase from the previous year’s balance of approximately $6.5 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 – 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 $1 billion, which is significantly in excess of the Town’s outstanding general obligation debt classified as inside the debt limit. At the end of the current fiscal year, the Town had total debt outstanding of approximately $133.5 million. Over $50.3 million is related to the Town’s Governmental activities and over $83.1 million is related to the Town’s Business-type activities. The entire amount comprises debt backed by the full faith and credit of the government. In addition, the Town issues bond anticipation notes prior to permanent financing to fund the initial stages of capital projects. At June 30, 2015 the bond anticipation note payable balances approximated $5.3 million. Town of Nantucket, Massachusetts Page 30 of 135 Comprehensive Annual Financial Report The Town’s total debt decreased by approximately $3.7 million during the fiscal year due to following: Additional information on the Town’s short-term and long-term debt can be found in Note II under subsections F and G. 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. Current rates are trending toward 10 year bests seen in 2005 and 2006. 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. In calendar year 2014 the Town exceeded $1 billion in property sales for only the third time in Island history. All of the above items were considered when the Town developed its budget for fiscal year 2016. The budget was adopted in April 2015 and the Town set its tax rate in December 2015. Regular scheduled maturities: Governmental Activities (5,478,306)$ Business-Type Activities (5,361,524) Issuance of refunding bonds: Governmental Activities 758,200 Business-Type Activities 2,581,800 Payments to Escrow Agent: Governmental Activities (775,000) Business-Type Activities (2,670,000) Issuance of debt: Governmental Activities 993,000 Business-Type Activities 6,418,200 Amortization of bond premium: Governmental Activities (18,034) Business-Type Activities (126,933) (3,678,597)$ Town of Nantucket, Massachusetts Page 31 of 135 Comprehensive Annual Financial Report 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 Director of Finance, 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 32 of 135 Comprehensive Annual Financial Report Basic Financial Statements Town of Nantucket, Massachusetts Page 33 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 34 of 135 Comprehensive Annual Financial Report Nantucket Governmental Business-Type Nantucket Islands Activities Activities Total County Land Bank Assets Cash and cash equivalents 50,742,137$ 27,993,935$ 78,736,072$ 3,887,606$ 7,129,643$ Investments 2,661,698 - 2,661,698 - 4,728,638 Investments, designated - - - - 2,408,427 Receivables, net: Property taxes 2,495,731 - 2,495,731 - - User fees - 3,059,495 3,059,495 - - Departmental and other 4,012,234 448,368 4,460,602 - 216,500 Intergovernmental 1,297,424 2,128,578 3,426,002 70,672 - Inventory - 412,473 412,473 - 282,853 Deposit held by third party 1,952,600 - 1,952,600 - - Prepaid items 161,047 - 161,047 - - Other assets - - - - 1,023,256 Internal balances (256,018) 256,018 - - - Restricted cash and cash equivalents - - - - 1,785,545 Restricted investments - - - - 2,772,758 Cash surrender value of life insurance - - - - 818,401 Land conservation rights - - - - 30,000 Capital assets not being depreciated 182,413,819 35,612,607 218,026,426 3,283,842 278,119,843 Capital assets, net of depreciation 52,720,848 169,376,315 222,097,163 26,591 16,676,231 Total Assets 298,201,520 239,287,789 537,489,309 7,268,711 315,992,095 Deferred Outflows of Resources 63,804 28,121 91,925 888 2,520 Liabilities Warrants and accounts payable 4,315,536 1,878,500 6,194,036 18,456 394,594 Accrued payroll and withholdings 2,230,289 303,830 2,534,119 5,717 - Accrued expenses - - - - 682,687 Health claims incurred but not reported 775,395 - 775,395 - - Accrued interest 552,773 894,205 1,446,978 - - Other liabilities 244,293 388,367 632,660 - - Bond anticipation notes payable 2,728,551 2,598,912 5,327,463 - - Noncurrent liabilities: Due within one year 6,586,916 6,383,316 12,970,232 - 4,290,660 Due in more than one year 114,606,435 109,148,926 223,755,361 644,262 23,962,865 Total Liabilities 132,040,188 121,596,056 253,636,244 668,435 29,330,806 Deferred Inflows of Resources - - - - - Net Position Net investment in capital assets 181,710,594 119,242,898 300,953,492 3,310,433 268,013,922 Restricted: Nonexpendable permanent funds 44,805 - 44,805 - - Federal and State grants 2,063,578 - 2,063,578 - - Community preservation 4,907,977 - 4,907,977 - - Capital outlay 7,117,776 - 7,117,776 - - Public safety revolving funds 4,029,761 - 4,029,761 - - Gift funds 809,270 - 809,270 - - Other purposes 2,022,345 - 2,022,345 2,912,552 4,558,303 Unrestricted (36,480,970) (1,523,044) (38,004,014) 378,179 14,091,584 Total Net Position 166,225,136$ 117,719,854$ 283,944,990$ 6,601,164$ 286,663,809$ TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2015 See accompanying notes to basic financial statements. Primary Government Component Units Town of Nantucket, Massachusetts Page 35 of 135 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 11,574,757$ 771,006$ 541,847$ -$ (10,261,904)$ (10,261,904)$ Public safety 15,484,735 3,203,714 157,012 - (12,124,009) (12,124,009) Education 38,839,302 1,433,969 5,758,264 - (31,647,069) (31,647,069) Public works 5,131,842 376,600 5,000 1,280,612 (3,469,630) (3,469,630) Health and human services 1,528,171 190,627 33,426 - (1,304,118) (1,304,118) Culture and recreation 5,397,098 346,626 16,445 606,331 (4,427,696) (4,427,696) Interest expense 1,616,600 - 250,000 - (1,366,600) (1,366,600) Total governmental activities 79,572,505 6,322,542 6,761,994 1,886,943 (64,601,026) (64,601,026) Business-type activities: Siasconset water 738,719 1,016,504 - - 277,785$277,785 Wannacomet water 3,544,191 5,068,402 - - 1,524,211 1,524,211 Sewer 6,255,624 6,459,779 - 700,341 904,496 904,496 Nantucket Memorial Airport 15,096,177 13,119,422 90,820 5,377,844 3,491,909 3,491,909 Our Island Home 7,945,959 4,314,808 - - (3,631,151) (3,631,151) Solid waste 10,324,817 3,760,030 - - (6,564,787) (6,564,787) Total business-type activities 43,905,487 33,738,945 90,820 6,078,185 (3,997,537) (3,997,537) Total Primary Government 123,477,992$ 40,061,487$ 6,852,814$ 7,965,128$ (64,601,026) (3,997,537) (68,598,563) Component units: Nantucket County 782,493$ 974,357$ 170,201$ -$ 362,065 - Nantucket Islands Land Bank 7,580,040 23,279,820 2,112,600 3,202,300 - 21,014,680 Total Component units 8,362,533$ 24,254,177$ 2,282,801$ 3,202,300$ 362,065 21,014,680 General Revenues: Property taxes 65,895,498 - 65,895,498 - - Motor vehicle and boat excise 2,607,277 - 2,607,277 - - Hotel and meals excise 4,026,389 - 4,026,389 - - Community Preservation Fund surcharges 1,835,287 - 1,835,287 - - Grants and contributions not restricted to specific programs 186,666 - 186,666 - - Penalties and interest on taxes 882,916 - 882,916 - - Unrestricted investment income 257,230 32,935 290,165 11,159 87,130 Gain on sale of capital assets 2,430,079 829,212 3,259,291 - - Transfers (net)(7,881,295) 7,881,295 - - - Total general revenues and transfers 70,240,047 8,743,442 78,983,489 11,159 87,130 Change in Net Position 5,639,021 4,745,905 10,384,926 373,224 21,101,810 Net Position: Beginning of year, as restated (see Note IV)160,586,115 112,973,949 273,560,064 6,227,940 265,561,999 End of year 166,225,136$ 117,719,854$ 283,944,990$ 6,601,164$ 286,663,809$ See accompanying notes to basic financial statements. TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Component Units Town of Nantucket, Massachusetts Page 36 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2015 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents 24,603,888$ 2,545,794$ 21,459,750$ 48,609,432$ Investments 2,388,876 - 156,187 2,545,063 Receivables, net of allowance for uncollectibles: Property taxes 2,392,859 - 102,872 2,495,731 Departmental and other 3,610,574 - 251,128 3,861,702 Intergovernmental 53,834 - 1,243,590 1,297,424 Prepaid items 11,406 - - 11,406 Due from other funds 770,308 - - 770,308 Total Assets 33,831,745 2,545,794 23,213,527 59,591,066 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 33,831,745$ 2,545,794$ 23,213,527$ 59,591,066$ Liabilities: Warrants and accounts payable 515,815$ 1,130,275$ 630,634$ 2,276,724$ Accrued payroll and withholdings 2,136,291 - 93,998 2,230,289 Other liabilities 78,899 - 165,394 244,293 Due to other funds - - 770,308 770,308 Bond anticipation notes payable - 2,100,000 628,551 2,728,551 Total Liabilities 2,731,005 3,230,275 2,288,885 8,250,165 Deferred Inflows of Resources Unavailable revenue - property taxes 1,679,512 - 102,872 1,782,384 Unavailable revenue - other 3,114,128 - 251,128 3,365,256 Total Deferred Inflows of Resources 4,793,640 - 354,000 5,147,640 Fund Balances: Nonspendable 11,406 - 44,805 56,211 Restricted 488,344 424,870 20,525,837 21,439,051 Committed 4,013,474 - - 4,013,474 Assigned 6,323,207 - - 6,323,207 Unassigned 15,470,669 (1,109,351) - 14,361,318 Total Fund Balances 26,307,100 (684,481) 20,570,642 46,193,261 Total Liabilities , Deferred Inflows of Resources and Fund Balances 33,831,745$ 2,545,794$ 23,213,527$ 59,591,066$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 37 of 135 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, 2015 Total Governmental Fund Balances 46,193,261$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.235,134,667 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 5,147,640 Deferred outflows and inflows of resources to be recognized in future pension expense are not available resources and, therefore, are not reported in the funds: Net difference between projected and actual earnings on pension plan investments 63,804 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.1,314,564 In the Statement of Activities, interest is accrued on outstanding long-term debt whereas in the governmental funds, interest is not reported until due.(552,773) Long-term liabilities are not due and payable in the current period and therefore are not reported in the government funds: Bonds and notes payable (50,328,581) Unamortized premiums on bonds (22,332) Compensated absences (1,890,243) Other postemployment benefits (31,578,816) Net pension liability (37,256,055) Net Position of Governmental Activities 166,225,136$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 38 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2015 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Property taxes 66,805,456$ -$ -$ 66,805,456$ Intergovernmental 4,676,636 - 4,051,389 8,728,025 Motor vehicle and other excises 2,552,156 - 39,879 2,592,035 Hotel and meals taxes 4,026,389 - - 4,026,389 Community preservation surcharges - - 1,844,628 1,844,628 Licenses and permits 1,455,080 - - 1,455,080 Penalties and interest on taxes 882,916 - - 882,916 Fines and forfeitures 283,179 - - 283,179 Investment income 230,807 - 21,378 252,185 Departmental and other revenue 1,553,589 - 3,053,308 4,606,897 Contributions and donations - - 107,578 107,578 Total Revenues 82,466,208 - 9,118,160 91,584,368 Expenditures: Current: General government 8,412,812 1,078,999 942,553 10,434,364 Public safety 8,828,296 9,233 1,117,180 9,954,709 Education 24,684,152 1,109,351 3,079,396 28,872,899 Public works 4,686,420 10,222 1,263,658 5,960,300 Health and human services 797,970 - 282,894 1,080,864 Culture and recreation 1,130,146 22,590 3,859,143 5,011,879 Pension and fringe benefits 16,212,172 - - 16,212,172 State and county assessments 574,275 - - 574,275 Debt service: Principal 5,179,291 - 299,015 5,478,306 Interest 1,746,458 - - 1,746,458 Total Expenditures 72,251,992 2,230,395 10,843,839 85,326,226 Excess (Deficiency) of Revenues Over (Under) Expenditures 10,214,216 (2,230,395) (1,725,679) 6,258,142 Other Financing Sources (Uses): Issuance of bonds and notes - - 993,000 993,000 Issuance of refunding bonds 758,200 - - 758,200 Premiums from refunding bonds 51,600 - - 51,600 Sale of capital assets - - 2,474,833 2,474,833 Payments to refunding escrow agent (790,820) - - (790,820) Transfers in 81,000 1,200,000 350,000 1,631,000 Transfers out (9,512,295) - - (9,512,295) Total Other Financing Sources (Uses)(9,412,315) 1,200,000 3,817,833 (4,394,482) Net Change in Fund Balances 801,901 (1,030,395) 2,092,154 1,863,660 Fund Balances - Beginning 25,505,199 345,914 18,478,488 44,329,601 Fund Balances - Ending 26,307,100$ (684,481)$ 20,570,642$ 46,193,261$ See acompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 39 of 135 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, 2015 Net Change in Fund Balances - Total Governmental Fund Balances 1,863,660$ 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: Capital outlays 8,504,352 Depreciation expense (3,842,996) Disposal of capital assets (44,754) Net effect of reporting capital assets 4,616,602 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.410,036 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: Issuance of bonds and notes (993,000) Issuance of refunding bonds (758,200) Premiums from refunding bonds (51,600) Payments to refunding escrow agent 790,820 Repayments of debt 5,478,306 Net effect of reporting long-term debt 4,466,326 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.(926,671) 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: Interest expense 111,824 Amortization of premiums on bonds and notes payable 18,034 Compensated absences (349,483) Pension benefits (209,693) Other postemployment benefits (4,361,614) Net effect of reporting long-term liabilities (4,790,932) Change in Net Position of Governmental Activities 5,639,021$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 40 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2015 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 1,264,071$ 2,145,725$ 8,173,514$ 9,527,534$ 4,164,665$ 2,718,426$ 27,993,935$ 2,132,705$ Investments - - - - - - - 116,635 Receivables (net): User charges 147,875 550,723 870,666 516,110 337,908 636,213 3,059,495 - Privilege fees - - 448,368 - - - 448,368 - Intergovernmental - - 182,370 403,327 - - 585,697 - Inventory - 54,559 - 357,914 - - 412,473 - Reinsured claims receivable - - - - - - - 150,532 Prepaid items - - - - - - - 149,641 Total current assets 1,411,946 2,751,007 9,674,918 10,804,885 4,502,573 3,354,639 32,499,968 2,549,513 Noncurrent assets: Receivables (net): Intergovernmental - - 1,542,881 - - - 1,542,881 - Deposit held by third party - - - - - - - 1,952,600 Nondepreciable capital assets 3,762,581 3,760,535 14,307,049 10,911,170 219,866 2,651,406 35,612,607 - Capital assets (net of depreciation)8,715,794 32,082,033 69,959,121 52,566,397 624,364 5,428,606 169,376,315 - Total noncurrent assets 12,478,375 35,842,568 85,809,051 63,477,567 844,230 8,080,012 206,531,803 1,952,600 Total Assets 13,890,321 38,593,575 95,483,969 74,282,452 5,346,803 11,434,651 239,031,771 4,502,113 Deferred Outflows of Resources Deferred pension 184 3,794 2,314 8,858 12,971 - 28,121 - Total Deferred Outflows of Resources 184 3,794 2,314 8,858 12,971 - 28,121 - Total Assets and Deferred Outflows of Resources 13,890,505$ 38,597,369$ 95,486,283$ 74,291,310$ 5,359,774$ 11,434,651$ 239,059,892$ 4,502,113$ Liabilities: Current liabilities: Warrants and accounts payable 7,601$ 40,128$ 121,402$ 800,791$ 94,136$ 814,442$ 1,878,500$ 2,038,812$ Accrued payroll and withholdings 754 27,923 21,255 99,681 153,736 481 303,830 - Health claims incurred but not reported - - - - - - - 775,395 Accrued interest 74,063 184,226 537,634 92,051 - 6,231 894,205 - Other liabilities - 1,081 - 387,286 - - 388,367 - Bond anticipation notes payable 10,000 15,000 1,000,000 1,573,912 - - 2,598,912 - Compensated absences - 99,064 51,004 287,046 205,227 - 642,341 - Workers' compensation claims incurred but not reported - - - - - - - 117,324 Bonds and notes payable 625,048 1,657,799 2,570,974 847,154 - 40,000 5,740,975 - Total current liabilities 717,466 2,025,221 4,302,269 4,087,921 453,099 861,154 12,447,130 2,931,531 Noncurrent liabilities: Compensated absences - 99,065 51,004 287,047 205,227 - 642,343 - Landfill closure - - - - - 7,663,000 7,663,000 - Other postemployment benefits 247,303 545,384 341,617 2,356,377 3,527,413 - 7,018,094 - Net pension liability 107,351 2,215,255 1,350,982 5,172,032 7,573,732 - 16,419,352 - Bonds and notes payable 6,115,624 17,688,813 42,376,678 10,810,022 - 415,000 77,406,137 - Total noncurrent liabilities 6,470,278 20,548,517 44,120,281 18,625,478 11,306,372 8,078,000 109,148,926 - Total Liabilities 7,187,744 22,573,738 48,422,550 22,713,399 11,759,471 8,939,154 121,596,056 2,931,531 Total Deferred Inflows of Resources - - - - - - - - Total Liabilities and Deferred Inflows of Resources 7,187,744 22,573,738 48,422,550 22,713,399 11,759,471 8,939,154 121,596,056 2,931,531 Net Position: Net investment in capital assets 5,727,703 16,480,956 38,318,518 50,246,479 844,230 7,625,012 119,242,898 - Unrestricted 975,058 (457,325) 8,745,215 1,331,432 (7,243,927) (5,129,515) (1,779,062) 1,570,582 Total Net Position 6,702,761$ 16,023,631$ 47,063,733$ 51,577,911$ (6,399,697)$ 2,495,497$ 117,463,836 1,570,582$ Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterprise funds over time 256,018 117,719,854$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 41 of 135 Comprehensive Annual Financial Report Net Position of Business Type Activities (page 35) TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2015 Governmental Activities Nantucket Our Internal Siasconset Wannacomet Memorial Island Solid Service Water Water Sewer Airport Home Waste Total Fund Operating Revenues: Charges for services 1,016,504$ 4,834,202$ 6,297,741$ 13,119,422$ 4,276,797$ 3,758,250$ 33,302,916$ -$ Employee contributions - - - - - - - 1,811,460 Employer contributions - - - - - - - 11,483,855 Other - 234,200 162,038 - 38,011 1,780 436,029 766,246 Total Operating Revenues 1,016,504 5,068,402 6,459,779 13,119,422 4,314,808 3,760,030 33,738,945 14,061,561 Operating Expenses: Operating costs 275,003 2,124,942 2,881,629 11,647,329 7,929,261 10,038,320 34,896,484 - Depreciation 206,374 871,923 2,157,304 2,394,011 75,442 269,517 5,974,571 - Maintenance - - - 654,814 - - 654,814 - Employee benefits - - - - - - - 13,532,259 Total Operating Expenses 481,377 2,996,865 5,038,933 14,696,154 8,004,703 10,307,837 41,525,869 13,532,259 Total Operating Income (loss)535,127 2,071,537 1,420,846 (1,576,732) (3,689,895) (6,547,807) (7,786,924) 529,302 Nonoperating Revenues (Expenses): Intergovernmental - - - 90,820 - - 90,820 - Investment income 909 4,686 - 22,909 4,431 - 32,935 5,045 Gain on sale of assets 829,212 - - - - - 829,212 - Interest expense (259,322) (559,134) (1,229,526) (438,160) - (17,787) (2,503,929) - Total Nonoperating Revenues (Expenses)570,799 (554,448) (1,229,526) (324,431) 4,431 (17,787) (1,550,962) 5,045 Income (Loss) Before Capital Contributions and Transfers 1,105,926 1,517,089 191,320 (1,901,163) (3,685,464) (6,565,594) (9,337,886) 534,347 Capital Contributions Intergovernmental - - 252,443 5,377,844 - - 5,630,287 - Privilege fees - - 447,898 - - - 447,898 - - - 700,341 5,377,844 - - 6,078,185 - Transfers Transfers in - - - - 2,562,508 5,399,787 7,962,295 - Transfers out - (50,000) - (31,000) - - (81,000) - Transfers - (50,000) - (31,000) 2,562,508 5,399,787 7,881,295 - Change in Net Position 1,105,926 1,467,089 891,661 3,445,681 (1,122,956) (1,165,807) 4,621,594 534,347 Net Position at Beginning of Year, as restated (See note IV)5,596,835 14,556,542 46,172,072 48,132,230 (5,276,741) 3,661,304 1,036,235 Net Position at End of Year 6,702,761$ 16,023,631$ 47,063,733$ 51,577,911$ (6,399,697)$ 2,495,497$ 1,570,582$ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds 124,311 4,745,905$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 42 of 135 Comprehensive Annual Financial Report Change in net position of business-type activities (page 36) TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED JUNE 30, 2015 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 1,009,493$ 4,827,553$ 6,204,380$ 13,394,482$ 5,748,150$ 3,693,701$ 34,877,759$ -$ Employee contributions - - - - - - - 1,811,460 Employer contributions - - - - - - - 11,483,855 Receipts from other operating revenues - 234,200 162,038 - 38,011 1,780 436,029 797,212 Payments to employees - (1,484,585) (1,164,802) (3,651,377) (3,472,312) (33,140) (9,806,216) - Payments to vendors (192,954) (731,809) (2,041,160) (8,135,066) (3,892,753) (8,988,667) (23,982,409) - Payments for interfund services used - - - - - - - (12,543,284) Net Cash Provided by (Used in) Operating Activities 816,539 2,845,359 3,160,456 1,608,039 (1,578,904) (5,326,326) 1,525,163 1,549,243 Cash Flows from Noncapital Financing Activities: Operating grants - - - 90,820 - - 90,820 - Advances (to) from other funds - - - - - - - - Transfers in - - - - 2,562,508 5,399,787 7,962,295 - Transfers out - (50,000) - (31,000) - - (81,000) - Net Cash Provided by (Used in) Noncapital Financing Activities - (50,000) - 59,820 2,562,508 5,399,787 7,972,115 - Cash Flows from Capital and Related Financing Activities: Proceeds from the issuance of bonds and notes - - 4,999,200 - - - 4,999,200 - Sewer privilege fees - - 431,062 - - - 431,062 - Proceeds from capital grants - - 1,713,395 5,396,789 - - 7,110,184 - Proceeds from sale of assets 888,261 - - - - - 888,261 - Acquisition and construction of capital assets (4,269) (998,959) (2,204,180) (3,745,445) (236,907) - (7,189,760) - Proceeds from bond anticipation notes 500,000 800,000 1,000,000 1,717,912 - - 4,017,912 - Repayments of bond anticipation notes (500,000) (800,000) (5,999,200) (1,001,000) - - (8,300,200) - Principal payments on bonds and notes (605,000) (1,560,000) (2,322,524) (834,000) - (40,000) (5,361,524) - Interest payments on bonds and notes (278,111) (758,102) (1,241,353) (430,551) - (18,231) (2,726,348) - Net Cash Provided by (Used in) Capital and Related Financing Activities 881 (3,317,061) (3,623,600) 1,103,705 (236,907) (58,231) (6,131,213) - Cash Flows from Investing Activities: Investment income 909 4,686 - 22,909 4,431 - 32,935 5,045 Investment of operating cash - - - - - - - (116,635) Net Cash Provided by Investing Activities 909 4,686 - 22,909 4,431 - 32,935 (111,590) Net Change in Cash and Cash Equivalents 818,329 (517,016) (463,144) 2,794,473 751,128 15,230 3,399,000 1,437,653 Cash and Cash Equivalents: Beginning 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 End of the year 1,264,071$ 2,145,725$ 8,173,514$ 9,527,534$ 4,164,665$ 2,718,426$ 27,993,935$ 2,132,705$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating Income (Loss)535,127$ 2,071,537$ 1,420,846$ (1,576,732)$ (3,689,895)$ (6,547,807)$ (7,786,924)$ 529,302$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 206,374 871,923 2,157,304 2,394,011 75,442 269,517 5,974,571 - Changes in assets, deferred outflows and liabilities: Receivables (7,011) (6,649) (93,361) 268,751 1,471,353 (64,549) 1,568,534 30,966 Prepaid items - - - - - - - (107,541) Inventory - (32,945) - 12,905 - - (20,040) - Deposits held by third party - - - - - - - (122,600) Deferred outflows of resources - - - - - - - - Accounts payable and accrued expenses 576 (101,255) (386,557) 29,754 (3,179) 647,513 186,852 1,219,116 Accrued benefits payable 81,473 41,667 62,224 473,041 567,375 - 1,225,780 - Landfill closure - - - - - 369,000 369,000 - Other liabilities - 1,081 - 6,309 - - 7,390 - Net Cash Provided by (Used in) Operating Activities 816,539$ 2,845,359$ 3,160,456$ 1,608,039$ (1,578,904)$ (5,326,326)$ 1,525,163$ 1,549,243$ Noncash investing capital and financing activities: Intergovernmental subsidies of debt service -$ -$ 407,607$ -$ -$ -$ 407,607$ -$ Amortization of bond premiums 5,048 62,716 30,738 28,431 - - 126,933 - See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 43 of 135 Comprehensive Annual Financial Report TOWN OF NANUCKET, MASSACHUSETTS FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2015 Other Postemployment Private Benefits Purpose Agency Trust Fund Trust Funds Funds Assets: Cash and cash equivalents 372,681$ 140,929$ 988,566$ Investments 393,313 2,232,280 - Receivables, net of allowance for uncollectibles - - 115,510 Total Assets 765,994 2,373,209 1,104,076 Liabilities: Warrants payable - 526 35,000 Accrued payroll and withholdings - - 10,795 Agency liabilities - - 410,851 Planning board deposits - - 647,430 Total Liabilities - 526 1,104,076 Net Position: Held in trust for other postemployment benefits 765,994 - - Held in trust for private purposes - 2,372,683 - Total Net Position 765,994$ 2,372,683$ -$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 44 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FISCAL YEAR ENDED JUNE 30, 2015 Other Postemployment Private Benefits Purpose Trust Fund Trust Funds Additions Contributions: Employee 333,929$-$ Employer 2,624,999 - Other - 43,985 Total contributions 2,958,928 43,985 Investment income: 17,472 27,402 Interest and dividends Net earnings on investments - 15 Net investment earnings 17,472 27,417 Other income - 427,500 Total Additions (net)2,976,400 498,902 Deductions Life and health insurance premiums paid for retirees 2,458,928 - Education - scholarships - 156,050 Health and human services - public assistance - 330,221 Total Deductions 2,458,928 486,271 CHANGE IN NET POSITION 517,472 12,631 NET POSITION AT BEGINNING OF YEAR 248,522 2,360,052 NET POSITION AT END OF YEAR 765,994$2,372,683$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 45 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2015 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 is as 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 County shares the same geographical boundaries as the Town and (1) the economic resources received or held are entirely for the benefit of the Town and its constituents, (2) the Town has the ability to access the economic resources of the County, and (3) those economic resources are significant to the Town therefore exclusion would cause the financial statements to be misleading. The County Commissioners consist of a five-member elected board which operates a Registry of Deeds and Corrections Office. Complete stand-alone financial statements as of June 30, 2015 may be obtained at 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 due primarily to its close relationship and financial integration with the Town therefore exclusion would cause the basic financial statements to be misleading. Complete stand-alone financial statements as of June 30, 2015 may be obtained at 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 the Airport Commission at 14 Airport Road, Nantucket, MA 02554. Town of Nantucket, Massachusetts Page 46 of 135 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 outflows of resources, liabilities and deferred inflows 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 inflows 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. Town of Nantucket, Massachusetts Page 47 of 135 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 48 of 135 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 49 of 135 Comprehensive Annual Financial Report 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 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. Town of Nantucket, Massachusetts Page 50 of 135 Comprehensive Annual Financial Report 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. 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. Town of Nantucket, Massachusetts Page 51 of 135 Comprehensive Annual Financial Report 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. The Town has one item that is reported on the government- wide statement of net position which relate to outflows from changes in the net pension liability. The deferred pensions will be recognized in pension expense in future years as more fully described in Note III, subsection A. 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. The Town has only one type of item, which arises only under a modified accrual basis of accounting, which qualifies for reporting in this category. Accordingly, the item unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenue from two sources: property taxes and other. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 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. Capital outlay represents assets that are restricted for the purposes of funding capital projects. Public safety revolving funds represent assets that have accumulated from user charges assessed to support specific public safety programs. These amounts are restricted by state law for the purpose of funding those programs for which the user charges were assessed. Gift funds represent assets that are restricted by donors for specific purposes. Other purposes represent assets that are restricted for numerous various minor specific governmental programs and uses. Town of Nantucket, Massachusetts Page 52 of 135 Comprehensive Annual Financial Report 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. Fund balance is reported in five components – nonspendable, restricted, committed, assigned, and unassigned as described below: Nonspendable 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 constraints imposed by 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 $4,834,733 at June 30, 2015 and is reported as unassigned fund balance in the General Fund. Town of Nantucket, Massachusetts Page 53 of 135 Comprehensive Annual Financial Report 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 reported separately. The Town reports $2,161,707 of encumbrances from normal purchasing activity in the general fund as assigned and $4,013,474 of encumbrances from Town Meeting Articles in the general fund as committed. 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 snow and ice removal costs by $157,123. This was raised through subsequent tax assessments when the Town set its tax rate for fiscal year 2016, in December 2015. The Town did not did not exceed appropriations for any of its other legally adopted line item appropriations in the budget. In addition, the Town did not experience deficits in any of its other funds. Town Nonmajor Capital Governmental General Projects Funds Total Nonspendable: Prepaid items 11,406$ -$ -$ 11,406$ Nonexpendable trust funds - - 44,805 44,805 Restricted: School grants - - 724,936 724,936 Town grants - - 737,838 737,838 School revolving - - 956,962 956,962 Town revolving - - 5,271,078 5,271,078 Capital outlay - 424,870 7,117,776 7,542,646 Community preservation - - 4,907,977 4,907,977 Gift funds - - 697,888 697,888 Expendable trust funds - - 111,382 111,382 Debt service 488,344 - - 488,344 Committed: Capital outlay 3,912,986 - - 3,912,986 Other purposes 100,488 - - 100,488 Assigned: Purchase orders 2,161,707 - - 2,161,707 Subsequent years' budget 4,161,500 - - 4,161,500 Unassigned 15,470,669 (1,109,351) - 14,361,318 26,307,100$ (684,481)$ 20,570,642$ 46,193,261$ Town of Nantucket, Massachusetts Page 54 of 135 Comprehensive Annual Financial Report The Town incurred deficits of $1,109,351 which is reported in the Capital Projects major fund. These deficits will be funded through available revenues, grant funds or bond proceeds in future fiscal years. 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, deferred outflows, liabilities, deferred inflows, disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. 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 $63,396,946 and the bank balance was $64,450,934. Of the Town's bank balance, $55,154,510 was covered by federal depository insurance or the Depositors Insurance Fund (“DIF”), and the remainder 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 Town of Nantucket, Massachusetts Page 55 of 135 Comprehensive Annual Financial Report a third party custodian approved by the Treasurer in the Town’s name and tax identification number. The Town’s investments of $2,912,422 in U.S. government obligations, $2,080,128 in corporate debt securities and $294,742 in equity 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 $1 billion with no individual client limit. The repurchase agreements consist of overnight sweep agreements which are invested in U.S. Treasury notes. Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio. Credit Risk – The Town restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. Concentration of Credit Risk – The Town does not place a limit on the amount that may be invested in any one issuer. The Town has 68% of its investments in United States government backed securities, which include repurchase agreements. No other issuer was greater than 5% of the Town’s investments. At June 30, 2015 the Town had the following investments and maturities: Time Until Maturity (Years) Fair Less More Investment Type Value Than 1 1-5 6-10 Than 10 Corporate fixed income securities 2,080,128$ -$ 1,590,876$ 246,252$ 243,000$ U.S. government obligations 2,912,421 638,410 2,274,011 - - Certificates of deposit 4,478,641 1,434,967 2,506,216 380,038 157,420 State investment pool 1,773,906 1,773,906 - - - Total Town investments with maturities 11,245,096 3,847,283$ 6,371,103$ 626,290$ 400,420$ Other investments: Equities 294,742 Mutual funds 15,067,397 Total Town investments 26,607,235$ Town of Nantucket, Massachusetts Page 56 of 135 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 $3,887,606 and the bank balance of $3,923,097 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 $42,941 which were covered by federal depository insurance and were not subject to custodial credit risk. These are recorded as cash equivalents at June 30, 2015. Interest Rate Risk - The County limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio Credit Risk - The County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer. Corporate U.S. Government State Fixed Income Agencies & Certificates Investment Securities Treasuries Of Deposit Pool Total AA+243,000$ 2,821,088$ -$ -$ 3,064,088$ AA-- 91,333 - - 91,333 A 951,899 - - - 951,899 BB 137,165 - - - 137,165 BB+49,971 - - - 49,971 BBB+698,093 - - - 698,093 Not Rated - - 4,478,641 1,773,906 6,252,547 Total - All 2,080,128$ 2,912,421$ 4,478,641$ 1,773,906$ 11,245,096$ Town of Nantucket, Massachusetts Page 57 of 135 Comprehensive Annual Financial Report 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 approximately $11,133,000, of which approximately $1,021,000 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, 2015: Series A Debt Reserve $1,246,074 Mitigation agreements 329,408 Life insurance premium 210,063 $1,785,545 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 include Certificates of Deposit totaling $4,728,638 which were covered by federal depository insurance or DIF and were not subject to custodial credit risk, mature in less than one year, are stated at fair market value and are unrated in terms of credit risk quality ratings. The Land Bank also maintains investments in U.S Treasury bonds totaling $2,772,758 which mature in May 2022 and have a Moody’s quality rating of AAA. The Land Bank has entered into an agreement with the Town, which requires the Land Bank to establish a working capital reserve fund. This fund, along with the guarantee of the Town of its full faith and credit, secures the Series 2007A, Series 2009A and Series 2012A bonds outstanding at year-end. In addition, the Land Bank is prohibited from acquiring additional real estate at any time that an amount equal to one year’s debt service relating to the bonds in the reserve fund is not on deposit. Interest Rate Risk -The Land Bank does not have a formal policy regarding interest rate risk. B. Receivables Receivables as of year-end for the Town’s individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes 2,761,292$ (265,561)$ 2,495,731$ Tax liens 2,720,866 - 2,720,866 Motor vehicle and other excise taxes 1,446,876 (534,684) 912,192 Departmental and other 425,644 (197,000) 228,644 Intergovernmental 1,297,424 - 1,297,424 Total 8,652,102$ (997,245)$ 7,654,857$ Town of Nantucket, Massachusetts Page 58 of 135 Comprehensive Annual Financial Report Receivables as of year-end for the Town’s proprietary funds are as follows: 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 components of deferred inflows of resources in the governmental funds: Massachusetts Clean Water Trust – The Town has entered into numerous loan agreements with the Massachusetts Clean Water Trust (“MCWT”). It is expected that the Town will be subsidized by MCWT on a periodic basis for principal in the amount of $1,707,628 and interest in the amount of $1,139,247 until the maturity of these agreements. GAAP requires the recognition of gross debt relative to these agreements; therefore, a receivable totaling $1,707,628 has been reported in the Sewer Enterprise Fund. Gross Allowance for Net Amount Uncollectibles Amount Receivables: Water user charges 698,598$ -$ 698,598$ Sewer user charges 870,666 - 870,666 Sewer privilege fees 448,368 - 448,368 Airport user charges 516,110 - 516,110 Our Island Home user charges 337,908 - 337,908 Solid waste user charges 636,213 - 636,213 Stop loss receivable 150,532 - 150,532 Intergovernmental 2,128,578 - 2,128,578 Total 5,786,973$ -$ 5,786,973$ Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes 1,679,512$ 102,872$ 1,782,384$ Tax liens 2,676,419 44,447 2,720,866 Motor vehicle and other excise taxes 415,746 - 415,746 Departmental and other 21,963 206,681 228,644 Total 4,793,640$ 354,000$ 5,147,640$ Town of Nantucket, Massachusetts Page 59 of 135 Comprehensive Annual Financial Report C. Capital Assets Capital asset activity for the year ended June 30, 2015, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land 167,808,554$ 325,000$ (44,754)$ 168,088,800$ Construction in process 14,158,604 4,106,176 (3,939,761) 14,325,019 Total capital assets not being depreciated 181,967,158 4,431,176 (3,984,515) 182,413,819 Capital assets being depreciated: Buildings and improvements 54,842,377 376,386 - 55,218,763 Infrastructure 29,908,421 4,967,729 - 34,876,150 Machinery and equipment 5,806,235 2,230,173 (858,575) 7,177,833 Vehicles 8,521,465 438,649 (597,608) 8,362,506 Total capital assets being depreciated 99,078,498 8,012,937 (1,456,183) 105,635,252 Less accumulated depreciation for: Buildings and improvements (20,440,820) (1,426,574) - (21,867,394) Infrastructure (20,220,333) (967,795) - (21,188,128) Machinery and equipment (3,357,736) (1,039,431) 858,575 (3,538,592) Vehicles (6,508,702) (409,196) 597,608 (6,320,290) Total accumulated depreciation (50,527,591) (3,842,996) 1,456,183 (52,914,404) Total capital assets being depreciated, net 48,550,907 4,169,941 - 52,720,848 Total governmental activities capital assets, net 230,518,065$ 8,601,117$ (3,984,515)$ 235,134,667$ Business-Type Activities: Capital assets not being depreciated: Land 17,826,570$ -$ (59,049)$ 17,767,521$ Construction in process 16,388,473 5,508,157 (4,051,544) 17,845,086 Total capital assets not being depreciated 34,215,043 5,508,157 (4,110,593) 35,612,607 Capital assets being depreciated: Buildings and improvements 59,178,902 68,093 - 59,246,995 Infrastructure 161,034,545 3,498,478 - 164,533,023 Machinery and equipment 22,417,466 1,530,276 (1,487,461) 22,460,281 Vehicles 4,367,582 636,300 (115,744) 4,888,138 Total capital assets being depreciated 246,998,495 5,733,147 (1,603,205) 251,128,437 Less accumulated depreciation for: Buildings and improvements (12,824,415)(1,385,886)- (14,210,301) Infrastructure (43,891,663) (3,726,750) - (47,618,413) Machinery and equipment (16,758,306) (701,293) 1,487,461 (15,972,138) Vehicles (3,906,372) (160,642) 115,744 (3,951,270) Total accumulated depreciation (77,380,756)(5,974,571)1,603,205 (81,752,122) Total capital assets being depreciated, net 169,617,739 ( 241,424)- 169,376,315 Total business-type activities capital assets, net $ 203,832,782 $ 5,266,733 (4,110,593)$ $ 204,988,922 Town of Nantucket, Massachusetts Page 60 of 135 Comprehensive Annual Financial Report Beginning Ending Balance Increases Decreases Balance Business-type Activities: Siasconset Water Capital assets not being depreciated: Land 2,674,627$ -$ (59,049)$ 2,615,578$ Construction in process 1,142,734 4,269 - 1,147,003 Total capital assets not being depreciated 3,817,361 4,269 (59,049) 3,762,581 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 (219,650) (9,121) - (228,771) Infrastructure (1,136,261) (194,179) - (1,330,440) Machinery and equipment (53,739) (3,074) - (56,813) Total accumulated depreciation (1,409,650) (206,374) - (1,616,024) Total capital assets being depreciated, net 8,922,168 (206,374) - 8,715,794 Total Siasconset Water capital assets, net 12,739,529$ (202,105)$ (59,049)$ 12,478,375$ Business-type Activities: Wannacomet Water Capital assets not being depreciated: Land 3,388,367$ -$ -$ 3,388,367$ Construction in process * 3,333,403 369,372 (3,330,607) 372,168 Total capital assets not being depreciated 6,721,770 369,372 (3,330,607) 3,760,535 Capital assets being depreciated: Buildings and improvements 1,792,458 - - 1,792,458 Infrastructure 32,974,319 2,727,051 - 35,701,370 Machinery and equipment 3,829,534 1,233,143 (1,451,206) 3,611,471 Vehicles 237,898 - (25,054) 212,844 Total capital assets being depreciated 38,834,209 3,960,194 (1,476,260) 41,318,143 Less accumulated depreciation for: Buildings and improvements (428,135) (41,697) - (469,832) Infrastructure (6,190,362) (687,291) - (6,877,653) Machinery and equipment (2,984,052) (142,935) 1,451,206 (1,675,781) Vehicles (237,898) - 25,054 (212,844) Total accumulated depreciation (9,840,447) (871,923) 1,476,260 (9,236,110) Total capital assets being depreciated, net 28,993,762 3,088,271 - 32,082,033 Total Wannacomet Water capital assets, net 35,715,532$ 3,457,643$ (3,330,607)$ 35,842,568$ * As restated. Town of Nantucket, Massachusetts Page 61 of 135 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 6,043,663 1,919,988 (32,185) 7,931,466 Total capital assets not being depreciated 12,419,246 1,919,988 (32,185) 14,307,049 Capital assets being depreciated: Buildings and improvements 271,701 - - 271,701 Infrastructure 82,962,990 - - 82,962,990 Machinery and equipment 15,667,677 45,869 - 15,713,546 Vehicles 790,102 270,508 (51,042) 1,009,568 Total capital assets being depreciated 99,692,470 316,377 (51,042) 99,957,805 Less accumulated depreciation for: Buildings and improvements (149,819) (6,864) - (156,683) Infrastructure (15,859,541) (1,688,962) - (17,548,503) Machinery and equipment (11,468,366) (370,309) - (11,838,675) Vehicles (414,696) (91,169) 51,042 (454,823) Total accumulated depreciation (27,892,422) (2,157,304) 51,042 (29,998,684) Total capital assets being depreciated, net 71,800,048 (1,840,927) - 69,959,121 Total Sewer capital assets, net 84,219,294$ 79,061$ (32,185)$ 84,266,170$ Capital assets not being depreciated: Land 2,736,587$ -$ -$ 2,736,587$ Construction in process 5,868,673 2,994,662 (688,752) 8,174,583 Total capital assets not being depreciated 8,605,260 2,994,662 (688,752) 10,911,170 Capital assets being depreciated: Infrastructure * 34,429,586 771,427 - 35,201,013 Buildings and improvements 45,745,494 51,052 - 45,796,546 Machinery and equipment 1,326,238 251,264 (36,255) 1,541,247 Vehicles 3,220,499 365,792 (39,648) 3,546,643 Total capital assets being depreciated 84,721,817 1,439,535 (75,903) 86,085,449 Less accumulated depreciation for: Infrastructure * (19,928,016) (1,156,318) - (21,084,334) Buildings and improvements (7,181,765) (1,038,649) - (8,220,414) Machinery and equipment (956,468) (129,571) 36,255 (1,049,784) Vehicles (3,134,695) (69,473) 39,648 (3,164,520) Total accumulated depreciation (31,200,944) (2,394,011) 75,903 (33,519,052) Total capital assets being depreciated, net 53,520,873 (954,476) - 52,566,397 Total Nantucket Memorial Airport capital assets, net 62,126,133$ 2,040,186$ (688,752)$ 63,477,567$ * As restated. Business-type Activities: Nantucket Memorial Airport Town of Nantucket, Massachusetts Page 62 of 135 Comprehensive Annual Financial Report Beginning Ending Business-type Activities: Our Island Home Balance Increases Decreases Balance Capital assets not being depreciated: Construction in process -$ 219,866$ -$ 219,866$ Capital assets being depreciated: Buildings and improvements 1,567,158 17,041 - 1,584,199 Machinery and equipment 216,285 - - 216,285 Vehicles 119,083 - - 119,083 Total capital assets being depreciated 1,902,526 17,041 - 1,919,567 Less accumulated depreciation for: Buildings and improvements (998,759) (53,033) - (1,051,792) Machinery and equipment (101,919) (22,409) - (124,328) Vehicles (119,083) - - (119,083) Total accumulated depreciation (1,219,761) (75,442) - (1,295,203) Total capital assets being depreciated, net 682,765 (58,401) - 624,364 Total Our Island Home capital assets, net 682,765$ 161,465$ -$ 844,230$ Business-type Activities: Solid Waste Capital assets not being depreciated: Land 2,651,406$ -$ -$ 2,651,406$ Capital assets being depreciated: Buildings and improvements 9,437,236 - - 9,437,236 Infrastructure 777,483 - - 777,483 Machinery and equipment 1,300,936 - - 1,300,936 Total capital assets being depreciated 11,515,655 - - 11,515,655 Less accumulated depreciation for: Buildings and improvements (3,846,287) (236,522) - (4,082,809) Infrastructure (777,483) - - (777,483) Machinery and equipment (1,193,762) (32,995) - (1,226,757) Total accumulated depreciation (5,817,532) (269,517) - (6,087,049) Total capital assets being depreciated, net 5,698,123 (269,517) - 5,428,606 Total Solid Waste capital assets, net 8,349,529$ (269,517)$ -$ 8,080,012$ Town of Nantucket, Massachusetts Page 63 of 135 Comprehensive Annual Financial Report Restatement – The Town conducted an evaluation of its capital assets in fiscal year 2015. As a result of this evaluation, the determined that previously reported capital assets of the Wannacomet Water Enterprise Fund were understated by $1,184,598 and capital assets of the Nantucket Memorial Airport Enterprise Fund were overstated by $499,005. These amounts were reported as a restatement to the Town’s net position at June 30, 2015. Depreciation expense was charged to functions/programs as follows: Governmental Activities:Business-Type Activities: General government 215,148$ Water 1,078,297$ Public safety 1,178,623 Sewer 2,157,304 Education 1,272,993 Airport 2,394,011 Public works 896,900 Our Island Home 75,442 Health and human services 10,186 Solid waste 269,517 Culture and recreation 269,146 5,974,571$ 3,842,996$ 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 187,927 - - 187,927 Less accumulated depreciation for: Machinery and equipment (145,344) (15,992) - (161,336) Total capital assets being depreciated, net 42,583 (15,992) - 26,591 Total Nantucket County capital assets, net 3,326,425$ (15,992)$ -$ 3,310,433$ Discretely Presented Component Unit - Nantucket Islands Land Bank Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 257,810,267$ 20,309,576$ -$ 278,119,843$ Capital assets being depreciated: Buildings, improvements and equipment 24,748,152 2,966,508 (1,745,650) * 25,969,010 Less: accumulated depreciation (8,603,356) (969,251) 279,828 * (9,292,779) Total capital assets being depreciated, net 16,400,742 1,997,257 (1,465,822) 16,676,231 Total Nantucket Islands Land Bank capital assets, net 274,211,009$ 22,306,833$ (1,465,822)$ 294,796,074$ * Includes $1,462,822 that is included as an increase to land. Town of Nantucket, Massachusetts Page 64 of 135 Comprehensive Annual Financial Report D. Interfund Receivables, Payables and Transfers The composition of interfund balances at June 30, 2015, was as follows: The outstanding balances between funds result mainly from the timing difference between the dates that (1) reimbursable expenditures occur, (2) the intergovernmental reimbursements are received and (3) the payments to the general fund are made. The composition of interfund transfers for the fiscal year ended June 30, 2015, was as follows: E. Temporary Debt The Town is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to collection of revenues, expenditures may be financed through the issuance of revenue or tax anticipation notes (RANS or TANS). Capital Projects and Other Approved Costs – Projects may be temporarily funded through the issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases, prior to the issuance of these temporary notes, the governing body must take the necessary legal steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed the aggregate amount of bonds authorized or the grant award amount and carry maturity dates that are limited by state law. Interest expenditures and expenses for temporary borrowings are accounted for in the general fund and enterprise funds, respectively. Amount General Fund Nonmajor Governmental Funds - 770,308$ Road Improvements Total 770,308$ Receivable Fund Payable Fund Town Nonmajor Our General Capital Governmental Island Solid Fund Projects Funds Home Waste Total General Fund -$ 1,200,000$ 350,000$ 2,562,508$ 5,399,787$ 9,512,295$ (1) Wannacomet Water 50,000 - - - - 50,000 (2) Nantucket Memorial Airport 31,000 - - - - 31,000 (2) Total 81,000$ 1,200,000$ 350,000$ 2,562,508$ 5,399,787$ 9,593,295$ (1) Transfer to town capital projects to fund town pier project; transfer to nonmajor funds to fund community school programs; and transfers to enterprise funds to subsidize operations. (2) Transfers to general fund to fund a portion of a capital article. Transfers In Transfers Out Town of Nantucket, Massachusetts Page 65 of 135 Comprehensive Annual Financial Report Temporary notes outstanding at June 30, 2015, are payable as follows: On October 22, 2015, the Town issued $2,932,000 in general obligation bonds that mature on October, 15, 2035 and pay interest at 2-3% per annum. $2,156,000 of the proceeds from these bonds was used to retire the same amount of BANS outstanding at June 30, 2015 and have been reflected as retirements above and long-term debt issuances in fiscal year 2015. On November 13, 2015, the Town issued BANS totaling $5,653,912 that mature on November 11, 2016 and pay interest at 1.75% per annum. $4,206,912 of the proceeds from these BANS, along with the $2,156,000 of bond proceeds described above and an additional $855,000 of available funds were used to retire the $7,217,912 BAN maturing on November 13, 2015. Short-term (BANs) issued for nonmajor governmental funds were used for septic betterments ($265,551), recreational fields ($363,000) and school construction ($2,100,000). Those issued for business-type funds were issued for water projects ($25,000), sewer projects ($1,000,000) and airport projects ($1,573,912). The Town is eligible for interim loan financing from the MCWT in anticipation of permanent financing through MCWT for costs related to the Town’s septic management program. The interim loans must be converted to permanent long-term debt no later than August 5, 2016. Short-term MCWT loans totaling $265,000 are reported in the non-major governmental funds. F. Long–Term Obligations The Town issues general obligation bonds and notes to provide funds for the acquisition and construction of major capital facilities. General obligation bonds and notes have been issued for both governmental and business-type activities. Additionally, the Town incurs various other long-term obligations relative to associated personnel costs. Interest Maturity July 1,June 30, Type Rate Date 2014 Additions Retirements 2015 MCWT 0.00% Matured 521,551$ -$ (521,551)$ -$ MCWT 0.00% 08/05/16 - 265,551 - 265,551 BAN 1.00% Matured 1,100,000 - (1,100,000) - BAN 0.75% 11/13/15 - 3,200,000 (737,000) *2,463,000 Total Governmental Notes 1,621,551 3,465,551 (2,358,551) 2,728,551 MCWT 0.13% Matured 4,999,200 - (4,999,200) - BAN 1.00% Matured 3,301,000 - (3,301,000) - BAN 0.75% 11/13/15 - 4,017,912 (1,419,000) *2,598,912 Total Business-Type Notes 3,301,000 4,017,912 (4,720,000) 2,598,912 Total Notes Payable 4,922,551$ 7,483,463$ (7,078,551)$ 5,327,463$ * A portion of these BAN's were permanently financed subsequent to year end as described below. Town of Nantucket, Massachusetts Page 66 of 135 Comprehensive Annual Financial Report The following reflects the current year activity in the long-term liability accounts: Beginning Ending Due within Balance Additions Deletions Balance one year Governmental Activities: Bond and note indebtedness 54,830,687$ 1,751,200$ (6,253,306)$ 50,328,581$ 5,511,741$ Unamortized bond premium 40,366 - (18,034) 22,332 12,729 Workers' compensation 50,571 117,324 (50,571) 117,324 117,324 Compensated absences 1,540,760 1,119,863 (770,380) 1,890,243 945,122 Other postemployment benefits 27,217,202 6,290,612 (1,928,998) 31,578,816 - Net pension liability * 36,982,558 3,715,274 (3,441,777) 37,256,055 - Total Governmental Activities 120,662,144$ 12,994,273$ (12,463,066)$ 121,193,351$ 6,586,916$ Business-Type Activities - Siasconset Water: Bond and note debt 6,785,000$ 490,000$ (605,000)$ 6,670,000$ 620,000$ Unamortized bond premium 75,720 - (5,048) 70,672 5,048 Other postemployment benefits 166,434 116,635 (35,766) 247,303 - Net pension liability * 106,563 10,705 (9,917) 107,351 - Total Siasconset Water 7,133,717 617,340 (655,731) 7,095,326 625,048 Business-Type Activities - Wannacomet Water: Bond and note debt 19,710,000 3,366,800 (4,230,000) 18,846,800 1,598,000 Unamortized bond premium 562,529 - (62,717) 499,812 59,799 Compensated absences 214,022 91,118 (107,011) 198,129 99,064 Other postemployment benefits 500,292 65,035 (19,943) 545,384 - Net pension liability * 2,198,993 220,911 (204,649) 2,215,255 - Total Wannacomet Water 23,185,836 3,743,864 (4,624,320) 22,305,380 1,756,863 Business-Type Activities - Sewer: Bond and note debt 42,068,959 4,999,200 (2,322,524) 44,745,635 2,542,956 Unamortized bond premium 232,755 - (30,738) 202,017 28,018 Compensated absences 43,093 82,672 (23,757) 102,008 51,004 Other postemployment benefits 341,491 182 (56) 341,617 - Net pension liability * 1,341,064 134,724 (124,806) 1,350,982 - Total Sewer 44,027,362 5,216,778 (2,501,881) 46,742,259 2,621,978 Business-Type Activities - Nantucket Memorial Airport: Bond and note debt 12,134,000 144,000 (834,000) 11,444,000 820,000 Unamortized bond premium 241,607 - (28,431) 213,176 27,154 Compensated absences 303,026 467,162 (196,095) 574,093 287,046 Other postemployment benefits 2,094,350 377,913 (115,886) 2,356,377 - Net pension liability * 5,134,064 515,769 (477,801) 5,172,032 - Total Nantucket Memorial Airport 19,907,047 1,504,844 (1,652,213) 19,759,678 1,134,200 Business-Type Activities - Our Island Home: Compensated absences 187,666 366,928 (144,140) 410,454 205,227 Other postemployment benefits 3,124,841 580,616 (178,044) 3,527,413 - Net pension liability * 7,518,133 755,273 (699,674) 7,573,732 - Total Our Island Home 10,830,640 1,702,817 (1,021,858) 11,511,599 205,227 Business-Type Activities - Solid Waste: Bond and note debt 495,000 - (40,000) 455,000 40,000 Landfill closure 7,294,000 369,000 - 7,663,000 - Total Solid Waste 7,789,000 369,000 (40,000) 8,118,000 40,000 Total Business-Type Activities 112,873,602$ 13,154,643$ (10,496,003)$ 115,532,242$ 6,383,316$ * Restated due to GASB 68 implementation (See Note, III, Subsection H) Town of Nantucket, Massachusetts Page 67 of 135 Comprehensive Annual Financial Report The Town’s governmental activities liabilities will be liquidated by the general fund. The business-type liabilities will be liquidated by the respective business-type funds. The following is a summary of outstanding long-term debt obligations as of June 30, 2015: 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 2.00 - 5.00% 19,905,200$ 737,000$ (3,531,800)$ 17,110,400$ Refunding Bonds 1.50 - 5.00% 17,833,900 758,200 (2,054,300) 16,537,800 USDA Notes 4.13%1,207,500 - (34,500) 1,173,000 Massachusetts Clean Water Trust 0.00 - 2.42% 15,884,087 256,000 (632,706) 15,507,381 Total Governmental Activities 54,830,687 1,751,200 (6,253,306) 50,328,581 Add: Unamortized bond premium 40,366 - (18,034) 22,332 Total Governmental Activities, net 54,871,053$ 1,751,200$ (6,271,340)$ 50,350,913$ Business-Type Activities - Siasconset Water: General Obligation Bonds 2.00 - 5.00% 6,785,000$ 490,000$ (605,000)$ 6,670,000$ Total Siasconset Water 6,785,000 490,000 (605,000) 6,670,000 Business-Type Activities - Wannacomet Water: General Obligation Bonds 2.00 - 5.00% 17,370,000 785,000 (4,180,000) 13,975,000 Refunding Bonds 1.50 - 5.00% 2,340,000 2,581,800 (50,000) 4,871,800 Total Wannacomet Water 19,710,000 3,366,800 (4,230,000) 18,846,800 Business-Type Activities - Sewer: General Obligation Bonds 2.00 - 5.00% 4,496,800 - (480,200) 4,016,600 Refunding Bonds 2.00 - 5.00%826,100 - (100,700) 725,400 Massachusetts Clean Water Trust 0.00 - 5.50% 36,746,059 4,999,200 (1,741,624) 40,003,635 Total Sewer 42,068,959 4,999,200 (2,322,524) 44,745,635 Business-Type Activities - Nantucket Memorial Airport: General Obligation Bonds 2.00 - 5.00% 12,134,000 144,000 (834,000) 11,444,000 Total Nantucket Memorial Airport 12,134,000 144,000 (834,000) 11,444,000 Business-Type Activities - Solid Waste: General Obligation Bonds 2.50 - 5.00%445,000 - (40,000) 405,000 Refunding Bonds 1.50 - 4.00%50,000 - - 50,000 Total Solid Waste 495,000 - (40,000) 455,000 Total Business-Type Activities 81,192,959 9,000,000 (8,031,524) 82,161,435 Add: Unamortized bond premium 1,112,611 - (126,934) 985,677 Total Business-Type Activities, net 82,305,570$ 9,000,000$ (8,158,458)$ 83,147,112$ Town of Nantucket, Massachusetts Page 68 of 135 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 2016 5,511,741$ -$ 5,511,741$ 1,518,642$ (292)$ 1,518,350$ 7,030,091$ 2017 5,695,010 - 5,695,010 1,349,828 (228) 1,349,600 7,044,610 2018 5,217,793 - 5,217,793 1,150,303 (162) 1,150,141 6,367,934 2019 3,278,101 - 3,278,101 1,011,920 (96) 1,011,824 4,289,925 2020 3,247,738 - 3,247,738 914,453 (32) 914,421 4,162,159 2021-2025 14,297,920 - 14,297,920 3,075,963 - 3,075,963 17,373,883 2026-2030 7,605,976 - 7,605,976 1,297,730 - 1,297,730 8,903,706 2031-2035 3,099,852 - 3,099,852 525,404 - 525,404 3,625,256 2036-2040 2,063,950 - 2,063,950 154,612 - 154,612 2,218,562 2041-2045 172,500 - 172,500 49,809 - 49,809 222,309 2046-2049 138,000 - 138,000 14,230 - 14,230 152,230 Total 50,328,581$ -$ 50,328,581$ 11,062,894$ (810)$ 11,062,084$ 61,390,665$ Business-Type Activities: Siasconset Water 2016 620,000$ -$ 620,000$ 245,875$ -$ 245,875$ 865,875$ 2017 375,000 - 375,000 248,485 - 248,485 623,485 2018 380,000 - 380,000 229,862 - 229,862 609,862 2019 395,000 - 395,000 216,337 - 216,337 611,337 2020 405,000 - 405,000 197,788 - 197,788 602,788 2021-2025 2,205,000 - 2,205,000 748,115 - 748,115 2,953,115 2026-2030 2,150,000 - 2,150,000 261,923 - 261,923 2,411,923 2031-2035 120,000 - 120,000 11,669 - 11,669 131,669 2036-2040 20,000 - 20,000 300 - 300 20,300 6,670,000$ -$ 6,670,000$ 2,160,354$ -$ 2,160,354$ 8,830,354$ Business-Type Activities: Wannacomet Water 2016 1,598,000$ -$ 1,598,000$ 584,666$ -$ 584,666$ 2,182,666$ 2017 1,570,800 - 1,570,800 628,099 - 628,099 2,198,899 2018 1,545,000 - 1,545,000 570,776 - 570,776 2,115,776 2019 1,554,000 - 1,554,000 516,702 - 516,702 2,070,702 2020 1,469,000 - 1,469,000 462,061 - 462,061 1,931,061 2021-2025 6,931,000 - 6,931,000 1,540,081 - 1,540,081 8,471,081 2026-2030 3,634,000 - 3,634,000 407,558 - 407,558 4,041,558 2031-2035 510,000 - 510,000 29,800 - 29,800 539,800 2036-2040 35,000 - 35,000 525 - 525 35,525 18,846,800$ -$ 18,846,800$ 4,740,268$ -$ 4,740,268$ 23,587,068$ Business-Type Activities: Sewer 2016 2,542,956$ (164,747)$ 2,378,209$ 1,233,532$ (228,350)$ 1,005,182$ 3,383,391$ 2017 2,595,035 (176,386)2,418,649 1,142,861 (200,123) 942,738 3,361,387 2018 2,487,239 (184,053) 2,303,186 1,060,846 (179,364) 881,482 3,184,668 2019 2,454,474 (189,738) 2,264,736 987,229 (162,957) 824,272 3,089,008 2020 2,515,451 (205,829) 2,309,622 894,464 (118,631) 775,833 3,085,455 2021-2025 12,348,016 (786,875) 11,561,141 3,280,240 (249,012) 3,031,228 14,592,369 2026-2030 8,673,998 - 8,673,998 1,838,576 - 1,838,576 10,512,574 2031-2035 7,456,829 - 7,456,829 882,970 - 882,970 8,339,799 2036-2040 3,671,637 - 3,671,637 134,376 - 134,376 3,806,013 44,745,635$ (1,707,628)$ 43,038,007$ 11,455,094$ (1,138,437)$ 10,316,657$ 53,354,664$ Town of Nantucket, Massachusetts Page 69 of 135 Comprehensive Annual Financial Report MCWT Loan Subsidies – As previously noted in Note I. B., the Town has entered into loan agreements with the MCWT. It is expected that the Town will be subsidized by MCWT on a periodic basis for principal in the amount of $1,707,628 and interest in the amount of $1,139,247 until the maturity of these agreements. The following represents authorized and unissued debt as of June 30, 2015: Year Ending Principal Interest June 30 Balance Subsidy Net of Subsidy Balance Subsidy Net of Subsidy Total Business-Type Activities: Nantucket Memorial Airport 2016 820,000$ -$ 820,000$ 401,243$ -$ 401,243$ 1,221,243$ 2017 839,000 - 839,000 385,309 - 385,309 1,224,309 2018 755,000 - 755,000 359,287 - 359,287 1,114,287 2019 740,000 - 740,000 337,187 - 337,187 1,077,187 2020 625,000 - 625,000 314,138 - 314,138 939,138 2021-2025 2,825,000 - 2,825,000 1,241,387 - 1,241,387 4,066,387 2026-2030 2,455,000 - 2,455,000 762,939 - 762,939 3,217,939 2031-2035 2,100,000 - 2,100,000 310,931 - 310,931 2,410,931 2036-2040 285,000 - 285,000 13,894 - 13,894 298,894 11,444,000$ -$ 11,444,000$ 4,126,315$ -$ 4,126,315$ 15,570,315$ Business-Type Activities: Solid Waste 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 35,000 - 35,000 12,024 - 12,024 47,024 2021-2025 175,000 - 175,000 39,723 - 39,723 214,723 2026-2029 90,000 - 90,000 7,650 - 7,650 97,650 455,000$ -$ 455,000$ 120,029$ -$ 120,029$ 575,029$ Project Amount Governmental: Title V septic 1,000,000$ Fire station 15,000,000 School building 44,100,000 Business-type: Wannacomet water projects 6,100,000 Sewer projects 3,306,413 Wastewater treatment facility 8,800,000 Nantucket Memorial Airport 7,172,113 Solid waste - landfill 2,133,000 Total Authorized and Unissued 87,611,526$ Town of Nantucket, Massachusetts Page 70 of 135 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, 2015: Beginning Ending Due within Balance Additions Deletions Balance one year Bond and note indebtedness 29,132,571$ -$ (2,474,854)$ 26,657,717$ 4,227,753$ Capital leases 183,392 - (58,957) 124,435 62,907 Net pension liability 1,463,527 144,210 (136,364) 1,471,373 - Total Land Bank 30,779,490$ 144,210$ (2,670,175)$ 28,253,525$ 4,290,660$ The following is a summary of outstanding long-term debt obligations as of June 30, 2015: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Notes payable 3.00 - 6.06% 2,652,607$ -$ (468,575)$ 2,184,032$ General obligation bonds 2.00 - 5.00% 26,479,964 - (2,006,279) 24,473,685 Total Land Bank 29,132,571$ -$ (2,474,854)$ 26,657,717$ Year Ending June 30 Principal Interest Total 2016 4,270,736$ 914,880$ 5,185,616$ 2017 2,151,704 711,504 2,863,208 2018 2,226,704 640,168 2,866,872 2019 2,296,704 566,449 2,863,153 2020 2,381,704 490,098 2,871,802 2021-2025 7,298,520 1,602,720 8,901,240 2026-2030 5,190,500 445,638 5,636,138 2031-2032 841,145 32,370 873,515 Total 26,657,717$ 5,403,827$ 32,061,544$ Town of Nantucket, Massachusetts Page 71 of 135 Comprehensive Annual Financial Report III.Other Information A. Retirement System Plan Description – The Town, County and Land Bank contribute to the Barnstable County Retirement System (BCRS), a cost-sharing multiple-employer defined benefit pension plan established under MGL Chapter 32 and is administered by the Barnstable County Retirement Board (BCRB). Standalone audited financial statements for the year ended December 31, 2014 were issued and may be obtained by writing to the Barnstable County Retirement System, 750 Attucks Lane, Hyannis, Massachusetts 02601. Membership – Membership in the Retirement System as of December 31, 2014, was as follows: Retirees and beneficiaries currently receiving benefits 2,729 Active plan members 4,696 Inactive plan members 651 Total 8,076 Benefit Terms – Membership in the Retirement System is mandatory for all full-time employees and non-seasonal, part-time employees who, in general, regularly work more than twenty hours per week. Teachers and certain administrative personnel employed by the Town’s school department participate in a separate pension plan administered by the Massachusetts Teachers’ Retirement System, which is the legal responsibility of the Commonwealth of Massachusetts. Members of the Retirement System do not participate in the federal Social Security retirement system. Massachusetts contributory retirement system benefits are uniform from retirement system to system. The Retirement System provides for retirement allowance benefits up to a maximum of 80% of a participant’s highest three-year or five-year average annual rate of regular compensation, depending on the participant’s date of hire. Benefit payments are based upon a participant’s age, length of creditable service, level of compensation and job classification. The most common benefits paid by the Retirement System include normal retirement, disability retirement and survivor benefits. Normal retirement generally occurs at age 65. However, participants may retire after twenty years of service or at any time after attaining age 55, if hired prior to April 2, 2012 or at any time after attaining age 60 if hired on or after April 2, 2012. Participants with hire dates subsequent to January 1, 1978 must have a minimum of ten years’ creditable service in order to retire at age 55. Participants become vested after ten years of service. Benefits commencing before age 65 are provided at a reduced rate. Members working in certain occupations may retire with full benefits earlier than age 65. Ordinary disability retirement is where a participant is permanently incapacitated from a cause unrelated to employment. Accidental disability retirement is where the disability is the result of an injury or illness received or aggravated in the performance of duty. The amount of benefits to be received in such cases is dependent upon several factors, including the age at which the disability retirement occurs, the years of service, average compensation and veteran status. Town of Nantucket, Massachusetts Page 72 of 135 Comprehensive Annual Financial Report Survivor benefits are extended to eligible beneficiaries of participants whose death occurs prior to or following retirement. Cost-of-living adjustments granted to members of Massachusetts retirement systems granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth during those years have been the financial responsibility of the Commonwealth. Beginning in 1998, the funding of cost-of-living amounts became the responsibility of the participating units like the Retirement System. The Retirement System may be amended or terminated in whole or in part at any time by the Massachusetts Legislature, provided that no such modification, amendment or termination shall be made that would deprive a current member of superannuation pension rights or benefits provided under applicable laws of Massachusetts, if such member has paid the stipulated contributions specified in sections or provisions of such laws. There were no significant changes to the Retirement System’s benefit terms in 2015. Contributions Requirements – The Town has elected provisions of Chapter 32, Section 22D (as amended) of Massachusetts General Laws, which require that a funding schedule be established to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating employers are assessed their share of the total retirement cost based on the entry age, normal actuarial cost method. The Town, County and Land Bank contributed $4,958,624, $47,838, and $135,733, respectively, to the Retirement System in fiscal year 2015, which equaled the actuarially-determined contribution requirements for the fiscal year. The Town, County and Land Bank contributions as a percentage of covered payroll were each approximately 19.9% in fiscal year 2015. Net Pension Liability – At June 30, 2015, the Town, County and Land Bank reported liabilities of $53,675,407, $518,574 and $1,471,373, respectively, for the proportionate shares of the net pension liability. The net pension liability was measured as of January 1, 2014 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. These figures were updated by the independent actuary to December 31, 2014. There were no material changes made in this update to the actuarial assumptions (see below) nor were there any material changes to the Retirement System’s benefit terms since the actuarial valuation. The Town, County and Land Bank’s proportions of the net pension liability are based on a projection of their long-term share of contributions to the Retirement System relative to the projected contributions of all employers. The Town, County and Land Bank’s proportions were approximately 9.507%, 0.092% and 0.261%, respectively, at December 31, 2014, which was consistent with the proportions measured at January 1, 2014. Pension Expense – The Town, County and Land Bank recognized $5,260,732, $50,825 and $144,210, respectively, in pension expense in the statement of activities in fiscal year 2015. Town of Nantucket, Massachusetts Page 73 of 135 Comprehensive Annual Financial Report Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2015, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual Experience $ — $ — Changes of assumptions — — Net difference between projected and actual earnings on pension plan investments 91,925 — Changes in proportion and differences between Town contributions and proportionate share of contributions — — Town contributions subsequent to the measurement date — — Total $ 91,925 $ — The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the Town’s pension expense as follows: Year ended June 30, 2016 $ 22,981 2017 22,981 2018 22,981 2019 22,982 The County and Land Bank reported deferred outflows of resources totaling $888 and $2,520, respectively, which both resulted from the net difference between the projected and actual earnings on pension plan investments. The deferred outflows of resources are expected to be recognized in the pension expense of the County and Land Bank in the annual amounts of $222 and $630, respectively, through fiscal year 2019. Actuarial Valuation – The measurement of the Retirement System’s total pension liability is developed by an independent actuary. The latest actuarial valuation was performed as of January 1, 2014. The significant actuarial assumptions used in the January 1, 2014 actuarial valuation included: Actuarial cost method: Entry Age Normal Cost Method Amortization method: Payments increase at 4.0%, except for 2010 Early Retirement Incentive, which is a level payment Remaining amortization period: 22 years from July 1, 2014 for 2002 and 2003 Early retirement Incentives, retiree sheriffs liability, and remaining unfunded liability, and 8 years from July 1, 2014 for 2010 Early Retirement Incentive Town of Nantucket, Massachusetts Page 74 of 135 Comprehensive Annual Financial Report Asset valuation method: Sum of actuarial value at beginning of the year, contributions and investment earnings based on the actuarial interest assumption less benefit payments and operating expenses plus 20% of the market value at the end of the year in execs of that sum, plus additional adjustment toward market value as necessary so that final actuarial value is within 20% of market value. Investment rate of return: 7.75% Projected salary increases: Varies by length of service with ultimate rates of 4.25% for Group 1, 4.50% for Group 2, and 4.75% for Group 4 Inflation rate: Cost of living adjustments: 4% 3% of $15,000 Mortality rates: Pre-retirement rates reflect the RP-2000 Employee Mortality Table projected generationally with Scale AA from 2010. The post-retirement rates reflect the RP-2000 Healthy Annuitant Mortality Table projected generationally with Scale AA from 2010 Disabled life mortality: RP-2000 Healthy Annuitant Mortality Table set forward three years for males only projected generationally with Scale AA from 2010 The investment rate of return assumption is a long-term assumption and is based on capital market expectations by asset class, historical returns and professional judgment. The market expectations analysis used a building-block approach, which included expected returns by asset class and the target asset allocation. The target allocation and best estimates of arithmetic real returns for each major asset class are summarized in the following table: Asset Class Target Allocation Long-term Expected Real Rate of Return Domestic equity 20.0% 6.60% International developed markets equity 16.0% 7.10% International emerging markets equity 7.0% 9.40% Core fixed income 13.0% 2.20% High-yield fixed income 10.0% 4.70% Real estate 10.0% 4.40% Commodities 4.0% 4.40% Hedge funds 10.0% 3.90% Private equity 10.0% 11.70% Town of Nantucket, Massachusetts Page 75 of 135 Comprehensive Annual Financial Report Discount Rate – The discount rate used to measure the total pension was 7.75%. The projection of cash flows used to determine the discount rate assumed plan member contributions were made at the current contribution rate and that employer contributions will be made at rates equal to the actuarially-determined contribution rates and the member rate. Based on those assumptions, the Retirement System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis – The following presents the proportionate shares of the net pension liability calculated using the discount rate of 7.75% as well as the proportionate shares of the net pension liability using a discount rate that is one percentage point lower (6.75%) or one percentage point higher (8.75%) than the current rate: 1% Decrease (6.75%) Current Discount (7.75%) 1% Increase (8.75%) Town’s proportionate share of the net pension liability $ 69,195,880 $ 53,675,407 $ 40,514,849 County’s proportionate share of the net pension liability $ 668,521 $ 518,574 $ 391,426 Land Bank’s proportionate share of the net pension liability $ 1,896,822 $ 1,471,373 $ 1,110,608 B. Massachusetts Teachers’ Retirement System Teachers and certain administrative employees of the Town’s school department participate in the Massachusetts Teachers’ Retirement System (“MTRS”), a cost-sharing multiple employer defined benefit pension plan. MTRS is managed by the Commonwealth on behalf of municipal teachers and municipal teacher retirees. Like the Retirement System, MTRS was established under Chapter 32 of Massachusetts General Laws. The Commonwealth’s legislature has the authority to amend or modify the MTRS’s funding policies. The Commonwealth is a nonemployer contributor to the MTRS and is legally responsible by statute for all actuarially determined employer contributions and future benefit requirements of the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by GASB Statement No. 68, Accounting and Financial Reporting for Pensions. For the year ended June 30, 2015, the Commonwealth contributed $2,000,967 to the MTRS on behalf of the Town. The Town’s proportionate share of the collective MTRS net pension liability at this reporting date was 0.213464%, which was based on the actual, actuarially determined contribution made by the Commonwealth on behalf of the Town as a percentage of the total annual contribution made by the Commonwealth on behalf of all employers. Town of Nantucket, Massachusetts Page 76 of 135 Comprehensive Annual Financial Report The table below presents the Town’s proportionate share of the following: Commonwealth Portion Paid (or assumed) On Behalf of the Town Town Portion Net pension liability $ 33,392,995 $ (33,392,995) $ — Pension expense 2,357,488 (2,357,488) — The Town has recognized intergovernmental revenue and pension expense of $2,357,488 associated with this arrangement. C. Other Postemployment Benefits (OPEB) Plan Description – The Town administers a cost sharing multiple-employer defined benefit healthcare plan (the “Plan”). The Plan provides health and life insurance benefits to current and future retirees, their dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B. Specific benefit provisions and contribution rates are established by collective bargaining agreements, state law, and Town ordinance. All benefits are provided through the Town’s self-funded insurance program described previously. The Plan does not issue a stand–alone financial report. The number of participants in the Plan consists of 490 active employees and 311 retired employees for a total of 801. Funding Policy – The contribution requirements of Plan members and the Town are established and may be amended by the Town, through negotiation with the Town employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the Town. The Town pays the remainder. The Town currently contributes enough money to the Plan to satisfy current obligations on a pay- as-you-go basis. The costs of administering the Plan are paid by the Town. Annual OPEB Cost and Net OPEB Obligation – The Town’s annual OPEB cost is calculated based on the annual required contribution “ARC” of the employer, an actuarially determined amount that is calculated in accordance with GASB Statement #45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded liabilities over a period not to exceed thirty years. The following table reflects the activity regarding the Town’s OPEB obligation: Annual required contribution (ARC)7,178,910$ Interest on net OPEB obligation 1,502,724 Adjustment to ARC (1,250,641) Annual OPEB cost 7,430,993 Contributions made (2,278,693)$ Increase in net OPEB obligation 5,152,300 Net OPEB obligation at beginning of year 33,444,610 Net OPEB obligation at end of year 38,596,910$ Town of Nantucket, Massachusetts Page 77 of 135 Comprehensive Annual Financial Report Trend information regarding Town’s 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, 2013 $ 7,177,116 36.4% $ 28,726,456 June 30, 2014 $ 7,587,850 37.8% $ 33,444,610 June 30, 2015 $ 7,430,993* 30.7% $ 38,596,910 * Reflected in the Statement of Activities as follows: The AOPEBC at June 30, 2014 was charged to the following functional programs: General Government $637,272; Public Safety $1,359,128; Education $3,733,906; Public Works $355,262; Health and Human Services $123,635; Culture and Recreation $81,409; Siasconset water $116,635; Wannacomet water $65,035; Sewer $181; Airport $377,913; and Our Island Home $580,617. Funding Status and Funding Progress – The funded status of the Plan at June 30, 2015, based on the most recent actuarial valuation performed as of June 30, 2014, was as follows (in millions): Actuarial Value of Assets (A) Actuarial Accrued Liability (AAL) Entry Age Normal Cost (B) Unfunded AAL (UAAL) (B – A) Funded Ratio (A/B) Covered Payroll (C) UAAL as a Percentage of Covered Payroll ((B-A)/C) $0.25 $88.80 $88.55 0.28% N/A N/A Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Amounts determined regarding the funded status of the Plan and the ARC of the employer are subject to continual revision as estimates are compared to actual results and past expectations. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AAL for benefits. Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive Plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The significant methods and assumptions as of the latest valuation are as follows: Valuation date: June 30, 2014 Actuarial cost method Projected Unit Credit Amortization method 4.0 percent increasing Remaining amortization period: 30 years (open) Town of Nantucket, Massachusetts Page 78 of 135 Comprehensive Annual Financial Report Interest discount rate: 4.5 percent Inflation rate: 4.0 percent Healthcare/Medical cost trend rate: 10.0% decreasing by 0.5% for 10 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. 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 $150,000 are reinsured by the Plan. The Town accrues an amount representing claims incurred but not reported (IBNR), which is based on a one month claims paid average. At June 30, 2015, the amount of the liability Annual required contribution (ARC)26,902$ Interest on net OPEB obligation 5,632 Adjustment to ARC (4,687) Annual OPEB cost 27,847 Contributions made (8,539)$ Increase in net OPEB obligation 19,308 Net OPEB obligation at beginning of year 106,380 Net OPEB obligation at end of year 125,688$ Town of Nantucket, Massachusetts Page 79 of 135 Comprehensive Annual Financial Report 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, 2013, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2015 $775,395 $13,286,061 $(13,286,061)$775,395 $775,395 Fiscal Year 2014 667,271 13,328,647 (13,220,523) 775,395 775,395 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 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, 2015, 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, 2013, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2015 $ 50,571 $204,098 $(137,345) $117,324 $117,324 Fiscal Year 2014 161,236 157,802 (268,467) 50,571 50,571 E. Commitments The Town is in the planning stages of several major capital projects including fire station, school building and waste water treatment plant improvements. The Town plans to enter into contracts to expend approximately $15,000,000, $44,000,000, and $9,000,000, 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, 2015, 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, 2015. 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. Town of Nantucket, Massachusetts Page 80 of 135 Comprehensive Annual Financial Report 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, 2014, the Authority’s reserve fund balance totaled $2,234,250 and bonds outstanding totaled $47,961,481, net of unamortized premiums of $3,285,649 and a deferred loss on refunding of $9,168. For the fiscal year ended December 31, 2014, the Authority’s revenues exceeded its cost of services by $8,422,920. 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. 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 allowed the Town to mine the current landfill for useable materials through fiscal year 2014; however the mining program is continuing pending an approval of an extension request. 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 $7,663,000 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 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 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 this Statement became effective for financial statements for periods beginning after June 15, 2013 and impact the financial reports of the pension systems that communities participate in and not the financial statements of the communities themselves. 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 Town of Nantucket, Massachusetts Page 81 of 135 Comprehensive Annual Financial Report 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 GASB 68 became effective for the Town in fiscal year 2015 and had a material effect on its 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 GASB 69 became effective for the Town in fiscal 2015 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 2015 and did not have a material effect on its financial statements. In November 2013, the GASB issued GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. The objective of GASB 71 is to address an issue regarding application of the transition provisions 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 GASB 71 became effective for the Town in fiscal year 2015 and had a material effect on its financial statements. Future Year Implementation In February 2015, the GASB issued GASB Statement No. 72, Fair Value Measurement and Application. GASB 72 addresses accounting and financial reporting issues relating to fair value measurements by providing guidance for determining a fair value measurement for financial reporting purposes. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 73, Accounting and Financial Reporting for Pension and Related Assets That Are Not within the Scope of GASB Statement No. 68 and Amendments to Certain Provision of GASB Statement No. 67 and No. 68. The objective of GASB 73 is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as well as for the assets accumulated for purposes of providing those pensions. In addition, it establishes requirements for defined contribution pensions that are not within the scope of Statement 68. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016) – except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of GASB Statement No. 68, which are effective for fiscal years beginning after June 15, 2106 (fiscal year 2017). The Town is currently evaluating whether adoption will have a material impact on the financial statements. Town of Nantucket, Massachusetts Page 82 of 135 Comprehensive Annual Financial Report In June 2015, the GASB issued GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans. GASB 74’s objective is to improve the usefulness of information about postemployment benefits other than pensions included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2016 (fiscal year 2017). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension Plans. GASB 75 established new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2017 (fiscal year 2018). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In June 2015, the GASB issued GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of GASB 76 is to identify –in the context of the current governmental financial reporting environment – the hierarchy of generally accepted principles (GAAP). This Statement reduces the GAAP hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2015 (fiscal year 2016). The Town is currently evaluating whether adoption will have a material impact on the financial statements. I. Subsequent Event On October 22, 2015, the Town issued $2,932,000 in general obligation bonds that mature on October, 15, 2035 and pay interest at 2-3% per annum. $2,156,000 of the proceeds from these bonds was used to retire the same amount of BANS outstanding at June 30, 2015 and has been reduced from bond anticipation notes payable and reported as long-term debt issuances in fiscal year 2015. IV. Prior Period Restatements A prior period adjustment was made to decrease the Town’s beginning net position to reflect the net pension liability with the implementation of GASB 68. The Town also restated beginning net position for an increase in the capital assets reported in the Wannacomet Water Enterprise Fund and a decrease in the capital assets reported in the Nantucket Memorial Airport Enterprise Funds. Finally, a prior period adjustment was made to decrease the governmental activities and increase the business-type beginning net position to record an internal service fund ‘look back’ adjustment. Town of Nantucket, Massachusetts Page 83 of 135 Comprehensive Annual Financial Report A summary of the restatements is as follows: Discretely Presented Component Unit’s A prior period adjustment was made to decrease the beginning net position of Nantucket County and the Nantucket Islands Land Bank to reflect the net pension liabilities with the implementation of GASB 68. The adjustments were made to reflect the prior period costs related to the implementation of the net pension liability. A summary of the restatements is as follows: Governmental Business-type Siasconset Wannacomet Activities Activities Water Water Prior year as presented 197,700,380$ 128,455,466$ 5,703,398$ 15,570,937$ Record net pension liability (36,982,558) (16,298,817) (106,563) (2,198,993) Restate capital asset balances - 685,593 - 1,184,598 Record internal service 'look-back' (131,707) 131,707 - - As restated 160,586,115$ 112,973,949$ 5,596,835$ 14,556,542$ Nantucket Our Memorial Island Sewer Airport Home Prior year as presented 47,513,136$ 53,765,299$ 2,241,392$ Record net pension liability (1,341,064) (5,134,064) (7,518,133) Restate capital asset balances - (499,005) - As restated 46,172,072$ 48,132,230$ (5,276,741)$ Nantucket Nantucket Islands County Land Bank Prior year as presented 6,742,638$ 267,022,376$ Record net pension liability (514,698) (1,460,377) As restated 6,227,940$ 265,561,999$ Town of Nantucket, Massachusetts Page 84 of 135 Comprehensive Annual Financial Report Required Supplementary Information Town of Nantucket, Massachusetts Page 85 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 86 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2015 SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Year Ended December 31, 2014 Town's proportion of the net pension liability (asset)9.51% Town's proportionate share of the net pension liability (asset)53,675$ Town's covered-employee payroll 24,938$ Town's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 215.23% Plan fiduciary net position as a percentage of the total pension liability 60.43% SCHEDULE OF THE TOWN'S CONTRIBUTIONS TO PENSION PLAN Year Ended December 31, 2014 Actuarially determined contribution 4,959$ Contributions in relation to the actuarially determined contribution 4,959 Contribution deficiency (excess)-$ Town's covered-employee payroll 24,938$ Contributions as a percentage of covered-employee payroll 19.9% N/A - Information not currently available This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. (dollar amounts are in thousands) (dollar amounts are in thousands) Town of Nantucket, Massachusetts Page 87 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2015 SCHEDULE OF THE COUNTY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Year Ended December 31, 2014 County's proportion of the net pension liability (asset)0.09% County's proportionate share of the net pension liability (asset)519$ County's covered-employee payroll 241$ County's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 215.35% Plan fiduciary net position as a percentage of the total pension liability 60.43% SCHEDULE OF THE COUNTY'S CONTRIBUTIONS TO PENSION PLAN Year Ended December 31, 2014 Actuarially determined contribution 48$ Contributions in relation to the actuarially determined contribution 48 Contribution deficiency (excess)-$ County's covered-employee payroll 241$ Contributions as a percentage of covered-employee payroll 19.9% N/A - Information not currently available This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. (dollar amounts are in thousands) (dollar amounts are in thousands) Town of Nantucket, Massachusetts Page 88 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2015 SCHEDULE OF THE LAND BANK'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY Year Ended December 31, 2014 Land Bank's proportion of the net pension liability (asset)0.26% Land Bank's proportionate share of the net pension liability (asset)1,471$ Land Bank's covered-employee payroll 683$ Land Bank's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 215.37% Plan fiduciary net position as a percentage of the total pension liability 60.43% SCHEDULE OF THE LAND BANK'S CONTRIBUTIONS TO PENSION PLAN Year Ended December 31, 2014 Actuarially determined contribution 136$ Contributions in relation to the actuarially determined contribution 136 Contribution deficiency (excess)-$ Land Bank's covered-employee payroll 683$ Contributions as a percentage of covered-employee payroll 19.9% N/A - Information not currently available This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. (dollar amounts are in thousands) (dollar amounts are in thousands) Town of Nantucket, Massachusetts Page 89 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - MTRS YEAR ENDED JUNE 30, 2015 Year Ended June 30, 2014 Commonwealth's proportion of the collective net pension liability (asset)100.0% Town's proportion of the collective net pension liability (asset)0.0% Commonwealth's proportionate share of the net pension liability (asset)15,896,354$ Commonwealth's actuarially determined contribution 937,379$ Contributions to MTRS are the responsibility of the Commonwealth of Massachusetts. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditors' report. (dollar amounts are in thousands) SCHEDULE OF THE COMMONWEALTH'S COLLECTIVE SHARE OF THE NET PENSION LIABILITY MASSACHUSETTS' TEACHER'S RETIREMENT SYSTEM Town of Nantucket, Massachusetts Page 90 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OTHER POSTEMPLOYMENT BENEFITS YEAR ENDED JUNE 30, 2015 SCHEDULE OF FUNDING PROGRESS 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) 7/1/2014 $ 248,522 88,841,553$ $ 88,593,031 0.28%N/A N/A 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 Annual Year Ended OPEB Actual Percentage June 30,Cost Contributions Contributed 2015 7,490,800$ 2,287,232$ 30.5% 2014 7,587,850 2,869,694 37.8% 2013 7,177,116 2,612,243 36.4% 2012 6,257,000 2,534,000 40.5% 2011 5,905,000 2,200,000 37.3% 2010 11,184,000 2,587,000 23.1% See accompanying independent auditors' report. SCHEDULE OF CONTRIBUTION FUNDING Town of Nantucket, Massachusetts Page 91 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Revenues: Taxes: Real estate taxes 63,434,444$ 63,434,444$ 64,721,467$ -$ 64,721,467 1,287,023 Personal property taxes 1,462,409 1,462,409 1,400,961 - 1,400,961 (61,448) Tax title - - 602,805 - 602,805 602,805 Motor vehicle excise 2,000,000 2,000,000 2,512,722 - 2,512,722 512,722 Boat excise 30,515 30,515 39,434 - 39,434 8,919 Meals taxes 820,000 820,000 908,283 - 908,283 88,283 Room occupancy taxes 2,450,000 2,450,000 3,041,496 - 3,041,496 591,496 70,197,368 70,197,368 73,227,168 - 73,227,168 3,029,800 Intergovernmental: State aid - chapter 70 2,126,945 2,126,945 2,126,945 - 2,126,945 - State aid - unrestricted 70,503 70,503 70,504 - 70,504 1 State aid - state owned land 116,162 116,162 116,162 - 116,162 - State aid - other 15,424 15,424 5,537 - 5,537 (9,887) 2,329,034 2,329,034 2,319,148 - 2,319,148 (9,886) Departmental fees, charges, and other: Payments in lieu of taxes 7,330 7,330 31,328 - 31,328 23,998 Selectmen rentals 117,450 117,450 174,517 - 174,517 57,067 Planning office filing and inspection fees 197,500 197,500 85,443 - 85,443 (112,057) Police department fees 123,600 123,600 138,225 - 138,225 14,625 Public safety detail charges 51,000 51,000 52,245 - 52,245 1,245 Fire department fees 43,790 43,790 49,295 - 49,295 5,505 Inspection fees 180,600 180,600 261,723 - 261,723 81,123 Harbormaster fees 213,000 213,000 95,253 - 95,253 (117,747) Public works rentals 176,996 176,996 175,730 - 175,730 (1,266) Historic district fees 137,000 137,000 202,764 - 202,764 65,764 Medicare reimbursements 49,245 49,245 44,762 - 44,762 (4,483) Other miscellaneous 241,769 241,769 242,304 - 242,304 535 1,539,280 1,539,280 1,553,589 - 1,553,589 14,309 Licenses and permits: Liquor licenses 127,600 127,600 208,600 - 208,600 81,000 Building permits 869,951 869,951 1,013,926 - 1,013,926 143,975 Other licenses and permits 186,449 186,449 232,554 - 232,554 46,105 1,184,000 1,184,000 1,455,080 - 1,455,080 271,080 Fines and forfeitures: Parking fines 207,160 207,160 234,444 - 234,444 27,284 Other fines 17,840 17,840 48,735 - 48,735 30,895 225,000 225,000 283,179 - 283,179 58,179 Penalties and interest on taxes 598,411 598,411 882,916 - 882,916 284,505 Interest and investment income 100,000 100,000 172,382 - 172,382 72,382 Total Revenues 76,173,093 76,173,093 79,893,462 - 79,893,462 3,720,369 Town of Nantucket, Massachusetts Page 92 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Expenditures: General Government: Moderator: Salary 175 175 175 - 175 - Operating 1,500 1,500 1,500 - 1,500 - 1,675 1,675 1,675 - 1,675 - Town Administration: Salary 536,690 561,690 556,878 - 556,878 4,812 Operating 322,327 404,327 235,502 91,896 327,398 76,929 Articles 3,347,413 3,337,124 1,150,992 2,097,800 3,248,792 88,332 4,206,430 4,303,141 1,943,372 2,189,696 4,133,068 170,073 Finance Committee: Operating 17,650 17,650 17,488 - 17,488 162 Articles 500,000 136,490 - - - 136,490 517,650 154,140 17,488 - 17,488 136,652 Finance and Operations: Salary 590,180 522,180 514,934 - 514,934 7,246 Operating 278,868 278,712 131,853 74,971 206,824 71,888 Articles - 35,263 22,896 10,230 33,126 2,137 869,048 836,155 669,683 85,201 754,884 81,271 Assessor: Salary 394,340 396,340 393,456 - 393,456 2,884 Operating 305,842 287,484 197,050 60,861 257,911 29,573 700,182 683,824 590,506 60,861 651,367 32,457 Collector: Salary 255,050 267,050 264,285 - 264,285 2,765 Operating 89,244 89,244 87,145 498 87,643 1,601 344,294 356,294 351,430 498 351,928 4,366 Treasurer: Salary 289,220 343,220 336,618 - 336,618 6,602 Operating 102,675 121,189 95,539 26,000 121,539 (350) 391,895 464,409 432,157 26,000 458,157 6,252 Information Systems/GIS: Salary 486,820 461,820 459,183 - 459,183 2,637 Operating 343,737 343,737 284,705 40,394 325,099 18,638 Articles 24,936 24,936 24,936 - 24,936 - 855,493 830,493 768,824 40,394 809,218 21,275 Legal: Operating 330,000 466,600 435,760 25,834 461,594 5,006 330,000 466,600 435,760 25,834 461,594 5,006 Human Resources: Salary 144,700 144,700 144,152 - 144,152 548 Operating 25,942 25,942 25,828 - 25,828 114 170,642 170,642 169,980 - 169,980 662 Town Clerk: Salary 218,410 218,410 217,611 - 217,611 799 Operating 69,900 69,900 69,744 - 69,744 156 288,310 288,310 287,355 - 287,355 955 (continued) Town of Nantucket, Massachusetts Page 93 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Nantucket Planning Office: Salary 670,670 711,170 711,170 - 711,170 - Operating 256,927 221,364 192,781 15,108 207,889 13,475 Articles 6,445 3,131 - - - 3,131 934,042 935,665 903,951 15,108 919,059 16,606 Public Buildings: Operating 804,571 879,572 861,060 3,081 864,141 15,431 804,571 879,572 861,060 3,081 864,141 15,431 Natural Resources: Salary 316,140 316,140 314,435 - 314,435 1,705 Operating 15,390 15,390 13,699 761 14,460 930 331,530 331,530 328,134 761 328,895 2,635 Insurances: Auto casualty 173,000 167,810 98,198 - 98,198 69,612 Blanket liability 1,208,000 1,090,710 1,043,889 - 1,043,889 46,821 Claims deductible 107,203 107,203 58,932 24,675 83,607 23,596 Insurance consulting 26,000 26,000 22,738 2,910 25,648 352 1,514,203 1,391,723 1,223,757 27,585 1,251,342 140,381 Total General Government 12,259,965 12,094,173 8,985,132 2,475,019 11,460,151 634,022 Public Safety: Police: Salary 3,960,960 3,775,943 3,758,508 - 3,758,508 17,435 Operating 800,812 808,812 631,174 162,240 793,414 15,398 4,761,772 4,584,755 4,389,682 162,240 4,551,922 32,833 Centralized Dispatch: Salary 628,970 644,292 644,292 - 644,292 - 628,970 644,292 644,292 - 644,292 - Fire: Salary 2,292,248 2,292,248 2,274,632 - 2,274,632 17,616 Operating 209,279 209,278 185,815 21,787 207,602 1,676 Articles - - - - - - 2,501,527 2,501,526 2,460,447 21,787 2,482,234 19,292 Inspectors: Salary 481,120 496,120 484,846 - 484,846 11,274 Operating 2,050 4,100 3,556 540 4,096 4 483,170 500,220 488,402 540 488,942 11,278 Emergency Management: Operating 8,200 8,200 8,134 - 8,134 66 8,200 8,200 8,134 - 8,134 66 Marine: Salary 700,020 679,600 580,591 - 580,591 99,009 Operating 101,744 101,744 71,748 14,684 86,432 15,312 Articles 414,440 398,230 185,000 213,230 398,230 - 1,216,204 1,179,574 837,339 227,914 1,065,253 114,321 Total Public Safety 9,599,843 9,418,567 8,828,296 412,481 9,240,777 177,790 Town of Nantucket, Massachusetts Page 94 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Education: Salary and operating 24,989,580 24,989,200 24,039,537 793,863 24,833,400 155,800 Articles 2,522,485 2,522,679 644,615 1,878,064 2,522,679 - Total Education 27,512,065 27,511,879 24,684,152 2,671,927 27,356,079 155,800 Public Works: Public Works: Salary 1,912,698 1,865,586 1,864,023 - 1,864,023 1,563 Operating 380,425 570,437 495,678 43,407 539,085 31,352 Articles 2,375,111 2,345,111 1,644,423 545,547 2,189,970 155,141 4,668,234 4,781,134 4,004,124 588,954 4,593,078 188,056 Street Lighting: Operating 105,900 135,900 109,571 1,808 111,379 24,521 105,900 135,900 109,571 1,808 111,379 24,521 Mosquito Control: Operating 102,500 102,500 88,439 9,343 97,782 4,718 102,500 102,500 88,439 9,343 97,782 4,718 Snow and Ice Removal: Operating 25,000 25,000 182,123 - 182,123 (157,123) 25,000 25,000 182,123 - 182,123 (157,123) Gas/Town Vehicles: Operating 377,000 377,000 302,163 - 302,163 74,837 377,000 377,000 302,163 - 302,163 74,837 Total Public Works 5,278,634 5,421,534 4,686,420 600,105 5,286,525 135,009 Health and Human Services: Health: Salary 117,610 134,110 133,347 - 133,347 763 Operating 17,225 20,737 20,622 115 20,737 - 134,835 154,847 153,969 115 154,084 763 Commision on Disability: Salary 10,100 10,100 7,699 - 7,699 2,401 Operating 1,575 1,675 1,643 - 1,643 32 11,675 11,775 9,342 - 9,342 2,433 Senior Services/Council on Aging: Salary 152,050 152,050 150,444 - 150,444 1,606 Operating 29,055 28,955 15,904 617 16,521 12,434 181,105 181,005 166,348 617 166,965 14,040 Veterans Services: Salary 15,000 8,000 5,784 - 5,784 2,216 Operating 19,100 19,100 8,868 - 8,868 10,232 34,100 27,100 14,652 - 14,652 12,448 Human Services: Salary 184,090 131,090 130,042 - 130,042 1,048 Operating 16,235 16,235 5,737 1,318 7,055 9,180 Articles 317,880 317,880 317,880 - 317,880 - 518,205 465,205 453,659 1,318 454,977 10,228 Total Health and Human Services 879,920 839,932 797,970 2,050 800,020 39,912 (Continued) Town of Nantucket, Massachusetts Page 95 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Culture and Recreation: Atheneum (Library): Operating 685,233 685,233 685,233 - 685,233 - 685,233 685,233 685,233 - 685,233 - Visitor Services: Salary 282,810 252,810 252,714 - 252,714 96 Operating 62,950 92,950 79,979 8,385 88,364 4,586 345,760 345,760 332,693 8,385 341,078 4,682 Historical District Commission: Salary 187,380 110,380 108,484 - 108,484 1,896 Operating 2,400 2,400 2,234 - 2,234 166 189,780 112,780 110,718 - 110,718 2,062 Town Clock: Operating 2,900 2,900 1,502 298 1,800 1,100 2,900 2,900 1,502 298 1,800 1,100 Total Culture and Recreation 1,223,673 1,146,673 1,130,146 8,683 1,138,829 7,844 State and County Assessments: State assessments and charges 66,456 66,456 65,993 - 65,993 463 Transportation authorities assessments 338,080 338,080 338,081 - 338,081 (1) County assessments and charges 170,201 170,201 170,201 - 170,201 - Total State and County Assessments 574,737 574,737 574,275 - 574,275 462 Pension and Fringe Benefits: Medical Insurance: Salary 9,890,000 9,890,000 9,890,000 - 9,890,000 - 9,890,000 9,890,000 9,890,000 - 9,890,000 - Unemployment: Salary 341,000 341,000 125,362 - 125,362 215,638 341,000 341,000 125,362 - 125,362 215,638 Workers' Compensation: Salary 197,000 197,000 - - - 197,000 197,000 197,000 - - - 197,000 Laborer's Union Pension: Salary 44,000 44,000 34,234 4,916 39,150 4,850 44,000 44,000 34,234 4,916 39,150 4,850 Pension Assessments: Barnstable Retirement 3,420,000 3,481,695 3,481,694 - 3,481,694 1 3,420,000 3,481,695 3,481,694 - 3,481,694 1 Other Employee Benefits: Salary 473,855 473,855 323,394 - 323,394 150,461 473,855 473,855 323,394 - 323,394 150,461 Total Pension and Fringe Benefits 14,365,855 14,427,550 13,854,684 4,916 13,859,600 567,950 Town of Nantucket, Massachusetts Page 96 of 135 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, 2015 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Debt Service 7,421,391 7,421,391 6,925,749 - 6,925,749 495,642 Total Expenditures 79,116,083 78,856,436 70,466,824 6,175,181 76,642,005 2,214,431 Other Financing Sources (Uses) Transfers in 922,300 922,300 672,300 672,300 250,000 Transfers out (8,017,385) (9,512,295) (9,512,295) (9,512,295) - Total Other Financing Sources (Uses)(7,095,085) (8,589,995) (8,839,995) (8,839,995)$ 250,000 Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures/Uses Of Prior Year Budgetary Fund Balance (10,038,075) (11,273,338) 586,643$ 6,184,800$ Other Budgetary Items Use of unassigned fund balance 4,331,016$ 5,552,269$ Use of debt service reserve 174,111 174,111 Prior year encumbrances 2,047,757 2,047,757 Prior year articles 3,730,302 3,744,312 Prior year deficits (245,111) (245,111) Total Other Budgetary Items 10,038,075 11,273,338 Net budget and actual -$ -$ (Concluded) The notes to the required supplementary information are and integral part of this statement. Town of Nantucket, Massachusetts Page 97 of 135 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2015 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 2015, Town Meeting approved various supplemental budgetary appropriations which decreased departmental budgets approximately $250,000 and increased transfers to other funds by approximately $1.5 million The Finance Director’s Office has the responsibility to ensure that budgetary control is maintained in the manner in which the appropriations were voted by Town Meeting. Budgetary control is exercised through the Town’s accounting system. Budgetary-to-GAAP Reconciliation – The Town’s general fund is prepared on a basis of accounting other than GAAP to conform to the Uniform Municipal Accounting System basis of accounting as prescribed by the Massachusetts Department of Revenue. A reconciliation of the budgetary-basis to GAAP-basis results for the General Fund for the fiscal year ended June 30, 2015, is as follows: Basis of Accounting Fund Perspective Differences Differences Total Revenues on a budgetary basis 79,893,462$ Stabilization revenue -$ 58,425$ 58,425 Change in accruing revenues to GAAP basis 156,833 - 156,833 On behalf payments 2,357,488 - 2,357,488 Revenues on a GAAP basis 2,357,488$ -$ 82,466,208$ Expenditures on a budgetary basis 70,466,824$ Reclass indirect transfers against expenditures (591,300)$ -$ (591,300) Refunding transaction 18,980 - 18,980 On behalf payments 2,357,488 - 2,357,488 Expenditures on a GAAP basis 2,357,488$ -$ 72,251,992$ Other financing (uses) on a budgetary basis (8,839,995)$ Reclass indirect transfers against expenditures (591,300)$ -$ (591,300) Refunding transaction 18,980 - 18,980 Other financing (uses) on a GAAP basis (572,320)$ -$ (9,412,315)$ Town of Nantucket, Massachusetts Page 98 of 135 Comprehensive Annual Financial Report Excess of Expenditures Over Appropriations - During the fiscal year ended, the Town overspent its appropriation for snow and ice removal costs by $157,123. This was raised through subsequent tax assessments when the Town set its tax rate for fiscal year 2016 in December 2015. Town of Nantucket, Massachusetts Page 99 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 100 of 135 Comprehensive Annual Financial Report Combining Statements Town of Nantucket, Massachusetts Page 101 of 135 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 102 of 135 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. Town of Nantucket, Massachusetts Page 103 of 135 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Assets: Cash and cash equivalents 212,368$ 174,174$ 446,095$ 33,347$ 631,632$ Investments - - - - - Receivables, net of allowance for uncollectibles: Property taxes - - - - - Departmental and other - - - - - Intergovernmental - - 109,696 60,926 - Total Assets 212,368 174,174 555,791 94,273 631,632 Total Deferred Outflows of Resources - - - - - Total Assets and Deferred Outflows of Resources 212,368$ 174,174$ 555,791$ 94,273$ 631,632$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable 111,563$ 1,585$ 202$ 4,005$ 15,777$ Accrued payroll and withholdings - 2,720 522 3,917 1,477 Other liabilities - - - - - Due to other funds - - - - - Bond anticipation notes payable - - - - - Total Liabilities 111,563 4,305 724 7,922 17,254 Deferred Inflows of Resources Unavailable revenue - property taxes - - - - - Unavailable revenue - other - - - - - Total Deferred Inflows of Resources - - - - - Fund Balances: Nonspendable - - - - - Restricted 100,805 169,869 555,067 86,351 614,378 Total Fund Balances 100,805 169,869 555,067 86,351 614,378 Total Liabilities, Deferred Inflows of Resources and Fund Balances 212,368$ 174,174$ 555,791$ 94,273$ 631,632$ JUNE 30, 2015 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Town of Nantucket, Massachusetts Page 104 of 135 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 5,326,229$ -$ 1,053,201$ 5,765,573$ 7,117,776$ 699,355$ 21,459,750$ - - - - - - - 102,872 - - - - - 102,872 44,447 - - 206,681 - - 251,128 - 770,308 - 302,660 - - 1,243,590 5,473,548 770,308 1,053,201 6,274,914 7,117,776 699,355 23,057,340 - - - - - - - 5,473,548$ 770,308$ 1,053,201$ 6,274,914$ 7,117,776$ 699,355$ 23,057,340$ 53,621$ -$ -$ 442,414$ -$ 1,467$ 630,634$ 1,631 - 31,650 52,081 - - 93,998 - - 165,394 - - - 165,394 - 770,308 - - - - 770,308 363,000 - - 265,551 - - 628,551 418,252 770,308 197,044 760,046 - 1,467 2,288,885 102,872 - - - - - 102,872 44,447 - - 206,681 - - 251,128 147,319 - - 206,681 - - 354,000 - - - - - - - 4,907,977 - 856,157 5,308,187 7,117,776 697,888 20,414,455 4,907,977 - 856,157 5,308,187 7,117,776 697,888 20,414,455 5,473,548$ 770,308$ 1,053,201$ 6,274,914$ 7,117,776$ 699,355$ 23,057,340$ (Continued) Town of Nantucket, Massachusetts Page 105 of 135 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2015 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Assets: Cash and cash equivalents -$ -$ -$ 21,459,750$ Investments 138,684 17,503 156,187 156,187 Receivables, net of allowance for uncollectibles: Property taxes - - - 102,872 Departmental and other - - - 251,128 Intergovernmental - - - 1,243,590 Total Assets 138,684 17,503 156,187 23,213,527 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 138,684$ 17,503$ 156,187$ 23,213,527$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable -$ -$ -$ 630,634$ Accrued payroll and withholdings - - - 93,998 Other liabilities - - - 165,394 Due to other funds - - - 770,308 Bond anticipation notes payable - - - 628,551 Total Liabilities - - - 2,288,885 Deferred Inflows of Resources Unavailable revenue - property taxes - - - 102,872 Unavailable revenue - other - - - 251,128 Total Deferred Inflows of Resources - - - 354,000 Fund Balances: Nonspendable 44,305 500 44,805 44,805 Restricted 94,379 17,003 111,382 20,525,837 Total Fund Balances 138,684 17,503 156,187 20,570,642 Total Liabilities, Deferred Inflows of Resources and Fund Balances 138,684$ 17,503$ 156,187$ 23,213,527$ (Concluded) Town of Nantucket, Massachusetts Page 106 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 107 of 135 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Revenues: Intergovernmental 116,678$ 598,950$ 494,715$ 261,321$ 564,337$ Motor vehicle and other excises - - - - - Community preservation surcharges - - - - - Investment income - - - 46 - Departmental and other revenue 377,797 - - - 32,723 Contributions and donations - - - - - Total Revenues 494,475 598,950 494,715 261,367 597,060 Expenditures: Current: General government - - - 229,772 96,274 Public safety - - - 5,105 58,835 Education 578,354 511,628 603,619 - - Public works - - - - 65,327 Health and human services - - - 15,000 186,713 Culture and recreation - - - - 11,261 Debt service: Principal - - - - 299,015 Total Expenditures 578,354 511,628 603,619 249,877 717,425 Excess (Deficiency) Of Revenues Over (Under) Expenditures (83,879) 87,322 (108,904) 11,490 (120,365) Other Financing Sources (Uses): Issuance of bonds and notes - - - - 256,000 Sale of capital assets - - - - - Transfers in - - - - - Total Other Financing Sources (Uses)- - - - 256,000 Net Change in Fund Balances (83,879) 87,322 (108,904) 11,490 135,635 Fund Balances - Beginning of Year 184,684 82,547 663,971 74,861 478,743 Fund Balances - End of Year 100,805$ 169,869$ 555,067$ 86,351$ 614,378$ Special Revenue Funds FISCAL YEAR ENDED JUNE 30, 2015 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 108 of 135 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 606,331$ 1,185,502$ -$ 223,555$ -$ -$ 4,051,389$ - - - 39,879 - - 39,879 1,844,628 - - - - - 1,844,628 18,748 - - 895 - - 19,689 16,321 - 1,047,420 1,538,547 - - 3,012,808 - - - - - 107,578 107,578 2,486,028 1,185,502 1,047,420 1,802,876 - 107,578 9,075,971 - - - 275,199 289,912 51,396 942,553 - - - 1,013,431 - 39,809 1,117,180 - - 1,360,784 - - 25,011 3,079,396 - 1,185,502 - 9,746 - 2,319 1,262,894 - - - 81,181 - - 282,894 3,748,044 - - 98,142 - 1,696 3,859,143 - - - - - - 299,015 3,748,044 1,185,502 1,360,784 1,477,699 289,912 120,231 10,843,075 (1,262,016) - (313,364) 325,177 (289,912) (12,653) (1,767,104) 737,000 - - - - - 993,000 - - - - 2,474,833 - 2,474,833 - - 350,000 - - - 350,000 737,000 - 350,000 - 2,474,833 - 3,817,833 (525,016) - 36,636 325,177 2,184,921 (12,653) 2,050,729 5,432,993 - 819,521 4,983,010 4,932,855 710,541 18,363,726 4,907,977$ -$ 856,157$ 5,308,187$ 7,117,776$ 697,888$ 20,414,455$ (Continued) Town of Nantucket, Massachusetts Page 109 of 135 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2015 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Revenues: Intergovernmental -$ -$ -$ 4,051,389$ Motor vehicle and other excises - - - 39,879 Community preservation surcharges - - - 1,844,628 Investment income 1,479 210 1,689 21,378 Departmental and other revenue 40,500 - 40,500 3,053,308 Contributions and donations - - - 107,578 Total Revenues 41,979 210 42,189 9,118,160 Expenditures: Current: General government - - - 942,553 Public safety - - - 1,117,180 Education - - - 3,079,396 Public works 764 - 764 1,263,658 Health and human services - - - 282,894 Culture and recreation - - - 3,859,143 Pension and fringe benefits - - - - Debt service: Principal - - - 299,015 Total Expenditures 764 - 764 10,843,839 Excess (Deficiency) Of Revenues Over (Under) Expenditures 41,215 210 41,425 (1,725,679) Other Financing Sources (Uses): Issuance of bonds and notes - - - 993,000 Sale of capital assets - - - 2,474,833 Transfers in - - - 350,000 Total Other Financing Sources (Uses)- - - 3,817,833 Net Change in Fund Balances 41,215 210 41,425 2,092,154 Fund Balances - Beginning of Year 97,469 17,293 114,762 18,478,488 Fund Balances - End of Year 138,684$ 17,503$ 156,187$ 20,570,642$ (Concluded) Town of Nantucket, Massachusetts Page 110 of 135 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 111 of 135 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2015 Total Health Workers'Internal Claims Compensation Service Funds Assets: Current assets: Cash and cash equivalents 2,074,151$ 58,554$ 2,132,705$ Investments - 116,635 116,635 Reinsured claims receivable 150,532 - 150,532 Prepaid items 149,641 - 149,641 Total Current Assets 2,374,324 175,189 2,549,513 Noncurrent assets: Deposits held by third party 1,952,600 - 1,952,600 Total noncurrent assets 1,952,600 - 1,952,600 Total Assets 4,326,924 175,189 4,502,113 Total Deferred Outflows of Resources - - - Total Assets and Deferred Outflows of Resources 4,326,924 175,189 4,502,113 Liabilities: Current liabilities: Warrants and accounts payable 2,023,675$ 15,137$ 2,038,812$ Health claims incurred but not reported 775,395 - 775,395 Workers' compensation claims - 117,324 117,324 Total Current Liabilities 2,799,070 132,461 2,931,531 Total Deferred Inflows of Resources - - - Total Liabilities and Deferred Inflows of Resources 2,799,070 132,461 2,931,531 Net Position: Unrestricted 1,527,854 42,728 1,570,582 TOTAL NET POSITION 1,527,854$ 42,728$ 1,570,582$ Town of Nantucket, Massachusetts Page 112 of 135 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2015 Total Health Workers'Internal Service Claims Compensation Funds Operating Revenues: Employee contributions 1,811,460$ -$ 1,811,460$ Employer contributions 11,483,855 - 11,483,855 Reinsured claims proceeds 766,246 - 766,246 Total Operating Revenues 14,061,561 - 14,061,561 Operating Expenditures: Employee benefits 13,328,161 204,098 13,532,259 Operating Income (loss)733,400 (204,098) 529,302 Nonoperating Revenues: Investment Income 2,049 2,996 5,045 Income Before Transfers 735,449 (201,102) 534,347 Change in Net Position 735,449 (201,102) 534,347 Fund Balances - Beginning of Year 792,405 243,830 1,036,235 Fund Balances - End of Year 1,527,854$ 42,728$ 1,570,582$ Town of Nantucket, Massachusetts Page 113 of 135 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2015 Total Health Workers'Internal Service Claims Compensation Funds Cash Flows From Operating Activities: Receipts from interfund services provided 13,295,315$ -$ 13,295,315$ Receipts from reinsured claims 797,212 - 797,212 Payments for interfund services used (12,417,067) (126,217) (12,543,284) Net Cash Provided by (Used in) Operating Activities 1,675,460 (126,217) 1,549,243 Cash Flows From Investing Activities: Investment income 2,049 2,996 5,045 Investment of operating cash - (116,635) (116,635) Net Cash Provided by (Used in) Investing Activities 2,049 (113,639) (111,590) Net Change in Cash and Cash Equivalents 1,677,509 (239,856) 1,437,653 Cash and Cash Equivalents: Beginning of the Year 396,642 298,410 695,052 End of the Year 2,074,151$ 58,554$ 2,132,705$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating income (loss)733,400$ (204,098)$ 529,302$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Changes in assets and liablities: Receivables 30,966 - 30,966 Prepaid items (107,541) - (107,541) Deposits held by third party (122,600) - (122,600) Accounts payable and accrued expenses 1,141,235 77,881 1,219,116 Net Cash Provided by (Used in) Operating Activities 1,675,460$ (126,217)$ 1,549,243$ Town of Nantucket, Massachusetts Page 114 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 115 of 135 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 116 of 135 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2015 Beginning End of Year Additions Deletions of Year Assets Current assets: Cash and cash equivalents 767,476$ 1,518,534$ (1,297,444)$ 988,566$ Receivables, net of allowance 98,628 418,247 (401,365) 115,510 Total Assets 866,104$ 1,936,781$ (1,698,809)$ 1,104,076$ Liabilities Current liabilities: Warrants and accounts payable 28,654$ 387,973$ (381,627)$ 35,000$ Accrued payroll and withholdings 16,930 425,602 (431,737) 10,795 Agency liabilities 820,520 1,123,206 (885,445) 1,058,281 Total Liabilities 866,104$ 1,936,781$ (1,698,809)$ 1,104,076$ Town of Nantucket, Massachusetts Page 117 of 135 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 118 of 135 Comprehensive Annual Financial Report STATISTICAL SECTION The winter of 2015 was one for the record books in New England. Parts of the area racked up over 10 feet of snow in a 30 day period of time, which made it the all-time snowiest season on record. Nantucket, which typically does not receive significant snow, was not spared. The picture below shows a typical street in Nantucket after one of the massive blizzards hit. It was a life-sized snow globe. 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. Town of Nantucket, Massachusetts Page 119 of 135 Comprehensive Annual Financial Report LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental activities: Invested in capital assets……….…………………. 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$ 181,710,594$ Restricted………………………………………………………………………….. 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 20,995,512 Unrestricted……………………………………………………………… 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 (36,480,970) Total governmental activities net position……………………………………….. 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$ 166,225,136$ Business-type activities: Invested in capital assets……….…………………. 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$ 119,242,898$ Restricted……………………………...…………………..… - - - - - - - - - - Unrestricted………………………………………………………………. 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 (1,523,044) Total business-type activities net position……………………………. 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$ 117,719,854$ Primary government: Invested in capital assets……….…………………. 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$ 300,953,492$ Restricted………………………………………………………………………. 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 20,995,512 Unrestricted…………………………………………………………… 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 (38,004,014) Total primary government net position…………………………………………………. 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$ 283,944,990$ NET POSITION BY COMPONENT Town of Nantucket, Massachusetts Page 120 of 135 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Expenses - Governmental activities: General government…...……………………………………………………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$ 11,574,757$ Public safety…..………………………………………………………………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 15,484,735 Education……..………………………………………………………………….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 38,839,302 Public works……...……………………………………………………………….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 5,131,842 Health and human services………………………………………………………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 1,528,171 Culture and recreation………...……………………………………………………..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 5,397,098 Interest expense……………………………………………………………………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 1,616,600 Total government activities expenses……………………………………..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 79,572,505 Business-type activities: Siasconset Water……………………………………………………………………277,724 413,420 434,272 577,851 602,507 719,668 682,682 712,820 724,927 738,719 Wannacomet Water……………………………………………………………………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 3,544,191 Sewer……………………………………………………………………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 6,255,624 Solid waste……………………………………………………………………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 10,324,817 Nantucket Memorial Airport……………………………………………………………………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 15,096,177 Our Island Home……………………………………………………………………- - - - - 8,808,654 6,923,716 7,079,676 7,670,514 7,945,959 Total business-type activities expenses……………………………………..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 43,905,487 Total primary government expenses……………………………………….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$ 123,477,992$ Program Revenues - Governmental activities: Charges for services: General government…………………………………………………General government…...……………………………………………………87,871$ 448,176$ 1,018,223$ 211,203$ 1,358,150$ 426,552$ 741,512$ 622,049$ 917,730$ 771,006$ Public safety………………………………………………………………..Public safety…..………………………………………………………………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 3,203,714 Education……………………………………………………………….Education……..………………………………………………………………….565,693 569,468 688,028 515,790 498,985 501,915 780,977 1,488,121 1,490,713 1,433,969 Public works……………………………………………………………….Public works……...……………………………………………………………….111,057 124,570 69,200 66,298 55,092 59,430 276,502 300,317 340,272 376,600 Health and human services………………………………………………………3,143,759 2,687,242 3,284,823 3,120,051 3,661,973 35,445 82,788 132,655 188,221 190,627 Culture and recreation………...……………………………………………………..326,786 348,352 318,742 321,181 289,279 325,010 522,063 248,089 295,416 346,626 Operating grants and contributions……………………………………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 6,761,994 Capital grants and contributions…………………………………………..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 1,886,943 Total government activities program revenues...……………………………..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 14,971,479 Business-type activities: Charges for services……………….………………………………….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 33,738,945 Operating grants and contributions……………………………………1,728,527 3,494,514 1,773,605 1,113,866 776,060 1,287,762 746,499 85,992 91,000 90,820 Capital grants and contributions…………………………………………..- - 6,804,856 15,208,679 7,057,702 3,307,275 2,146,931 1,989,292 2,479,717 6,078,185 Total business-type activities program revenues……………………………………..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 39,907,950 Total primary government program revenues……………………………………….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$ 54,879,429$ Net (Expense)/Program Revenue Governmental activities……………………....……………………………..(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)$ (64,601,026)$ Business-type activities……………………....……………………………..(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) (3,997,537) Total primary government net (expense)/program revenue……………………………………….(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)$ (68,598,563)$ (continued) Town of Nantucket, Massachusetts Page 121 of 135 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Revenues and other Changes in Net Position - Governmental activities: Real estate and personal property taxes, net of tax refunds payable…………………………………………………. 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$ 65,895,498$ Motor vehicle and other excise taxes…………………………………………………… 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 2,607,277 Hotel and meals excise……………………………………………..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 4,026,389 Penalties and interest on taxes………………………………………………………………306,207 398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 Community Preservation Fund surcharges………………………………………………………………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 1,835,287 Grants and contributions not restricted to specific programs………………………………………………………………240,798 413,538 469,868 376,265 587,474 935,761 307,901 737,402 278,049 186,666 Unrestricted investment income……………………………………………. 678,052 355,288 634,539 277,329 160,970 65,960 173,698 66,235 159,229 257,230 Gain on sale of capital assets……………………………………………. --- -1,143,075 73,530 813,011 736,256 1,379,639 2,430,079 Other revenue………………………………………………………………1,377,948 593,982 583,420 850,819 789,238 748,060 438,678 604,871 -- Transfers………………………………………………………………(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) (7,881,295) Total governmental activities………………………………………………………………… 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 70,240,047 Business-type activities: Unrestricted investment income……………………………………………………………… - -- --- 11,993 55,748 44,030 32,935 Gain on sale of capital assets………………………………………. - -- --- ---829,212 Transfers………………………………………………………………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 7,881,295 Total business-type activities….………..…………………………………..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 8,743,442 Total primary government general revenues and other changes in net position………………………………………………….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$ 78,983,489$ Changes in Net Position Governmental activities……………………....……………………………..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$ 5,639,021$ Business-type activities……………………....……………………………..246,220 3,740,241 21,002,776 14,539,803 4,856,227 580,778 5,760,318 (1,319,293) 571,995 4,745,905 Total primary government changes in net position………………………………………. 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$ 10,384,926$ (concluded) Town of Nantucket, Massachusetts Page 122 of 135 Comprehensive Annual Financial Report 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund: Nonspendable………………………………. -$ -$ -$ -$ -$ -$ -$ -$ -$ 11,406$ Restricted………………………………. 398,963 374,421 931,390 - 250,000 - 1,485,147 1,577,323 650,518 488,344 Committed…………………………….. 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 4,013,474 Assigned…………………………….. 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 6,323,207 Unassigned…………………………… 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 15,470,669 Total general fund…………………………….. 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$ 26,307,100$ All Other Governmental Funds: Nonspendable……………………………….308,153$ 308,153$ 308,153$ 308,153$ 308,153$ 288,280$ 44,305$ 44,305$ 114,762$ 44,805$ Restricted………………………………. 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 20,950,707 Unassigned…………………………… - - - - - (138,806) (104,106) - - (1,109,351) Total all other governmental funds…………….. 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$ 19,886,161$ Note: The Town implemented GASB 54 in fiscal year 2011. All previous years (2006 - 2010) data presented were restated to conform to GASB 54 presentation. FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 123 of 135 Comprehensive Annual Financial Report 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues: Real estate and personal property taxes, net of tax refunds……………………………………………………. 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$ 66,805,456$ Motor vehicle and boat excise………………………………………… 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 2,592,035 Hotel and meals excise………………………………………………. 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 4,026,389 Departmental and other……………………………………….. 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 4,606,897 Communities Preservation surcharges……………………………………… 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 1,844,628 Penalties and interest on taxes………………………………………………………..306,207 398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 Licenses and permits………………………………………………………..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 1,455,080 Fines and forfeitures…………………………………………………………….331,706 411,439 266,693 240,648 248,231 254,285 223,054 208,503 296,917 283,179 Intergovernmental………………………………………………………..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 8,728,025 Contributions………………………………………………………..- 850 1,300 96,821 83,320 1,249,415 - 258,425 372,331 107,578 Investment income……………………………………………………….. 635,636 436,029 758,901 440,459 278,439 159,602 164,936 63,751 147,521 252,185 Total Revenue………………………………………………… 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 91,584,368 Expenditures: General government……………………………………………………………. 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 8,658,027 Public safety……………………………………………………………… 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 9,444,096 Education………………………………………………………………… 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 25,775,358 Public works…………………………………………………………….. 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 2,977,129 Health and human services………………………………………………… 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 1,080,864 Culture and recreation……………………………………………….. 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 4,875,189 Pension and fringe benefits………………………………………………………… 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 16,212,172 State and county charges………………………………………… 440,372 447,745 462,130 449,457 458,657 461,358 531,772 546,250 566,814 574,275 Capital outlay and other………………………………………………………………. 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 8,504,352 Debt service: Principal……………………………………………………………… 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 5,478,306 Interest……………………………………………………………………. 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 1,746,458 Total Expenditures……………………………………………………….. 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 85,326,226 Excess of revenues over (under) expenditures………………………………………………… 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 6,258,142 Other Financing Sources (Uses): Issuances from bonds and notes………………...………………………………………… 2,810,000 6,680,000 19,551,578 5,990,490 13,070,000 - 3,200,000 478,449 - 993,000 Issuances from refunding bonds………………...…………………………………………17,924,000 - - - - 1,329,900 8,685,000 - 758,200 Premiums from debt issuances………………………….434,629 - - - 279,138 - 212,513 808,509 - 51,600 Payments to refunded bond escrow agent………………………….(18,261,489) - - - - - (1,519,037) (9,505,125) - (790,820) Sale of capital assets………………………………………………… - - - - 1,143,075 73,530 - 865,210 3,888,758 2,474,833 Transfers in……………………………………………………………………………… 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 1,631,000 Transfers out…………………………………………………………………………… (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) (9,512,295) Total other financing sources (uses)………………………………………………………………….. 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) (4,394,482) Net change in fund balance…………………………………………………………………. 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$ 1,863,660$ Debt service as a percentage of noncapital expenditures………………………………………………. 10.03% 10.20% 10.19%13.20%14.00%14.68%13.12%11.34%10.22%9.40% LAST TEN FISCAL YEARS CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 124 of 135 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 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 2.89 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 2.55 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 2.73 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 2.81 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 3.06 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 3.66 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 3.70 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 3.72 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 3.82 2015 16,946,921,756 11,664,300 944,004,094 49,617,300 229,217,719 1,222,839,113 18,181,425,169 17,816,255,100 102.05%3.61 6.38 3.65 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 Town of Nantucket, Massachusetts Page 125 of 135 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 81,383,254$ 1 0.45%137,791,767$ 1 Richmond Great Point Development LLC Private 55,907,692 2 0.31%70,523,353 3 Nantucket Electric Company Private Utility 50,908,692 3 0.28%47,352,320 5 0.29% Penant Realty LLC Residential 40,036,787 4 0.22% Nantucket Yacht Club Recreation 38,682,518 5 0.21%50,027,954 4 0.30% Nantucket Island Resort LLC Resort 30,911,644 6 0.17%73,682,608 2 0.45% Great Harbor Yacht Club Inc.Private 29,927,244 7 0.16% White Elephant Hotel LLC Resort 20,596,646 8 0.11% Sankaty Head Golf Club, Inc.Recreation 20,229,113 9 0.11%18,535,278 8 0.11% US REIF Marine Nantucket FEE LLC Retail 18,566,843 10 0.10% NIR Retail III LLC Resort 27,206,500 6 0.17% Nantucket Golf Course Recreation 21,232,582 7 0.13% Wauwinet Inn, LLC Resort 16,403,775 9 0.10% Westmoor Club Resort 11,589,400 10 0.07% Totals 387,150,433$ 2.13%474,345,537$ 1.61% Source: Official Statements 2015 2006 Town of Nantucket, Massachusetts Page 126 of 135 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 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%2,495,326 59,704,511 98.68% 2011 63,040,150 879,419 62,160,731 59,524,809 95.76%2,485,154 62,009,963 99.76% 2012 62,274,744 1,022,718 61,252,026 59,159,055 96.58%2,305,236 61,464,291 100.35% 2013 63,618,273 1,436,973 62,181,300 61,289,075 98.57%1,392,789 62,681,864 100.81% 2014 64,647,039 1,419,342 63,227,697 62,277,217 98.50%1,699,044 63,976,261 101.18% 2015 66,329,953 1,433,100 64,896,853 63,859,829 98.40%- 63,859,829 98.40% Source: Accounting Records and Official Statements PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Tax Levy Collections Town of Nantucket, Massachusetts Page 127 of 135 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 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 10,130 541,043,300 17,208,429,905 69,057,471 6,817 12.76%0.40% 2012 10,298 550,016,180 16,844,170,191 65,559,307 6,366 11.92%0.39% 2013 10,298 550,016,180 17,101,129,679 60,299,542 5,855 10.96%0.35% 2014 10,298 550,016,180 16,939,727,455 54,871,053 5,328 9.98%0.32% 2015 10,298 550,016,180 18,181,425,169 50,350,913 4,889 9.15%0.28% 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 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 14.97%0.47%150,040,866 14,812 27.7%0.87% 2012 87,513,595 8,498 15.91%0.52%153,072,902 14,864 27.8%0.91% 2013 83,901,285 8,147 15.25%0.49%144,200,827 14,003 26.2%0.84% 2014 82,305,570 7,992 14.96%0.49%137,176,623 13,321 24.9%0.81% 2015 83,147,112 8,074 15.12%0.46%133,498,025 12,963 24.3%0.73% 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 128 of 135 Comprehensive Annual Financial Report 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Equalized Valuation………………………………….. 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$ 17,816,255,100$ Debt Limit…………………………..…………………. 878,102,880 878,102,880 1,124,902,015 1,124,902,015 1,095,719,670 1,095,719,670 902,050,960 902,050,960 890,812,755 890,812,755 Outstanding general obligation bonds………………. 85,654,576 111,505,499 146,529,779 150,698,238 157,240,850 150,040,866 153,072,902 144,200,827 137,176,623 133,498,025 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 87,611,526 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) (38,186,867) Legal debt margin………………………………………….. 659,502,868$ 627,347,596$ 852,425,087$ 849,628,491$ 818,251,731$ 831,320,920$ 653,566,086$ 663,137,624$ 685,988,094$ 631,516,337$ Total debt applicable to the limit as a percentage of debt limit………………………………….. 18.54%22.83%18.73%16.74%15.85%16.46%17.12%16.86%13.41%20.53% Source: State Division of Local Services, Accounting Records COMPUTATION OF LEGAL DEBT MARGIN LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 129 of 135 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……………………………………………………………. 50,350,913 Total direct and overlapping debt…………………………………………… 50,350,913$ *Outstanding debt as of June 30, 2015. Source: Official Statements, Accounting Records The estimated percentage applicable is based 100% to the Town. AS OF JUNE 30, 2015 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Town of Nantucket, Massachusetts Page 130 of 135 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 2006 10,241 456,461,852 44,572 36.7 1,199 2.50% 2007 10,531 492,650,711 46,781 36.7 1,220 2.30% 2008 11,215 549,422,850 48,990 36.7 1,288 6.30% 2009 11,322 579,686,400 51,200 36.7 1,294 7.40% 2010 10,172 543,286,520 53,410 39.4 1,255 7.80% 2011 10,130 541,043,300 53,410 39.4 1,230 6.80% 2012 10,298 550,016,180 53,410 39.4 1,282 6.00% 2013 10,298 550,016,180 53,410 39.4 1,322 5.90% 2014 10,298 550,016,180 53,410 39.4 1,378 6.20% 2015 10,298 550,016,180 53,410 39.4 1,535 3.60% 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 131 of 135 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 670 1 8.74%710 1 7.34% 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 90 4 1.17%105 4 1.08% Stop & Shop Retail 90 5 1.17%65 6 0.67% Blue Hills Bank Finance 60 6 0.78%0.00% Myles Reis Trucking Haulage 30 7 0.39% Steamship Authority Transportation 28 8 0.37%32 7 0.33% Don Allen Auto Dealership 25 9 0.33% Bartlett Oceanview Farm Farm/Retail 25 10 0.33% Harbor Fuel Petroleum Products 30 8 0.31% Pacific National Bank/Fleet Finance 28 9 0.29% The Brotherhood Restaurant 27 10 0.28% Nantucket Bank Finance 70 5 0.72% Source: Official Statements 2015 2006 CURRENT YEAR AND NINE YEARS AGO PRINCIPAL EMPLOYERS (INCLUDING TOWN) Town of Nantucket, Massachusetts Page 132 of 135 Comprehensive Annual Financial Report Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General government……………………………………………………………. 51 54 53 58 60 60 63 60 66 68 Public safety…………………………………………….. 78 79 79 78 77 77 81 81 81 81 Education…………………………………………………… 302 305 306 293 295 292 299 299 301 301 Public works…………………………………………………………….. 23 24 26 27 24 26 28 27 30 30 Health and human services………………………………………………………….. 5 5 4 4 4 4 4 5 5 5 Culture and recreation………………………………………………… 29 25 22 18 16 17 9 10 10 10 Sub-total governmental activities ……………………………………………………….. 488 492 490 478 476 476 484 482 493 495 Nantucket Memorial Airport………………………… 46 47 47 41 45 47 44 44 41 41 Siasconset Water………………………………………………………………… 1 1 1 1 1 1 - - - - Wannacomet Water………………………….. 11 11 11 11 11 11 11 11 11 11 Sewer………………………………………………………………… 10 10 10 12 12 12 10 10 10 10 Our Island Home………………………………………………………………… 74 78 80 78 72 73 71 69 69 70 Sub-total business-type activities ……………………………………………………….. 142 147 149 143 141 144 136 134 131 132 Total Town employees…………….…………………...…….. 630 639 639 621 617 620 620 616 624 627 Source: Town personnel records FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 133 of 135 Comprehensive Annual Financial Report Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Government: Town Clerk Registered voters…………………………………….. 7,998 7,998 8,164 8,164 7,907 7,907 8,394 8,394 8,546 8,618 Public Safety: Police Criminal offenses Arrests……………………………….. 764 902 551 1,309 1,169 1,062 1,160 1,531 992 584 Reported crimes…………………….. 581 590 587 621 716 499 479 490 501 356 Motor vehicle responses………………………… 3,015 3,076 4,857 3,103 2,910 2,600 2,994 3,469 3,411 3,432 Other responses………………………… NA 16,446 19,783 18,962 17,659 15,913 18,553 20,648 17,899 21,576 Total criminal offenses…………. 4,360 21,014 25,778 23,995 22,454 20,074 23,186 26,138 22,803 25,948 Fire Incidents Fires…………………………….. 188 86 63 56 40 66 41 52 67 82 Non-fire incidents……………………………………………………….. 4,464 3,974 3,896 4,072 3,783 3,637 3,640 3,721 4,915 3,893 Total fire calls…………………4,652 4,060 3,959 4,128 3,823 3,703 3,681 3,773 4,982 3,975 Inspectional Services: Number of building permits…………………………………. 1,435 1,439 1,280 972 1,156 1,145 1,406 1,639 1,797 2,010 Education: Number of students…………………………………. 1,199 1,220 1,288 1,294 1,255 1,230 1,282 1,322 1,378 1,535 Public Works: Landfill Solid waste tonnage………………………….. 35,000 38,000 33,359 40,056 24,687 34,933 34,000 33,710 37,400 38,000 Health and Human Services: Board of Health Inspections Food establishments…………………. 239 231 230 228 210 205 212 230 247 262 Other………………………….. 308 348 328 355 329 302 341 358 367 380 Total inspections………………….. 547 579 558 583 539 507 553 588 614 642 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 3,965 3,889 3,512 3,838 3,628 3,845 3,795 3,973 4,102 Transportation: Nantucket Memorial Airport Number of enplanements……… 269,433 278,133 257,755 203,786 201,638 179,410 175,420 178,303 174,129 164,290 Number of tower operations…… 161,685 150,200 144,073 127,482 127,575 120,806 125,960 126,898 119,976 109,225 Gallons of fuel sold……………. N/A N/A N/A N/A N/A 1,127,270 1,217,635 1,164,958 1,194,978 1,207,361 N/A - Information not available Source: Various Town Departments, State websites and annual Town Report. OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 134 of 135 Comprehensive Annual Financial Report Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 2 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 135 of 135 Comprehensive Annual Financial Report